Wal-Mart Stores Inc.’s back-to- basics approach is boosting its apparel business.
The retailer’s U.S. division posted the first full year of positive comp sales in apparel in seven years in 2012. Wal-Mart U.S. chief executive officer Bill Simon said the growth was the result of a new apparel strategy focused more on basics and essentials that was put in place more than a year ago.
“This quarter, we posted low-single digit positive comps driven by the improved quality of our offering,” he said.
Jewelry posted the best comps of the year during the holiday season.
The improved results in apparel and jewelry came despite softer overall sales in the fourth quarter ended Jan. 26 that continued into the start of February. On Thursday, Wal-Mart reported that net income in the quarter rose 8.6 percent to $5.61 billion, or $1.67 a diluted share, from $5.16 billion, or $1.50, in the comparable 2011 period. Revenues rose 3.9 percent, to $127.92 billion from $123.17 billion. Same-store sales were at the low end of Wal-Mart’s guidance, up 1 percent in U.S. stores, lower than the 1.5 percent increase registered in the year-ago quarter.
For the full fiscal year, net income rose 8.3 percent to $17 billion, or $5.02 a diluted share, from $15.7 billion, or $4.52. Revenues increased 5 percent to $469.16 billion from $446.95 billion.
Wal-Mart’s gains in the fourth quarter were aided by a lower than expected effective tax rate. Wal-Mart president and ceo Mike Duke said the company’s goals include strengthening the U.S. business, improving International’s returns, greater efficiency through disciplined capital allocation, investing in global e-commerce and, in a reference to the retailer’s alleged corruption scandal in Mexico and possibly other foreign markets, continuing to strengthen Wal-Mart’s compliance organization.
Compliance, according to Duke, is “non-negotiable.” He said the retailer’s compliance programs “significantly improved around the world in fiscal 2013. We’ve spent thousands of hours and millions of dollars with compliance experts on anticorruption support and training,” he said.
The retailer said same-store sales are expected to be flat for the first quarter compared with a 2.6 percent increase in last year’s first quarter.
“February sales started slower than planned, due in large part to the delay in income tax refunds,” Simon said in a prerecorded earnings call.
Wal-Mart expects EPS for fiscal 2014 to range between $5.20 and $5.40.