Walmart sales up 3%, driven by Neighborhood Market and e-commerce

Walmart (NYSE:WMT) reported a net sales increase of $3.2 billion for the second quarter, a 2.8 percent increase from the same period in 2013. The $119.3 billion total can be attributed to an increase in Neighborhood Market sales and a strong quarter for e-commerce.

"I'm pleased with our solid earnings per share performance," said Doug McMillon, president and CEO, Walmart. "As it relates to the positives from the quarter, I'm encouraged by the performance of our international business, our Neighborhood Market sales in the U.S., and by our e-commerce growth. As it relates to our challenges in the quarter, we wanted to see stronger comps in Walmart U.S. and Sam's Club, but both reported flat comp sales. Stronger sales in the U.S. businesses would've also helped our profit performance."

Despite the flat comp sales reported in the quarterly earnings report, comp sales for the Neighborhood Market format were up 5.6 percent.

Although Walmart launched the first Neighborhood Market for the convenience-crazed shopper in 1998, the company announced it would ramp up expansion this year. Comp store sales traffic in the retailer's small format stores grew 4.1 percent in Q2. Walmart opened 22 Neighborhood Markets in the quarter and remains on track to open 180 to 200 new stores this year.

Feeding off of the small format frenzy, a Walmart to Go convenience store opened in spring. Walmart is also testing 20 Express stores in three markets, which are around 1,500 sq.-ft. in size.

In the United States, Walmart's net sales increased by 2.7 percent to more than $70 billion, while international grew 3.1 percent to $33.9 billion.

McMillon indicated that while Walmart would continue to invest in e-commerce, it also needed to work on moving more quickly to serve shoppers efficiently.

"We see opportunities to improve in merchandising, pricing and store level service in our supercenters, and we are working to close those gaps," McMillon said. "Our investments in e-commerce and mobile are very important, as the lines between digital and physical retail continue to blur. Our customers expect a seamless experience, and we're working to deliver that for them around the world."

The Sam's Club brand saw a 1.7 percent increase in sales, up to $13 billion for the quarter. The warehouse discounter's goal is largely focused this year on growing its customer loyalty base. The retailer is still in the early stages of offering shoppers Plus member cash rewards and the cash back Mastercard.

For more:
-See this Walmart quarterly earnings report

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