Wal-Mart (WMT) doesn't give analysts a crack at its execs with a live conference calll, but did provide some commentary on a pre-recorded message.
Despite a strong performance from the Neighborhood Markets concept during Q2, margins dipped 70 bps for Wal-Mart U.S. and comps were flat. Strength was seen in the health and wellness category, while the entertainment business was a drag.
Sam's Club saw a gross profit rate loss of 50 bps during the quarter, of which 23 bps are attributed to the investment in Cash Rewards. Product mix and promotions were also factors.
Wal-Mart International's strong performances in Brazil and Japan helped to offset margin pressures at Walmex and in Canada.
Guidance includes a bump in health care costs to $500M from $330M for Wal-Mart's fiscal year.
Earnings call transcript (.pdf)