Business
Walmart reported higher-than-expected Q1 profit and revenue.
Reuters reports:
Wal-Mart Stores Inc (WMT.N) on Thursday reported a higher-than-expected quarterly profit as increased drug prices and solid demand for basic apparel items boosted sales, and its shares jumped more than 7 percent. The company's performance bucked a string of weak results from competitors. On Wednesday, rival Target Corp (TGT.N), which caters to a higher-income customer than Wal-Mart, gave a cautious outlook and reported a lower-than-expected rise in quarterly sales due to unseasonable weather and soft demand. "It looks like the middle-to-higher-income customers have cut back, but the lower-income customer is spending," said Edward Jones analyst Brian Yarbrough. The upbeat results also suggest Wal-Mart may be benefiting from its $2.7 billion investment to increase entry-level wages and in training of its workforce. Store visits rose 1.5 percent in the first quarter ended on April 29. "Overall a pretty strong quarter," Chief Financial Officer Brett Biggs said in an interview. “We are very pleased with the traffic increases, and I think that goes along with what we are seeing with customer experience scores that continue to improve.” Lower utility costs resulting from warmer-than-usual winter weather also supported profitability, Wal-Mart said.
On Monday, Wal-Mart announced it had signed an expanded sourcing deal with McKesson, which will help lower costs as the retailing giant and U.S. drug distributor expand an alliance for jointly procuring generic medicines. The deal is aimed at "using our combined size and scale to drive efficiencies," George Riedl, senior vice president and president of the health and wellness division at Wal-Mart in the U.S., said in a statement. Wal-Mart also made headlines earlier this month when it said it was suing Visa for allegedly forcing the retailer to let customers use signatures when paying with their chip-based debit cards. "PIN is the only truly secure form of cardholder verification in the marketplace today, and it offers superior security to our customers," Wal-Mart said in a Tuesday statement.
The Wall Street Journal notes:
Wal-Mart’s results stand out from a list of retailers with disappointing starts to the year. On Wednesday, Target Corp. reported that consumers pulled back on spending, with its chief executive citing “an increasingly volatile consumer environment.” Soft results from department stores like Macy’s Inc. and Nordstrom Inc. illustrated shoppers’ shift away from brick-and-mortar stores and spurred declines across the retail sector. Wal-Mart gets more than half its revenue from grocery products, which analysts have said could shield it from some of the pressures on brick-and-mortar retailers, as food shopping has been slower to shift online. Executives have said they are working to improve the grocery business, ensuring foods freshness and offering a wider selection of brands. Results on Thursday showed low-single digit growth in grocery sales, in part due to deflationary pressures.
