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Wal-Mart Cites Weather For Chilling Q1 Sales

For the first quarter ended April 30, Wal-Mart Stores, Inc. posted net income of $3.8 billion, up 1.1% versus the year-earlier period, while diluted earnings per share reached $1.14, a 4.6% advance from $1.09. However, comparable stores sales at namesake stores in the United States fell by 1.4% as overall U.S. comps slipped by 1.2% versus the period last year, the retailer reported.

Wal-Mart earnings per share figure missed a Thomson Reuter’s consensus analyst estimate by a penny.

The retailer said a delay in tax refund checks, tough weather conditions, less-than-expected grocery inflation and the payroll tax increase all hurt Walmart U.S. store comps. Comp traffic slipped 1.8%, although average ticket increased 0.4%.

“Despite comps being lower than expected, we continued to generate market share gains,” Bill Simon, Walmart U.S. president and CEO insisted. “According to The Nielsen Co., we gained 20 basis points of market share in the measured category of food, consumables and health & wellness/OTC during the 13-weeks ended April 27.”

In a conference call, Simon said that weather sensitive departments such as outdoor living, sporting goods, air movement and apparel were hurt by conditions, particularly, in terms of year-over-year comparisons, from mid-March to mid-April. Bright spots emerged where weather was fairly normal, he said, including in Florida. Within home operations, the outdoor living segment drove the category to a mid single-digit negative comp, he concluded.

Sam’s Club comps gained 0.2% in the first quarter. Sam’s Club comp traffic gained 1.3%, while ticket slipped 1.1% in the period.

“Comp sales for the first quarter were impacted by unfavorable weather and less than expected inflation,” said Rosalind Brewer, Sam’s Club president and CEO. “Our business member is an integral part of our business, and comp sales and traffic patterns indicated that they remained pressured in the first quarter. Small business optimism remains at historically low levels, as businesses adapt to higher payroll taxes and cautious consumers.”

She noted that, although Sam’s apparel and home category experienced a low single-digit comp decline, home actually saw modest gains, driven by domestics and mattresses.

Wal-Mart net sales were $113.4 billion, up 1% over last year’s period, the retailer related. Consolidated net sales in the year-prior quarter benefited by 1% from the extra day due to leap year, Walmart stated, adding that on a constant currency basis, net sales would have increased 1.8% to $114.2 billion. Membership and other income gained 1.6% compared to the year-earlier period primarily because of an increase in membership income. Total revenue for the first quarter was $114.2 billion, a 1% increase over last year.

E-commerce sales grew by 30%, Mike Duke, Wal-Mart president and CEO, pointed out.

In commenting on the financial results in general, Duke said, “In a quarter marked by considerable headwinds to top line sales, Walmart delivered solid EPS growth of 4.6%. Walmart’s mission is simple and focused, to help people save money so they can live better. When we simplify and focus our execution against this mission, it’s easy for our associates to prioritize what they have to do to serve our customers.

“I’m confident about our long-term strategy and the direction Walmart is headed. Our expectations about our U.S. businesses’ performance, coupled with more discipline in international, will allow us to improve our performance throughout the year.”

As for the online performance, Duke said, “There is no doubt that our company is making the right investments in e-commerce to differentiate ourselves and become a better Walmart. And with our sales growth in the first quarter, we believe our investments are paying off.”