Walmart’s Sales Results Show Big Isn’t Better

BENTONVILLE, Ark. -- Bigger isn't always better. Wal-Mart's Stores Inc.'s latest financial results are proof of that.

Same-store sales at Walmart's supercenters declined in its 2014 fiscal second quarter, with convenience stores a major beneficiary. The big-box giant reported a 0.3-percent same-store sales decline year over year, while foot traffic at these stores dropped 1.1 percent.

"I think convenience is where the consumers have been looking, [especially] if you look at the Baby Boomers," Walmart's Chief Financial Officer Charles Holley said during a call with reporters Thursday.

Walmart's supercenters are perhaps losing business to the company's own Neighborhood Market stores, which are approximately one-fifth the size of its larger counterparts. Same-store sales growth increased by 5.6 percent at these 400 stores, while traffic increased 4.1 percent year over year, reported Business Insider.

Edward D. Jones analyst Brian Yarborough believes the retailer's inability to attract customers making quick "milk-and-bread runs" due to the massive size of its stores is a primary reason for Walmart's weaker same-store sales growth.

According to Seeking Alpha, several c-store operators have seen recent same-store sales growth, likely at the expense of Walmart. The list includes Alimentation Couche-Tard Inc.'s Circle K division, 7-Eleven Inc., The Pantry Inc., Marathon Petroleum Corp.'s Speedway division and QuikTrip Corp.

Walmart CEO Doug McMillon specifically touted its Neighborhood Market stores during the company's Thursday earnings call. The retailer plans to add "gas bars" to many of the Neighborhood Market locations, aiming to attract customers who want a quick, mid-week grocery purchase without entering large supercenters.

Target Corp. has also turned to small-format stores. As CSNews Online previously reported, the retailer opened its first TargetExpress 20,000-square-foot store in the Dinkytown section of Minneapolis in July. Target plans to open four more TargetExpress stores in 2015.

Despite weakening sales growth at its supercenters, Holley stressed that Bentonville-based Walmart has no plans to close any of its 3,300 supercenters.

"Supercenters still have one of the highest returns of any [store] format in the company," he told Business Insider.