Rebound in snacks and beverages help boost results at Wal-Mart
Nov. 14, 2013
by Eric Schroeder
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BENTONVILLE, ARK. — Strong sales and earnings gains in the company’s U.S. operations — buoyed by improvements in the snacks and beverages categories — contributed to overall sales and earnings gains at Wal-Mart Stores, Inc. in the third quarter. Net income in the third quarter ended Oct. 31 was $3,727 million, up 3% from $3,635 million in the same period a year ago. Net sales were $115,688 million, up 1.7% from $113,800 million.
Operating income at Walmart U.S. totaled $5,123 million, up 6% from $4,841 million in the same period a year ago. Net sales increased 2.4% to $67,692 million from $66,113 million.
“Walmart U.S. delivered another quarter of market share gains, with an increase of 18 basis points in the measured category of ‘food, consumables and health and wellness/OTC’ during the 13 weeks ending Oct. 26, according to The Nielsen Co.,” Bill Simon, president and chief executive officer of Walmart U.S., said during a Nov. 14 conference call. “Throughout the quarter, we continued to see strength in produce, home, apparel and wireless. Our focus on improved quality, pricing and brand innovation produced strong sales in these areas.”
Looking specifically at the company’s grocery business, which includes food and consumables, Mr. Simon said Walmart U.S. had a low single-digit negative comp at 0.7%.
“Inflation in dairy, meat, and produce was slightly higher than last year; however, overall grocery inflation was muted and in line with last year,” he explained. “I’m pleased with the continued strength in produce and adult beverages which delivered a mid single-digit and high single-digit positive comp, respectively. I’m also encouraged by the improvement throughout the quarter from our aggressive mass merchandising events. As I mentioned, ‘Stock-up and Save’ and ‘October Savings’ helped sales particularly in areas like snacks and beverages, baby consumables and paper products. In fact, in carbonated soft drinks, an important traffic-driving category, these initiatives helped us gain over 240 basis points of unit share for the 13-weeks ending Oct. 26, according to The Nielsen Co.”
Mr. Simon said Wal-Mart will focus on mass merchandising, featured items and special holiday promotions in grocery during the fourth quarter to help customers stretch their paychecks a little further.
At Sam’s Club, operating income increased 9% to $474 million from $434 million, while sales rose 1.1% to $14,075 million from $13,918 million.
“We’re pleased with our third-quarter results, especially our positive comp sales and steady increase in traffic,” said Rosalind Brewer, president and c.e.o. of Sam’s Club.
Ms. Brewer said fresh/freezer/cooler posted low single-digit sales comp during the third quarter.
“In fresh, mid single-digit comp growth was partially offset by disinflation within freezer/ cooler,” she said. “In gourmet deli and home meal solutions, our professional chefs have developed new gourmet items like Chicken Marsala and Shrimp and Lobster Ravioli. Members love these delicious entrees, which are helping to lift comp and unit growth mid single-digits.”
Meanwhile, Sam’s Club recorded a low single-digit comp in its grocery and beverage business during the quarter.
“The introduction of new products within our snacks category, such as Brownie Brittle and Greek Yogurt Drizzled Popcorn, benefitted dry grocery sales,” Ms. Brewer said. “Within beverages, craft beers and high-end spirits are performing well, and our adult beverage Instant Savings program, now in 11 states, is driving awareness and sales.”
The Walmart International segment had operating income of $1,457 million, up 2% from $1,432 million during the same period of the previous year. The segment had sales of $33,109 million, up 0.2% from $33,046 million during the same quarter of the previous year.
For the nine months ended Oct. 31, the company as a whole saw income rise 2% to $11,564 million, equal to $3.53 per share, which compared with $11,366 million, or $3.37 per share, during the same period of the previous year. Sales for the nine months were $346,588 million, up 1.7% from $340,875 million during the same period of the previous year.
The company updated its full-year earnings per share guidance to the range of $5.11 to $5.21 per share, which compared with previous guidance of $5.10 to $5.30.