Although Wal-Mart reported a 1.4% dip in net sales in the second quarter compared to the same period last year, improvements in fresh product areas were a positive force.

The Bentonville, Ark.-based company released its second quarter earnings report for the 13-week period ending July 31 on Aug. 13.

“I’m also pleased with how the investment in merchandising systems and processes is driving product quality in our fresh areas,” said Eduardo Castro-Wright, vice chairman, responsible for Wal-Mart U.S., according to a transcript of an Aug. 13 teleconference. “We have greatly improved the flow of perishables into our stores, which has reduced damaged goods.”

Castro-Wright said customers are giving Wal-Mart credit for improving the quality of its fresh operations, reflected by higher comparative sales in grocery overall.

The company’s Neighborhood Market stores achieved a comparative sales increase of 3.8% during the period.

“Our grocery and health and wellness comps were positive and remained ahead of our major competitors during the 13-week period,” Castro-Wright said.

Lower inflation in certain categories, including food, negatively affected the company’s net sales globally, said Mike Duke, president and chief executive officer. The bigger factors leading to the lower net sales, though, were currency exchange and lower fuel prices in the U.S.

“Even with lower sales than we’d expected, we believe that our comparable store sales outperformed the retail sector almost every place where we do business,” Duke said during the conference.

Wal-Mart U.S. contributed $64.2 billion to total net sales, increasing 0.3% over the same time last year. The company cited more selective consumers with discretionary spending habits, deflationary pressures on grocery prices and the benefit of stimulus checks that went out during the second quarter of 2008 as reasons for the negative sales growth.

Despite sales declines, Wal-Mart’s balance sheet remains strong because of increased operating income stemming from more streamlined operations, company officials said.

Traffic in U.S. Wal-Mart stores was up 1.3%, while comparable store sales were down 1.5%.

Company officials repeatedly referred to changes in merchandising practices, an initiative that began three years ago to decrease inventory in stores. At the same time, Wal-Mart is involved in an initiative to create a way to measure and analyze sustainability on a global scale.

“We recently proposed the creation of a worldwide ‘sustainability index’ that for the first time will generate important data from suppliers and give customers a clear and consistent view of the environmental impacts of the products they buy,” Duke said during the conference.

Wal-Mart is working with a coalition called the Stewardship Index for Specialty Crops on the fresh produce segment of the worldwide sustainability index. The stewardship group expects to unveil seven of its indices this fall, and Wal-Mart has promised to follow those metrics.

Wal-Mart attributes strength to improvements in perishables