Walmart Delivers Improved Q1
Wal-Mart Stores Inc. posted net sales for the first quarter of fiscal 2012 ended April 30 of $103.4 billion, a 4.4 percent increase from the $99.1 billion reported in the year-ago period. Net sales for the quarter included a currency exchange rate benefit of $1.3 billion.
“Walmart is reporting first-quarter earnings from continuing operations of 98 cents per share, which was above guidance,” said Walmart president and CEO Mike Duke. “This reflects the stability and strength of our global operations.”
Continued Duke: “Walmart U.S. comp sales for the first quarter were within our guidance range. We recognize we still have work to do, and comp sales growth remains the greatest priority for me and the entire Walmart U.S. team. The good news is that the plan Bill Simon and his team are executing is gaining traction. We’re focused on delivering everyday low prices and a wide assortment.”
Walmart International grew first-quarter net sales by 11.5 percent over last year to almost $28 billion, with all countries except Japan, which experienced the devastating earthquake and tsunami in March, showing sales increases. Because of the calendar shift, the majority of Easter holiday sales for International will fall in the company’s second quarter.
“International remains the key growth driver for our company, and the segment is seeing continued growth through a combination of comp sales and new stores,” observed Duke. “Mexico, China and Chile had the highest percentage sales increases for the first quarter compared to last year.”
The division reported operating income that included a currency exchange rate benefit of $49 million for the first quarter. On a constant-currency basis, operating income declined 3.3 percent for the first quarter. Because of discrete items in the first quarter, Walmart International’s operating expenses outpaced sales.
Net sales for Sam’s Club, excluding fuel, grew to $11.3 billion, an increase of 4.9 percent from the year-ago period. Sam’s Club operating income for the first quarter rose 7.0 percent. Excluding fuel, operating income for the first quarter was up 6.3 percent, compared with last year.
“Sam’s Club delivered really good results this quarter, with a 4.2 percent comp that was well above our guidance,” noted Duke. “Sam’s momentum is reflected in comp sales and increases in new members. The warehouse channel is increasing in importance in the retail landscape, and Sam’s is gaining further momentum. We expect Sam’s to add even more value to the company’s overall portfolio.”
Walmart U.S. operating income for the quarter was above last year’s first quarter, which the company attributed primarily to sales growth, in addition to expense leverage, on a flat gross margin rate.
During the 13-week period, the majority of the Walmart U.S. comparable-store sales decrease was attributable to a decline in traffic, according to the company, while average ticket was up from the prior year. Grocery and health-and-wellness categories posted positive comps for the first quarter.
“We are monitoring the economic environment carefully, as significant changes in gas prices and inflation during the quarter will influence our actual performance,” noted Bill Simon, Walmart U.S. president and chief executive officer. “We continue to focus on delivering EDLP across the store.”
The company anticipates good news in the next quarter as well, particularly from Sam’s Club. “Our second quarter is underway, and we expect our strong sales momentum to continue across grocery, home and apparel,” said Brian Cornell, Sam’s Club president and CEO.