Socks and plus-size fashions are propping up the ailing apparel department at Wal-Mart Stores Inc.’s U.S. discount stores.
Comparable-store sales in softline goods, including apparel and home, fell in the third quarter, contributing to the chain’s 1.3 percent overall drop, which marked the retailer’s sixth consecutive quarterly decline. Adding in international operations and Sam’s Club, Wal-Mart Stores Inc. posted better sales and profits for the quarter and raised its guidance for the year.
Bill Simon, president and chief executive officer of Wal-Mart’s U.S. discount stores, said the apparel business was hurt by warmer than expected weather. But the merchandising shift toward basics appeared to be gaining some traction.
“As we cycle through the inventory based on our previous apparel strategy, we’re seeing improving sales trends,” said Simon on a recorded call for investors. “Our focus on the core customer has started to show areas of encouragement as sales of socks and underwear, ladies plus sizes and activewear outperformed the rest of apparel. We’re pleased with the expansion of our plus-size offering across all of ladies.”
Simon succeeded Eduardo Castro-Wright in June and opted not to hire a replacement for chief merchant John Fleming, who resigned in July.
The U.S. discount division has added nearly 10 million square feet of retail space since last year and decreased its operating expense by $61 million. Operating profits at the division inched up 1.9 percent to $4.4 billion in the quarter on a 0.1 percent dip in total sales to $62.18 billion.
The unit’s comp sales for the fourth quarter are expected to range from down 1 percent to up 2 percent.
Wal-Mart’s international operations proved to be much more dynamic, with operating profits shooting up 13.5 percent to $1.22 billion on a 9.3 percent rise in sales to $26.92 billion.
Overall, net income attributable to the Bentonville, Ark.-based retailer rose 9.3 percent in the third quarter to $3.44 billion, or 95 cents a diluted share, from $3.14 billion, or 81 cents, a year earlier. Excluding a tax benefit, profits per share matched the 90 cents analysts expected.
Total revenues for the quarter ended Oct. 31 inched up 2.6 percent to $101.24 billion from $98.67 billion.
For the full year, Wal-Mart said its earnings per share would range from $4.08 to $4.12, up from the $3.95 to $4.05 range previously projected. Investors approved, and pushed shares of the company up 31 cents, or 0.6 percent, to $54.26 Tuesday.