WMT: earnings exceed guidance, U.S. outlook weak
Walmart overcame a tepid sales performance from its U.S. stores division to generate record first-quarter financial results, which saw the company beat analysts’ consensus earnings estimates. Total sales increased 6% to $99 billion, including a $2.5 billion beneficial effect of currency exchange, while profits increased 10% to $3.3 billion.
“Our teams around the world delivered on our commitment to the productivity loop,” said Mike Duke, Walmart president and CEO. “We leveraged operating expenses for the second consecutive quarter and improved the profitability of our business.”
Earnings per share increased to 88 cents from 77 cents the prior year. The earnings per share performance exceeded the company’s guidance and analysts’ consensus estimate by three cents. The company’s outlook for the second quarter calls for earnings per share in a range from 93 cents to 98 cents compared with an 88-cent-per-share profit last year.
“Our guidance is based on our view of the global business. This includes the continuing challenging sale environment in the United States,” said CFO Tom Schoewe.
The forecast for second-quarter same-store sales at the U.S. stores division ranges from a 2% decline to a 1% increase compared with a 1.5% decline last year. Despite this year’s first-quarter comps decline, the U.S. stores division was the biggest contributor to the company’s profit performance, with operating income that grew 5.6% to $4.6 billion. The improved profitability occurred despite a 1.4% decline in same-store sales, as the company said it experienced soft customer traffic that was only partially offset by an increase in the average transaction size. Total sales for the U.S. stores division increased 1.1% to $62.3 billion.
Walmart international grew sales 21.4% to $25 billion, with currency exchange rate fluctuations benefitting sales by $2.5 billion. Operating profits increased nearly 29% to slightly more than $1 billion.
Sam’s Club’s sales increased 4.6% to $11.7 billion, while operating profit grew nearly 10% to $429 million. Same-store sales increased 0.7%, excluding the favorable impact of fuel price, which were higher during the first quarter of this year.