Walmart’s Q2 2015 Results – Comments

I found various notable items in Walmart’s Q2 2015 management call transcript (pdf) dated May 14, 2014.  (as well, there is Walmart’s press release of the Q2 results)

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 Greg Foran, president and CEO of Walmart U.S., page 9:

Let me provide some additional detail. In Q2, net sales for Walmart U.S. grew $1.9 billion. For the 13-week period ended August 1st, we delivered a flat sales comp; and this was despite a SNAP-related headwind of about 70 basis points. Ticket was up 1.1 percent, while traffic was down 1.1 percent, a 30 basis point improvement over Q1. Our e-commerce business, including store-fulfilled sales, delivered double-digit sales growth and contributed approximately 30 basis points to the total Walmart U.S. comp sales growth.


For gross profit, we continued to invest in price, particularly in the categories of meat and health & wellness. That investment, blended with sales mix, resulted in a gross margin decline of 7 basis points versus last year.

comments from Greg Foran, president and CEO of Walmart U.S., page 10:

The combination of gross margin investment and expense deleverage resulted in an operating income decrease of 2.4 percent for Q2. We expect operating income to remain challenged for the balance of this fiscal year, given the increased health-care costs and our commitment to price investment and customer service.


Neighborhood Markets continued to perform well and delivered an approximate 5.6 percent sales comp for the 13-week period. Sales were particularly strong in pharmacy, produce, meat, and adult beverages. Comp store traffic grew 4.1 percent. During Q2, we opened 22
Neighborhood Markets and remain on track to deliver 180 to 200 new units for the year.


The Special Note summarizes my overall thoughts about our economic situation

SPX at 1955.18 as this post is written