As the economy continues to struggle, Walmart has been scrambling to figure out ways to win back customers that it has been losing to deep discounters like Dollar General and Family Dollar.
So, Walmart’s investors were probably pleased to see the company eek out a 1.3% year-over-year gain in its namesake’s Q3 same-store sales.
However, Deutsche Bank’s Charles Grom doesn’t think the gain was due to a recovery in customer traffic. Rather, he points to food price inflation and an increase in stock keeping units.
He also notes that Walmart really went crazy with its advertising efforts:
Importantly, we also note that WMT has materially increased its promotional presence year-over-year over the past few months. To this point, utilising Market Track data that surveys circular activity suggests that WMT’s measured advertising (# of inserts x # of pages) increased 143% YOY in October following a 37% increase in August and September, on average – see Figure 1 [below]. Digging deeper…the number of inserts (per market) during October rose from 1.2x to 2.0x on a weekly basis while page count increased to 16 per insert compared to 12 a year ago.
See the chart:
Photo: Deutsche Bank
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