Walmart’s Q3 2015 Results – Comments

I found various notable items in Walmart’s Q3 2015 management call transcript (pdf) dated November 13, 2014.  (as well, there is Walmart’s press release of the Q3 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” label.

Here are various excerpts that I find most notable:

comments from Greg Foran, president and CEO of Walmart U.S., page 10:

Now, let’s turn to this quarter’s performance. Net sales grew $2.3 billion, or 3.4 percent. For the 13-week period ended October 31, comparable sales were up 0.5 percent. This is the first positive comp for the Walmart U.S. business in 7 quarters, despite approximately 70 basis points of impact from SNAP-related headwinds. Ticket was up 1.2 percent, while traffic declined 0.7 percent. Note that traffic improved 40 basis points from Q2 and 70 basis points from Q1.

comments from Greg Foran, president and CEO of Walmart U.S., page 11:

Shifting to the remainder of our financial results … Gross profit rate declined 22 basis points. This was driven primarily by pharmacy cost inflation and reductions in third-party reimbursement rates. Additionally, we’ve continued price investment in key categories such as meat and preferred Medicare plans in pharmacy.

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

As we enter the fourth quarter, we see both opportunities and challenges ahead of us. We lapped the approximately 6 percent reduction in SNAP benefits on November 1. Additionally, gas prices are considerably lower this year than a year ago, which may give customers a little more discretionary spending power in the coming months. And as I just discussed, we’re enthused by our holiday plans across the box and online. However, we expect this holiday season to be highly competitive, and we’re mindful that the entertainment business, which comprises a larger percentage of overall Q4 sales, is up against continued deflation and a lack of new product innovation. We’ll continue to see pressures to the bottom line as we balance wage leverage with higher customer service standards.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2042.73 as this post is written