On a headline basis, Wal-Mart earnings were fine, with EPS of $.98 beating estimates by $.03.
But from an actual economic perspective, things aren’t good.
As this table shows, ex-fuel, same-store sales between normal Walmart stores and Sam’s Club Warehouse stores shrunk.
The company’s commentary on this speaks more to the fuel issues:
During the 13-week period, the majority of the Walmart U.S. comparable store sales decrease was due to a decline in traffic, while average ticket was up versus the prior year. Grocery and health and wellness categories had positive comp sales for the first quarter.
For the 4-5-4 period from April 30 through July 29, 2011, Walmart U.S. expects comparable store sales to range from negative one per cent to positive one per cent. The Walmart U.S. 13-week comp for the second quarter of fiscal 2011 declined 1.8 per cent.
“We are monitoring the economic environment carefully, as significant changes in gas prices and inflation during the quarter will influence our actual performance,” said Bill Simon, Walmart U.S. president and chief executive officer. “We continue to focus on delivering EDLP (Everyday Low Pricing) across the store.”
The good news, international growth continues to be a bigger and bigger chunk of the company’s business, helped, in part by the weak currency.
Of the nearly $3 billion in addition Walmart International sales, $1.3 billion came due to the currency conversion.
Going back to the fuel matter… All of this fits with the recent commentary from CEO Mike Duke, who said his customers were feeling the squeeze form higher gas prices.
This chart we recently ran from Nomura sums it all up. The Walmart quintile has to spend the most on gas.