‘Considerable Headwinds’ Blunt Wal-Mart Q1 Profits

Wal-Mart’s overall revenues and net income grew by about one percent with the retail giant blaming weather, low inflation, and sluggish consumer spending for the small gains.

The Bentonville-based retailer reported first quarter net income of $3.784 billion on revenue of $114.2 billion. One year ago, Wal-Mart posted net income of $3.742 billion on sales of $112.26 billion.

U.S. same-store sales actually declined 1.2% although Sam’s Club revenue was up 0.2%.

“In a quarter marked by considerable headwinds to top line sales, Walmart delivered solid EPS [earnings per share] growth of 4.6 percent,” said Mike Duke, Wal-Mart Stores, Inc. president and CEO.

Duke noted that e-commerce sales grew more than 30% in the first quarter versus last year. Wal-Mart has made significant pushes to boost its e-commerce offerings as consumers are altering shopping habits to more online purchases.

“There is no doubt that our company is making the right investments in e-commerce to differentiate ourselves and become a better Walmart,” said Duke. “And with our sales growth in the first quarter, we believe our investments are paying off.”

“I’m confident about our long-term strategy and the direction Walmart is headed,” Duke added. “Our expectations about our U.S. businesses’ performance, coupled with more discipline in International, will allow us to improve our performance throughout the year.”

International sales, which in frequent years have fueled Wal-Mart revenue growth with double-digit gains, cooled to just a 2.9% increase from the previous year’s first quarter.

Despite what will likely be viewed as a sluggish report by investors, Wal-Mart’s management team said they were pleased with elements of improvement in U.S. market share and they hinted that the second quarter was off to a better start than the first.

“Despite comps being lower than expected, we continued to generate market share gains,” said Bill Simon, Walmart U.S. president and CEO. “According to The Nielsen Company, we gained 20 basis points of market share in the measured category of ‘food, consumables and health & wellness/OTC’ during the 13-weeks ended Apr. 27, 2013.”

“The second quarter is off to a good start, with positive comps,” Simon said. “We continue to believe in the strength of our strategic plan to deliver a broad assortment with EDLP. We also continue to monitor the impact of the 2 percent payroll tax increase, along with other factors, like fuel prices.”

During the first quarter, Wal-Mart repurchased approximately 30 million shares for $2.2 billion. In addition, the company paid $1.6 billion in dividends. As previously announced, the company increased its dividend by 18 percent for fiscal 2014 to $1.88 per share.