The Economy

Walmart’s Numbers Brighten Retail Picture

Thanks to tactical changes, the retailing giant is growing revenues in a very competitive environment.
Katie Kuehner-HebertMay 19, 2016

A day after Target’s disappointing sales casted a shadow on the retail sector, Walmart surprised Wall Street with better-than-expected quarterly results.

The Bentonville, Ark.-based retailer’s revenue rose 4% to $119.4 billion on a constant currency basis for its fiscal first quarter of 2017, ended April 30. Analysts on average had estimated $112.67 billion in revenue, according to a survey by Zacks Investment Research.

Walmart U.S. delivered positive comparable sales for the seventh consecutive quarter, up 1%, driven by the sixth consecutive quarter of positive traffic, up 1.5%. Neighborhood market comp sales increased about 7.1%.

Net sales at Walmart International reached $28.1 billion. Excluding currency, net sales were $31.6 billion, an increase of 4.3%. Operating income increased 22%. Globally, on a constant currency basis, e-commerce sales increased 7%.

“We are pleased to see the U.S. comp result, strong performance outside the U.S., membership trends in Sam’s Club, and EPS results versus guidance,” the company’s president and chief executive Doug McMillon said in a press release. “In addition, we are focused on building the e- commerce capabilities we need to drive growth to a higher level and deliver the seamless shopping experience for customers they desire.”

The good news from the world’s largest retailer came one day after Target reported slowing quarterly sales. Macy’s, J.C. Penney, Nordstrom, and Kohl’s also posted weak first-quarter sales. In addition to competition from Amazon, retailers’ sales are down because consumers are spending their disposable income at other places, including restaurants and on vacations, analysts said.

“Walmart is making lots of changes that it says keep it competitive in a changing retail landscape,” the AP wrote. “It’s paying particular attention to what it’s stocking on store shelves and expanding online grocery shopping to more than 150 locations across more than 20 markets in the U.S.”

The company is also competing head on with Amazon, quickening its free-shipping pilot program to two-day delivery from three. Walmart is also cutting the membership price.

Overall, Walmart’s net income fell 7.8% to $3.08 billion, or 90 cents per share for the quarter. Excluding one-time charges and benefits, per-share earnings were 98 cents, a dime better than Wall Street had expected.

Walmart anticipates a second-quarter profit between 95 cents and $1.08 per share.