Wal-Mart Sales Rise as Retailer Dodges Industry Malaise -Update
August 17 2017 - 8:35AM
Dow Jones News
By Austen Hufford
Wal-Mart Stores Inc. said sales rose in its latest quarter
Thursday, showing that the world's largest retailer continues to
avoid the malaise that has hit some competitors, but it came at the
expense of profits.
Wal-Mart saw same-store sales continue to rise but also faced
margin pressures as it worked to grow its online business and cut
prices. Wal-Mart's U.S. second-quarter same-store sales rose 1.8%,
the 12th straight quarterly increase. Foot traffic rose 1.3% as
Wal-Mart's efforts to lower some prices and improve stores
continued to pay off. However, U.S. profit margins fell and
operating expenses rose, as the retailer continued making
investments to compete with online retailers and discounters.
The company also released profit expectations that were below
what analysts were expecting. For the current quarter, Wal-Mart
forecast earnings per share of 90 cents to 98 cents, compared with
the 98 cents that Wall Street was looking for.
The same-store sales increase was in line with Wal-Mart's
expectations. The retailer has already done some of the hard work
that rivals like Target Corp. are now undertaking, such as
investing in store improvements and digital initiatives. On
Wednesday, Target's efforts to cut prices and improve its digital
operations showed signs of success, as store sales rose for the
first time in a year and the rival retailer raised its profit
forecast.
"Our customers are responding to the improvements in stores and
online," Wal-Mart Chief Executive Doug McMillon said in a
statement.
Shares in Wal-Mart fell 2.1% premarket to $79.26. They have
risen 17% this year through Wednesday's close.
During the quarter, U.S. online sales surged 60%. The retail
giant has been investing in e-commerce by purchasing online
retailer Jet.com in September and by buying a number of smaller
sites like ModCloth, Moosejaw and ShoeBuy. Jet.com founder Marc
Lore took the helm of Wal-Mart's U.S. e-commerce operations last
Sept., pushing the company to move to two-day shipping on more
products and offer a discount to pick up some online orders in
stores.
In all for the period, Wal-Mart earned $2.9 billion, or 96 cents
a share, compared with $3.77 billion, or $1.21 a share, a year ago.
On an adjusted basis, which excludes certain debt and
asset-sale-related charges, earnings were $1.08 a share, up from
$1.07 a share a year prior. Revenue grew 2.1% to $123.36 billion.
Analysts, polled by Thomson Reuters, were looking for earnings of
$1.07 a share on $122.84 billion in revenue.
Wal-Mart said operating, selling, general and administrative
expenses grew 2.6% during the quarter as the cost of sales grew
2.3%.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
August 17, 2017 08:20 ET (12:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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