Wal-Mart sales increase, visibility reduced

BENTONVILLE, Ark. Same-store sales at Wal-Mart’s U.S. stores increased 2.1% in January, narrowly topping the company’s guidance that had been reduced the prior month to a range of flat to 2%.

“We are pleased that we exceeded our expectations for comp store sales in January,” said Wal-Mart vice chairman Eduardo Castro-Wright. “Our sales results were driven by a continuation of gains in customer traffic. Clearly, our stores are performing very well, as we continue to emphasize customer service and innovative merchandising.”

The company said sales were strong in grocery and health and wellness and that it met or exceeded planned results in home, entertainment and hardlines.

“Our 52-week comp growth is three times higher this year than it was last year. Our January results contributed to a strong performance for the fourth quarter and the year,” Castro-Wright said.

Total sales for the U.S. stores division increased 6.1% to $17.9 billion while Sam’s Club sales declined 0.8% to $3.1 billion and international sales slid 7.3% to $6.6 billion due to the impact of a stronger dollar. Without the negative effect of currency fluctuations, international sales advanced 11% in January. Sam’s Clubs same-store sales, excluding fuel increased 2.4%.

Aside from the numbers themselves, the other revelation contained in the January sales release is that Wal-Mart will shift to providing a quarterly rather than monthly same-store sales forecast effective immediately.

“We believe this guidance is a more appropriate measure for our investors, particularly in volatile times when consumer swings re more difficult to predict,” said CFO Tom Schoewe. “This is more consistent with the long-term view we take on our business.”

The rational for the move is similar to that offered several years ago when Wal-Mart suspended the practice of providing the financial community with a weekly sales call. Wal-Mart will continue to report monthly results, it just won’t provide an estimate of same store sales for the coming month.

“Rather than providing monthly guidance 12 times a year, we will provide 13-week guidance four times a year, based on the (National Retail Federation) retail calendar,” Schoewe said.

Accordingly, he noted that the company expects first quarter same-store sales to be in a range of 1% to 3%.

“Because our value proposition is so relevant to our customers and members, we believe our underlying business around the world will remain very healthy,” Schoewe said.