Walmart reported a 1.1% increase in net income to $3.78 billion, or $1.14 per diluted share, for the first quarter of fiscal 2014, as sales grew 1% to $113.43 billion.

Comparable-store sales, Walmart U.S., Samís Club, Mike Duke, Bill Simon, Charles Holley

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Walmart first quarter sales disappoint

May 16th, 2013

BENTONVILLE, Ark. – Walmart reported a 1.1% increase in net income to $3.78 billion, or $1.14 per diluted share, for the first quarter of fiscal 2014, as sales grew 1% to $113.43 billion.

The earnings performance missed by a penny the average estimate among analysts surveyed by Thomson Reuters.

The tepid results were generated by unexpectedly weak domestic sales. Net sales at Walmart U.S. improved 0.3% to $66.55 billion, but comparable-store sales fell 1.4%, driven by a 1.8% decrease in customer traffic that more than offset a 0.4% uptick in the average transaction. Net sales at Sam’s Club, meanwhile, inched up 0.1% to $13.87 billion, as comparable-club sales expanded 0.2% excluding fuel. Including Sam’s Club’s fuel business, Comp-club results dipped 0.2%.

The top-line figures for Sam’s Club reflect a 1.3% increase in customer transactions that was partially offset by a 1.1% decrease in average transaction.

"Frankly, we had a more difficult quarter than expected when we announced our guidance in February," said president and chief executive officer Mike Duke in a prerecorded call. "It’s important to note that Walmart U.S. continued to gain market share across several key categories. Sales were pressured primarily by delayed tax refunds, which caused customers to put off discretionary purchases. And though no one likes to talk about weather, it was a real factor across the United States."

The profit performance at both Walmart U.S. and Sam’s Club was much stronger, with operating income up 5.9% to $5.33 billion for Walmart U.S., while Sam’s Club posted a 7.4% rise in operating profit to $525 million including fuel. Excluding gas, operating results still improved 6.6% to $519 million.

The International division reported a 4.7% drop in operating profit to $1.26 billion on a 2.9% gain in sales to $33.01 billion.

Looking ahead to the current second quarter, which will end on July 26, comparable-store sales for Walmart U.S. are projected to range between flat and a 2% increase. At Sam’s Club, comp-club sales are expected to grow between 1% and 3%, excluding fuel.
Walmart U.S. president and CEO Bill Simon said that comparable-store sales thus far in the second quarter were positive, and that the division was off to a good start.

"Given current business and economic trends, including currency, we expect second quarter earnings per share to be in the range of $1.22 to $1.27," said chief financial officer Charles Holley. "Investments in Global eCommerce were forecast to have an incremental 9 cent impact for fiscal 2014, and this remains in our guidance. We expect the second quarter impact to be in line with the 2 cents per share we had in the first quarter. In addition to eCommerce initiatives, expenses related to FCPA [Foreign Corrupt Practices Act] matters are expected to range from $65 million to $70 million for the second quarter."