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Profits Down at Wal-Mart, Kohl’s

Both retailers miss consensus estimates and see declines in comps for wintry period.

Weak demand and wintry weather drove down profits and comparable sales at Wal-Mart Stores Inc. and Kohl’s Corp. in the first quarter.

 

At Wal-Mart, net income in the three months ended April 30 was $3.59 billion, or $1.11 a diluted share, 5 percent below the year-ago mark of $3.78 billion, or $1.14 a share. Analysts, on average, had expected EPS of $1.15 from the Bentonville, Ark.-based retail giant.

 

Revenues also missed analysts’ estimates, rising 0.8 percent to $114.96 billion from $114.07 billion, versus the consensus estimate of $116.3 billion. Wal-Mart U.S. sales were up 2 percent to $67.85 billion, international sales down 1.4 percent to $32.42 billion and Sam’s Club sales up 0.1 percent to $13.89 billion. International sales would have risen 3.4 percent without the effects of currency fluctuation, the company said.

 

In the U.S., comp-store sales were down 0.2 percent, with Wal-Mart down 0.1 percent and Sam’s Club off 0.5 percent. Wal-Mart traffic decreased 1.4 percent and average ticket increased 1.3 percent. Excluding fuel, Sam’s Club traffic fell 0.2 percent with average ticket down 0.3 percent.

 

E-commerce sales grew 27 percent on a global basis during the quarter.

 

“Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected,” said Doug McMillon, president and chief executive officer, adding that the company’s “underlying business is solid, and I’m confident in our long-term strategies.”

 

Operating income fell at Wal-Mart U.S. and Sam’s Club but rose in the international unit.

 

In guidance, the company said it expected EPS from continuing operations of between $1.15 and $1.25 in the second quarter, below the analysts’ consensus expectation of $1.28. The discrepancy pushed shares of Wal-Mart down 2.6 percent, to $76.66, in pre-market trading Thursday.

 

At Menomonee Falls, Wisc.-based Kohl’s, net income slipped 15 percent in the three months ended May 3 to $125 million, or 60 cents a diluted share, from $147 million, or 66 cents, in the year-ago period. Analysts expected the most recent quarter to yield EPS of 62 cents.

 

Sales receded 3.1 percent to $4.07 billion from $4.2 billion, with same-store sales 3.4 percent lower.

 

“We did not achieve our first-quarter sales goals,” said Kevin Mansell, chairman, president and ceo, “but we were encouraged by the improvement in sales as the quarter progressed. Our teams managed our inventory levels appropriately and expenses were controlled throughout the organization during the quarter.”

 

Kohl’s stuck with previous full-year guidance for EPS of between $4.05 and $4.45.

 

Shares fell 3.2 percent to $52.30 in pre-market trading.

 

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