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In releasing its second quarter financial results yesterday, Walmart laid out the following imperatives as it moves forward:

“Chief Executive Officer Mike Duke has cut prices on cereal, detergent and other items to lure U.S. consumers,” Bloomberg reports. “The so-called price rollbacks did not generate the sales the company had anticipated,” according to US stores chief William Simon.

Simon also said that “the company has restored ‘thousands’ of products that had been removed amid previous inventory reductions and has also added new products,” Bloomberg reports. “Low-priced merchandise displays in the front of stores -- so-called Action Alleys -- have also come back over the past six weeks, he said. Simon expects to see improvement in sales by the fiscal fourth quarter.”

Bloomberg also writes that “sales of food in the U.S. increased in the quarter, Simon said, particularly fresh produce such as strawberries. Sales of apparel, home furnishings, and entertainment declined.”

Here’s how Advertising Age frames Walmart’s current condition:

“Walmart will bring back thousands of items previously cut through Project Impact, scrap the deep ‘Rollbacks’ it tried in April and May and reduce ad spending to ‘historical levels’ as new U.S. President William Simon wastes no time reversing much of what his predecessor did.

“New U.S. President William Simon acknowledged that many of the deep 'Rollbacks' on merchandise last quarter were funded out of Walmart's margin, not supplier funds. Moves such as returning merchandise displays to the ‘Action Alley’ aisles of Walmart stores have already resulted in better customer traffic and sales in July than during the prior two months of the just-completed fiscal second quarter, said Mr. Simon on a pre-recorded Aug. 17 earnings call.”

And, Ad Age noted that Simon said, “"We plan to win in every category and let customers decide through their purchase decisions what to include in our assortment.” And, he said that “he's placing an emphasis on strengthening supplier relationships, and that store and regional managers are getting greater leeway to merchandise and manage assortment.” more than a billion dollars a day in sales

For the record, Walmart reported a 3.6 percent increase in Q2 profit to $3.6 billion, compared to the same period a year ago, and sales abroad were up 7.3 percent while US sales were down 1.8 percent - the fifth consecutive quarterly decline.
KC's View:
There is no doubt here that Walmart will figure this out and get pointed in the right direction, though it may take some time (perhaps more than Walmart expects) and it could even require additional turnover in the company’s executive suite (how long a leash is CEO Mike Duke on?).

But enough people tell me that Walmart has moved too far away from its traditional EDLP approach, allowing dollar stores and other competitors to get a foothold; it will complicate or at least prolong the process of re-establishing its mass market/discount credibility.

Some folks think that Sam Walton is rolling over in his grave, thinking about Walmart has become. But let’s keep in mind that it remains a company generating more than a billion dollars a day in sales. It may have detoured a bit from the path it took to world domination, but that doesn’t mean that Walmart can’t fix what ails it.