Walmart Q2 Net Up 1.3 Percent on Weak Sales
BENTONVILLE, Ark.-In a quarter in which its checkouts left something to be desired, Walmart posted net income of $4.1 billion, up a slight 1.4 percent from last year's second quarter.
Net sales in the quarter, which ended on July 31, rose 2.4 percent to $116.2 billion. At Walmart U.S. stores, sales were up 2.1 percent, including a 0.3 percent decline in same-store sales. Bill Simon, president and CEO at Walmart U.S., said the comp numbers reflected the increase earlier this year in payroll taxes. Simon also said, however, that the U.S. operation had positive same-store numbers for its home and apparel departments. "I'm encouraged by the improvement in traffic and comp sales as we progressed through the quarter," Simon said.
Sam's Club reported a net sales pickup of 2.6 percent, including a same-store sales increase of 1.7 percent both with and without gasoline sales. Rosalind Brewer, president and CEO of Sam's Club, said, "Sales were up, traffic continued to improve and comp sales were within our guidance."
Walmart International posted a 2.9 percent gain in net sales. Doug McMillon, president and CEO of Walmart International, said, "Consumers in both mature and emerging markets curbed their spending during the second quarter, and this led to softer than expected sales."
Gross margin in the quarter rose 16 basis points to 25.2 percent. Operating expenses increased 3.4 percent in dollars and 21 basis points as a percentage of sales, to 19.4 percent.
As a result of this quarter, Walmart revised its expectations for full fiscal-year sales growth to from 2 to 3 percent, down from the previous projection of from 5 to 6 percent. For the third quarter, Walmart U.S. same-store sales are expected to be relatively flat, while for Sam's Club, same-store sales should be in the range of from flat to 2 percent higher.
Mike Duke, Walmart's president and CEO, said, "I'm encouraged by our position to execute in the second half of the year, particularly with the steps we're taking to improve performance. There are areas of our business where we can do a better job, and we will."