Wal-Mart Sees Positive U.S. Comp Sales As Net Income Slips

Wal-Mart posted net income of $3.711 billion on revenue of $119 billion in its third quarter, a small decline in profitability from a year ago.

In its 2013 third quarter, the Bentonville-based retail giant recorded profits of $3.738 billion on revenue of $115.69 billion. On a positive note, Wal-Mart had its first quarter in nearly two years of increased comp sales at its U.S. stores. Same-store sales rose 0.5% for the first time in seven quarters.

Company officials chalked the small same-store sales good news to a strong back-to-school season, Halloween sales, and key merchandise categories that drove top-line growth.

Other key financial highlights from the quarter included:

• Comp sales for the Neighborhood Market format increased approximately 5.5%.
• Walmart U.S. net sales increased $2.3 billion, or 3.4%, to approximately $70 billion.
• Walmart International grew net sales 1.7% to $33.7 billion.
• Sam’s Club comp sales, without fuel, increased 0.4% for the 13-week period ended Oct. 31.
• Sam’s Club increased membership income 10.1% for the quarter, and grew operating income more than twice the rate of sales growth.
• E-commerce sales globally increased approximately 21% on a constant currency basis.

“Walmart reported solid earnings per share of $1.15 in the third quarter,” said Doug McMillon, Wal-Mart Stores president and CEO. “The highlights for the quarter include the positive comp in Walmart U.S., including the strong performance from Neighborhood Markets, the 21 percent increase in e-commerce sales globally and the profit performances from Sam’s Club and our International business.”

McMillon stressed the need to strengthen Walmart’s sales growth and improve the customer experience, both in stores and online, especially as the retail giant heads into the all-important holiday sales season.

“We’re investing in key areas of our business, including wages in our U.S. stores and in e-commerce and mobile capabilities. We continue to see opportunities to improve our business,” he added. “Being the price leader is an ongoing priority for us and a commitment to customers. As with every year, that is even more important during the holiday season. We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we’re set to deliver for customers during this time.”

The company issued fourth quarter per share earnings guidance of between $1.46 and $1.56, and full year per share guidance of $4.90 and $5.15. Prior to the earnings report, the consensus estimate among analysts who cover the company was for fourth quarter earnings at $1.57 per share, and $4.99 per share for the full year.

Wal-Mart shares (NYSE: WMT) closed trading Wednesday at $79.20, up 19 cents. Thursday’s pre-market activity was pushing the shares to open trading at around $81 per share. During the past 52 weeks, the share price has ranged from an $81.37 high to a $72.27 low.