Asda owner Walmart has reported same-store sales in the US fell by 0.3 per cent in the second quarter of the year – missing analyst expectations of a one per cent rise (release).
Walmart revised down its full-year earnings per share (EPS) expectation to a range of $5.10 to $5.30 from the previous range of $5.20 to $5.40).
However, its not the US business that is giving it trouble. Operating income in the US grew by 5.2 per cent over the quarter - compared to just 1.3 per cent in the international division.
President and chief executive Mike Duke said:
We delivered a solid increase in earnings per share for the second quarter. Consolidated net sales and our Walmart U.S. comp were below expectations. While the retail environment was challenging across all of our markets, the Walmart U.S. and Sam's Club businesses improved comp sales from the first quarter, and the growth of International sales was consistent.
I'm encouraged by our position to execute in the second half of the year, particularly with the steps we're taking to improve performance. There are areas of our business where we can do a better job, and we will. I'm confident in our associates' abilities to deliver for our customers with EDLP and for shareholders with improved expense savings.
Asda performed well, with like-for-like sales excluding VAT and fuel growing by 0.7 per cent in the 12 weeks to 5 July. Operating income grew seven per cent in the period.
Walmart International president and chief executive Doug McMillon said the UK is an example of where Walmart is "leading with a core strength, investing in price on essential food items".
However, he warned that the British consumer "remains under pressure" and said Asda had invested to ensure "lower inflation across the overall basket for our UK customers".
Overall, the company reported a 0.8 per cent boost in pre-tax income ($6.24bn) and a 4.2 per cent increase in basic earnings per share ($1.24). Revenue rose to $116.2bn.
Speaking at a results briefing this morning, Asda president and chief executive Andy Clarke said he was "pleased" with Asda's performance.
We continued to grow our sales while also investing in holding down the price of essentials, increasing access points to Asda’s value and putting money back in customers’ pockets when they need it the most.
Our focus on opening up more ways for more customers to shop with us, particularly in areas currently underserved by Asda, provides us with real opportunity to grow space and channels to adapt our business to today’s customer.
I’m confident this focus will continue to drive growth in a sustainable way.
Looking ahead to the end of the year, the retailer said it expects three quarters of its customers to shop through "multiple channels" this Christmas, including online and in-store.