The retailer reported total U.S. comparable sales rose 4% in Q1 to top the consensus estimate for a 2.2% increase. Comparable sales were 3% higher at Walmart stores with transaction growth flat and average ticket up 3%. Comparable sales rose 10.2% at Sam's Club locations in the U.S. off transaction growth of 10.0%.
Consolidated gross profit rate declined 87 basis points during the quarter, primarily due to Sam’s Club and 38 basis points in Walmart U.S. on elevated supply chain costs and product mix.
Consolidated operating expenses as a percentage of sales increased 45 basis points, primarily due to increased wage costs in Walmart U.S.
Operating income fell to $4.5B for Walmart U.S. from $5.5B. Operating income dropped to $0.8B for Walmart International from $1.2B. Operating income for Sam's Club was $0.5B vs. $0.6B a year ago.
CEO update: "Bottom line results were unexpected and reflect the unusual environment. U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than expected. We’re adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future."
Looking ahead, Walmart (WMT) now sees Q2 EPS and consolidated operating income to be flat to up slightly and full-year EPS to be down about 1%. Comparable sales at Walmart U.S. are seen rising 4% to 5% without factoring in fuel sales.