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Walmart, Big-Box Retailers Struggle To Get Shoppers Into Stores As Sales Drop

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WALMART US SALES

Walmart continues to turn a profit. But it's doing so in spite of American consumers, not because of them.

And the world's largest retailer is only one of America's big-box retailers that has seen domestic sales drop and foot traffic decrease. With consumers across the country grappling with rising prices and and high unemployment, diminished demand shows few signs of a quick turnaround, regardless of revamped low-price guarantees.

Walmart earned $3.4 billion in profit last quarter, but it came largely on the back of strong overseas sales, which rose 11.5 percent, Reuters reported on Tuesday.

That international success only highlights the steady decline of Walmart's domestic business, as the retail giant posted its eighth consecutive decline in same-store sales, or sales at stores that have been open over a year. And while the 1.1 percent decline is slightly less severe than that expected by analysts polled by Thomson Reuters, it's now been two years since domestic sales have been a source of growth for the company.

Despite that dwindling source of revenue, Walmart's sales rose 4.4 percent overall, to $103.42 billion, due to the growing importance of the company's overseas consumers.

It's not that those shopping at Walmart are buying less. On the contrary, the average Walmart shopper actually bought more last quarter. The real problem, instead, is the dwindling number of people even stepping foot inside the stores at all.

The decline highlights the plight of working Americans, who have borne the brunt of a recession that has left the country with 9.0 percent unemployment, as many corporations have remained competitive by increasing productivity, rather than hiring additional workers.

Compounding the pressures of the jobs crisis are skyrocketing food and gas prices that the Federal Reserve continue to insist aren't indications of inflation. And that's before taking into account the debt: 28.4 percent of all single-family homes with mortgages are now "underwater," meaning the borrowers owe more than the house is worth, according to Zillow.

Walmart's trends are reflected across the retail industry. Home Depot on Tuesday reported sales dropped by 0.2 percent, despite Spring typically being one of the company's strongest seasons, the Wall Street Journal reports. The company raised profits from one year ago, nevertheless. Like Walmart, Home Depot saw the number of total customers fall by 1.9 percent, but the amount spent by the average customer rise 1.5 percent.

Home Depot's largest home improvement competitor, Lowe's, was hit even harder by the dual effects of recession and weather, as number of visits to older stores fell by 3.4 percent, Bloomberg reports.

In the sales department, where the company saw a 1.6 decline, the largest problem for Lowe's seems to be that the projects being pursued by customers are smaller than usual. The company expects 84 percent of customers projects within the next six months will cost less than $500, CEO Robert Niblock said in a conference call, Bloomberg noted.

Around the Web

Wal-Mart says needs more time to fix U.S. missteps | Reuters

Wal-Mart's U.S. Sales Fall, Missing Projections - NYTimes.com

Summary Box: Wal-Mart's US sales still weak - Yahoo! Finance

Wal-Mart profit rises despite stumbling U.S. sales - Los Angeles Times

Wal-Mart says needs more time to fix U.S. missteps - Business ...

Wal-Mart 1Q Profit Up 3% On International Sales Strength

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