Strategy

Wal-Mart Posts Another Gain in Comp Sales

Same-store sales have increased for eight straight quarters, indicating Wal-Mart's spending on improving stores is paying off.
Matthew HellerAugust 19, 2016

Wal-Mart Stores reported same-store sales growth for the eighth quarter in a row and blew past earnings estimates, generating a solid return on its investment in revamping stores and changing the merchandise mix.

The world’s biggest retailer earned $3.8 billion in the second quarter, up 8.6% from a year ago. Earnings of $1.21 per share easily topped estimates of $1.02, according to S&P Global Market Intelligence.

Revenue edged up 0.5% to $120.85 billion while same-store sales, a key measurement for retailers, rose 1.6%.

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Wal-Mart “is reaping the benefits of spending heavily to improve stores and draw shoppers,” The Wall Street Journal said, noting that it “has poured billions recently into making its U.S. stores more efficient and pleasant, boosting employee wages and improving e-commerce operations.”

For the first time in nine quarters, Wal-Mart’s e-commerce sales rose faster than the previous quarter. Earlier this month, the company moved to boost its online business by purchasing Jet.com for $3.3 billion.

“We remain focused on building e-commerce capabilities globally,” CEO Doug McMillon said in a news release. “Wal-Mart is uniquely positioned to provide customers with a seamless shopping experience where we save them time and money.”

Wal-Mart’s results came the day after rival Target, which has struggled to draw shoppers to its selection of fresh groceries, reported a 9.7% plunge in earnings. Greg Foran, CEO of Walmart U.S., attributed Wal-Mart’s relative strength to improved grocery options, tidier stores, better customer service and discounts.

“It’s filling store aisles with attractive displays of organic fruits, gourmet cheeses and other fresh products to snatch shoppers who’d more typically head to major grocery chains like Wegman’s, Safeway or Whole Foods for such goods,” USA Today reported.

During the second quarter, Wal-Mart also offered a free month-long trial of a $49 two-day shipping membership similar to Amazon’s popular Prime program and rapidly increased the number of items available on Walmart.com.

The company now forecasts full-year earnings in a range of $4.15 to $4.35 a share. Analysts were expecting $4.27.