Tardy tax refunds, cool weather impact Walmart’s Q1

Bentonville, Ark. — Walmart Stores on Thursday reported profit and sales lower than Wall Street expectations as the retail giant struggled against the payroll tax increase, delayed tax returns and an unseasonably cold spring impacting its U.S. sales. The retailer also scaled back its earnings expectations for the current three-month period.

Walmart’s net income rose 1.1% to $3.8 billion. Revenue edged up 1%, to $113.4 billion.

"Frankly, we had a more difficult quarter than expected when we announced our guidance in February,” said Walmart CEO Mike Duke on the company’s first quarter earnings conference call. “Sales were pressured primarily by delayed tax refunds, which caused customers to put off discretionary purchases. And though no one likes to talk about weather, it was a real factor across the United States.”

Same-store sales in the United States fell 1.4%, while comp traffic was down 1.8% and the average ticket increased 0.4%.

"Despite comps being lower than expected, we continued to generate market share gains," stated Bill Simon, Walmart U.S. president and CEO. "According to The Nielsen Company, we gained 20 basis points of market share in the measured category of 'food, consumables and health & wellness/OTC' during the 13-weeks ended Apr. 27, 2013."

Simon was optimistic looking forward, and said that the second quarter is off to a good start, with positive comps.

"We continue to believe in the strength of our strategic plan to deliver a broad assortment with EDLP,” he said. “We also continue to monitor the impact of the 2% payroll tax increase.”

At Sam's Club, sales rose 0.2%, while comp traffic was up 1.3%, while ticket was down 1.1% for the 13-week period ended April 26.

"Comp sales for the first quarter were impacted by unfavorable weather and less than expected inflation," stated Rosalind Brewer, Sam's Club president and CEO. "Our business member is an integral part of our business, and comp sales and traffic patterns indicated that they remained pressured in the first quarter.”

In remarks released with the company’s results, Duke echoed Simon’s optimism.

“I'm confident about our long-term strategy and the direction Walmart is headed," he stated. "Our expectations about our U.S. businesses' performance, coupled with more discipline in International, will allow us to improve our performance throughout the year."

Duke also noted that the chain’s e-commerce sales grew more than 30% in the first quarter versus last year.

"There is no doubt that our company is making the right investments in e-commerce to differentiate ourselves and become a better Walmart," said Duke. "And with our sales growth in the first quarter, we believe our investments are paying off."

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