Profits up, comps down at Walmart

Same-stores sales at Walmart turned negative during the third quarter, but profits of 84 cents a share handily exceeded the company’s guidance and analysts’ estimates, thanks to expense control and inventory management.

Although the profit figure exceeded the company’s guidance of 78 cents to 82 cents, and was a 9% increase from the prior year’s earnings per share of 77 cents, top-line growth proved challenging largely due to food price deflation and the fact that same-store sales at the company’s U.S. stores declined 0.5%.

That was below the company’s expectation, but continued increase in customer traffic and market share gains, especially in grocery and health and wellness, underscores the strength of the underlying business, according to the company.

“Increased productivity and improved inventory management led to a better customer experience and contributed to our strong financial performance,” said Walmart president and CEO Mike Duke. “The sales environment continued to be difficult this quarter, but customer traffic is up throughout the company. We gained market share, especially in the United State, the United Kingdom and Mexcio, as customers around the globe continued to count on Walmart for quality and low prices.”

Total company sales, including Sam’s Club and the international operations, increased 1.1% to $98.6 billion, but excluding the negative effect of foreign exchange rates would have made them 3.8% higher at roughly $101.3 billion.

Looking ahead to the fourth quarter, Walmart offered a tepid sales forecast with comps expected to be in a range of plus or minus 1%. Continued leverage of expenses and supply chain management are, however, expected to produce continued profit growth during the fourth quarter and result in the company slightly increasing its full year range of earnings guidance to $3.57 to $3.61 from a range of $3.50 to $3.60.

“We continue to operate in a very challenging economy and remain dedicated to providing the lowest prices to our customers around the world,” said CFO Tom Schoewe. “We believe Walmart is positioned better than any other retailer to succeed with customers this holiday season.”