US: Wal-Mart Q4 profit slides but US comps rise
- Q4 net income down 14.7% to US$5.1bn
- Sales rose 5.8% to $122.28bn
- US same-store sales up 1.5%
Discount retail giant Wal-Mart has seen its fourth-quarter earnings fall 14.7%, but recorded its second consecutive rise in US quarterly same-store sales.
For the quarter ended 31 January, the company said net income was down to US$5.1bn, despite seeing sales rise 5.8% to $122.28bn.
The company's US division saw fourth-quarter operating income grow 1.4% to $6.1bn. Its sales were up 2.4% to $72.78bn, helped by the second consecutive quarter of comparable-store sales growth, which rose 1.5% over last year.
However, the retailer admitted the US division's operating income grew at a slower rate than sales due to a reduction in gross profit margin as a result of its price investment strategy.
"We invested in price in the fourth quarter and will continue to do so through this fiscal year, so we can pass savings on to customers," said Wal-Mart US president and CEO Bill Simon.
The results emphasised that the company's turnaround plan in the US is gaining momentum, after it ended a run of nine consecutive quarters of same-store sales declines.
"All three Walmart US geographic units delivered positive comps, reinforcing that our plan is working and resonating with customers. Our stores have greater price leadership, broader assortment, and improved on-shelf availability. The combination of these factors contributed to positive traffic," said Simon.
For the full-year, net income fell 4.2% to $15.7bn, although sales increased 5.9% to $443.8bn.
The US division recorded a 2.2% increase in operating income to reach $20.3bn, while sales rose 1.5% to $264.2bn. Full-year comparable store sales in the US were down 1.6%.
The company's international division, which saw the acquisition of Massmart and Netto over the year, reported a 10.8% increase in operating income to reach $6.2bn. Sales were up 15.2% to $125.8bn.
"Walmart International delivered strong growth through both comp store sales and a record number of new units, including the acquisitions of Netto and Massmart," said company president and CEO Mike Duke.
"The leadership teams are focused on improving profitability, and our ‘Powered by Walmart' initiatives will strengthen productivity and reduce expenses in our markets."
The company's share price was down 3.3% in pre-market trading to $60.40 per share.
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