Wal-Mart reports mixed results, drops expectations - The Packer

Wal-Mart reports mixed results, drops expectations

08/15/2013 11:15:00 AM
Coral Beach

Wal-Mart produce employeeCourtesy Wal-MartAn employee restocks apples in a Wal-Mart produce department. Corporate executives reported single-digit growth in fresh produce sales for the second quarter of 2013 in the chain's U.S. storesProfits and revenue for Wal-Mart Stores Inc. were both up more than 2% for the second quarter, but fell short of projections and caused the retailer to lower expectations for the rest of the year, despite strong performance in the e-commerce arena and growth in fresh produce sales.

Executives for the Bentonville-Ark.-based retailer reported second-quarter details in a recorded conference call Aug. 15. They said same-store sales for the second quarter were flat compared to a 2.5% increase in the second quarter of 2012.

Charles Holley, chief financial officer, said the full-year expectations for net sales growth is being lowered to the 2%- to 3%-range, down from 5% to 6% projected earlier this year.

For the quarter ending July 31, Wal-Mart reported a profit of $4.07 billion, up from $4.02 billion for the same period in 2012. Revenue increased 2.3% to $116.95 billion, which was short of the $118.47 billion estimate from analysts, according to the Wall Street Journal.

The retailer’s chief executive officer, however, said he is optimistic.

“I’m encouraged by our position to execute in the second half of the year, particularly with the steps we’re taking to improve performance,” president and CEO Mike Duke said on the call.

Wal-Mart's 100% money back guarantee on fresh produce is just one of the strategies the retailer is using to encourage sales of fresh foods.Pushing produce

One of those steps is continued focus on fresh foods, including produce in U.S. stores. Bill Simon, chief executive officer for Wal-Mart U.S., said fresh produce sales continue to gain momentum in the U.S. with “strong mid single-digit” growth in the second quarter.

“We’re getting more efficient at transporting the product from farm to shelf,” Simon said during the call.

“We’re executing weekly store audits and equipping associates with additional skills and tools to ensure quality and freshness … we saw consistently improving comps (same-store sales) in produce throughout the quarter with a high single-digit (increase) in July,” Simon said during the call.

Produce sales at Sam’s Club stores are also increasing in the single-digit range, said Rosaline Brewer, president and chief executive officer for Sam’s Club.

“Lingering effects of unseasonably cold weather affected produce availability in some of our key summer fruit items, such as strawberries and watermelons,” Brewer said during the call. “We overcame this headwind with exceptional quality in other seasonal produce items such as blueberries and apples.”

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