Despite deceleration in sales momentum, Walmart expects profitable holiday season
BENTONVILLE, Ark. — Walmart maintained an optimistic outlook for the holiday season despite a 1.5% third-quarter comp increase that reflected a modest deceleration in sales momentum seen earlier this year.
Total company sales increased 3.4% to $113.2 billion, with the U.S. stores division advancing 3.6% to $66.1 billion — thanks to the combination of the 1.5% same stores sales increase and new store growth. Company profits increased at a slightly faster pace, with net income advancing 9.5% to $3.825 billion, and earnings per share increasing 11.3% to $1.08, a penny better than analysts’ forecast and toward the upper end of the company’s guidance range of $1.04 to $1.09.
Wal-Mart Stores president and CEO Mike Duke said the company was "very pleased" with its financial performance as the company achieved its goal of leveraging expenses to deliver on a commitment to reduce costs, improve productivity and invest in price.
"Our disciplined approach to operating the business and to the productivity loop drove profitability and expense leverage," Duke said. "Our fundamentals are strong, and we are well-positioned for the fourth quarter, including innovative plans to drive traffic, especially in our U.S. stores."
Duke said Walmart’s strong price position and broad assortment would give the company a clear competitive advantage during the holidays in the U.S. and worldwide.
"Across all of our markets, we are seeing the same price consciousness as we do in the United States. More customers are part of a growing global middle class, looking for quality, value and a better life, and our EDLP model matters to these customers," Duke said.
The company’s U.S. customers appeared to take a bit of a breather in advance of the holidays as same store sales growth of 1.5%, while within a guidance range that called for a 1% to 3% increase, was a modest deceleration from an on-plan 2.2% increase in the second quarter and an expectation beating 2.6% first-quarter increase. The first and second quarter gains came against prior year declines. However, the third-quarter figure marked the first time the company was up against a prior year increase, as the 1.3% gain in the third quarter of 2011 marked the first time Walmart’s U.S. comps turned positive after a two-year string of negative numbers.
"We again delivered strong sales across the business, adding $2.3 billion in revenue," said Walmart U.S. president and CEO Bill Simon. "We’re excited about the fourth quarter. November sales started ahead of plan. Our Black Friday plans are innovative and designed to drive additional traffic in our stores. We expect strong performance through Thanksgiving weekend."
The company forecast fourth-quarter comps will increase in the range of 1% to 3%, but it is up against a fourth quarter the prior year when same store sale increased 1.5%.
"Current macroeconomic conditions continue to pressure our customers," said Walmart CFO Charles Holley. "The holiday season is predicted to be very competitive, but we are well prepared to deliver on the value and low prices our customers expect."
For the full year, Walmart tightened, but didn’t increase its profit forecast to a range of $4.88 to $4.93 compared to prior guidance of $4.83 to $4.93.
Target ready for holiday shopping season with increase in 3Q sales
MINNEAPOLIS — A 2.9% third-quarter same-store sales increase and the sale of its credit card business pushed Target’s third-quarter profit up 17.6% to 96 cents a share.
Total sales increased 3.4% to $16.6 billion in the third quarter due to the 2.9% comp increase and the benefit of a net increase of 18 stores compared to the prior year. Target ended the period with 1,781 stores and was up against a challenging prior year comparison when comps advanced 4.3%.
"We’re pleased with Target’s third-quarter financial performance, which reflects superb execution across each of our business segments," said Gregg Steinhafel, chairman, president and CEO of Target. "We are well-positioned to deliver strong fourth-quarter performance by offering compelling merchandise and unbeatable value through initiatives like the Target/Neiman Marcus Holiday Collection, 5% REDcard Rewards and our new Holiday Price Match, which allow our guests to shop at Target with confidence throughout the holiday season."
Earnings per share increased 17.6% to 96 cents from 82 cents, but that figure includes a 15 cent benefit from the pending sale of the company’s credit card receivables portfolio and expenses related to next year’s entry into Canada. On an adjusted basis, excluding the impact of expenses related to Canada, earnings per share increased 4.3% to 90 cents from 86 cents.
Meijer features U.S.-made toys on website
GRAND RAPIDS, Mich. – Two new wooden toys that won a contest sponsored by Midwestern mass merchandiser Meijer will be featured exclusively on the retailer’s website, the company said Thursday.
Meijer announced the winners of the Meijer Next Great Toymaker contest: Franklin, N.C.-based Circa Toys’ Wagon of Blocks and Goshen, Ind.-based Peters’ Group’s Stick & Stack Cozy Cabin. The Wagon of Blocks, which sells for $69.99, is designed for children ages 1 to 3 years, while the Cozy Cabin, at $44.99, is for children ages 4 to 8 years.
"Meijer is excited to announce these exclusive additions to our huge online selection of nearly 8,000 toys," Meijer VP e-commerce Liwanag Ojala said. "We believe the U.S. heritage of these toys, along with their classic style and quality craftsmanship, will be a winning combination for our Meijer.com shoppers this holiday season."
The contest was open to small toy companies and entrepreneurs in the United States with 50 or fewer employees. Winners were chosen by a panel of Meijer judges and scored on uniqueness, educational relevance, creativity and quality. Toys will be available for at least six months on Meijer’s website starting on Thursday.