Wal-Mart reports record results, but lowers guidance for full year
Wal-Mart, the world’s largest retailer and the nation’s third largest home improvement retailer, reported total-company second-quarter sales of $91.99 billion, up 8.8 percent over last year. Net income rose 49 percent to $3.1 billion compared with $2.18 billion last year.
The company noted that though the numbers reflect record sales and earnings on the outset, operational net income rose just 4.1 percent to $3.11 billion from $2.98 billion in the previous year.
“Although some people will report that Wal-Mart has had record sales and earnings, our underlying operating performance this quarter is not what we expect of ourselves,” said Lee Scott, president and CEO of Wal-Mart Stores. “For the remainder of this year, our management team is focused on inventory improvements, delivering quality products at low prices and store execution at the highest standards.”
In the company’s Wal-Mart Stores division, sales rose 6.5 percent to $59.01 billion from $55.39 billion last year. Sales at Sam’s Club stores rose 8.6 percent to $11.38 billion from $10.47 billion in the previous year. International sales showed the most growth at 15.7 percent, to $21.6 billion from $18.66 billion last year.
Comparable-store sales in the United States rose 2 percent. For the third quarter, the company estimates the comparable-store sales increase in the United States to be between 1 percent and 3 percent.
The company updated its full-year guidance, lowering earnings-per-share expectations to between $3.05 and $3.13, down from an earlier estimate of $3.15 and $3.23 per share.
“The company’s current earnings guidance reflects the need to continue to improve our underlying operating performance,” said Tom Schoewe, Wal-Mart Stores executive vp and CFO. “This guidance also reflects the economic trends that have developed in many of our major markets.”
Wal-Mart was listed as the third largest home improvement retailer in the United States on HCN’s top 500 list of home channel retailers, with $24 billion in home improvement product sales in 2006.
Lowe’s lays off 205 at Florida distribution center
Lowe’s has laid off 205 workers at an Osceola County, Fla., distribution center, according to an article in the Orlando Sentinel.
The job cuts account for about 20 percent of the total work force at the distribution center, which saw growth during the housing boom in Florida and increased demand for building materials because of hurricanes in the region. A spokesperson for Lowe’s told the newspaper the company sought other solutions outside a reduction in force and noted that the distribution center now employs about 700 people.
The distribution center supplies 96 retail stores in Florida and southern Georgia. At the company’s last earnings call, Lowe’s noted difficult year-over-year comparisons with hurricane-affected regions of the Gulf Coast and some Florida markets. Gulf Coast areas most impacted by Hurricanes Katrina and Rita reported negative 23 percent comparable-store sales.
Comparable-store sales fall at Sears
Sears Holdings announced today that domestic comparable-store sale for its second quarter fell 4.3 percent at Sears stores and 3.8 percent at the company’s Kmart stores. The company will release its official second-quarter results by Aug. 30.
Sears said it anticipates second-quarter net income of between $170 million and $185 million. Last month, the company forecast net income in the range of $160 million to $200 million. The company reported net income of $294 million in last year’s second quarter.
Since that earlier forecast, “the company has experienced higher markdowns, most notably within seasonal apparel categories,” according to a press release from Sears.
Sales fell “across most categories,” the company said, with some increases in consumer electronics, women’s apparel and footwear. The company saw a second-quarter pre-tax gain of $15 million from items including bankruptcy-related settlements and insurance recoveries on claims filed for property damaged by hurricanes during fiscal 2005.
Sears Holdings’ CEO Aylwin Lewis said while the company recognized the slowdown in the housing market contributed to declining sales, “we are disappointed with our second-quarter results.”
“We will work hard to improve our financial performance going forward,” Lewis said.
The company also said its board of directors approved a plan to buy back up to $1.5 billion of stock.
Sears is the fourth largest home channel retailer in the United States, according to HCN’s Top 500 list of home channel retailers, with 2006 home improvement sales of $10.7 billion.