Walmart Earnings Decline In Q2

Walmart has reported its second quarter results ended July 31 for its fiscal year 2016, showing an earnings decline and a modest U.S. sales rise. 

Consolidated operating income declined 10% to $6.1 billion from $6.7 billion in the prior second quarter. The U.S. division saw operating income decline 8.2% to $4.8 billion. Overall net income declined 11.4% to $3.48 billion from $3.92 billion the previous year.

According to Walmart, second quarter earnings were pressured by currency fluctuations, lower Walmart U.S. margins and investments in customer experience initiatives, such as e-commerce technology and its investments in employee wages.

Walmart said that its U.S. division delivered a 1.5% comparable store sales increase driven by a traffic increase of 1.3% in the second quarter. The retailer’s Neighborhood Market format store comps increased approximately 7.3%, with strong growth from new stores, according to Walmart.

Total revenue was $120.2 billion, a slight .1% increase over last year’s second quarter $120.1 billion revenue. On a constant currency basis, total revenue was $124.5 billion, Walmart said.

Net sales were up 4.8% at Walmart U.S., which posted $74 billion in sales compared to $70.6 billion in last year’s second quarter. Walmart’s international division saw sales tumble 9.6%, however, to $30.6 billion compared to $33.9 billion in the prior year quarter.

Sam’s Club net sales in the quarter were down slightly, .9% to $14.7 billion compared to $14.9 billion in the 2015 second quarter. Excluding fuel, comp sales increased by 1.3% from last year.

E-commerce sales globally increased approximately 16% on a constant currency basis, according to the retailer.

Second quarter diluted earnings per share from continuing operations was $1.08. Currency exchange rates negatively impacted earnings per share by approximately $0.04. A Thomson Reuters analyst average estimate had called for earnings of $1.12 per share.

The company also cut its outlook for the remainder of the year, lowering its earnings per share forecast to a range of $4.40 to $4.70 from previous estimates of $4.70 to $5.05 earlier in the year.

“We’re pleased that the investments we’ve made are helping to improve our business. Even if it’s not as fast as we would like, the fundamentals of serving our customers are consistently improving, and it’s reflected in our comps and revenue growth. In this case, our desired changes require investments, which are pressuring earnings this year. We’re confident that our strategic growth plan will create robust sustainable growth for shareholder returns over time,” stated Doug McMillon, president and CEO, Wal-Mart Stores.

Wal-Mart currently operates 11,532 stores under 72 banners in 28 countries and e-commerce websites in 11 countries.