Wal-Mart 2Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“Consolidated net sales and our Walmart U.S. comp were below expectations for the quarter. While the retail environment was challenging across all of our markets, the Walmart U.S. and Sam’s Club businesses improved comp sales from the first quarter, and reported sales in International remained consistent. We expect to see improvement in all of our segments in the back half of the year.”

“Traffic decreased 0.5 percent and ticket increased 0.2 percent. The lack of meaningful inflation and the 2 percent increase in payroll taxes impacted our results”

“Nevertheless, I was encouraged by the improvement we saw, as traffic and comp sales increased throughout the quarter. We also saw some slight increases in inflation towards the end of the quarter. In addition, there were some key parts of the business, like produce, home and apparel, that were very successful. ”

“For the quarter, grocery sales, which includes food and consumables, grew by nearly $1 billion. We delivered delivered a slightly negative comp for the retail period. Our results were influenced by lower than anticipated inflation, even deflation in some areas, including dry grocery, frozen and snacks and beverages.”

“Entertainment, including toys, posted a mid single-digit negative comp. Our performance was pressured by soft results in both electronics and media and gaming”

“Within electronics, we’re disappointed at the performance of the TV category, as we lost market share for the 3 months ending June 30”

“The British consumer remains under pressure, with market inflation growing 2.8 percent, outpacing wage growth of 0.9 percent. ”

“Our EDLP journey in China continues to move forward. We’re building trust with the Chinese customer through our “worry free” program. Worry free pricing was launched last fall and continues to gain traction. The team in China continues to improve operations by focusing on optimizing the buying organization, investing in logistics and food safety and simplifying the supply chain.”

“Last year, we discussed our decision to moderate our growth in China and focus more on our store opening process and opening stores in more productive locations, an example of our commitment to simplifying and prioritizing.”

“In Japan, consumer spending continued to be soft during the quarter. ”

“As a reminder, the four strategies we are executing are: Excelling in the fundamentals of e-commerce; innovating in new areas like big data, social and mobile; we’re growing in key markets, namely the U.S., U.K., Brazil and China; and we’re providing the tie to unite and expand the Walmart customer experience to do what no one else can do.”