Walmart encouraged by sales improvement, reaffirms commitment to EDLP
BENTONVILLE, Ark. — Despite the absence of top line growth at Walmart’s U.S. stores division, second-quarter earnings grew 12.4% to $1.09 and came in a penny ahead of analysts’ estimates, which was enough for the company to narrow and increase the range of its full-year profit forecast.
Full-year earnings per share now are expected to fall within the range of $4.41 to $4.51, which is a tighter window and a penny higher than the guidance of $4.35 to $4.50 provided back in February when fourth-quarter results were released. Total company sales for the second quarter increased 5.5% to $108.6 billion, aided by a $2.3 billion currency exchanged benefit, and profits increased 5.7% to $3.8 billion.
The company’s profit performance is noteworthy, given the ongoing difficulties with the U.S. stores division, where a 0.9% same-store sales decline was the ninth consecutive quarter of negative comp growth and came on top of a prior-year decline of 1.8%.
Wal-Mart Stores president and CEO Mike Duke said he was encouraged by the sales improvement in the United States, which increased sequentially each month within the quarter.
“In fact, this was the best quarterly performance since the third quarter of fiscal 2010,” Duke said. “We’re committed to delivering positive comp sales by widening the gap on price, and we have a specific plan to deliver [everyday low prices] to every customer.”
Also sounding an optimistic tone was Walmart U.S. president and CEO Bill Simon, who said he was encouraged by sales momentum from the second quarter.
“Our grocery and health-and-wellness business, representing two-thirds of our sales continued to deliver positive comps,” Simon said. “Our hardlines and apparel businesses are improving.”
Sales at the stores division increased 0.4% to nearly $64.9 billion, while operating profits grew 2.1% to nearly $5 billion, and Simon indicated that based on the start of August sales he was confident the company’s plans are working and will produce ongoing sales improvement.
However, expectations for same-store sales in the third quarter continue to envision a potential decline with the range of possibilities extending from a 1% decline to a 1% increase. Simon noted that this year’s third quarter ends on Oct. 28 and therefore could be negatively affected by last minute Halloween sales, which would fall in the fourth quarter.
Comps are expected to turn positive by the fourth quarter, according to Simon and other executives at the company, who contend the emphasis on EDLP on a broad assortment of merchandise will continue to gain traction.
“As you have heard from us before, we know that strengthening price leadership starts with being the low-cost provider,” Wal-Mart Stores CFO Charles Holley said. “As we continue to lower our costs, we will also be investing in price, helping our customers save money so they can live better. We will be relentless in widening the price gap, as Mike (Duke) says, to pass savings along to our customers around the world. We believe that EDLP will lead to top line growth as customer traffic improves.”
Walmart ended the second quarter with a total of 9,230 units worldwide, including 4,427 stores in the United States. The company now operates 2,933 supercenters and the number of discount stores has dwindled to 692 units as they continue to be converted to supercenters. There were 609 Sam’s Club, 183 Neighborhood Markets and 10 small format stores at the end of the second quarter.
A little more than half of Walmart’s store base, or 4,803 units, are now located outside of the U.S. in the following markets: Mexico (1,789); United Kingdom (536); Brazil (484); Japan (413); China (338); Canada (325); Chile (290); Costa Rica (183); Guatemala (177); El Salvador (78); Argentina (64); Nicaragua (62); Honduras (58) and India (6).
The international division grew sales by 16.2% to $30 billion and operating profits increased 8.9% to $1.4 billion.
The strongest performance was turned in by Walmart’s small division. Sam’s Club same-store sales increased 5%, at the high end of the company’s guidance range and marked the sixth consecutive quarter of sequential improvement. Sam’s total sales increased 9.5% to $13.6 billion and operating profits increased 15% to $492 million. Sam’s Club president and CEO Brian Cornell said he expects third-quarter comps to increase between 3% and 5%.
Firstline develops hair extension clip-ons for African-American women
NEW YORK — Firstline, a manufacturer of hair care accessories for multicultural consumers, has introduced temporary hair attachments for African-American women called Evolve NuDo clip-on hair attachments.
Made with synthetic fiber, the NuDo clip-on hair attachments can be styled just like human hair and virtually are undetectable when clipped or wrapped into the hair, according to the manufacturer. The line includes seven hair attachments that can be clipped in to change a look in seconds. The collection includes instant bangs, braided and layered buns, and ponytails (long, mid-length, straight, wavy, and curly), varying in length from 10.5 in. to 18 in.
The attachments are priced at $14 to $20 each and are available in jet black, natural black and brown. Additional colors soon will be available.
"For years, women with naturally curly or kinky hair have had to choose between having fresh, stylish hair and ruining it by sweating after a run on the treadmill,” stated Joni Odum, Firstline’s marketing director. “NuDo clip-on hair attachments offer women an opportunity for an active lifestyle and beautiful hair without sacrificing fitness goals or damaging hair with weaving, bonding, sew-ins, and glue. Ladies can prolong their hairstyles even on wilting summer days and can simply and safely ‘evolve’ their style in seconds with very little expense.”
Firstline products are available at Walmart, Target, CVS, Walgreens, H-E-B and Sally Beauty Supply.
Events to raise awareness of AIDS, healthcare initiatives
WASHINGTON — The Community Education Group and the Urban Coalition for HIV/AIDS Prevention Services will sponsor a series of community mobilizing events around the country in the time leading up to the International AIDS Conference in Washington next July.
AIDS 2012 will mark the first time that the conference has taken place in the United States in 20 years, and the Road to AIDS 2012 is an official affiliated event of the conference. The event will take place in 15 cities and is designed to heighten public awareness of AIDS 2012, the National HIV/AIDS Strategy, the Affordable Care Act and strategies being implemented to integrate and coordinate prevention, care and treatment.
"We are proud to support the Road to AIDS 2012 and to partner with key groups to increase education and awareness about HIV treatment and prevention," said EVP Ellen Lambert of the Merck Company Foundation, which is donating $500,000 to support the event. "Merck has a decades-long commitment to HIV research and education. Our long-standing support continues through programs like these that generate new ideas and solutions toward the prevention, care and treatment of HIV."
The Road to AIDS 2012 will visit Atlanta; Baltimore; Chicago; Dallas; Houston; Los Angeles; Miami; New York; Philadelphia; San Francisco; Washington and San Juan, Puerto Rico — all of which are sites of the Department of Health and Human Services’ 12 Cities Initiative, designed to support and accelerate comprehensive HIV/AIDS planning in areas with the highest AIDS burden — as well as New Orleans; Jackson, Miss.; and Birmingham, Ala.