Sunday, February 21, 2016

WAL-MART CUTS INVENTORY

Curbing inventory or recognizing weaknesses with store and ecommerce sales? 




Wal-Mart Curbs Inventory Growth

Wal-Mart Stores Inc. said inventories grew at a slower pace than sales in the fourth quarter, the result of efforts to control the company’s sprawling supply chain



Wal-Mart Stores Inc. inventory growth slowed last quarter, as the company worked to put more items in front of customers. ENLARGE
Wal-Mart Stores Inc. inventory growth slowed last quarter, as the company worked to put more items in front of customers. Photo: Reuters
Wal-Mart Stores Inc. WMT 0.84 % says it clamped down on inventory growth in the past year and reduced shipping costs while putting more goods on store shelves in front of consumers.
The results, part of the retail giant’s fourth-quarter earnings report released Thursday, suggest progress in a major initiative Wal-Mart started last year to gain better control of a sprawling supply chain that’s been pressured by growing globalization and the rapid expansion of e-commerce sales.
Wal-Mart’s overall inventories grew 0.9% in the fourth quarter compared to the same period the year before, said Greg Foran, president and chief executive of Wal-Mart’s U.S. business. That was 25% of the rate of total sales growth, and inventory measured against comparable stores for the year before declined 2.9%, he said.
“New technologies is in our associates’ hands and better processes are creating efficiencies in the stores, driving higher-end stocks and a continuing decline in comp-store inventory,” Mr. Foran said in a conference call with analysts.
“Inventory will remain a key focus area for us in this new fiscal year,” he said.
Wal-Mart’s efforts to restrain inventory growth have been complicated by the surging e-commerce sales. The company, like other many retailers, is trying to balance its current use of distribution centers that serve stores with separate fulfillment centers tailored to the demands of e-commerce shoppers.
The fulfillment centers “lived up to our targets for efficiency and productivity,” Mr. Foran said. “They showed that they can scale with our business and combined with our stores, DCs and transportation network to deliver speed, efficiency and better experiences for customers.”
Wal-Mart got some help in reining back its logistics costs, with lower fuel prices reducing its overall transportation spending.
Write to Paul Page at paul.page@wsj.com