Wal-Mart’s December Comps Rise 1.7%

 

“Due to the difficult economy and severe winter weather in some regions, the holiday season was more challenging for retailers than expected,” said Eduardo Castro-Wright, vice chairman, Wal-Mart Stores, Inc. “We are pleased that we had positive traffic for the third month in a row and that Walmart performed relatively well given the environment.”

 

With mid-single digit comparable store sales results, grocery and health and wellness were the primary sales drivers for Walmart U.S. in the December period. Electronics sales were solid, while apparel and jewelry were soft. Weather conditions slowed sales in several areas of the country the week before Christmas, forcing the closure of 40 stores for periods ranging from two hours to nine days.

 

“We believe we continue to gain market share on the strength of positive traffic in response to Walmart's price leadership, as well as overall customer experience improvements,” Castro-Wright added.

Sales at walmart.com were significantly ahead of the same period last year, led by sales of entertainment and home products and the site-to-store program.

 

 

Overall, sales for the holiday season at Sam's Club were below expectations. Sales results were softer in the first three weeks, with improved performance during the last two weeks of the December period. Winter storms negatively impacted traffic and sales in some markets. Traffic increased for both Business and Advantage members. However, average ticket declined for both Business and Advantage members.

 

Sales strengths continued in fresh food, dry grocery and consumables. Continued softness in general merchandise had a greater negative impact on sales during this period when general merchandise usually comprises a larger share of sales. Jewelry and home-related products were among the softer categories.

 

“Relative to our plan, sales came very late in the reporting period,” said Doug McMillon, Sam's Club president and chief executive officer. “Our members were clearly cautious with their discretionary spending. Our small business members in particular continue to face more pressure from today's economy and also are more selective in their purchases.”

Continued significant declines in fuel prices resulted in reduced fuel sales in comparison to last year.

 

 

“Our customers around the world continue to feel pressure from the current global economy, leading to sales for Wal-Mart International that were below expectations,” said Mike Duke, vice chairman, Wal-Mart Stores, Inc. “As we see consumers focusing on the necessities in this environment, we are reinforcing the value we provide to them through our every day low price philosophy.”

 

Sales from each country are covered on a constant currency basis, excluding any impact from changes in exchange rates.

 

In the U.K., ASDA experienced one of the company's strongest Christmas sales seasons, which concluded a quarter of strengthening comparable store sales, without fuel. Sales were strongest in core grocery and George apparel. Traffic was up significantly in the week before Christmas, as sales came later than ever before. ASDA had record sales for a single day on Dec. 23.

 

Yesterday, Wal-Mart de Mexico announced a comparable store sales increase of 0.6 percent for the December period, reflecting the country's continued economic slowdown. Walmex is aggressively reinforcing its price position, driving increased customer traffic at self-service formats, particularly Bodega Aurrera. Superama stores showed the strongest comparable store sales.

 

At Wal-Mart Canada, comparable store sales were in the low single digits driven by an increase in average ticket and strong sales following Christmas. Food and consumables, as well as electronics, seasonal and cold weather categories performed well. Apparel sales were weaker than expected.

 

In December, Wal-Mart Brazil opened 11 new stores, more than in any month since Wal-Mart entered Brazil in 1995. Todo Dia, supermarkets in the south and hypermarkets in the southeast all achieved solid real comparable store sales in the low single digits. The cash and carry format, Maxxi, continued its strong performance, with customer count increasing in the low double digits.

 

In Japan, comparable store sales were positive, driven by the shift to every day low pricing in food and consumables and by solid customer response to direct import items. Sales in general merchandise and apparel were soft due to the general downturn in the economy, with the exception of baby, which is growing due to the shift to every day low pricing.

 

Higher average ticket drove comparable store sales increases in the mid single digits at both Wal-Mart China and Trust-Mart.

 

 

“The current economy remains challenging for all businesses, and retailers have already seen customers pull back on discretionary spending. Consumers are very focused on value and necessities,” said Tom Schoewe, executive vice president and chief financial officer. “We expect comparable store sales for the January four-week period to be between flat and two percent.”

 

The January period runs from Saturday, Jan. 3 through Friday, Jan. 30, 2009.

 

“Our previous fourth quarter guidance for earnings per share from continuing operations was a range of $1.03 to $1.07, which we provided Nov. 13. This range reflected our expectation that changes in currency exchange rates would negatively affect this year's fourth quarter results by approximately six cents per share,” Schoewe said.

 

“The company announced on Dec. 23 that earnings per share from continuing operations also would be negatively impacted by approximately six cents, stemming from the after-tax charge for the settlement of 63 class action wage and hour lawsuits.

 

“Our fourth quarter sales for Sam's Club and Wal-Mart International are trending below our expectations and our expenses are higher than anticipated. Therefore, we now expect fourth quarter earnings per share from continuing operations to be between $0.91 and $0.94,” Schoewe added. “Considering the impact of currency and litigation charges, we continue to expect our underlying operating performance for the fourth quarter of fiscal 2009 to be at or above the prior year's quarter.”