Wal-Mart planning new private label launch

by Monica Watrous    View Me on Google+
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Price First items include snacks, pasta and condiments.

BENTONVILLE, ARK. — Price First, a new opening price point private label line, is set to debut nationally in Wal-Mart U.S. stores in the coming months.

Peanut butter, pasta, snacks, baking mixes and condiments are among items offered at significantly lower prices than branded products. Over the past year, Wal-Mart piloted approximately 50 items in a couple hundred stores and now has expanded distribution to more than 2,500 stores, according to a company representative.

“In an environment where customers have so many choices about where to shop and how to buy, and many of them are feeling pressure on their budgets, we have to be at our best,” said Doug McMillon, president and chief executive officer of Wal-Mart Stores, Inc., during an Aug. 14 conference call with financial analysts to discuss second-quarter earnings. “That’s why it’s so important for us to deliver a compelling customer proposition of low prices and quality service for every transaction.”

Price First is one way in which Wal-Mart Stores, Inc. is adapting to changing consumer needs. Smaller-format stores and e-commerce platforms represent additional areas of focus for the retailer. Challenged by price investments and reduced SNAP benefits, Wal-Mart U.S. reported flat comparable performance for its food business during the second quarter.

“Stronger sales in the U.S. businesses would have helped our profit performance in the quarter,” Mr. McMillon said. “We can get better operationally, and we will.”

Turnaround efforts include the recent announcement of a new leader for Wal-Mart U.S. Greg Foran in July was promoted to president and chief executive officer of Wal-Mart U.S., succeeding Bill Simon, who had been in the role since June 2010 and will transition out of the company.

Wal-Mart also continues to invest heavily in its e-commerce business, which posted double-digit growth in the United States during the quarter, outpacing the e-commerce market overall.

Wal-Mart recently began the roll-out of a global technology platform with streamlined search and navigation functionality that personalizes the user’s experience. The company also launched its Savings Catcher program nationwide, which automatically matches competing retailers’ prices and delivers a rebate to customers via a mobile app. And an improved checkout process is also on the way, executives said.

“Because the lines between digital and physical retail have blurred, we must be nimble to adjust so that we can exceed customer expectations,” Mr. McMillon said.

For the second quarter ended July 31, income from continuing operations attributable to Wal-Mart fell 3% to $3,923 million, equal to $1.27 per share on the common stock, which compared with $4,062 million, or $1.25 per share, in the prior-year period, reflecting headwinds from healthcare costs and incremental labor expenses.

Revenues totaled $120,125 million, up 2.8% from $116,830 million.

Although Wal-Mart U.S. comparable sales were flat for the quarter, executives said they were encouraged by an improvement over the prior year’s string of negative comps as well as an increase in traffic.

“While it’s early in the quarter, I’m encouraged by a strong start to Q3,” Mr. Foran said. “However, we know we’re in a challenging retail environment, and it will take some work to continue moving in the right direction. Given that, we expect comp sales to be relatively flat for the 13-week period from Aug. 2 through Oct. 31, 2014.”

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