Last week Walmart reported a strong set of results for its second quarter ended July 31.

Despite Walmart’s strong results, footfall fell in Brazil, China and Mexico

In the US, Walmart reaped the rewards of its renewed back-to-basics approach to report its fourth consecutive quarter of sales increases, with revenue up 3.8% to $67.4bn (£42.9bn). Like-for-like sales rose 2.2% and operating profit increased 5.3% to $5.3bn (£3.4bn), as Walmart emphasised low prices and a wide assortment.

Sales at Walmart International jumped 6.4% to $32bn (£20.4bn), while operating income rose 5.4% to $1.5bn (£955m). However, there was a less upbeat development as the retailer confirmed plans to slow the rate of expansion in Brazil, China and Mexico to focus on improving pricing and profitability. These are all markets where Walmart had been expanding rapidly, but it has reported slower footfall despite an increase in average ticket value.

Walmart International chief executive Doug McMillon admitted the retailer may have been “too flexible” in accepting unsuitable stores in its pursuit of growth, particularly in China. The move seems prudent, considering Tesco and Carrefour were also hit by similar trends. Given the projected growth in global ecommerce, it is likely that big-box formats will become less relevant in these markets as multichannel and smaller stores evolve.

Meanwhile, Walmart has won approval to increase its investment in Chinese ecommerce site Yihaodian, which is set to be critical to its growth in the region. Walmart will now own a majority stake, but restrictions on third-party selling imposed as part of the deal may put it at a disadvantage against local competitors.

Another revelation this quarter was that Walmart suffered a single- digit decline in entertainment sales. After grocery, which accounts for more than half of revenue, Walmart’s entertainment category (including consumer electronics) is its second largest, representing more than $30bn (£19.1bn) in annual sales. As many items in this category shift online and to digital download, specialist entertainment retailers are not alone in being hit by this trend.

It may make sense for Walmart to look at downsizing the physical space dedicated to entertainment and supplement this with in-store kiosks and ordering terminals to promote services such as on-demand disc creation and the Vudu streaming service. With Target set to partner with Best Buy to put Geek Squad staff into 29 of its stores, the pressure will be on Walmart to compete within this category or to shift it online.

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