BENTONVILLE, Ark. - Wal-Mart Stores here said last week it expects higher gasoline and utility prices to pressure second-quarter results.
Speaking with analysts in a conference call, Thomas W. Schoewe, executive vice president and chief financial officer, said rising fuel costs affected comparable-store sales late in the first quarter that ended April 30, noting that customer traffic declined slightly "toward the end of the quarter, [when] we clearly saw the impact of rising fuel costs on our customers."
Reflecting the company's ongoing concerns over the impact of fuel costs, Schoewe said Wal-Mart expects earnings per share for the second quarter to fall between 70 cents and 74 cents. The company had not previously issued second-quarter guidance, but because first-quarter results were a penny higher than the company had forecast while year-end projections - of $2.88-$2.95 per share - stayed the same, analysts said results for the second, third and fourth quarters would essentially be slightly lower.
Net income for the quarter rose 6.3% to $2.6 billion, while sales increased 12.3% to $79.6 billion and comparable store sales were up 3.8%. Schoewe said the company expects second-quarter comps to rise 2%-4%.
In the Wal-Mart Stores segment, operating income jumped 20.4% to $4 billion, while sales rose 10.2% to $52.5 billion. Food comps were up "in the mid-single digits," with food sales at supercenters growing more than 12.5%, Schoewe said.
Carol Schumacher, vice president, investor relations, said the company opened 14 new supercenters during the first quarter and relocated or expanded 28 others, for a total of 2,022 locations. It also added four new Neighborhood Markets during the quarter for a total of 104.
At Sam's Clubs, operating profits in the quarter increased 8.1% to $319 million, while sales climbed 6.8% to $9.8 billion and comps rose 4.3%. In the company's international division, operating profits rose 6.9% to $713 million, and sales increased 22.9% to $17.3 billion.
Michael T. Duke, vice chairman, Wal-Mart International, said the company plans to open its first three supercenters in Canada this year. He said the company is training Canadian store managers outside of Canada to operate the supercenters.
In other comments, Duke also said Wal-Mart opened its second Asda Essentials store in the United Kingdom last week, following the opening of the first store there in March. Asda Essentials offers private-label consumables, including food, at discount prices, he explained.