Wal-Mart takes aim at Canadian rivals by driving down prices

August 17, 2017

By Noah Zivitz, Managing Editor | BNN

Wal-Mart Stores Inc. said on Thursday it’s gaining ground on its Canadian rivals, in part by driving down prices.

The Bentonville, Arkansas-based retail said its total sales in Canada rose 3.4 per cent in the second quarter, while sales at stores that have been open for at least one year rose 2.5 per cent, up from 2.7 per cent and 1.5 per cent growth, respectively, in the previous quarter.

“We further improved our price position against competitors, which contributed to market share gains in key traffic driving categories such as food and consumables,” said Chief Financial Officer Brett Biggs in a recorded conference call Thursday.

“Canada is the bellwether for Wal-Mart worldwide,” said retail industry consultant Burt Flickinger in an interview with BNN Thursday. “Wal-Mart circled the proverbial wagons in the provinces of Canada as well as the States and what Wal-Mart does to win in Canada will be a leading indicator of how Wal-Mart will win in North America as well as worldwide.”

Meanwhile, the intense competition among food retailers has been holding back overall inflation in this country. Statistics Canada’s food price index inched up 0.6 per cent in June after eight straight declines dating back to 2016. While the overall index turned positive, there was still evidence of price deflation in supermarkets as prices for food purchased from stores dipped 0.3 per cent year-over-year in June.

The persistent price pressure has even been on the Bank of Canada’s radar. In the central bank’s January Monetary Policy Report, it flagged “intensified competition in the retail food sector” as a drag on Canada’s consumer price index.

Overall, Wal-Mart earned US$1.08 on an adjusted per share basis in the second quarter, while revenue rose 2.1 per cent to US$123.4 billion. Analysts, on average, expected US$1.07 per share in profit and US$122.8 billion in revenue.

Wal-Mart expects full-year earnings in the range of US$4.30 to $4.40 per share.

Wal-Mart shares have climbed 17 per cent since the beginning of the year, while the Standard & Poor’s 500 index has risen 10 per cent. The stock has risen 11 per cent in the last 12 months.