Walmart U.S. posted a comp gain in the first quarter, and the retailer pointed to the strength of its U.S. store base as well as e-commerce growth.
For the first quarter ended April 30, Walmart posted company consolidated net income of $2.1 billion, or 72 cents per diluted share, versus $3 billion, or $1 per diluted share, in the period a year previous.
Adjusted to take into account an unrealized loss on investment in JD.com in China based on new accounting principles and a benefit from tax reform legislation, first quarter earnings per share were $1.14, which topped a MarketBeat-published analyst average estimate by two cents.
Walmart revenue gained 4.4% to $122.7 billion versus the quarter a year prior while revenue on a constant currency basis advanced 2.7% to $120.7 billion. Operating income declined 1.6% to $5.2 billion and operating income on a constant currency basis slipped 4% to $5 billion from the period a year earlier.
Walmart U.S. first quarter net sales increased 3.1% to $77.7 billion versus the year-prior period with comparable sales, excluding the impact of fuel, up 2.1% based on a 0.8% gain in traffic and a 1.3% advance in average ticket year over year. At Sam’s Club, comps increased 3.8% with a 5.6% gain in traffic and a 1.8% decline in average ticket versus the earlier-year period while net sales declined 2.7% to $13.6 billion. In both cases, e-commerce contributed about 100 basis points to the comps.
Doug McMillon, Walmart’s president and CEO, called the first quarter “solid.” He added, “We’re transforming to better serve customers. We are changing from within to be faster and more digital, while shaping our portfolio of businesses for the future.”
In a conference call, McMillon pointed out, “We also recently introduced new apparel brands with improved design, quality and value. Customer experience scores continue to improve as we’ve lowered prices and taken steps to make shopping with us easier and more enjoyable.”
At Walmart U.S., he said, “Overall, the stores business is getting stronger. We’re using technology in more ways to simplify work for associates so they can better serve customers. This is also helping with inventory flow and expense management. The previously announced starting hourly wage rate increase took effect in February. But because we’re operating more efficiently, we were able to leverage expenses in our stores this quarter.”
He said that, in the Walmart U.S. business, e-commerce delivered sales growth of 33% compared with the year-before quarter with strength at Walmart.com and online grocery, and that, earlier in May, the company launched a newly redesigned Walmart.com website and app.
“Customers are responding well to the refreshed, personalized and engaging experience,” he said. “We’ve also added new brands to Walmart.com, and the redesigned site will include a new Lord & Taylor store where customers can shop a broader assortment of premium brands,” he said.
On Sam’s Club, McMillon said, “Keep in mind that our decision to remove tobacco from certain clubs will be a headwind to reported comp sales throughout the year, and pressured the first quarter comp by approximately 140 basis points. Including that impact, Sam’s comp sales, excluding fuel, grew 3.8%. The Sam’s team is also doing a good job driving growth in our private brand, Member’s Mark. Private brand penetration increased more than 220 basis points year-over-year.”