Walmart (NYSE:WMT)'s first quarter saw its same-store sales plunge for the first time in seven quarters, the chain reported on Thursday, even though that quarter's profit and revenue increased slightly. Executives blamed several factors—including late income-tax-refund checks and a payroll tax increase—but the most-often-cited was the weather.
"While we don't generally like talking about weather, it certainly had an impact. 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," Bill Simon, Walmart's chief U.S. executive, told financial analysts in a conference call. "However, there were bright spots. Where weather was fairly normal, in Florida for example, we had positive comps for the quarter."
U.S. same-store sales fell 1.4 percent, when Walmart in February forecast flat comparable-store sales, reported The Wall Street Journal. "When we provided flat comp guidance for the first quarter, we had expected, among other things, to recover a reasonable portion of tax refunds and had also assumed that customers would follow historical spending patterns with these funds," Simon said. "This did not materialize."
Focusing on how financially strapped many of its shoppers are—or at least perceive themselves to be, as consumer confidence is a highly psychological reality—Walmart said it had tried tweaking its SKU lineup by pushing smaller packaging and other lower-cost items.
For the quarter, Walmart reported a profit of $3.78 billion, or $1.14 a share, up from $3.74 billion, or $1.09 a share, a year earlier. The company's February forecast called for earnings of between $1.11 and $1.16 a share. Analysts expected $1.15 a share. Revenue rose 1 percent to $114.19 billion. International sales rose 2.9 percent to $33 billion, or 5.4 percent on a constant currency basis, the Journal reported. The company forecast earnings of between $1.22 and $1.27 a share for its current quarter, below the $1.29 per-share profit analysts expected.
Seeking Alpha, a financial news site, saw the numbers released also suggesting problems for Walmart Canada. "The Q1 report released by Walmart is one of the first indications of how Target's expansion into Canada is playing out for its rival," the story said. "During the earnings call, execs didn't say the T-word (and the company won't take analyst questions), but they did cite lower traffic and a decline in operating income as well as noting Wal-Mart didn't leverage expenses in" Canada.
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