Walmart Posts Record Q1; CE Results Mixed

By Steve Smith -- TWICE, 6/7/2010

BENTONVILLE, ARK. - Wal-Mart Stores reported record fiscal first-quarter sales and earnings for the period ending April 30.

Net sales rose 6 percent to $99.1 billion, including a $2.5 billion benefit from favorable exchange rates, while income from continuing operations edged up $300 million, to $3.3 billion year over year.

In the U.S., operating income rose 5.6 percent to $4.6 billion at Walmart stores while comp-store sales declined 1.4 percent due to soft traffic, partially offset by an increase in average ticket.

Comps increased 0.7 percent at Sam's Club excluding fuel, and operating income grew 9.2 percent to $429 million as the division leveraged operating expenses.

In a pre-recorded announcement, Mike Duke, president/CEO of Wal-Mart Stores, acknowledged that "A number of economic pressures, including gas prices and ongoing concerns about unemployment, continue to affect key segments of retail, and this is especially true for Walmart's core customer."

Within CE, vice chairman Eduardo Castro-Wright reported lower comps on mixed results. Large-screen TVs, including new LED models, continued to show strength, as did laptops and wireless, while sales of video game hardware and software fell below expectations across all platforms due to fewer new releases and a "lack of innovation in gaming systems," he said.

Castro-Wright added that CE sales are benefitting from a store remodeling program, and that more than 550 Walmart locations would be upgraded this year.

CE was also constrained at Sam's Club, albeit due to industry-wide shortages in flat-panel TV and the chain's transition to new models and technologies, including backlit LED.  Brian Cornell, president/CEO of the warehouse club division, said next-generation products from LG, Samsung and Vizio are now arriving, and Sam's Club is experiencing improved performance and good market demand for CE. - Additional reporting by Alan Wolf