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Earnings Report

Wal-Mart’s vast fleet of stores and its online business are starting to click together.

The company raised its earnings outlook for the year on Thursday and delivered strong profit and sales for the second quarter, as moves to improve the store and online experience are winning over customers.

Wal-Mart has launched a flurry of changes, from making sure vegetables look good to cleaning up the stores to being sharper on keeping prices low. It’s melding online services with the stores — rolling out a mobile payment system to speed checkouts. And it’s pressing ahead with online grocery and pick-up services.

As a result, the Bentonville, Arkansas-based company reported its eighth consecutive quarterly increase in comparable-store sales, and the seventh straight quarterly gain in customer traffic.

“We’ve got existing customers who are visiting stores more often and putting an extra item in their basket,” said Greg Foran, CEO of Wal-Mart’s U.S. business, which accounts for 62 percent of total sales. Wal-Mart is also picking up new customers, but that will take some time.

Like its direct store rivals, Wal-Mart is reinventing itself to be more nimble as it tries to fight off competition. In particular, it’s trying to compete with online leader Amazon.com, whose Prime shipping program is swiftly converting members into loyal shoppers. And it faces competition from dollar stores and traditional grocers like Kroger, which are ramping up promotions and lowering prices. The report contrasts with results from Target Corp., which cut its profit forecast Wednesday as customer traffic waned.

Wal-Mart is vastly expanding the items available on its website, and global online sales rose 11.8 percent in the second quarter. That’s up from the 7 percent pace of the first quarter but still far weaker than the 20 percent increases from less than two years ago. It’s also spending $3 billion to acquire fast-growing online retailer Jet.com, which it says will help it grab higher-income and younger customers. It will incorporate some of Jet.com’s technology that lowers prices in real time.

Hormel Foods reported better-than-expected quarterly sales on Thursday, as the maker of Spam canned meat and Jennie-O turkey recovered from avian flu that hit its results a year ago.

The Austin, Minn.-based company said total sales were up 5 percent, boosted by a 1 percent increase in volume.

Its Jennie-O Turkey unit saw a 20 percent sales increase from the year-ago results, which were hit by avian flu. Sales for the U.S. grocery unit saw a 3 percent increase, while volume rose 1 percent. The maker of Dinty Moore stew and other products said the grocery unit results benefited from its acquisition of Justin’s peanut butter, as well as stronger performance by Skippy products and Spam products.

For the quarter, the company earned $195.7 million, or 36 cents per share. That was better than the 34 cents per share analysts expected, according to Zacks Investment Research. Total revenue of $2.3 billion in the period also topped the $2.24 billion Wall Street expected.

Hormel expects full-year earnings to be $1.60 to $1.64 per share.

Hormel shares had decreased 8 percent since the beginning of the year, while the Standard & Poor’s 500 index has climbed almost 7 percent.

Swiss food and beverage giant Nestle says first-half profit dipped due to a one-time tax expense even as revenues edged up behind growth in its key North American food business and despite a slowdown in the Chinese market.

The maker of Kit Kat chocolate bars, Lean Cuisine meals, Maggi noodles and Gerber baby foods said Thursday that its net income was $4.27 billion.

Food companies like Nestle, which is based in Vevey, Switzerland, have sought to burnish their reputations on health and nutrition amid concerns about growing obesity rates and pressure they have faced for marketing foods full of fat, salt and sugar. Nestle in June announced it is bringing in health care executive Ulf Mark Schneider as its next CEO starting Jan. 1.

Unveiling the latest results, Nestle decried “historically low levels” of pricing in the first half of 2016, but chief financial officer Francois-Xavier Roger said in a conference call that the company was “confident that pricing is going to improve” in the coming months.

Nestle affirmed its outlook for the remainder of this year.

Innovations and marketing investment helped underpin growth in its North American frozen meals business, particularly at Lean Cuisine and Stouffer’s, Nestle said. But growth in the Chinese food and beverage market slowed significantly, with its Yinlu food unit dragging on performance.

Roger said demand is “clearly slowing” in China, where Nestle faces “much more price competition.” He said the company is nevertheless gaining market share in the world’s most populous country.

Nestle is working to overcome a setback to its Asian operations last year after pulling Maggi noodles from store shelves in India for five months after the popular snack was found to contain lead above permissible limits.

 

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