“We’re seeing the strongest results in areas such as meat, produce and dairy, where we’re investing to keep our prices low for customers despite pressure from cost inflation,” said Bill Simon, president and CEO of Wal-Mart US, during a May 15 call with analysts to discuss first-quarter earnings. “Additionally, food delivered strong Easter results, with double-digit sales growth in Easter candy and strength across other categories such as meat and eggs.”
Still, company earnings declined more than 5 percent, due to lower net sales and higher costs associated with severe weather compared with the prior year. Contributing to a modest bump in quarterly revenue was Wal-Mart’s e-commerce platform, which generated double-digit sales growth during the period.
“Overall, we are continuing to increase our capabilities in this area,” Simon said. “To further integrate our digital platform with our store fleet, we’ve recently rolled out an e-receipts program. The initiative makes it easier for our customers to keep track of their purchases and when combined with the Savings Catcher program, will provide an opportunity for our customers to save even more.”
Income from continuing operations in the first quarter ended April 30 was $3,582 million, or $1.11 per share on the common stock, down 5 percent from $3,775 million, or $1.15 per share, in the year-ago period.
Revenues totaled $114,960 million, up 0.8 percent from $114,070 million.
Operating income at Wal-Mart US dropped 4 percent to $4,975 million from $5,197 million the first quarter of the year before. Net sales increased 2 percent to $67,852 million from $66,553 million.
During the quarter, Wal-Mart opened 13 Neighborhood Market stores and 25 Supercenters, including 16 new and nine conversions. The company said it is on track to open about 115 supercenters, between 180 and 200 Neighborhood Markets and 90 to 100 Wal-Mart Express stores this fiscal year.
Sam’s Club drove lower sales than anticipated during the quarter, while membership income increased, driven by a fee increase implemented last year. A new assortment of snacking options that includes exclusive better-for-you choices helped drive double-digit growth in the retailer’s fit segment, the company said. But cost inflation in meat and dairy pressured the fresh, freezer and cooler segment, leading to a low single-digit positive comparable performance. Additionally, dry grocery and beverage struggled during the quarter, with good performance from new sweet and salty snack offerings that were offset by declines in beverages and other large categories.
“Our underlying business is solid and I’m confident in the company’s long-term strategies,” said Doug McMillon, president and CEO. “We’re making progress on building a more customer-centric organization with a foundation of everyday low prices. We are investing in technology and our multi-format portfolio to bring Wal-Mart’s value proposition to many more customers around the world. We have a tremendous opportunity to win with the integration of digital and physical retail as customers have the resources from us to shop on their terms.”