Bentonville, Ark. - Wal-Mart reported flat earnings and slightly lower revenue for its second quarter ended July 31, citing soft demand, currency fluctuations and price deflation in electronics and other categories.
Net income slipped 0.2 percent to $3.4 billion and net sales declined 1.4 percent to $100 billion for the three-month period. Excluding the impact of currency exchange rates, net sales increased 2.7 percent to $104.3 billion.
In the United States, net sales at the company's flagship Walmart stores edged down 0.3 percent to $64.2 billion, and comparable-store sales fell 1.5 percent, representing the chain's first comp decline in over a year.
According to Wal-Mart vice chairman Eduardo Castro-Wright, the weak comps "reflect a continuation of a challenging retail environment" and the positive effect of last year's government stimulus checks on year-ago results.
At the company's Sam's Club warehouse club division, net sales fell 3.2 percent to $11.9 billion and comp-store sales fell 4.3 percent, due largely to the impact of lower gasoline prices.
Sam's Club president and CEO Brian Cornell said big-ticket discretionary categories such as major appliances continue to face sales pressure, and that sales were also impacted by price deflation in key categories such as consumer electronics,
In prepared remarks, Mike Duke, president and CEO of Wal-Mart Stores, described the sales environment as "more difficult than we expected," but said the company beat Wall Street estimates through stringent cost controls, improved efficiencies and better inventory management. The latter led to a 6-percent decline in Walmart store inventory - representing about $1.4 billion - and a more than 5-percent drop in inventory at Sam's Club.
"We're benefiting from investments in merchandising systems and continued productivity initiatives," he said. "I'm especially proud of our performance in inventory, because it improves our financial results and the customer experience."
Duke added that today's customers are shopping smarter. "There's a "new normal" now where people are saving more, consuming less, and being more frugal and thoughtful in their purchases. They want quality products that are cost-effective, sustainable and provide real value," he said.
Looking ahead, the company is projecting comp sales for U.S. Walmart stores to be between flat and 2 percent for the current quarter ending Oct. 30.