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The end of easy comparisons begins now

8/23/2012

Walmart U.S. just reported its fourth consecutive quarter of positive same store sales growth. Now comes the hard part.


The current third quarter period marks the first time in three years that Walmart U.S. is up against a prior year increase in same store sales. As Walmart U.S. president and CEO Bill Simon reminded those listening to the company’s conference call last week, Walmart had a 1.3% comp increase in the third quarter of 2011 and this year he is expecting an increase in the range of 1% to 3%.


Recall that it was the third quarter last year when Walmart ended its string of negative same store sales that had begun in the second quarter of 2009. Following last year’s third quarter gain, Walmart went on to log a 1.5% increase in the fourth quarter, a 2.7%, weather aided increase in the first quarter followed by a sequential deceleration in the second quarter of 2.2%.


The thing about all of those increases is that they were easy, coming against negative results the prior two years. However, in the case of the recent 2.2% gain, it compared to three years of negative results. Walmart U.S. same store sales declined 1.5% in 2009, followed by a 1.8% decline in 2010 and then last year’s 0.9% decline.


Looking at the third quarter and Walmart’s guidance in the range of 1% to 3%, the company is lapping a 1.3% increase from the third quarter of 2011, but that figure came on top of a 1.3% decline in 2010 and a 0.5% decline in 2009.


Walmart contends it is pleased with the momentum it is seeing in its U.S. business, but the gains of the past four quarters have merely brought the U.S. division back to an even footing with where it was several years earlier. Now come the type of challenging comparisons that will offer more meaningful insight into whether the momentum of the U.S. business is sustainable.


 



 


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