Retail News Breaks Archives
Disappointing sales prompt Walmart to cut guidance
August 15th, 2013
BENTONVILLE, Ark. – Higher payroll taxes and gasoline prices constrained spending among Walmart’s shopper base, and the world’s largest retailer reported disappointing top- and bottom-line results for the second quarter.
Net income rose 1.3% to $4.07 billion, while sales gained 2.4% to $116.2 billion. Net sales at Walmart U.S. increased 2.1% to $68.73 billion, although comparable-store sales declined 0.3%, as customer traffic decreased 0.5%. It was the second straight quarter in which comparable-store sales fell, after six consecutive quarters of increases.
Analysts polled by Thomson Reuters had expected a 1% increase on average.
"While I’m disappointed in our comp-sales decline, I’m encouraged by the improvement in traffic and comp sales as we progressed through the quarter," Bill Simon, president and chief executive officer of Walmart U.S., said in a statement. "The 2% payroll tax increase continues to impact our customer. Furthermore, we also expected an increase in the level of grocery inflation, which did not materialize in a meaningful way. We were pleased that both home and apparel had positive comps."
Simon added that Nielsen data indicates that Walmart gained 14 basis points of market share in the measured category of food consumables and health and wellness/O-T-C during the 13 weeks that ended July 20.
Sam’s Club posted a 2.6% sales increase to $14.53 billion, while comparable-store sales both with and without fuel edged up 1.7%.
On a per-share basis, earnings rose 5.1% to $1.24 per diluted share, a penny short of the average estimate among analysts.
In view of the results and the consumer environment, management has scaled back its fiscal-year earnings guidance to a range of $5.10 to $5.30 per share, down from a previous forecast of $5.20 to $5.40 per share. Chief financial officer Charles Holley cautioned that there could be greater variability as well in the company’s effective income tax rate as a result of discrete tax items. Analysts are expecting earnings of $5.29 per share on average.
Net sales for the year are now projected to grow 2% to 3%, rather than the prior forecast of 5% to 6%. "This revision reflects our view of current global business trends, and significant ongoing headwinds from anticipated currency exchange rate fluctuations," Holley said.