Weather Knocks Walmart Q1

WalmartBENTONVILLE, Ark.-The severe winter weather of early this year proved to be a major factor in the 5 percent drop in Walmart’s net income for the first-quarter ending April 30, which totaled $3.6 billion.

In a conference call from Walmart’s management discussing the results this morning, Doug McMillon, Walmart’s president and CEO, said the “disruptive” weather had a negative impact on sales and pushed operating expenses up higher than anticipated. Total net sales did rise 0.8 percent to $114.2 billion, including a gain in U.S. net sales of 2 percent and a 0.1 percent increase in Sam’s Club sales. However, same-store sales dropped 0.1 percent for Walmart U.S., and same-club sales for Sam’s Club were down 0.5 percent. Walmart International was the one bright spot, McMillon said, with a 3.4 percent gain on a constant currency basis.

In addition, operating, selling, general and administrative expenses rose 1.9 percent in dollars and 22 basis points as a percentage of sales, to 19.3 percent. Gross margin was off six basis points to 24.1 percent. In the United States, Walmart U.S. President and CEO Bill Simon said during the call, gross margin declined due to the company’s continuing investment in lower prices.

Also in the U.S., Simon said, home saw some sales gains particularly from national brands, such as Rachael Ray, Farberware, Magic Bullet, Keurig and a broad assortment of basics. These increases were offset by the weakness, weather-related, in outdoor living, including patio furniture and live plants.

At Sam’s Club, home was one of the categories that posted a low single-digit increase in same-store sales, according to President and CEO Rosalind Brewer. Sales were softer for some new home products, which led to an increase in inventory levels.

Concluding, McMillon said Walmart is focused on rebuilding its same-store sales across all formats through sharpened merchandising and continuing leadership in price and service. Citing the company’s 12 e-commerce acquisitions over the past three years, he said Walmart will continue to be aggressive in adding capabilities to both e-commerce and mobile commerce. “As we view our business through the eyes of our customers, we’re working to deliver a relevant, personalized and seamless customer experience across all channels to further grow sales,” he said.