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Winter woes contribute to Walmart’s weak Q1 results

BY Mike Troy

BENTONVILLE, Ark. — Walmart continues to envision flat same-store sales at its U.S. stores after reporting weaker than expected profits on weak U.S. sales results that were negatively affected by a winter that wouldn’t end.

Net income declined 5% to $3.6 billion and earnings per share of $1.10 were five cents below analysts’ expectations and below the company’s prior year first-quarter profit of $1.14. Even excluding the effects of the severe winter, estimated by Walmart to be three cents a share, the company’s profit figure would have been below the prior year amount, although with the guidance range of $1.10 to $1.20.

Sales at Walmart’s U.S. stores increased 2% to $67.9 billion although same-store sales declined 0.1% after declining 1.4% during the first quarter the prior year. Sales at Sam’s Club, including fuel, were essentially flat at $13.9 billion, but increased 0.5% if fuel sales are excluded. Same-store sales declined 0.5%, excluding fuel, after a prior year drop of 0.2%.

“Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected," said Doug McMillon, Wal-Mart Stores, Inc. president and CEO. "Walmart’s underlying business is solid, and I’m confident in our long-term strategies. We’ll continue to invest in price and enhance our service to improve sales. We remain focused on growth across the enterprise, especially in small formats like Neighborhood Market in the U.S."

The company highlighted what it called significant investments in e-commerce initiatives, including its global technology platform, and said sales worldwide rose approximately 27% and noted that e-commerce had a 0.3% favorable impact on same store sales at U.S. stores.

"We have the opportunity to create transformative growth through stronger e-commerce capabilities," McMillon said. "Our investments are focused on improving customer experience and fulfillment capacity. We’re working to deliver a relevant, personalized and seamless customer experience across all channels to further grow sales."

Total company sales for the quarter ended April 30 increased 0.8% to $114.2 billion, but would have grown 2.1% if a $1.6 billion negative impact of currency exchange rates were excluded from the calculation.

Walmart had set a low bar for itself heading into the quarter which began in early February as severe winter weather was hitting the nation at the time the company provided guidance calling for flat same store sales at U.S. stores and clubs. Although weather conditions have improved nationwide, the retailer continues to forecast relatively flat comps while touting strong fundamentals of its business.

"A number of severe winter storms negatively impacted us during the quarter. A solid start to spring and a strong Easter drove positive comps in the back half of the quarter,” said Bill Simon, Walmart U.S. president and CEO. "Neighborhood Markets continued to deliver strong results. Comp sales increased approximately 5% for the quarter, and net sales have nearly doubled versus two years ago. We saw strength across food and health and wellness, and we’re particularly pleased with our overall traffic trend. April marked the 46th consecutive month of positive comps for Neighborhood Market.”

Like McMillon, Simon touted Walmart’s solid fundamentals and said, “our recently launched initiatives, including the Walmart 2 Walmart money transfer service and the video game trade-in program, along with continued price investment, will resonate with the customer."

As for Sam’s Club, president and CEO Rosalind Brewer, highlighted several noteworthy developments such as 10.9% growth in membership income driven by a fee increase.

"We expect that the combination of the national rollout of Sam’s Club Cash Rewards and the launch of our new industry leading cash back credit card will enhance member value to drive stronger membership growth,” Brewer said. “These programs, along with our improvements in merchandise, are expected to drive better comp sales in the future.”

 

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CVS Caremark gets OK to open MinuteClinic locations in Rhode Island

BY Antoinette Alexander

WOONSOCKET, R.I. — Health officials have given CVS Caremark the green light to open seven MinuteClinic locations in Rhode Island with imposed conditions, the pharmacy retailer has confirmed.

“We are pleased that the Rhode Island Department of Health has approved the application of MinuteClinic to open seven retail clinics in Rhode Island. We are now in the process of reviewing the report and the conditions related to the approval,” CVS Caremark spokesperson Carolyn Castel said in a statement sent to Drug Store News.

While approving plans to open retail clinics in the state, health director Michael Fine did impose 22 conditions intended to address physician concerns that such clinics could fragment care and interfere with the physician-patient relationship, according to a report by the Providence Journal. However, Fine did note that there is no evidence of such damage elsewhere in the country, and he acknowledged that demand demonstrates a need by patients.

Most of the conditions simply formalize measures that MinuteClinic had already promised to adopt, such as referring patients who don’t have their own doctors to nearby primary care doctors who are accepting patients and providing reports on any treatments to a patient’s doctor. However, according to the Providence Journal reports that he did add a few new requirements, including —

  • For each MinuteClinic that cannot locate a primary care provider within a five-mile radius, CVS will pay $25,000 to the Rhode Island Physician’s Loan Replacement Fund, to help boost the availability of primary care doctors;
  • Increased uncompensated care. MinuteClinic had agreed to provide free care to patients of the Rhode Island Free Clinic. Fine expanded that to include free care for all patients who can document that they qualify for charity care at a hospital, community health center, community mental health center or free clinic.

 

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sefortenberry says:
May-20-2014 09:35 pm

Wow! I wish the local Mercedes dealership (not within a five-mile radius) would pay me $25,000 since I bought a Ford (within a five-mile radius). Free care . . . there is no free care. Someone, somewhere pays.

R.HAMMERLE says:
May-16-2014 08:01 am

Imagine a state imposing similar requirements on any other new business! 1. If you can't find a competitor within a five mile radius and refer your customers to them, you get to pay $ 25,000 to help the state recruit new competitors. 2. If other businesses have customers who can't pay their bills, you agree to take them.

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Suit to block approval of generic Copaxone dismissed

BY Michael Johnsen

WASHINGTON — Teva Pharmaceutical on Wednesday was denied in its suit to block approval of Mylan’s and Sandoz’ generic Copaxone, a multiple sclerosis drug, 10 days before the patent on the medication expires, according to a Bloomberg report published Thursday morning

The court ruled that the suit had been filed prematurely and could be refiled at a later date, according to the report. 

According to the report, Teva is appealing a 2013 dismissal of Teva’s suits against Mylan and Sandoz for infringing patents covering Copaxone. That case is pending before the Supreme Court.

 

 

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