Walmart lowers forecast on weak Q2 results
BENTONVILLE, Ark. — Walmart early on Thursday reported weaker than expected second-quarter same-store sales at its U.S. division and lowered its full-year profit forecast, suggesting global economic conditions remain challenging.
Total company net sales increased 2.8% to $116.7 billion on a constant currency basis and profits increased 1.3% to $4.1 billion while earnings per share grew 5.1% to $1.24. That was a penny below the consensus forecast of analysts, although earnings per share included a charge related to international operations that reduced earnings by a penny.
Wal-Mart Stores, Inc., president and CEO Mike Duke characterized the earnings growth as a solid increase and also found a reason to be optimistic about the worse than expected same-store sales increase at U.S. stores.
“Consolidated net sales and our Walmart U.S. comp were below expectations,” Duke said. “While the retail environment was challenging across all of our markets, the Walmart U.S. and Sam’s Club businesses improved comp sales from the first quarter, and the growth of international sales was consistent.”
Duke said he is “encouraged by our position to execute in the second half of the year, particularly with the steps we’re taking to improve performance. There are areas of our business where we can do a better job, and we will.”
One of those areas is the U.S. stores division where total sales increased 2.1% to $68.7 billion, but same-store sales fell for the second consecutive quarter, dropping 0.3% and missing a company forecast of flat to up 2%. The division’s operating profits rose 5.2% to $5.5 billion.
The company said spending was negatively affected by the payroll tax increase earlier this year and a lack of inflation. Slightly fewer shoppers visited its stores with traffic down 0.5% and average transaction sizes growing a modest 0.2%.
“While I’m disappointed in our comp sales decline, I’m encouraged by the improvement in traffic and comp sales as we progressed through the quarter,” said Walmart U.S. president and CEO Bill Simon. “The 2% payroll tax increase continues to impact our customer. Furthermore, we also expected an increase in the level of grocery inflation, which did not materialize in a meaningful way. We were pleased that both home and apparel had positive comps.”
It was a little different story at the Sam’s Club division where sales increased 2.6% to $14.5 billion, same store sales excluding fuel increased 1.7% and operating profits increased 3% to $551 million.
“Sales were up, traffic continued to improve, and comp sales were within our guidance,” said Sam’s Club president and CEO Rosalind Brewer. “Response to our recent membership enhancements has been favorable, resulting in solid membership income growth and positive response to our Instant Savings Book. We were pleased with our improvement in business member traffic, reversing the decrease from the prior quarter."
Walmart’s international division struggled during the quarter, growing sales 2.9% to nearly $33 billion, but operating profits declined 1.3% to $1.47 billion.
“Across our international markets, growth in consumer spending is under pressure," said Doug McMillon, Walmart International president and CEO. "Consumers in both mature and emerging markets curbed their spending during the second quarter, and this led to softer than expected sales. While this creates a challenging sales environment, we are the best equipped retailer to address the needs of our customers and help them save money.”
As a result of worse than expected sales during the first half of the year and still uncertain global economic outlook, Walmart tempered its expectations for full year sales and earnings growth. Same stores sales at the U.S. division are expected to be flat during the third quarter while Sam’s is looking for a gain in the range of flat to 2%.
“Net sales in the first six months were below our expectations, so we are updating our forecast for net sales to grow between 2% and 3% for the full year versus our previous range of 5% to 6%,” said Walmart CFO Charles Holley. "This revision reflects our view of current global business trends, and significant ongoing headwinds from anticipated currency exchange rate fluctuations."
Accordingly, the company reduced its third-quarter profit forecast to a range of $1.11 and $1.16, a penny below analysts’ forecast. The full year forecast was reduced to a range of $5.10 to $5.30 compared to an earlier range of $5.20 to $5.40.
New pre-workout Met-Rx bars pump up the energy
RONKONKOMA, N.Y. — Met-Rx, a nutritional supplements and wellness company, announced this week the addition of a new protein bar designed to provide a burst of energy while working out.
The new Met-Rx NOS Pumped bars combine high-quality whey protein with L-Arginine, an amino acid and protein building block. The new energy bars come in chocolate mixed berry and orange creamsicle flavors.
"Met-Rx understands the fitness and training enthusiast’s mindset and needs better than anyone, as its new NOS Pumped energy bars prove once again," said Team Met-Rx sponsored athlete Greg Plitt, a former U.S. Army Ranger named one of America’s Fittest Americans by Men’s Health magazine. "These innovative bars have found a place in my pre-workout routine, as part of my overall protein-rich, good nutrition regimen."
The Met-Rx line spans protein powders, ready-to-drink shakes and other beverages, multivitamins to supplement daily nutritional needs, post workout products, specialty supplements tailored to a variety of training levels, protein bars, and more.
Met-Rx NOS bars, delivering high-quality protein, are now available at leading retailers including Kroger, Meijer and Publix.
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ECRM breaks into the e-cigarette, e-cigar category
LAS VEGAS — ECRM announced today it is hosting its first electronic cigarettes and cigars event at the Palms Casino Resort in Las Vegas beginning Monday, February 3 to Wednesday, February 5, 2014. The event will include vendors and buyers focused on electronics cigarettes, cigars and accessories. This event creates a custom experience where pre-scheduled meetings take place between suppliers, distributors and retailers from all channels of trade including; grocery, drug, mass, specialty and convenience.
According to ECRM, electronic cigarettes, also known as e-cigarettes or e-cigs, are gaining steam among smokers trying to kick their tobacco habit and the Consumer Packaged Goods industry is not turning a blind eye. Retailers are deepening the scope of this category. While consumer demand continues to rise, the competition pool is brimming with over 250 electronic cigarette brands on the market.
The company also pre-qualifies its meetings to ensure face time with the decision makers who can open new networks of distribution, improve program development and increase speed to market. This event format is unique to the trade show industry as the one-on-one meetings in a private setting help buyers save time by replacing office visits.
ECRM believes this proactive environment encourages creativity and innovation, which in turn can help build better programs and bring more value to customers while increasing the bottom line.
Another factor that defines this event is the all-inclusive price structure. Because all costs are woven into this one time fee, there are no surprise expenses at the event, the company noted. Meaning, everything is covered up front including; meetings, meals, hotel accommodations and odds and ends like internet, electricity and wastebaskets.
For more information, contact Jennifer Peace, Category Development Manager-GM, ECRM or paste the following link into your browser: ecrm.marketgate.com/Events/2014/02/ElectronicCigarettesCigars.aspx.