uploads///Walmart International

What’s Hurting Walmart’s International Sales?

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Feb. 21 2019, Updated 10:30 a.m. ET

Currency, scaling back of operations hurt

Walmart’s (WMT) International segment’s sales continued to fall for the second consecutive quarter in the fourth quarter of fiscal 2019. Its international sales fell 2.3% to 32.3 billion during the quarter as the deconsolidation of its operations in Brazil and currency volatility remained a drag. According to management, currency volatility had an adverse impact of $1.7 billion on the segment’s top line. However, the acquisition of Flipkart supported the segment’s sales.

Despite its weak top line performance, Walmart’s underlying sales in the International segment continued to impress thanks to sustained momentum in Mexico, Canada, and the United Kingdom.

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Sales by key markets

Sales in Walmart’s Walmex region (Mexico and Central America) continued to grow at a stellar rate. During the fourth quarter, net sales rose 5.3% in the region. Meanwhile, comps rose 3.8% driven by a 3.7% increase in ticket size and a slight increase in traffic. In Mexico, comps rose 4.6% on a two-year stacked basis. The expansion of stores and omni-channel offerings have driven the top line growth in the Walmex region.

In China, Walmart’s net sales grew 1%. However, its comps remained weak, reflecting heightened competition in both online and in-store platforms. Also, Walmart blamed slower economic growth for the decline.

Walmart’s net sales rose 1.5% in Canada, while its comps grew 1.1% driven by the strength in the grocery, consumables, and health and wellness categories. The expansion of the company’s online grocery pickup and delivery services supported its top line growth rate.

In the United Kingdom, Walmart’s net sales rose 2.7%, with its comps marking a 1.0% increase. Walmart managed to report positive comps for the seventh consecutive quarter despite a heightened competitive environment, which is encouraging. Strength in the grocery space driven by e-commerce offerings and growth in private label brands drove the International segment’s top line.

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