The retailer, which operates 621 stores in the country under the Asda banner, reported Thursday that same-store sales there plunged 5.7% in the first quarter. Store traffic fell 5%, while the average amount spent by customers declined 0.7%. The showing was by far the worst among Walmart's international divisions, and represented the seventh straight quarterly sales decline for the U.K. outfit.
Walmart pinned the blame on "significant structural shifts" in the U.K. market, primarily the rise of hard discount chains such as Aldi and Lidl. In reality, Walmart's competitors in the U.K. such as Tesco and Sainsbury have simply gotten better at offering deal-seeking Brits good discounts on apparel and food.
In April, supermarket chain Tesco posted its first quarter of U.K. sales growth in three years, and rival Morrison's has notched two consecutive quarters of sales gains there. Aldi and Lidl, meanwhile, have continued to add new stores in the U.K., which has weighed on Asda.
Luckily for Walmart, its U.S. business has come to life recently and key international markets such as Canada and Mexico continue to perform well.
Walmart delivered its seventh straight same-store sales increase in the U.S. in the first quarter. Same-store sales rose 1%, ahead of Walmart's guidance for a 0.5% increase. Walmart had success in most areas of its store, including apparel, health and wellness and groceries. And it appears the second quarter has started on the right foot -- Walmart said it sees same-store sales at its U.S. division rising 1%.
Meanwhile, Walmex (Walmart's business in Mexico with over 2,300 stores) recorded a strong 8.6% same-store sales increase in the quarter, driven by momentum in food and other household essentials. Operating profit for the division was higher than the prior year. Walmart Canada, which has more than 400 stores, saw same-store sales increase 6.7% behind interest in food and health and wellness products. It marked the eighth straight quarterly same-store sales increase for the division.
Good performances in the U.S. and certain overseas markets helped Walmart to deliver a bit of good cheer to its investors. Walmart reported first-quarter earnings of 98 cents a share, beating Wall Street forecasts of 88 cents. The company had estimated earnings of 80 cents a share to 95 cents a share. Total revenue clocked in at $115.9 billion, matching forecasts.