Walmart Q1 Sales ‘More Difficult’ Than Expected, Chain Says

Walmart’s fiscal Q1 was a “more difficult quarter than expected,” said CEO Mike Duke on the company’s earnings webcast Thursday. Walmart reported a comp sales decline of 1.4 percent from Jan. 26-April 26 versus the year-ago quarter due in part to a delay in income tax refund checks, “challenging weather conditions” and the payroll tax increase, Duke said.

The entertainment unit, including toys, posted a mid-single-digit negative comp, according to Bill Simon, CEO of Walmart U.S., who said discretionary spending impacted entertainment and created “even more significant headwinds for higher ticket electronics like TVs.” But Walmart’s wireless business showed a double-digit positive comp on sales of the Straight Talk prepaid wireless plans, he said. Walmart continued “to make great strides” in wireless due to selection and “affordable solutions,” and it was the top retailer in handset unit share for the three months ended March 31, he said, citing NPD figures.

Sam’s Club stores also posted a single-digit negative comp on “pressures in office electronics and media,” according to Sam’s Club CEO Rosalind Brewer. Those declines were partially offset by double-digit comp and unit growth in wireless, she said.

In its mobile commerce and online business, Walmart expanded its Scan & Go mobile self-checkout option to more than 200 stores in 14 regions, Simon said, adding that the majority of Scan & Go customers are repeat users. Walmart will soon begin testing digital coupons and gift cards with Scan & Go, he said, and will begin testing self-service lockers in select stores this summer to reduce wait time for Site to Store orders. Walmart is also expanding its Ship from Store program, which leverages the company’s physical footprint and fulfillment network, Simon said. Under the program, Walmart is shipping certain orders from 35 stores directly to customers’ homes and will expand the program “strategically” through the rest of the year, he said.

Walmart added 38 new brick-and-mortar stores and converted eight operations to Supercenters in the U.S. through relocation or expansion, Simon said. The 46 locations added 3.6 million square feet and included one discount store, 24 Supercenters and 21 small-format operations, primarily Neighborhood Market stores, he said. Walmart’s consolidated sales grew $1.2 billion, or 1 percent, to $113.4 billion in the quarter, it said. In the U.S., Walmart operating income grew 5.9 percent to $5.33 billion in the quarter, and Sam’s Club operating income grew 7.4 percent to $525 million, while Walmart International operating income dropped 4.7 percent to $1.25 billion, the company said. Walmart shares closed down 1.7 percent to $78.47.

Walmart is using new strategies to build store traffic, including a promotion that goes into effect this week. The retailer announced last month it had partnered with Warner Bros. on an exclusive deal that’s aimed at bringing customers to stores for movie tickets to the upcoming Man of Steel. Tickets to the screening will go on sale in roughly 3,700 Walmart stores starting at 8 a.m. on Saturday, Walmart said. Customers can buy up to four tickets per visit, and can choose either 2D or 3D viewings, where applicable, the retailer said. The screening will take place in selected local theaters nationwide at 7 p.m. on June 13, the day before the movie’s official release date in theaters, it said.