Walmart’s Q1 2013 Results – Comments

I found various notable items in Walmart’s Q1 2013 earnings call transcript (pdf) dated May 17, 2012.  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” label.

Here are various excerpts that I find most notable:

comments from Mike Duke, page 7:

I’m pleased that Walmart U.S. grew comp sales 2.6 percent. It was our best quarterly comp performance in three years and was well above the top end of our guidance range. Walmart U.S. not only delivered top line, they also delivered impressive profitability, with operating income growing faster than sales.

comments from Bill Simon, page 14:

Price was the focus of our first quarter marketing, and this will continue to be a key message this year.

comments from Bill Simon, page 14:

Let’s review the financial details for the first quarter. Net sales were up 5.9 percent to $66.3 billion for the quarter. Gross profit was up 4.9 percent to $18 billion. Gross profit rate was down 24 basis points versus last year as we continue strategic price investment. We expect this trend to continue during the year.

comments from Bill Simon, page 16:

While grocery inflation moderated slightly to approximately 3 percent for the quarter, customers are still trading down to lower price points and smaller pack sizes. Trade down and other initiatives reduced the net inflation impact on our customers to between 50 and 150 basis points.

comments from Bill Simon, page 18:

The overall economy is still our customers’ main concern. In particular, they remain concerned about job security or the availability of jobs, followed by gas and energy prices, and rising food costs. Food is consistently the top monthly expense outside of housing and vehicle payments.

comments from Bill Simon, page 19:

Our price investment strategy will gradually reduce what our customers pay, and thus our gross margin rate as well.  We will focus on productivity initiatives and expense management, which will continue to drive results to the bottom line.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1309.18 as this post is written