While the No. 1 retailer forecasts third-quarter same-store sales between a decline of 2% to a increase of 1%, exactly how it plans on returning to positive sales territory remains unclear.
There's no denying that the aggressive rollbacks put in place during the quarter didn't generate the traffic Wal-Mart expected. Thus, the company will return to its strategy of "everyday low prices."
During the second quarter, Wal-Mart's total revenue rose 2.8% to $103.73 billion, but this fell below analysts' expectations of $105.33 billion. Wal-Mart's U.S. same-store sales dropped 1.8%, at the low range of forecasts.Chief Financial Officer Tom Schoewe said on call with reporters that the Wal-Mart customer is under such severe pressure that even dramatic discounts are not enough to entice spending. So what is? "At the end of the day it is a function of price and assortment," Schoewe said. "When we get the two right, that's when we are successful." Wal-Mart, of course, hasn't gotten the two right for some time, though it appears to be taking proactive steps to mitigate the issue. Wal-Mart is currently in the process of restocking some merchandise that it misguidedly cut under its "Project Impact" initiative. "We took too much out and we are adjusting that," Schoewe said. Still, problems loom for Wal-Mart's discretionary segments, especially apparel. "Apparel is not where we want it to be, but it is an opportunity for us," Schoewe said. Wal-Mart is now planning on "returning to its roots" with apparel basics like socks, underwear and t-shirts. Improving its assortment, however, may prove difficult, as Wal-Mart is currently in the process of finding a replacement for Chief Merchandising Officer John Fleming, who stepped down earlier this month after Bill Simon was named the new CEO. Schoewe said that it is the company's intention to fill the position and they are looking at candidates internally and externally.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV