Insights

Planet Retail on Walmart’s Q3 results

BY CSA STAFF

By Stephen Springham, senior retail analyst at Planet Retail

Three quarters of results and a hat-trick of disappointments — Walmart U.S. again failed to achieve its guidance of flat comps in Q3, reporting a decline of 0.3%. This was not entirely unexpected as an already fragile consumer environment has not been helped by the government shutdown.

A nervy holiday season is undoubtedly in prospect in the United States. In what is likely to be a highly promotional festive period, Walmart has already fired a couple of opening salvos by improving its layaway terms and launching its one day ‘Cyber Event’ one full month ahead of Black Friday. But the nervous and challenged U.S. consumer will not part with his/her cash freely.

But there is some comfort for the longer term. Walmart’s Investor Day in October revealed a number of watershed issues — that the number of new small stores (Neighborhood Markets) openings will next year exceed Supercenters. This is welcome confirmation that Walmart has fully cracked small stores and has a sustainable twin development strategy going forward — the ‘ecosystem’ approach to supply chain is as innovative as it is efficient. Supercenter development has not receded by any means, but will inevitably see a growing shift towards renewals, refurbishments and relocations, as opposed to new builds.

“The other watershed issue is less positive but equally transforming — targets for new floor space development at the International division have been unceremoniously slashed (Walmart now forecasts that it will add 14 million sq. ft. this year internationally, against an original target of 20 million sq. ft. to 22 million sq. ft.).

Although the finger could be pointed at individual markets, this is fundamentally a collective issue, namely that the International division is at a crossroads and needs to reappraise. In short, the age of relentless acquisition and unbridled physical expansion is over. The company is being forced to take stock of its international position and plan for the longer term. This is unlikely to herald a major retrenchment or rationalization program, but new priorities and plans will have to be drawn up — ‘quick wins’ have largely been exhausted. Carrefour CEO’s recent declaration of ‘an end to imperialism’ should not be lost on its U.S.-based peer.


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REAL ESTATE

Expansion-minded rue21 opens its 1,000th store

BY Marianne Wilson

Warrendale, Pa. — Rue21 on Thursday celebrated the opening of its 1,000th store. Located in the Enid Crossing Shopping Center in Enid, Okla., the location is one of the company’s new rueGuy format stores and features an expanded assortment of young men’s apparel and accessories in addition to the girls’ apparel, jewelry, footwear and beauty product.

“This was a pivotal year for our Company: we launched our online website, introduced our new rueGuy store format, and transitioned from a publicly held to a privately owned company. We are looking forward to continuing our store expansion strategy and developing our brand as we grow past the one-thousand-store mark," stated Bob Fisch, rue21’s president and CEO.

Rue21 has opened over 100 stores each year since going public in 2009. The retailer anticipates growing to more than 1,700 stores in the continental United States

"Our real estate model gives us the opportunity to open successfully in strip centers, regional malls and outlet centers in small or midsized communities where there are few teen specialty apparel retailers," said Bob Thomson, senior VP of real estate for rue21.

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