Walmart Business Planning Falters: US Sales Down

Walmart was confident their business planning headed into the critical fourth quarter would produce results in the U.S. stores. The forecasted results were in the range of a decline of 1 percent to an increase of 2 percent. The business planning by executives failed, the U.S. stores division produced a 1.8% decline for the quarter, marking the seventh straight quarter Walmart U.S. has seen a decline.

According to Walmart Stores, Inc. president and chief executive officer, Mike Duke, "We are pleased with Walmart's strong earnings performance for both the fourth quarter and the full year across our three operating segments. At the same time, we are disappointed by Walmart U.S. fourth quarter sales."

Surrounded by a new team of executives, lead by Walmart U.S. president and CEO Bill Simon, Walmart was confident the sales in the fourth quarter was the turning point needed to end the steady decline in U.S. sales. During the summer months, the business planning by executives resulted in a decline. Rollbacks, temporary price cuts, failed to deliver the much needed results. Using Rollbacks as a business planning strategy failed because the price reductions were temporary.

Duke and Simon stated the cause of the failed business planning was due to revamping stores through Project Impact. Remodel efforts removed from stores shelves, removed promotional features and efforts placed on high performing items. This business planning strategy designed by former chief merchandising officer John Fleming, focused on the business planning strategy of "Win, Place, Show," an initiative which gave space on shelves to the higher priority items.

Duke agreed the business planning did not produce the results anticipated. He stated, "Some of the pricing and merchandising issues in Wal-Mart ran deeper than we initially expected, and they require a response that will take time to see results." Seven quarters of declining sales equals 21 months of Walmart U.S not being able to push sales into the black.

Duke, along with Simon have designed a new business planning strategy meant to improve Walmart U.S. sales. The four-point plan surrounds Everyday Low Price (EDLP), broad assortment, remodel improvement and multi-channel initiatives. Simon is confident the new business planning initiatives, "can improve sales throughout the rest of the year."

Although the confidence of Duke and Simon remains high, competitors such as dollar stores, Target and grocery chains are reaping the rewards of failed business planning by Walmart. Customers who migrated to Walmart during the great recession failed to return when the economy took an upturn.