Walmart U.S. Q3 Comp Sales Edge Up

Wal-Mart Stores Inc. posted net sales for the third quarter ended Oct. 31 of $118.1 billion, an increase of 2.8 percent from last year. This quarter included the negative impact of about $396 million from currency exchange rate fluctuations. On a constant-currency basis, net sales would have grown 3.1 percent to $118.5 billion. Membership and other income rose 13.9 percent from the year-ago period, while total revenue came to $119 billion, an increase of about $3.3 billion, or 2.9 percent.

Consolidated net income attributable to Walmart was $3.7 billion, a 0.7 percent decline, and diluted earnings per share from continuing operations attributable to Walmart were $1.15, or 0.9 percent higher than last year's $1.14. Operating expenses were affected by an organizational restructuring in the United Kingdom and losses due to Hurricane Odile in Mexico.

Applauding the company's "solid earnings per share," President and CEO Doug McMillon observed: "The highlights for the quarter include the positive comp in Walmart U.S., including the strong performance from Neighborhood Markets, the 21 percent increase in e-commerce sales globally, and the profit performances from Sam's Club and our International business."

McMillon went on to emphasize the necessity of bolstering Walmart's sales growth and enhancing the customer experience, both in stores and online.

"We're investing in key areas of our business, including wages in our U.S. stores and in e-commerce and mobile capabilities," he noted. "We continue to see opportunities to improve our business. Being the price leader is an ongoing priority for us, and a commitment to customers. As with every year, that is even more important during the holiday season. We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we're set to deliver for customers during this time."

Divisional Success

During the 13-week period, Walmart U.S. comp traffic dipped 0.7 percent, while average ticket edged up 1.2 percent. Excluding fuel, Sam's Club comp traffic was up 0.2 percent, and average ticket increased 0.2 percent. E-commerce sales positively affected both Walmart U.S. and Sam's Club comp sales by about 20 basis points for the 13-week period.

"We had several merchandise categories driving top-line growth," said Walmart U.S. President and CEO Greg Foran. "I'm encouraged by our performance during key seasonal events. We had strong back-to-school results in apparel, home and school supplies, and we ended the quarter well by executing a strong Halloween event."

Of the division's 0.5 percent comparable-store sales rise, Foran pointed out that it "was the first positive comp in seven quarters. Our overall grocery comp, which includes food and consumables, was relatively flat. Comp sales were positively impacted by net inflation, but were negatively affected by SNAP-related headwinds."

Further, he said he was "pleased by our Neighborhood Market performance, which reported an approximately 5.5 percent comp for the quarter. We continued to see sales increases in Neighborhood Market pharmacy and strong growth in consumables as we focused on in-stock and optimizing the store with relevant offerings for the customer."

For the 13-week period ending Jan. 30, 2015, Walmart U.S. expects comps to be between flat and 1 percent. Last year, Walmart's comps declined 0.4 percent for the 14-week period ended Jan. 31, 2014.

"Although we lapped the fee increase from last year, our membership income growth remained strong, at 10.1 percent," affirmed Sam’s Club President and CEO Rosalind Brewer. "Clearly, our members responded positively to our efforts to enhance membership value."

Added Brewer: "In the third quarter, comps increased 0.4 percent, driven by relatively balanced growth in traffic and ticket. We were pleased to see a cumulative comp improvement of 90 basis points over the 39-week period, and we are working even faster to infuse newness in our business to drive membership value."

Sam's Club expects comp sales, excluding fuel, for the 13-week period, to be between flat and 2 percent. Last year, comp sales, excluding fuel, dipped 0.1 percent for the 14-week period ended Jan. 31, 2014.

"We had a solid third quarter, once again growing operating income faster than sales, and we gained share in most of our largest markets," noted Walmart International President and CEO David Cheesewright, adding that the division had taken steps "to accelerate growth in e-commerce, including the launch of new expanded assortments and services in Mexico and China. We also expanded the number of collection points for online customers in the U.K. and China."

Walmart operates 11,156 stores under 71 banners in 27 countries, and e-commerce websites in 11 countries.