Wal-Mart cuts profit forecast on sluggish Q2
Bentonville, Ark. – Wal-Mart Stores Inc. stayed the course in the second quarter, delivering profit within Wall Street expectations, but cut its forecast for the full year as its U.S. business remains lackluster and costs associated with building new smaller-format stores, healthcare and e-commerce improvements continue to rise.
Consolidated net income in the second quarter edged up 0.6% to $4.1 billion from $4.07 billion in the year-ago period. Net sales rose 3% to $119.3 billion from $116.1 billion and U.S. same-store sales without fuel were flat. Traffic in U.S. stores was negative for the seventh consecutive quarter as the world’s largest retailer struggles to turn its domestic business around.
On the international front, Wal-Mart has showed continued strength; every country except China saw positive same-store sales.
CEO Doug McMillon pointed to the international strength, as well as e-commerce and Neighborhood Market sales in the U.S., as bright spots in the quarter. Same-store sales at Wal-Mart’s Neighborhood Market stores increased 5.6% over last year. Wal-Mart opened 22 Neighborhood Market stores in the second quarter and plans to add between 180-200 for the year. "We really like the position of our smaller stores,” CFO Charles Holley said in a media call.
Thursday’s results didn’t surprise Wall Street, which had low expectations leading up to the report. U.S. CEO Bill Simon’s recent departure left investors concerned that efforts to improve store merchandise and operations had not made a meaningful difference on sales and traffic.
Wal-Mart said it now expects earnings for the year of $4.90 to $5.15 a share, down from its previous range of $5.10 to $5.45 a share. U.S. comparable-store sales in the three months ending Oct. 31 should be relatively flat, the company said.
Advance Auto winning in hot retail sector
Advance Auto Parts demonstrated strength in its second quarter performance in one of the retail industry’s hottest sectors.
The company said its sales increased 51.5% to $2.35 billion, reflecting the inclusion of the acquired General Parts business. Same store sale increased 2.6%. The operator of 5,289 stores said profits on an adjusted basis to account for non-recurring acquisition related costs for the second quarter ended July 12 increased to $153.2 million, or $2.08 a share, compared to $117.7 million, or $1.60 a share. The improvement came despite the fact that gross margins contracted to 45.2% of sales from 50.3% of sales as commercial customers accounted for a larger portion of Advance Auto’s overall business.
"We are pleased with our second quarter performance led by strong execution from our team members delivering comparable cash EPS growth of 30% and an increase in comparable store sales of 2.6% in the quarter," said Advance CEO Darren Jackson. "We remain on pace against our base business expectations, integration milestones and with our financial performance.”
CFO Mike Norona said the favorable second quarter sales performance and synergy savings related to the merger would allow the company to exceed earlier earnings estimates.
“We are pleased with the continued progress made during our second quarter delivering positive sales performance and approximately 34% growth in Comparable Operating Income dollars,” said Mike Norona, Executive Vice President and Chief Financial Officer.
“We continue to stay focused on our base business while meeting our integration milestones to date and remain confident in achieving our full year synergy estimates,” Norona said. Given our performance in the first half of the year and the execution and integration momentum we continue to build, we are raising our full year guidance for comparable cash EPS to be in the range of $7.50 to $7.60.”
Fatburger pilots CurbStand valet app
Los Angeles – Fatburger is piloting CurbStand, the iOS app that allows users to seamlessly locate, pay and tip for valet parking from their mobile devices. For a limited time, customers at the Fatburger West Hollywood and Downtown Los Angeles locations can use the free CurbStand app, with plans for additional locations in the future.
The CurbStand app is used in three steps: Selecting the nearest valet with CurbStand’s geolocator map, viewing the valet rate for the selected parking location and confirming the payment type and amount – including an option to tip, and showing the app-generated reference number to parking personnel, with a receipt automatically emailed.