Walmart’s Q3 2013 Results – Comments

I found various notable items in Walmart’s Q3 2013 earnings call transcript (pdf) dated November 15, 2012.  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, page 8:

Walmart U.S. posted a comp sales increase of 1.5 percent, and delivered approximately $2.3 billion in net sales growth.


Price will continue to be a major factor for customers over the holidays. Our strong price position and broad assortment are clear competitive advantages in an economy where customers may still be cautious with their budgets.

comments from Mike Duke, page 9:

Across all of our markets, we are seeing the same price consciousness as we do in the U.S.

comments from Jeff Davis, page 11:

Consolidated gross profit rate was 24.5 percent, a 13-basis point reduction compared to the same time last year. You will hear more from our segment CEOs regarding their price investment in just a few moments.


With respect to operating expenses, the company leveraged expenses by 17 basis points, which covered the 13-basis point investment in gross profit rate. We are pleased to have delivered operating leverage for the quarter, despite the $105 million in pre-tax items I mentioned earlier.

comments from Bill Simon, page 14:

The earlier launch of our expanded layaway program generated approximately $300 million in additional third quarter volume versus last year, most of which we will recognize in the fourth quarter when the customers pay for and pick up the merchandise.

comments from Bill Simon, page 16:

Gross profit increased $443 million versus last year to $18.3 billion.  During the third quarter, gross profit rate decreased 30 basis points year-over-year, as we continued to reduce margin and execute the strategic price investments.

We also continue to significantly leverage expenses. For the quarter, operating expenses grew only 1.8 percent, half the rate of sales growth. Even with the impact of higher field incentive payouts this quarter, our team leveraged operating expenses as a percentage of sales by 37 basis points.

comments from Charles Holley, page 36:

While we are optimistic about sales, we are also realistic. Current macroeconomic conditions continue to pressure our customers.


The Special Note summarizes my overall thoughts about our economic situation

SPX at 1352.93 as this post is written