BENTONVILLE, Ark. -- Wal-Mart Stores last week said sales of food products continue to help pace strong sales and earnings growth at the company, based here.
In a prerecorded conference call discussing its earnings for the second quarter, which ended July 31, Wal-Mart said sales of food products grew 28% in the first half of its fiscal year compared with the same period a year ago. Comparable-store sales of food products "remain in double digits," the company said.
In a report issued last week by Retail Forward, Columbus, Ohio, the consulting and research firm projected that food sales at Wal-Mart supercenters would account for about one-third of the national spending increase on food between now and 2006. Retail Forward estimated that the company would have 2000 supercenters open by that time, up from 1,140 as of July.
Wal-Mart also said food sales were pacing strong gains outside the United States. In Canada, food was one of the strongest categories, helping boost that country's sales by 20% in the quarter. Strong sales at the company's Asda retail chain in the United Kingdom were fueled in part by comparable-store food sales that rose in the high single digits, outpacing the overall market growth, the company said.
Overall, Wal-Mart posted second-quarter net income of $2.04 billion, up 25.6% over last year's results, on a 13.1% increase in sales, to $59.7 billion. It marked the first time that the company tallied profits of more than $2 billion in a non-holiday quarter, the company said.
Comparable-store sales were up 6.4% for the quarter and 7.1% for the year, and the company projected third-quarter comparable-store sales growth of 4% to 6%. That represented a slowdown from previous projections of 5% to 7% comparable-store sales growth. The company said its sales slowed somewhat in the latter part of July, during what it described as a transitional season between summer sales and the back-to-school merchandising period.
"Slower sales do not necessarily represent a trend," said Lee Scott, president and chief executive officer.
Stronger sales gains at the company's discount-store and supercenter division were mitigated by weaker sales growth at Sam's Club, the company said.
During the quarter the company opened four food distribution centers, 14 discount stores, 43 supercenters (25 of which were relocations or expansions), three Neighborhood Markets and nine Sam's Clubs (five of which were relocations or expansions).
Since the quarter ended, the company also debuted its Neighborhood Market format in the Memphis, Tenn., market. The 40,000-square-foot food-and-drug combo store, located in Horn Lake, Miss., is the first of three planned for the Memphis area this year, according to local reports. The others will be in Memphis and in Bartlett, Tenn.