Walmart Net Falls 21 Percent for Q4, 5.7 Percent for Fiscal Year
BENTONVILLE, Ark.-In a rare development for the world's largest retailer, Walmart posted a 21 percent drop in its fourth-quarter net income, to $4.4 billion--bringing its net income for the fiscal year ending on Jan. 31 to $16 billion, down 5.7 percent.
Fourth-quarter net sales edged up 1.4 percent to $128.8 billion, which included a same-store sales drop of 0.4 percent for Walmart U.S. stores and a decline of 0.1 percent (both with and without gasoline sales) in same-club sales at Sam's Club. For the fiscal year, net sales were $473.1 billion, up 1.6 percent. Fiscal-year same-store sales were flat at Walmart U.S. and Sam's Club (factoring out gas), and up 0.2 percent at Sam's Club factoring in gas sales.
In a prerecorded call about the results, Doug McMillon, Walmart Stores Inc.'s president and CEO, said the fourth-quarter results owed to the fact that "like with many other retailers, the weather got the better of us." McMillon was referring to the severe weather that afflicted much of the nation through the fourth quarter, especially in December and January. It was McMillon's first statement on Walmart's financials since assuming his post on Feb. 1.
Gross margin in the quarter was reduced by 34 basis points to 24.5 percent. Operating, selling, general and administrative expenses increased 5.5 percent in dollars and 70 basis points as a percentage of sales, to 18.8 percent.
Looking ahead to this fiscal year, McMillon said Walmart's priority initiatives would include improving same-store sales, especially at the U.S. stores; continuing to focus on the company's expense structure; and intensifying its focus on its customers and the way they shop. Referring to Walmart founder Sam Walton's philosophy, he said, "We need to listen to our customers around the world as if they are our boss, because they are," he said. "Our focus is to invest in capabilities that will connect us with customers on their terms."
Among these added investments will be in the company's e-commerce platforms and in ramping up the number of small-format stores, the Neighborhood Markets and Walmart Express formats, in the United States (see separate story). Regarding the former, McMillon said, "We have invested in improving customer experience, and we will increase our e-commerce investment as opportunities present themselves."