Walmart returns items to shelves after lost sales

A Walmart shopping cart is seen in their parking lot in Westbury,New York, February 17, 2010.

SAN FRANCISCO (Reuters) - Wal-Mart Stores Inc has put roughly 300 items back on its U.S. store shelves after the retailer said it "disappointed" customers by not stocking certain products.

"We did discontinue some things that people didn't buy very often, but were aggravating to a customer to lose," said Walmart U.S. Chief Operating Officer Bill Simon, speaking at a Bank of America Merrill Lynch conference, which was broadcast over the Internet.

"Mostly in food and consumables, there were flavors, items, sizes that customers are very accustomed to and like very much and we disappointed them by taking them out."

As part of its Project Impact U.S. store remodeling program, the retailer has been removing slower-selling items from its shelves, looking to boost sales by replacing them with faster-selling or more popular products.

But Simon said that by not having certain sizes or flavors of food in stock, Walmart missed out on an entire shopping trip from a customer and not just on the sale of that one particular product it no longer sold.

For instance, he said if customers know they cannot find a one-pound bag of brown rice at Walmart and they also cannot afford the two-pound bag of brown rice that it does sell, they will spend their entire grocery budget at another retailer that does carry one-pound bags of brown rice.

"(We) lose an $80 basket or a $60 basket and not just the dollar for the one-pound brown rice," he said.

The retailer is also now working to improve its remodeling process so sales are not disrupted as much while the stores are being renovated, Simon said.

When Wal-Mart reported fourth-quarter results in February, it said its program to overhaul stores hurt sales as shoppers adjusted to new store layouts and product selections.

Simon also said that when it comes to lowering prices, Walmart is focusing on "rollbacks" -- cutting prices for the longer term -- instead of shorter-term promotions, such as a month-long promotion on turkeys it offered in November.

Ahead of the U.S. Thanksgiving holiday, Walmart sold select turkeys for 40 cents per pound, meaning a 12 pound turkey could be purchased for $4.80. At the time, Walmart would not comment on whether it was selling the turkeys at a loss.

Simon said customers snapped up the turkeys and also filled their shopping carts with other items.

"But with that relatively short burst ... we weren't able to generate the volume, the sales dollar volume, to offset the price reductions on turkeys and the food deflation that was in the rest of the basket," he said.

"So rather than investing the dollars on the month-long burst, we're focusing on ... longer-term price reductions on key food and consumable items that the customer wants."

(Reporting by Nicole Maestri; editing by Andre Grenon)