Neighborhood Markets highlight slow Q1 performance at Walmart

While severe winter weather impacted overall sales and profits, Wal-Mart Stores on Thursday boasted that comparable-store sales at its Neighborhood Market division increased by around 5% in the fiscal first quarter, “validating our strategy to accelerate unit growth,” officials said.

Bill Simon, CEO of Walmart U.S., said a 4% increase in traffic drove the comps at Neighborhood Markets, the company’s grocery-drug combination stores. The division through April has shown 46 consecutive months of positive comps, a streak that would date to July of 2010. Walmart did not provide a sales figure for the division and typically has not specified its performance with figures.

Walmart is set to open between 180 and 200 new Neighborhood Markets stores this year. The company operated 359 units through the end of April.

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Overall, Walmart’s U.S. sales increased 2% to $67.9 billion in the quarter, which ended May 2. Comparable-store sales decreased by 0.1% and operating income of $5 billion declined by 4.3%.

Simon reiterated remarks in the fourth quarter that about 10% of Walmart’s 3,300 U.S. supercenters were underperforming. He said the company has developed “store-specific action plans” to address sales at those units, and that those efforts — including additional staffing — resulted in comp improvements of 2% during the quarter. “While we’re encouraged with the early results, we anticipate this will be a ongoing work in progress.”

U.S. comps in grocery were “relatively flat” in the quarter, impacted by around 90 basis points by a reduction in SNAP benefits, Simon said, although food comps improved slightly. “We’re seeing the strongest results in areas such as meat, produce and dairy, where we’re investing to keep prices low for customers despite pressure from cost inflation.”