Bentonville, Ark. – Walmart and sister chain Sam’s Club reported soft CE sales last quarter, due in part to delayed West Coast port shipments.
In a pre-recorded discussion of the company’s first-quarter results, covering the three months ended April 30, Walmart U.S. president/CEO Greg Foran said port congestion related to the recent labor dispute hurt in-stock positions of TVs and other CE products, although the majority of the disruption appears to be over.
The discounter’s media and electronics business was also pressured by what Foran called “industry contraction,” as well as the shift from physical to digital media.
Total comp sales for Walmart U.S. edged up 1.1 percent, reflecting a 1 percent increase in traffic, flat average ticket and a 20 basis-point increase in e-commerce sales. The latter reflects a more than 100 percent increase in mobile traffic and higher conversion rates for that channel.
Walmart’s net sales rose 3.5 percent to $70.2 billion, and operating income slipped 6.8 percent to $4.6 billion. Gross profit rate declined 13 basis points, due largely to shrinkage, with half the thefts in food.
The port delays also impacted TV sales at Sam’s Club, which reported an overall comp decline for its technology and entertainment business. TV sell-through picked up later in the quarter as the delays decreased, president/CEO Rosalind Brewer reported, and audio sales were strong due to new headphones and soundbars.
Brewer said the audio category has been part of an initiative to streamline Sam’s CE assortment and improve its online offering. The narrower selection is intended “to provide the latest advancements in the technologies that matter,” she said.
Total comp sales at Sam’s Club, excluding fuel, were essentially flat, as was traffic. Average ticket edged up 0.6 percent, e-commerce sales rose 40 basis points, and net sales slipped 3 percent to $13.5 billion including fuel. Operating income fell 10.9 percent to $427 million.
For the quarter, parent company Wal-Mart Stores reported flat sales of $114.8 billion and a 7 percent decline in net income, to $3.3 billion, as the retailer raised store-level salaries and added back nearly 8,000 Walmart U.S. department managers to improve the shopping experience – a $1 billion investment – and continued spending on e-commerce infrastructure.
The fruits of the latter include a more simplified checkout process now being rolled out on walmart.com that’s based on the company’s Pangaea global technology platform. Part of the platform provides “a better experience on mobile devices,” noted Wal-Mart Stores president/CEO Doug McMillion, which is critical as “mobile is increasingly the driver of our e-commerce business.”
During the quarter Walmart U.S. opened opened 20 supercenters, including relocations and expansions; 15 full-size Neighborhood Market supermarkets; and nine smaller-format stores, including one campus store location.