Wal-Mart Stores Inc posted a -bigger-than-expected jump in quarterly profits yesterday, as strength overseas mitigated the continued pressure it felt in the US, where its same-store sales have now fallen for two years.
Wal-Mart’s core US shoppers are still stretched and have concerns about rising gasoline, energy and food prices, as well as employment issues. At the same time, small business owners who shop at its Sam’s Club warehouse stores remain concerned about the economy and their access to credit.
Shares of Wal-Mart, the world’s largest retailer, slipped 0.4 percent to US$55.82 in pre-market trading.
US same-store sales fell 1.1 percent, in line with the company’s forecast of a drop of 2 percent to flat and better than the average 1.3 percent decline expected by analysts according to Thomson Reuters.
“We recognize we still have work to do and comp sales growth remains the greatest priority for me and the entire Walmart US team,” Wal-Mart chief executive officer Mike Duke said in a recorded conference call.
While US same-store sales were within guidance, such sales still fell, which “tells us other players continue to steal market share,” said Wall Street Strategies analyst Brian Sozzi.
Wal-Mart continues to see a paycheck cycle and shoppers kept trading down to lower priced items and some private label goods, Walmart US chief executive Bill Simon said.
Most of the decline in first-quarter US same-store sales came from a drop in traffic in the stores, while the average that shoppers spent was up. Same-store sales of groceries and health and wellness items increased.
Walmart is not doing a good enough job getting people who come in for groceries to also buy clothing at its stores, and weather hurt sales of outdoor goods, Simon said.
Wal-Mart is not the only one feeling pressure from bad weather. US Home improvement chains Home Depot Inc and Lowes Cos Inc saw weak spring demand.
Wal-Mart earned US$3.4 billion, or US$0.98 a share, in the first quarter that ended on April 30, up from US$3.3 billion, or US$0.87 a share, a year earlier.
The company had forecast per share earnings of US$0.91 to US$0.96 and the analysts’ average estimate was US$0.95, according to Thomson Reuters I/B/E/S.
Sales rose 4.4 percent to US$103.42 billion, topping Wall Street’s average forecast of US$102.93 billion.
International sales soared 11.5 percent. At Asda, its British arm, sales growth almost ground to a halt.
The company forecast second-quarter earnings of US$1.05 to US$1.10 a share, up from US$0.97 a year earlier.