Wal-Mart's Sales Keep Climbing -- WSJ
May 19 2017 - 3:02AM
Dow Jones News
As rivals struggle, retailer has benefited from its investment
in stores, e-commerce
By Sarah Nassauer and Anne Steele
Wal-Mart Stores Inc. reported stronger quarterly sales Thursday,
showing the world's largest retailer is pulling in shoppers at a
time when many competitors are reeling in the era of Amazon.com
Inc.
Wal-Mart's U.S. same-store sales rose 1.4% in the first quarter
-- the 11th straight quarterly increase -- as the retailer
benefited from an increase in store foot traffic. The retailer also
reported a surge in e-commerce sales, led by its core Walmart.com
site.
The company said it continued making investments to improve
stores, lower prices and boost online shopping capabilities.
However, profit continued to fall, down 1.3% for the quarter.
In the U.S., which accounts for two-thirds of Wal-Mart's sales,
foot traffic rose 1.5% in the quarter ended April 30. That rise was
supported in part by strong sales of groceries and household goods.
Wal-Mart has been lowering some prices in those categories, in part
to compete with a rising crop of discount grocers including Lidl
and Aldi.
The average amount each U.S. shopper spent per trip declined
slightly, down 0.1% "primarily due to lower sales of higher ticket
items at the beginning of the quarter, as well as continued price
investment," said Wal-Mart Chief Financial Officer Brett Biggs in a
conference call. Overall, U.S. sales in the first part of the
quarter suffered because of a delay in federal tax-refund checks,
executives said.
Shares in the company added 2.5% in early afternoon trading to
$77.
The company's stable sales are a marked contrast with many
department store retailers and competitors including Target Corp,
which said on Wednesday that sales at stores open at least a year
fell 1.3% in the first quarter. U.S. retailers are closing stores
at a record pace this year in the face of online competition and
overbuilding. Many others have filed for bankruptcy protection,
including teen retailer Rue21, Hhgregg Inc. and Limited Stores
Co.
Meanwhile, Wal-Mart has leaned heavily into its online efforts
and improved stores to compete. Over the last two years it raised
store employee wages and shrunk inventory to smooth store
operations. Inventory levels in existing stores fell 7.3% in the
quarter.
U.S. e-commerce sales surged 63% in the first quarter, including
sales from Jet.com Inc. and other recent e-commerce acquisitions.
Most of the sales increase came from Walmart.com, said a spokesman.
Wal-Mart bought Jet.com in September for $3.3 billion and has since
bought up smaller e-commerce sites such as Modcloth, Moosejaw and
ShoeBuy. Chief Executive Doug McMillon said the purchases help add
to Wal-Mart's assortment of online products, but the company won't
"buy our way to success."
Though grocery sales rose, shoppers bought fewer general
merchandise items in the beginning of the quarter like apparel and
bikes, the company said. However, sales of those items strengthened
as the quarter progressed.
In all for the April period, Wal-Mart earned $3.04 billion, or
$1 a share, compared with $3.08 billion, or 98 cents a share, a
year ago, the first quarterly earnings-per-share increase in more
than two years. Revenue increased 1.4% to $117.54 billion.
Wal-Mart said operating, selling, general and administrative
expenses rose 2.2% during the quarter, mainly due to e-commerce and
technology investments.
"The first quarter was a solid quarter for Wal-Mart on multiple
fronts as margins held steady despite the myriad ongoing
investments in people, technology and price," said Moody's analyst
Charlie O'Shea.
Write to Sarah Nassauer at sarah.nassauer@wsj.com and Anne
Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 19, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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