Wal-Mart U.S. Comps Down

MARK HAMSTRA

BENTONVILLE, Ark. — Wal-Mart Stores here last week said same-store sales in the U.S. fell 1.1% in the first quarter, excluding fuel, although profits overall grew on strong international growth and other factors.

“We recognize we still have work to do, and comp sales growth remains the greatest priority for me and the entire Walmart U.S. team,” said Mike Duke, president and chief executive officer, Wal-Mart, in a prepared statement. “The good news is that the plan [Walmart U.S. President and CEO] Bill Simon and his team are executing is gaining traction.”

The company said it launched its new “Ad Match” marketing campaign in early April, “and the customer response has been terrific,” said Simon, speaking in a pre-recorded conference call discussing results.

He noted that grocery categories recorded “low single-digit positive comps for the quarter.”

“Our food business is delivering positive sales growth that's on par with the top competitors, and we're seeing a recovery in our consumables business,” he said. “Customers are responding positively as we expand our merchandise assortment, adding back items across all categories.”

The company began ramping assortment back up in dry grocery categories in last year's third quarter, after admitting that it had eliminated too many customer favorites in an over-zealous attempt at SKU rationalization.

“We're pleased with the comp sales improvement to date in this area, which is up 150 basis points from the fourth quarter,” Simon said. “I believe that sales improvement supports our belief that we're on the right track. As we add more SKUs throughout all categories, we expect to gain further traction, improving both traffic and ticket.”

Simon also implied that the company was passing along some price increases, reporting a “small tailwind” from inflation in the quarter. (See Retailers Pass Along Inflation.)

For the three months that ended April 30, Wal-Mart reported consolidated net income of $3.55 billion, up 3.1% over year-ago results, on a 4.4% increase in revenues, to $104.2 billion.

In the U.S., Wal-Mart said operating income rose 0.8%, to $4.65 billion, on a 0.6% increase in sales, to $62.7 billion. International sales rose 11.5%, to $27.9 billion, and Sam's Club posted sales of $12.8 billion, a 9.4% increase.