Walmart US Sales, Comps, Disappointing

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Walmart US Sales, Comps, Disappointing


While pleased with its strong earnings performance for both the fourth quarter and the full year across its three operating segments, it was disappointed by Walmart U.S. fourth quarter sales, Mike Duke, Wal-Mart Stores, Inc. president and CEO said during an earnings conference call today.

The Bentonville, Ark.-based retailer saw $115.6 billion in sales for the fourth quarter of fiscal year 2011, an increase of 2.5 percent from $112.8 billion last year.

Its U.S. comparable store sales for the fiscal quarter and year, however, were down 1.8 percent and 2 percent, respectively.

For the quarter, the majority of the Walmart U.S. comparable store decline was attributed to traffic, while average ticket was up slightly versus the prior year. For the 52-week period, traffic was down and ticket increased slightly in Walmart U.S. versus the prior year. Food and health and wellness categories had positive comps for the fourth quarter, according to the company.

Duke pointed out that under the leadership of president and CEO Bill Simon, Walmart U.S. is implementing a four-point plan designed to deliver better results, but acknowledged that it will take some time to see positive comparable store sales. "Some of the pricing and merchandising issues in Walmart ran deeper than we initially expected, and they require a response that will take time to see results," Duke explained. "There is no greater priority for Bill or me than getting sales back into positive territory."

The Walmart U.S. four-point plan is designed to improve performance in existing stores. The points are:

  1. EDLP price leadership. Walmart will deliver consistent every day low price on a basket of goods.
  2. Broadest assortment possible. Walmart is always working with suppliers to deliver the broadest and most relevant assortment possible at the lowest price in the market. This includes continued focus on adding merchandise back on the shelves, as well as in action alley in the stores.
  3. Improve remodel program. Improve store remodel efficiency and returns to right size square footage for various merchandise departments and categories.
  4. Multi-channel initiatives. Increase access for customers through multi-channel shopping options so they can shop on their own terms.

"We are confident that through these initiatives, as well as the commitment of our 1.4 million associates, we can improve sales throughout the rest of the year," Simon said. "And, we will make meaningful progress on new store growth, as we add supercenters and expand our store format portfolio."

Duke also recognized the strong full year operating results of Walmart International and Sam's Club.

"Walmart International continues to be our growth engine, and we expect accelerated growth in emerging markets,” he said. “International net sales exceeded $109 billion this year, an increase of more than 12 percent over the prior year. Every country contributed a sales increase in fiscal 2011, compared to the prior year. Sam's Club reached almost $50 billion in annual net sales. And, during the year, Sam's Club comp sales, excluding fuel, improved sequentially every quarter, with the fourth quarter being the strongest."

Based on its views of the global economy and its three operating segments, Walmart expects first quarter earnings per share to be between 91 cents and 96 cents, compared to 87 cents last year, and set its fiscal 2012 guidance to a range of $4.35 to $4.50.

Net sales for the fiscal year were $419 billion, an increase of 3.4 percent over fiscal 2010. Net sales included a currency exchange rate benefit of $4.5 billion. Income from continuing operations were $15.4 billion, a 6.3 percent increase from $14.4 billion last year.

Net sales for Sam's Club, excluding fuel, increased to $11.9 billion, an increase of 2.5 percent from last year. For the full year, net sales excluding fuel, grew by 1.4 percent.