Wal-mart Stores (WMT) Misses Q1 EPS by 5c; U.S. Comps Flat; Issues Light Q2 Outlook

May 15, 2014 7:04 AM

(Updated - May 15, 2014 7:07 AM EDT)

Wal-mart Stores (NYSE: WMT) reported Q1 EPS of $1.10, $0.05 worse than the analyst estimate of $1.15. Revenue for the quarter came in at $114.2 billion versus the consensus estimate of $116.29 billion.

"Walmart's first quarter net sales increased 0.8 percent over last year. Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected," said Doug McMillon, Wal-Mart Stores, Inc. president and chief executive officer.

"Walmart's underlying business is solid, and I'm confident in our long-term strategies. We'll continue to invest in price and enhance our service to improve sales," added McMillon. "We remain focused on growth across the enterprise, especially in small formats like Neighborhood Market in the U.S."

The company continued its significant investment in e-commerce initiatives, including the global technology platform, and sales worldwide rose approximately 27 percent.

"We have the opportunity to create transformative growth through stronger e-commerce capabilities," said McMillon. "Our investments are focused on improving customer experience and fulfillment capacity. We're working to deliver a relevant, personalized and seamless customer experience across all channels to further grow sales."

• Walmart U.S. comp sales were relatively flat as expected, down 8 basis points for the 13-week period ended May 2, 2014. Severe weather adversely impacted comp sales by approximately 20 basis points. Comp sales for the Neighborhood Market format rose approximately 5 percent. Walmart U.S. net sales increased $1.3 billion, or 2.0 percent.

• Excluding the impact of currency exchange rate fluctuations,1 Walmart International's net sales would have increased 3.4 percent to approximately $34 billion. On a reported basis, net sales were $32.4 billion, a decrease of 1.4 percent.

• Sam's Club comp sales, without fuel,1 decreased approximately 0.5 percent during the 13-week period ended May 2, 2014. Sam's Club delivered 10.9 percent membership income growth for the quarter.

• E-commerce sales globally increased approximately 27 percent for the quarter.

• Consolidated operating income was $6.2 billion, a decrease of 3.8 percent. Severe weather in the U.S. businesses negatively impacted the company's profit.

U.S. comparable store sales results

The company reported U.S. comparable store sales based on its 13-week retail calendar for the periods ended May 2, 2014 and April 26, 2013 as follows:

Without Fuel With Fuel Fuel Impact
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
5/2/2014 4/26/2013 5/2/2014 4/26/2013 5/2/2014 4/26/2013
Walmart U.S. -0.1% -1.4% -0.1% -1.4% 0.0% 0.0%
Sam’s Club -0.5% 0.2% -0.8% -0.2% -0.3% -0.4%
Total U.S. -0.2% -1.2% -0.2% -1.2% 0.0% 0.0%

During the 13-week period, Walmart U.S. comp traffic decreased 1.4 percent, while average ticket increased 1.3 percent. E-commerce sales positively impacted comp sales by approximately 0.3 percent for the 13-week period.

In the first quarter period, excluding fuel,1 Sam's Club comp traffic was down 0.2 percent, and ticket was down 0.3 percent. E-commerce sales positively impacted comp sales by approximately 0.2 percent for the 13-week period.

The company's e-commerce sales impact includes those sales initiated through the company's websites and fulfilled through the company's dedicated e-commerce distribution facilities, as well as an estimate for sales initiated online, but fulfilled through the company's stores and clubs.

Guidance:

Wal-mart sees Q2 EPS of $1.15 to $1.25, with consensus views looking for $1.28. The outlook assumes incremental investments in e-commerce, headwinds from higher health care costs in the U.S. and increased investments in Sam's Club membership programs.

For earnings history and earnings-related data on Wal-Mart Stores (WMT) click here.

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