Wal-Mart 1Q Sales Down 1.4 Percent But Profit Up; Mike Duke Cites 'Considerable Headwinds'

Wal-Mart Stores Inc. of Bentonville on Thursday reported a first-quarter same-store sales decline of 1.4 percent and earnings that narrowly missed analysts' expectations as its CEO cited "considerable headwinds" to top line sales.

Still, the world's largest retailer predicted a better second quarter with positive same-store sales growth.

(Click here for Wal-Mart's first-quarter earnings report.)

For the first quarter, Wal-Mart reported profit of $3.78 billion, or $1.14 per share, compared to $3.74 billion, or $1.09 per share, during the same quarter last year. Sales reached $114.2 billion, up 1.1 percent from the same quarter year.

Analysts had expected earnings per share of $1.15 and a 3 percent increase in sales to $116.4 billion. Wal-Mart said same-store sales performance was affected by a delay in income tax refund checks, "challenging weather conditions," less-than-expected grocery inflation and the payroll tax increase.

In all, same-store sales traffic was down 1.8 percent, but the average ticket total increased by 0.4 percent, the company said.

"In a quarter marked by considerable headwinds to top line sales, Walmart delivered solid [earnings per share] growth of 4.6 percent," Mike Duke, president and CEO, said in a news release. "Walmart's mission is simple and focused -- to help people save money so they can live better. When we simplify and focus our execution against this mission, it's easy for our associates to prioritize what they have to do to serve our customers."

Looking ahead, Wal-Mart predicted second-quarter earnings per share of between $1.22 to $1.27, which would be an increase from the $1.18 it reported in the second quarte last year.

Last year, Walmart delivered $1.18 in EPS for the second quarter.

Other Notes

  • Once again, Wal-Mart International posted the biggest sales increase of Wal-Mart's three divisions, with net sales up 2.9 percent to $33 billion. That figure is $33.8 billion on a constant currency basisWal-Mart said its international division gained market share "in a majority of the countries" in which it operates.
  • Meanwhile, sales at Wal-Mart's U.S. discount stores and Sam's Clubs were flat. U.S. store sales rose 0.3 percent to $66.5 billion, and Sam's Club sales rose 0.1 percent to $13.8 billion.
  • During the quarter, Wal-Mart paid $3.8 billion to shareholders through dividends and share repurchases.
  • In the second quarter, Wal-Mart expects expenses related to the investigations surrounding bribery allegations in the company's international division to be between $65 million and $75 million.
  • Duke said Wal-Mart's e-commerce sales grew more than 30 percent in the first quarter versus last year. "There is no doubt that our company is making the right investments in e-commerce to differentiate ourselves and become a better Walmart," Duke said. "And with our sales growth in the first quarter, we believe our investments are paying off."