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    Walmart Posts ‘Solid’ Q1 Despite Declines

    Investments in associates took bite out of operating income

    Wal-Mart Stores Inc. reported revenue for its first quarter of fiscal 2016 of $114.8 billion, a 0.1 percent dip from the year-ago period, although revenue excluding fuel sales increased 2.7 percent to $118.1 billion. Q1 diluted earnings per share from continuing operations was $1.03, within company guidance of 95 cents to $1.10, with currency adversely affecting earnings per share by about 3 cents, according to the company.

    Meanwhile, consolidated operating income fell 8.3 percent, from $6.2 billion to $5.7 billion, which the Bentonville, Ark.-based mega-retailer attributed to "impacts from currency fluctuations and investments in associate wages and training, and e-commerce."

    Nevertheless, net sales at Walmart U.S. were up 3.5 percent, from $67.9 billion last year to 70.2 billion, with U.S. comps edging up 1.1 percent, including positive traffic for the second consecutive quarter. Further bright spots were the improvement of customer experience scores across all formats, lower consumer gas prices and a 17 percent global rise in e-commerce sales.

    "We had a solid first quarter," said Doug McMillon, the company's president and CEO. "We took some important strategic steps to strengthen the foundation of our business for the future. We need to continue to get better at consistently running great stores, clubs and e-commerce everywhere we operate ... and we are."

    Walmart International posted net sales and operating income declines, of 6.6 percent and 11 percent, respectively, although net sales excluding fuel were up 3.4 percent. At Sam’s Club, net sales were down 3 percent (excluding fuel, they were up 1.2 percent), while comps without fuel inched up 0.4 percent and operating income plunged 10.9 percent (8.6 percent excluding fuel).

    "Based on our views of the global macroeconomic environment, and assuming currency exchange rates remain at current levels, we expect second-quarter fiscal 2016 earnings per share to range between $1.06 and $1.18," noted EVP and CFO Charles Holley. "Our second-quarter guidance includes the impact of approximately 4 cents per share from our previously announced investments in both U.S. associate wages and training, as well as 4 cents per share from currency."

    Walmart operates 11,489 stores under 72 banners in 27 countries, and e-commerce websites in 11 countries, employing about 2.2 million associates worldwide.

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