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World View For Walmart’s Private Label

August 21, 2012
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While Walmart has been able to make strides with its renewed focus on everyday low prices in the U.S., thanks greatly to private brands such as Great Value, the company took time while reporting its second quarter earnings to highlight the affect of private label programs on its international platforms.

The company reported its fourth consecutive quarter of same-store sales growth in the U.S., thanks in large part to traction gained in EDLP and its private label program. But it also reported positive same-store sales in each of its international countries during the quarter, and pointed out private label’s hand in the success.

In Canada, the company said sales were strong in food and consumables, health and wellness, and home lines.

“Gross profit rate increased slightly due to greater sales penetration in private label,” Walmart International CEO C. Douglas McMillon said on a call with analysts, as transcribed by Seeking Alpha.

In South Africa, where Walmart has a relationship with mass merchandiser Massmart, private label progress also was noted.

“We’ve worked with Massmart to implement unique Walmart-branded extended price cut promotions, which delivered significant savings to South African consumers,” McMillon said.

He talked again about South Africa on the call when discussing progress in the Builders Warehouse in the country.

“Regardless of the market, customers want great merchandise at great prices,” he said. “When we deliver that combination, we increase sales. In our Builders Warehouse format in South Africa, we recently launched a Great Value battery. As you know, Great Value is an important Walmart brand, and this battery retails for 35 percent less than the average national brand, and sales are going well.

“When we do this item by item, category by category, we can consistently grow comp sales and fulfill our purpose.”

Domestically, Sam’s Club reported strong results in its private label lines as well.

“Grocery, including fresh and consumables, remains key to driving traffic and attracting new members,” Sam’s Club CEO Rosalind Gates Brewer said on the call. “Members continue to enjoy new products, including hybrids like pluots, a plum-apricot mix, and new wine labels.

“In our consumables business, where we continue to focus on price, we had solid increases in unit sales. … Our recent launch of the new Member’s Mark paper plate is outselling comparable branded items and is creating additional margin that allows us to price more aggressively.”

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