Wal-Mart Stores Inc. reported U.S. sales fell for the eighth consecutive quarter as expensive gasoline pressured consumers, and the largest retailer said it is raising prices for some foods to offset inflation in meat, milk and other products.
Surging gasoline prices and high unemployment pushed consumers toward discounted items and cheaper private label products, according to Wal-Mart’s quarterly results released May 17. Many Wal-Mart customers are consolidating shopping trips to save money on fuel, the company said.
“We saw continued pressure from ongoing macro economic conditions, as customers continued to trade down,” Bill Simon, chief executive of the retailer’s U.S. operations, said during a pre-recorded conference call released May 17 along with financial results.
“Rising gas prices, high unemployment and increasing inflation continue to be the most important issues facing our customers today,” Simon said, according to a transcript of the call.
Wal-Mart is putting renewed emphasis on its long-running “Every Day Low Prices” promotions to win back customers. But, like other food retailers, Wal-Mart is also passing along higher costs for beef, pork and other commodities to its shelves.
During the previous quarter, Wal-Mart’s grocery inflation was about 1 percent, “with the greatest impact on perishables,” Simon said.
Rising retail prices are stirring concern that beef and pork demand will suffer as consumers shift to cheaper meats, such as chicken. Retail meat prices rose an average of 9.5 percent a month this year through April, compared with the same month in 2010, according to Bureau of Labor Statistics data. That compares to a 2.8-percent increase for all 2010.
As the largest U.S. food retailer, Wal-Mart is a major buyer of beef, pork, milk and other fresh foods. In the 12 months ended January 31, groceries accounted for 54 percent of Wal-Mart’s U.S. sales, or nearly $141 billion, according to a recent company filing.
Wal-Mart’s U.S. sales sagged over the past two years as the economy recovered slowly from the 2008-09 recession and consumers increasingly sought bargains at dollar stores and other discounters. More recently, pump gasoline near or above $4 a gallon has squeezed Wal-Mart’s customers.
Comparable U.S. store sales excluding gasoline fell 1.1 percent during the 13 weeks ended April 29 compared with the same period a year earlier, Bentonville, Ark.-based Wal-Mart said May 17. The sales figure excludes Sam’s Club, Wal-Mart’s warehouse store chain.