BENTONVILLE, Ark. — Wal-Mart Stores said Thursday that smaller and slower-arriving tax returns and unseasonable weather contributed to sales that were below the retailer’s modest ambitions in the fiscal first quarter.
In the U.S., net sales increased by 0.3% to $66.6 billion while comparable-store sales, excluding fuel, decreased by 1.2%.
Wal-Mart in its last quarterly update said it expected flat comps, citing a delay in tax returns that typically boosted quarterly sales. However, Bill Simon, chief executive officer of Walmart U.S., in a conference call Thursday said spending as returns came in did not materialize as anticipated, noting that tax returns were smaller overall. Simon also said payroll taxes, reduced inflation and poor spring weather negatively affected sales.
“While we don’t generally like talking about the weather, it certainly had an impact,” Simon said. “Weather-sensitive departments like outdoor living, sporting goods, air movement and apparel were challenged, particularly from mid-March to mid-April, when weather was much less favorable than last year.”
Wal-Mart estimated those factors affected comps by around 2%.
Simon said grocery generated a low single-digit comp on flat inflation “and I’m particularly excited about momentum in the produce area,” which saw mid-single digit comp increases in the quarter. Simon said Wal-Mart also made gains in consumables — particularly those items in which Wal-Mart invested in prices during the quarter.
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Wal-Mart’s Neighborhood Market grocery stores delivered low single-digit comps driven by gains in traffic, Simon added.
Sam’s Club comps improved 0.1% in the quarter. That division this week said it would raise its annual membership fees for the first time since 2006, with base memberships increasing by $5 or $10 to $45 per month. Rosalind Brewer, CEO of Sam’s Club, said the company did not expect a significant impact to renewal rates as a result of the increase. Brewer said Sam’s Club stores this year would introduce more regional variety and local brands to display “a new level of visual excitement.”
Comps in Canada declined by 1.3%, with store traffic down 2% despite a 6.1% increase in net sales due to new store growth. Operating income in Canada was down as the division failed to leverage its expenses amid soft sales impacted by colder weather and higher household debt levels in Canada, said Doug McMillon, CEO of Wal-Mart International.
Simon said he estimated comps would be flat to 2% in the second quarter, saying sales in May were off to a good start.
Companywide sales of $113.4 billion increased by 1% while net earnings of $3.8 billion increased by 1.1%. Earnings per share were slightly below analyst estimates.
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