Walmart 1Q14 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

It’s the weather’s fault

“Like other retailers in the United States, the unseasonably cold and disruptive winter weather negatively impacted our U.S. sales and drove operating expenses higher than expected for the company”

Weather was bad for two weeks

“As we indicated in February, we realized negative comp sales during the first two weeks of the fiscal year from severe winter storms. A solid start to the spring season and a strong Easter holiday drove positive comps over the remaining 11 weeks of the quarter”

Nice sales momentum in second half of quarter

“I’m encouraged by the sales momentum in the back half of the quarter”

Weather and reduction in public assistance hit Sams club

“The combination of severe weather and the reduction of public assistance represented an approximate 90 basis point impact to comp sales.”

Rapid acceleration in inflation

“Q1 was marked by a rapid acceleration in inflation, as cost inflation was approximately 160 basis points, compared to 30 basis points in Q4.”

Part of cost inflation was benefits enrollment

“as you heard from Bill, in the first quarter, we incurred more than $100 million of costs from higher benefit enrollment and utilization by our U.S. associates, as well as cost inflation. While associate enrollment does fluctuate, we continue to expect these costs to be a headwind of more than $300 million for the full year.”

Don’t fully cycle SNAP reductions until 3Q

” we will not cycle through SNAP reductions until the end of the third quarter for our U.S. businesses, and we will continue to invest in price for our customers and members.”