Wal-Mart Draws Shoppers, Bucks the Retail Slump -- 2nd Update
May 18 2017 - 12:04PM
Dow Jones News
By Sarah Nassauer and Anne Steele
Wal-Mart Stores Inc. reported stronger quarterly sales Thursday,
showing that the world's largest retailer is drawing 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, boosted by recent
acquisitions.
The company said it continued making investments to improve
stores, lower prices and boost online shopping capabilities.
However, profit continued to fall in the wake of those investments,
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 2.4% in late morning trading to
$76.89.
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,
"primarily driven by organic growth," said Marc Lore, the company's
U.S. e-commerce chief, on a call with reporters. The quarter also
included sales from its purchase of online retailer Jet.com in
September as well as smaller e-commerce sites Modcloth, Moosejaw
and ShoeBuy earlier this year. Global e-commerce sales rose 7% from
a year ago. Mr. McMillon said the purchases help add assortment to
Wal-Mart's 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, said the company, though those sales 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 18, 2017 11:49 ET (15:49 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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