Wal-Mart Store – Wal-Mart Stores Inc.’s reported its first quarterly revenue gain in its U.S. namesake business in more than two years, but the discounter’s third-quarter profit slipped 2.9 percent, missing Wall Street expectations.
That company has reversed nine consecutive quarters of revenue declines in its branded stores in the U.S. is a positive sign in the midst of otherwise bad economic news. Wal-Mart is a bellwether in the U.S., and its core low-income shoppers have been particularly hard hit by joblessness and the other challenges of the nation’s weak economy. The results indicate that Wal-Mart’s latest strategy to focus on low prices and restock popular merchandise can get those most hurt by the downturn to spend.
“The plan is working,” said Mike Duke, CEO of Wal-Mart, in a pre-recorded call released Tuesday. “Customers are responding favorably.”
Wal-Mart said Tuesday it earned 97 cents per share, or $3.33 billion in the three-month period ended Oct. 31. That compares with 95 cents per share, or $3.43 billion, in the year-ago period. The year-ago results included a tax benefit of a nickel. Net revenue rose 8.2 percent to $109.5 billion.
Analysts had expected 98 cents per share on revenue of $108.86 billion, according to Factset.
Wal-Mart’s U.S. namesake division’s revenue at stores opened at least a year — an indicator of a retailer’s health — rose 1.3 percent. That beat Wall Street estimates for a 0.3 percent increase and reverses nine straight quarters of declines in the measure.
Overall, revenue at stores in its U.S. business opened at least a year rose 1.9 percent, including a 5.7 percent increase at Sam’s Club stores. Analysts had expected a 4.9 percent gain at the Sam’s Club division. Wal-Mart said that the gains in revenue at stores opened at least a year were fueled by an increase in the average ticket, though traffic was still down. Sales of food and health and wellness products, sporting goods, crafts and clothing were strong.
Wal-Mart has been working to rebound sales at stores open at least a year at its U.S. business, which have been hurt by the economic downturn and missteps the retailer made in its pricing and selection. The business is particularly important to Wal-Mart because it accounts for 62 percent of its total revenue. The latest results show Wal-Mart’s strategy may be working.