Walmart in Brazil loses strength and grows less than rivals

Walmart in Brazil registered net loss of force in the first quarter of the year to establish an expansion of 5.5% in gross sales in the country. In the "same stores" (in operation for more than 12 months) the growth was 3.7%. It is the lowest rate of recent quarters. But the subsidiary managed to close the first quarter with "slight operating profit," said Doug McMillon, yesterday President of Walmart International, in Conference call with analysts.
Pão de Açúcar (area) and Carrefour recorded the largest growth rates of gross revenue in the period 10.6-%, and 13.3%, respectively. When you analyze the performance of food retail, the two networks and Walmart grow above the average. According to the IBGE's trade research, industry rating grew 1.74% in the first quarter.
Last year, gross sales of Food increased 9.4% GPA, Carrefour, 10.4%, and Walmart, 10.5%.
The strong base of comparison of 2012 may explain the deceleration of Walmart-in the first quarter of last year was 14.5% expansion. But the company admits it has not won the market in most categories and lost-traffic despite having expanded spending per person (average ticket). The loss of purchasing power of the population in 2013, reflecting inflationary pressure, also weighed. "Although we have not grown our participation in other categories, we won in the grocery store, perishable and hygiene and cleaning," said McMillon, about Brazil. "Product Sales in General were weak, as we reduce the interest-free credit offer [interest-free installment plan]".
The average ticket (spent by customer) grew 7.2%, but traffic fell 3.5% from January through March compared to last year, indicating that fewer people went to the shops, but who was bought more.
The Executive said that the company's Web site in Brazil has good performance, with an increase in sales of "more than 40%" from January to March.
The command of Walmart again strengthen the belief in the policy of "low price every day" (PBTD) in Brazil. "We continue with our mantra of" every day low price "and" low cost "every day, keeping the 7% reduction in the price of our products [in competition]".
The company changed its trade policy in Brazil in 2011, leaving to operate through specific promotions and offering what the company calls PBTD. This strategy is still being implemented in the country-at the moment, the wholesale shops are subject to change and is used by Walmart in the world. The basis of the strategy is to constantly offer goods at a price below that of rivals, says the network, and does not operate with sporadic discounts. In this way, theoretically, the company reduces fixed costs that exist in an operation of promotions.
Brazilians are accustomed to discounts and promotions and that culture would be the initial barrier to the implementation of the strategy of the network in the country, say analysts. Walmart says that the project has given results.
McMillon stressed that the gross margin increased slightly in the country, as a result of better management. But the company reported that it failed to reduce the expenditure and revenue "due to the low rate of growth of same store sales ', specifically in the form of wholesale". The wage adjustments also weighed in this account.
In the world, Walmart was discharged in net revenue of 1%, to $ 114.2 billion. Profit rose 1.1% to $ 3.78 billion. Same-store sales in the u.s. fell 1.4%-the analysts predicted stability. Cold weather and increase in payroll tax affected the result.