Walmart's U.S. stores are in their worst slump ever. On Tuesday, the mega-chain announced "disappointing" results for its most recent quarter. Sales at U.S. locations that have been open at least a year slipped for the seventh straight quarter — "the longest losing streak in company history." What's behind Walmart's woes? Here, four factors:
1. Walmart raised some prices...
The company became famous for founder Sam Walton's formula of "every day low prices," but it moved away from that strategy in recent years by charging more for some items while offering "rollbacks" on others. That may have confused some loyal customers. Now, says Parija Kavilanz at CNN Money, even though Walmart once again tried to compete by slashing prices for the holidays, it failed to increase traffic to its stores.
2. ... And changed its inventory
As part of its push to become more efficient and clean up its stores, Walmart removed thousands of items from its shelves. It also made an "up-market push" by selling fashionable "skinny jeans" and making a "foray into organic foods." Those moves turned off some of its core customers. The chain "lost its iron grip on U.S. households earning less than $70,000 a year — which made up 68 percent of its domestic business," says Miguel Bustillo in The Wall Street Journal.
3. So customers went elsewhere
While Walmart tried attracting more high-end shoppers, it "found itself being squeezed on the low end by dollar stores and closeout retailers," says Angela Moore at MarketWatch. The company now finds itself in an "ugly" bind, says Joe Weisenthal at Business Insider. Some customers who turned to Walmart at the depth of the recession "have gone back to higher-end shopping." And shoppers who traditionally looked for bargains at Walmart are now browsing the aisles at dollar stores.
4. And Walmart has responded slowly
The retailer has brought back many of the items it took out of stores, but executives say it will take the rest of the year to restock everything. But the giant still faces severe challenges, says Wall Street Strategies analyst Brian Sozzi, as quoted by MarketWatch. "Things do not change overnight for a company the size of Walmart."
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