Walmart Q1 comps gain 2.6%
BENTONVILLE, Ark. — First-quarter profits at Walmart exceeded analysts’ estimates as same-store sales increased 2.6% and the company said its strategy of low prices on a broad merchandise assortment is resonating again with shoppers.
Sales for the quarter increased 8.6% to $112.3 billion, compared with $103.4 billion in the first quarter last year. The results would have been even stronger except for an approximately $800 million headwind related to a negative currency exchange rate. Earnings per share of $1.09 were a nickel ahead of analysts’ estimates and three cents higher than the top end of the company’s guidance of $1.01 to $1.06.
“Our overall performance reflects the success of Walmart’s business model: driving the productivity loop, leveraging expenses and investing in price leadership,” Wal-Mart Stores president and CEO Mike Duke said. “We believe that the momentum throughout our business positions us very well for the rest of the year.”
Strength was evident across all three of the company’s business segments, but it was the performance of the U.S. group that stood out, thanks to a 2.6% same-store sales increase that exceeded the company’s flat to 2% guidance range and marked the third consecutive quarter of U.S. comp improvement. Total U.S. sales increased 5.9% to $66.3 billion.
“In a highly competitive retail environment, Walmart U.S. is increasing price separation across categories and driving increased traffic to both the grocery and general merchandise areas of our stores,” Duke said.
Walmart U.S. president and CEO took things a step further with comments about the effectiveness of a clear U.S. strategy.
“Our merchants are focused on increasing sales through the right assortment at the right time and for the lowest price,” Simon said. “We will continue to invest in price to lower costs for our customers by enhancing leverage initiatives and managing expenses.”
The U.S. sales improvement resulted from larger transaction sizes and increased traffic to stores and also benefitted somewhat from an easy prior year comparison when comps declined 1.1%. A similar comparison situation exists in the second quarter with last year’s comp down 0.9%, but Simon this year’s second-quarter comps are expected to increase between 1% and 3%.
Sam’s got in on the act as well and saw its sales increase 7.9% to $13.8 billion. A same-store sales increase of 5.3%, excluding fuel, was significant considering Sam’s was up against a 4.2% prior year comparison.
“Sam’s Club is off to a great start this year, with continued strength in traffic and ticket. Membership engagement scores are at record highs, membership income is growing, and renewals and upgrades are strong,” Duke said.
Sam’s expect second-quarter comps to increase in the range of 4% to 6% on top of last year’s 5% increase.
Sales grew the fastest at Walmart international where roughly $1.9 billion in acquisition-related volume was offset by a negative $800 million currency exchange rate. On a constant currency basis, international sales increased 10.9% to $31 billion.
“Walmart International delivered strong sales growth in the first quarter and operating income grew faster than sales, increasing more than 20%,” Duke said. “We are very focused on improving profitability and returns, and with greater transitions to everyday low price in more markets, we have stronger customer traffic, which contributed to net sales growth.”
AAFES rolls out latest exchange format to Travis Air Force Base
DALLAS — Military shoppers at Travis Air Force Base near Fairfield, Calif., welcomed the opening of a new Army and Air Force Exchange Service experience as a renovated and rebranded exchange opened earlier this month.
The renovated exchange boasts new colors, textures and graphics and also features a new layout divided into three major merchandise categories: home, life and style.
The rebranding effort, which is being rolled out to all exchanges, is designed to provide military shoppers with an updated shopping experience for all the things they need to outfit their unique lifestyle.
The branding team now moves on to Fort Bragg in North Carolina for a June 1 christening of the first Army Exchange to receive the new design.
Survey: Consumers to trade sand castles for shopping over Memorial Day weekend
CHARLESTON, S.C. — According to findings in two America’s Research Group surveys — conducted in late March and in late April — the number of Americans delaying their shopping to Memorial Day weekend is at an all-time high.
According to the surveys, shoppers will approach Memorial Day in keeping with a growing trend towards holding off on shopping until "big" holiday weekends. "This used to be an effect that was the private reserve of ‘Black Friday,’" ARG chairman Britt Beemer said. "Beginning with our [October 2011] survey, which showed Americans delaying in record numbers, Americans have begun using the ‘hold-it-until-the-holiday’ tactic in a much broader and more significant way."
More than 6% of shoppers in March and 21% in April reported that they are delaying their shopping plans until Memorial Day weekend. Last year, less than 3% of shoppers in March and only 11% of shoppers in April were waiting until Memorial Day.
"This is a major shift in the retail landscape," Beemer said. "Not only are Americans delaying, but they are also making a weekend that was once thought of as the ‘start of summer’ — a time to go someplace warmer or to relax or picnic, perhaps — into one that is akin to Black Friday: a time to clip coupons, look for sales."
Beemer estimated that shopping levels will exceed 35%, compared with 2011. "Those retailers who offer early bird specials and open early on Memorial Day … will see the best sales and the highest spending levels. The closer you come to creating Black Friday, the better your sales will be," Beemer said.