Walmart’s Q4 2015 Results – Comments

I found various notable items in Walmart’s Q4 2015 management call transcript (pdf) dated February 19, 2015.  (as well, there is Walmart’s press release of the Q4 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 management call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Doug McMillon, President and CEO, page 4:

Now clearly, our sales benefitted from customers having more spending power due to lower gas prices in most of our large markets. In addition, product inflation and more favorable weather were a tailwind to U.S. comp sales.

comments from Doug McMillon, President and CEO, page 7:

Value matters to everyone, regardless of household income level, and digital access creates even more price transparency. Being the low price leader has been a part of our customer proposition; and it will continue to be a priority in the future.


Walmart U.S. improved its sales and operating income trends each consecutive quarter during fiscal 2015. Fourth quarter comp sales were the strongest in more than 2 years, with positive traffic for the first time in 9 quarters. Our Neighborhood Markets have continued to deliver strong comps. Our emphasis remains on the quality of the stores that we open, not the quantity.

comments from Greg Foran, president and CEO of Walmart U.S., page 13:

First, we believe associates equally value their hourly rate and hours worked. We’re happy to announce improvements to both aspects of associates’ earning opportunity. Current and future associates will benefit from this initiative, which ensures that Walmart hourly associates earn at least $1.75 above today’s federal minimum wage, or $9.00 per hour in April. And current associates will earn $10.00 per hour or higher by next February.

comments from Greg Foran, president and CEO of Walmart U.S., page 16:

And finally, we saw strong performance from our Neighborhood Market format. While all formats experienced positive sales comps, our traditional Neighborhood Markets continue to outperform Walmart supercenters and discount stores, providing customers with the products and services they desire at locations that are convenient to them. Our traditional Neighborhood Markets delivered approximately a 7.7 percent comp for the quarter.

comments from Greg Foran, president and CEO of Walmart U.S., page 17:

Now let me cover our full-year financial performance. For the year, net sales increased 3.1 percent, or $8.6 billion, to $288 billion. Comp sales improved 0.5 percent for the 52-week period ended January 30, while operating income declined 2.1 percent to $21.3 billion. Gross profit improved 2.6 percent for the year, with a 12 basis point decline in gross profit rate. This was primarily driven by price investments in meat and preferred Medicare prescription plans.

comments from Greg Foran, president and CEO of Walmart U.S., page 18:

In FY16, we expect to open approximately 60 to 70 supercenters, including relocations and expansions. Additionally, we’ll open an estimated 180 to 200 Neighborhood Markets, including 10-15 smaller-format locations, as we complete our openings of this test program. We’ll continue to monitor the progress of these test locations before making any further commitments to this format. We expect to add approximately 15 to 16 million retail square feet this year.



The Special Note summarizes my overall thoughts about our economic situation

SPX at 2098.19 as this post is written