I really hope no one out there is surprised by this..
Back in April I said folks ought to get used to Wam-Mart (WMT) increasing its guidance. Today was no exception.
Wal-Mart reported a 5.8% increase in same store sales for the five weeks ending 7/4. Wal-Mart US was 6.1%, Sam’s Club was 4.6%. International sales held strong at 25% of the total.
Wal-Mart U.S.
All six merchandise units (grocery, entertainment, health and wellness, apparel, home and hardlines) achieved comparable store sales increases in the June five-week period. The strongest results remain in grocery, entertainment and health and wellness. Favorable weather and improved assortments helped drive seasonal sales in apparel, toys and hardlines. In addition, the economic stimulus checks contributed to increases in overall comparable store traffic results.
“Our underlying business is strong because of price leadership, clearly defined product offerings and a better store experience that continue to drive customers to our stores,” said Eduardo Castro-Wright, Wal-Mart U.S. president and chief executive officer. “Customers like what they are seeing and they’re shopping more of the store. Assortments and brands have improved, which bodes well for the upcoming seasons, including back-to-school.”
Sales in entertainment were strong, with flat panel television sets continuing to run high double-digit comparable store increases. Within apparel, sales of swimwear and sportswear were strong.
Sam’s Club
Sam’s Club sales during the June period had strengths in fresh foods, dry grocery and consumables. Video games and mattresses were among the best performing general merchandise categories. House wares and jewelry were soft. Seasonal hardline sales were also behind plan.
“Both traffic and ticket continued to increase with both our Business and Advantage members in June, even excluding fuel sales,” said Doug McMillon, Sam’s Club president and chief executive officer. “We continue to see a shift in the overall mix toward fuel, food and consumables, as our members manage through the current environment. Small business is especially price conscious in this environment and we remain committed to delivering value for them.”
Fuel sales were higher both in gallons and dollars sold, increasing comparable club sales with fuel by 3.7 percentage points. The transition of the clubs to back-to-college and fall merchandise is on schedule for later in the month.
“Our estimate for U.S. comparable store sales, excluding fuel, for the July four-week period is between two and four percent,” said Tom Schoewe, executive vice president and chief financial officer. “The Wal-Mart U.S. underlying business remains strong. However, consumers and small business owners remain concerned about the economy, inflation and most of all, higher gas prices. With the last large mailing of economic stimulus checks due this Friday, it is difficult to forecast the benefit from the economic stimulus through the remainder of the year.
“Because of our improved sales results during the quarter, we have updated our guidance estimate for earnings per share for the second quarter of fiscal year 2009 to a range of $0.82 to $0.84,” Schoewe said.
This all goes back to last fall when the “Save More Live Better” campaign was rolled out. At the the time I said:
“What Wal-Mart does with the ads is remind you what you can do with the money you save at their stores. Rather than the previous ad campaign that only told you they had “low prices” they are now saying “look at the fun things you can do with the money you save”. The images of a family vacation with the kids is sure to spur memories in people of their childhood and the desire to create similar memories with their kids”
It has resonated as folks pinched by fuel prices are going to Wal-Mart to stretch their dollars and be able to afford those very vacations in the commercial. It was the perfect campaign at the perfect time.
You know, I was hard on Scott for a while last year and actually called for him to go. Not long after he seems to have become far more shareholder friendly.
Glad I was wrong about him…… 🙂
Disclosure (“none” means no position):Long WMT, None
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