How far away is Mexico from the United States? It might as well be on the other side of the world as far as many Walmart shoppers in America are concerned. When they're hunting bargains in the store, the allegations of bribery against Walmart executives as they built their operation in Mexico are about as pertinent to U.S. shoppers as the won-loss record of the 1953 Brooklyn Dodgers.
Walmart executives have been saying as much since the New York Times broke the news on April 21 about the Mexican bribery scheme, as the company said the investigation wasn't expected to have a material impact on its business. But today, those executives acknowledged that the scope of the bribery scandal could widen — and that it had taken a hit on its reputation.
As the New York Times reports, "Wal-Mart also warned in Thursday’s [regulatory 8-K filing] that its reputation could be affected by the bribery scandal, with inquiries from the media and law enforcement authorities impacting the 'perception among certain audiences of its role as a corporate citizen.'"
The retailer today reported first quarter performance of better-than-expected profits driven by a 2.6-percent rise in sales at its U.S. stores open at least a year, continuing a recent string of quarterly same-store sales improvements. The uptick in the first quarter was provided at least in part by warm weather and an early Easter, but neither were Walmart's sales apparently dampened by consumer angst over the alleged bribery in Mexico.
Walmart CEO Bill Simon told investors that U.S. same-store sales in the second quarter are expected to rise 1 to 3 percent as well, as the chain continues to cut costs and lower prices to stay ahead of competitors, although the strategy constrains profit margins. But Walmart also said it can't guarantee that its results won't be materially hurt by the Mexico scandal in the future.
In the meantime, the chain also has its hands full executing an important part of its long-term strategy for the U.S. market: rolling out its smaller-format stores. Walmart is betting on small urban stores called Walmart Express to jump-start its growth in America and fend off fast-growing dollar-store chains.
Walmart hasn't been opening Walmart Express at a brisk pace, with fewer than a dozen locations on line since it launched the first 15,000-square-foot store a year ago. But the company also has been slow to roll out other important formats, such as its Neighborhood Market grocery stores; it only opened about 200 of them since the first in 1998, though Walmart now plans to open another 80 this year. (One of its latest locations: Southlake, TX.)
The chain also talked up, as the Wall Street Journal notes, how it's refining the format of Walmart Express. The urban minimart concept was tested with two stores Arkansas in June before officially debuting in Chicago last July.
Now, the retailer is aim to provide broad and deep selections of the goods the smaller stories carry, just like at a regular Walmart, without thwarting the quick entrance-and-exit that's a big part of the appeal of the Walmart retail experience for shoppers.
Below, take a look at the new and improved Walmart Express smaller format store, which opened this week in Chicago:
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