Bentonville, Ark. — Wal-Mart Stores here appears well positioned for the holidays, analysts said last week after the company issued its third-quarter earnings report.
Food sales at Wal-Mart Supercenters increased more than 13% during the period, which ended Oct. 31, Eduardo Castro-Wright, president of the division, said in a prerecorded call. Grocery and pharmacy sales were strong throughout the quarter, he said, with comparable-store food sales up 5.3% and pharmacy comps up 8%. Grocery sales accounted for more than 40% of volume at Wal-Mart Stores' U.S. division, which encompasses supercenters and discount stores, he added.
Castro-Wright said Wal-Mart was able to increase the price spread on grocery items during the quarter over three of its largest grocery competitors, with a current spread of 14% to 28%.
He also spoke about a supercenter Wal-Mart opened earlier this month in Highland Village, Texas, near Dallas — a 203,000-square-foot store “with many merchandising initiatives, new category adjacencies and a major commitment to food.” The store's features include a pastry shop, an open-hearth bakery and a circular deli department featuring meal solutions, he said.
“It's a store where navigation and sight lines were priorities to make it easy for customers to move around, and our goal was clear aisles and an uncluttered look throughout,” Castro-Wright explained.
Analysts were encouraged by Wal-Mart's financial results in the period and indicated that the chain could perform well this holiday season.
“We continue to view Wal-Mart as uniquely positioned to outperform broadlines peers this holiday season given [its] tightened inventory management, controlled expenses, aggressive pricing and defensive sales mix,” said Adrianne Shapira, Goldman Sachs, in a report following the earnings announcement.
Wal-Mart said net income rose 7.9% to $2.9 billion for the quarter and 17.6% to $8.6 billion for the nine-month span. Sales jumped 8.8% to $90.9 billion for the quarter and 8.7% to $268.3 billion for the year to date.
Excluding fuel, comps in the U.S. — encompassing the Wal-Mart and Sam's Club divisions — were flat at 1.5% for the quarter and up 1.4% for the nine months.
Comps at Sam's Clubs, excluding fuel, increased 3.9% for the quarter and 4.8% for the year to date. Comps at Wal-Mart Stores rose 1% for the quarter and 0.7% for the nine months.
The company said it expects fourth-quarter comps for the U.S. to be between 0% and 2%.
Qtr Ended | 10/31/07 | 10/31/06 |
---|---|---|
Sales | $90.9 billion | $83.5 billion |
Change | +8.8% | |
Comp-store | +1.5% (U.S. only) | |
Net Income | $2.9 billion | $2.7 billion |
Change | +7.9% | |
Inc/Share | 70 cents | 63 cents |
13 Weeks | 2007 | 2006 |
Sales | $268.3 billion | $246.9 billion |
Change | +8.7% | |
Comp-store | +1.4% (U.S. only) | |
Net Income | $8.6 billion | $7.4 billion |
Change | +17.6% | |
Inc/Share | $2.11 | $1.76 |