Sales slide continues at Walmart as profit goal met
Weak sales trends continued at Walmart’s U.S. stores division during the third quarter as same-store sales declined 1.3%; however the company managed to meet analysts’ third quarter earnings per share target of 90 cents.
Inclusion of a five cents a share tax benefit resulted in third quarter earnings per share of 95 cents and caused the company to raise the full-year profit forecast to a range of $4.08 to $4.12 from $3.95 to $4.05.
Walmart president and CEO Mike Duke said the company performed well in the third quarter and delivered solid earnings growth for shareholders.
“Our company now has delivered four consecutive quarter of operating expense leverage, and we continue to grow operating income faster than sales,” Duke said.
Operating income during the quarter grew 3.1% to $5.6 billion while sales increased 2.6% to slightly more than $101 billion.
Sales at the U.S. stores division were essentially flat at $62.2 billion, while operating profits increased 1.9% to $4.4 billion. The 1.3% comp decline at the U.S. division marked the sixth consecutive quarter of declining comps and Walmart left open the possibility of a fourth-quarter decline by offering a guidance range of negative 1% to plus 2%.
Internationally, sales on a constant currency basis increased 7.9% to $26.6 billion and operating profits increased 12.4% to $1.2 billion. Including favorable currency benefits, sales increased 9.3% to $26.9 billion and profit increased 13.5% to $1.223 billion. Sales at Sam’s Club increased 2.7% to $12.1 billion, while operating profits declined 7.1% to $367 million, and same-store sales, excluding the favorable impact of rising fuel prices, increased 2.4%.
“Our international business continues to deliver impressive results, with sales up more than nine percent,” Duke said. “We are also pleased with the ongoing sales momentum at Sam’s Club and expect that momentum to continue in the fourth quarter. Our Walmart U.S. business is on the right track with third quarter comps sales with guidance and operating income growing faster than sales.”