I found various notable items in Walmart’s Q1 2014 earnings call transcript (pdf) dated May 16, 2013. I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices. I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.
Here are various excerpts that I find most notable:
comments from Mike Duke, president and CEO of Wal-Mart Stores, Inc, page 4:
As you know, I like to visit customers in their local markets around the world. I recently traveled to stores throughout South America and the U.S. It’s gratifying to see how important EDLP is for our customers. Our mission is simple and focused – to help people save money so they can live better.
comments from Jeff Davis, EVP of finance and treasurer of Wal-Mart Stores, Inc, page 6:
Gross profit increased 1.2 percent, primarily driven by supply chain productivity and merchandise mix within our U.S. business segments. The gross profit rate was relatively flat to last year.
comments from Bill Simon, president and CEO of Walmart U.S., page 10:
Similar to what you’ve heard from companies in various industries that have reported earnings, top line revenue was challenged by a number of issues. These included a $9 billion reduction in IRS estimated tax refunds versus last year, and we cashed less in income tax refunds than the prior year. Additionally, the 2 percent increase in payroll taxes, reduced inflation and some of the most unfavorable spring weather we’ve seen in recent years across much of the country impacted our business.
In addition, as we gave guidance last quarter, we expected an increase in the level of grocery inflation, but it did not materialize in a meaningful way. We experienced very modest inflation, much lower than last year, and in fact, we had some deflation in areas like dry grocery.
comments from Bill Simon, president and CEO of Walmart U.S., page 11:
Our commitment to the productivity loop is a long-term, sustainable strategy. We will continue to be strategic about the price investments, monitoring competitor price gaps, market share and other data to ensure we maintain an appropriate balance between price investments and margin.
comments from Bill Simon, president and CEO of Walmart U.S., page 16:
This year started with many challenges for our core customer; nevertheless, I’m confident in our position and in the ability of our teams to execute. We believe that our strategy works under any economic environment and our underlying business remains strong.
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1667.47 as this post is written