Wal-Mart updated investors Thursday on its latest new gadgets and time-saving pickup options to lure shoppers to stores and away from arch-rival Amazon.
The good news? The company's array of investments in e-commerce, store beautification, low prices and higher employee pay are indeed driving up store traffic. The bad news? Profits are down. Wal-Mart U.S., the biggest division at Wal-Mart Stores, scored a 1.8 percent rise in comparable sales in the second quarter compared with the year-ago period, its 12th straight quarter with positive sales in the closely watched benchmark.
Revenues rose 2.1 percent to $123.4 billion. But net income fell 23.2 percent to $2.9 billion. Factors included more aggressive spending on e-commerce and low price investments, as well as costs of $788 million connected to a one-time debt payment. Executives expressed confidence in Wal-Mart's strategy and highlighted an especially strong performance in the U.S. grocery business, which experienced the biggest jump in five years, in part due to price inflation in meat and produce.
Wal-Mart holds the biggest share of the U.S. grocery market of any retailer, with its network of nearly 4,700 stores that the company says are located within 10 miles of about 90 percent of the U.S. population.
But Wal-Mart is girding for a more direct head-to-head battle with Amazon with the tech giant's impending purchase of Whole Foods Market. Consumers are also able to reorder their most frequent purchases with a few quick clicks and can utilize automated "pickup towers" to receive goods after scanning in a barcode.