Wal­mart con­tin­ues run of sales growth, raises fore­casts

The Standard (St. Catharines) - - Business - SARAH NASSAUER

Wal­mart Inc. said sales rose in the sec­ond quar­ter and it raised its profit fore­casts for the year, ex­tend­ing the re­tail gi­ant’s mul­ti­year streak of growth as it takes mar­ket share from strug­gling com­peti­tors and ex­pands on­line.

Sales at U.S. stores and web­sites op­er­at­ing at least 12 months grew 2.8%, due to strong gro­cery sales, on­line and off, and slightly more shop­pers vis­it­ing stores and web­sites. U.S. e-com­merce sales rose 37%.

“We’re gain­ing mar­ket share. We’re on track to ex­ceed our orig­i­nal earn­ings ex­pec­ta­tions for the year,” said Wal­mart CEO Doug McMil­lon Thurs­day in a re­lease.

Wal­mart now ex­pects U.S.com­pa­ra­ble sales to rise at the up­per end of a 2.5% to 3% range for the full year, an im­prove­ment from an ear­lier pre­dic­tion of sales fall­ing some­where in that range.

Wal­mart shares rose more than 5% in early trad­ing.

Wal­mart in­creased its profit tar­get for the year, say­ing that full-year earn­ings per share will come in at a “slight de­crease to slight in­crease” com­pared with last year. Last fis­cal year Wal­mart re­ported ad­justed earn­ings per share of $4.91 (U.S.). Pre­vi­ously, Wal­mart said earn­ings per share would de­cline this year.

The solid sales and earn­ings

up­grade from Wal­mart con­trasts with gen­eral ner­vous­ness in the stock mar­ket over the strength of the econ­omy and weak sales at some other re­tail­ers. On Wed­nes­day, Macy’s Inc. low­ered its ful­lyear earn­ings out­look, say­ing sales dur­ing the quar­ter didn’t meet ex­pec­ta­tions amid wor­ries over tar­iff-re­lated cost in­creases, send­ing its shares down 13%. And on Thurs­day J.C. Pen­ney Co. re­ported a 9% drop in sales.

“Other re­sults from the sec­tor need to be viewed against this con­text: At present there is just no ev­i­dence of a ma­te­rial down­turn,” said Neil Saun­ders, man­ag­ing

di­rec­tor of Glob­alData Re­tail. “Per­for­mance re­mains largely the re­spon­si­bil­ity of the strate­gies of in­di­vid­ual re­tail­ers.”

Na­tional data re­leased Thurs­day also eased con­cerns of a broader slow­down, with re­tail sales ris­ing a sea­son­ally ad­justed 0.7% in July from a month ear­lier, well above econ­o­mists’ ex­pec­ta­tions, the Com­merce De­part­ment said.

Sev­eral re­tail­ers in­clud­ing Tar­get Corp., Home De­pot Inc. and Lowe’s Co. Inc. are sched­uled to re­port earn­ings next week, pro­vid­ing a clearer pic­ture of the broader health of the sec­tor. In re­cent years, Wal­mart has in­vested heav­ily to grow on­line and add more dig­i­tal ca­pa­bil­ity to stores such as ser­vices that al­low shop­pers to buy gro­ceries on­line and pick up in store park­ing lots. It is also us­ing more au­to­ma­tion in stores to off­set la­bor costs to spend else­where, such as faster on­line ship­ping and e-com­merce tests such as Jet­black, a New York ser­vice that of­fers mem­bers pay­ing $600 a year text-based buy­ing and same-day ship­ping. U.S. stores are Wal­mart’s pri­mary sales and profit driver, while its U.S. e-com­merce busi­ness re­mains un­prof­itable.

Re­tail chains have ex­pressed con­cerns about the im­pact of the U.S.’s es­ca­lat­ing trade war with China ahead of the hol­i­day shop­ping sea­son. On Tues­day, the Trump ad­min­is­tra­tion sus­pended plans to im­pose new tar­iffs on about $156 bil­lion in goods from China un­til Dec. 15. The sus­pen­sion af­fected tar­iffs planned on items in­clud­ing toys, cell­phones and lap­top com­put­ers that had been set to take ef­fect Sept. 1. Tar­iffs on about $13.7 bil­lion of fab­rics and ap­parel were post­poned un­til the end of the year, but tar­iffs will still move for­ward on about $39 bil­lion of such items.

Wal­mart CFO Brett Biggs said Thurs­day Wal­mart has fac­tored the sus­pen­sion of tar­iffs into its full-year guid­ance, with­out break­ing down de­tails.

Septem­ber tar­iffs will still hit “ap­parel and TVs, which are de­cent size cat­e­gories for us,” said Mr. Biggs in an in­ter­view. But the de­lay “makes it a lit­tle more man­age­able,” he said.

Also on Thurs­day, Mr. McMil­lon gave for the first time more de­tails on the com­pany’s gun sales in the wake of a shoot­ing at an El Paso, Texas, Wal­mart ear­lier this month that killed 22 and sparked new calls from some cor­po­rate em­ploy­ees and gun­con­trol ac­tivists for the chain to stop sell­ing firearms.

Wal­mart sells about 2% of the na­tion’s firearms and 20% of the am­mu­ni­tion, said Mr. McMil­lon in a state­ment, “which we be­lieve places us out­side at least the top three sell­ers in the in­dus­try.”

Mr. McMil­lon re­it­er­ated a pre­vi­ous state­ment that the na­tion’s largest re­tailer and pri­vate em­ployer is think­ing through broader is­sues re­lated to gun vi­o­lence. “We will strive to use these ex­pe­ri­ences to iden­tify ad­di­tional ac­tions we can take to strengthen our pro­cesses, im­prove our tech­nol­ogy and cre­ate an even safer en­vi­ron­ment in our stores.”

He said Wal­mart sup­ports strength­en­ing back­ground checks for gun pur­chases and be­lieves the reau­tho­riza­tion of the as­sault-weapons ban “should be de­bated to de­ter­mine its ef­fec­tive­ness.”

PAUL RATJE AFP/GETTY IMAGES

The shoot­ing at a Wal­mart in El Paso, Texas, this month that killed 22 sparked new calls from some cor­po­rate em­ploy­ees and gun-con­trol ac­tivists for the chain to stop sell­ing firearms.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.