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Sales at US stores open at least a year beat expectations and rose 1.6 percent, excluding fuel prices. Earlier this week, Warren BuffettBRK.B 1.25 % ‘s Berkshire Hathaway Inc. disclosed that it had pared its stake in the retailer by 27% as of June 30. But that’s still weaker than the 20 percent increases from less than two years ago.
While the company has steadily reported positive same-store sales, some analysts say Wal-Mart will have to do better in an improved retail landscape. Revenue came in at $120.9 billion, which was better than the $120.1 billion expected. Total revenue rose 0.5 percent to US$120.9 billion. Currency depleted sales by approximately $2.7 billion.
The results exceeded Wall Street expectations. However, in constant currency – accounting for the impact of exchange rates courtesy of the strong US dollar – the net sales were $31.309 billion, up 2.2% compared to the 2015 quarter. “We’re more pleased this quarter but continue to press and keep growing the business at an accelerated pace”. Earnings amounted to $1.07 a share in the second quarter.
The world’s largest retailer appeared to take the financial results as proof that its decision to key in on its online business, including the $3 billion purchase of e-commerce site Jet.com announced last week, was the right path forward.
The “big four” supermarkets in the United Kingdom have come under increasing pressure from the expansion and popularity of German discount rivals Aldi and Lidl which are continuing to increase their market share.
Wal-Mart’s management has made some substantial moves for expanding its sales and earnings growth in the last few quarters. Comparable sales for the USA business will be up as much as 1.5 percent in the current quarter, the company said. Net sales totaled $14.543 billion in the quarter, down 1.3%. The Mean EPS forecast of 26 analysts for Next Quarter is set at $0.93. Neighborhood Market comparable store sales grew 6.5%. E-commerce sales positively impacted comp sales at Wal-Mart U.S.by 0.40% in the quarter.
Net sales at Walmart International was $28.621 billion, down 6.6% compared to the same quarter in 2015. The same, however, increased 2.2% on a constant currency basis to $31.3 billion, led by strong performance in Mexico and Canada. Stronger sales at Wal-Mart U.S. offset weaker results from its worldwide operations, which suffered from currency headwinds, while Sam’s Club also saw weakness. Sam’s Club operating income, however, increased 10.3% to $472 million in the quarter.
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Shares were up 1.7% at US$74.20 after 40 minutes’ trading.
