Wal-Mart Cites Weaker Inflation

BENTONVILLE, Ark. — Wal-Mart Stores here said earnings were flat and sales were down for the first quarter, with a slowdown in food inflation having a modest impact on U.S. grocery sales.

“While we believe our grocery business continues to outperform leading competitors and is benefiting from increased distribution of government assistance programs, grocery comp sales are being modestly impacted by a slowdown in inflation,” Eduardo Castro-Wright, vice chairman, said during a pre-recorded earnings call. “As consumers have more disposable income as a result of moderating food inflation, we have seen them spend those savings on more discretionary categories.”

He did not cite any specific numbers.

The company reported that net income for the 13-week quarter, which ended April 30, was $3 billion, identical to the results a year ago, while sales fell 0.6% to $93.5 billion. Comparable-store sales, excluding fuel, rose 3.7%.

Sales in the Wal-Mart U.S. division rose 3.8% to $61.2 billion, with comp sales, excluding fuel, up 3.6%. Sales at Sam's Club fell 1.4% to $11 billion, with comps, excluding fuel, up 4.2%. International sales dropped 11.1% to $21.3 billion — which the company said was due to negative currency translations to the U.S. dollar amounting to $4.8 billion.

On a constant currency basis, the company said international sales would have been up 9.1% to $26.1 billion and overall sales would have been up 4.5% to approximately $98.3 billion.

Mike Duke, president and chief executive officer, said Wal-Mart feels fiscal 2010 is off to a “very good start,” given the economy.

“When economic conditions improve, we believe customers who shop Wal-Mart today will stay with us because of the business improvements we're making by reducing costs, sharpening merchandising and updating stores.”

Castro-Wright said declining gas prices are driving store traffic, with a large part of the increase coming from new customers.

Q1 RESULTS