Meat helps drive strong Q2 performance for Walmart

By Carina Perkins

- Last updated on GMT

Meat helps drive strong Q2 performance for Walmart

Related tags Net sales Revenue Beef

Retail giant Walmart has reported strong sales in the second quarter of fiscal 2013, driven partly by outstanding performance from the company’s meat department in the US.

Overall net sales for Q2 were $113.5bn, up 4.5% from $108.6bn in the same period last year. This included a negative currency exchange rate impact of around $2.2bn, without which the company estimated net sales would have been $115.7bn.

Mike Duke, Walmart president and chief executive officer, said: “Walmart had a strong second quarter, and I’m pleased with the earnings and overall results. We had positive sales in Walmart US and Sam’s Club, as well as each of our international markets, reinforcing that customers rely on Walmart to help them save money and live better.”

Total revenue increased 4.5% to $762m in Q2, with income from continuing operations up 5.7% on Q2 last year, reaching $4.0bn. Operating income grew faster than sales, with consolidated operating income up 4.9% from last year to $6.7bn.

“It should be no surprise to hear me say that our company leveraged operating expenses again this quarter. Our intense focus on delivering productivity and reducing costs allows us to invest in lower prices for our customers and to deliver strong profitability for our shareholders,”​ Duke told investors.

International growth

Walmart US performed well, generating a 2.2% comparable sales rise in the 13-week period ended 27 July – the fourth consecutive quarter of comparable sales growth. Within this, grocery delivered a single-digit positive comparable sales rise for Q2, driven primarily by strong performance from the meat department, which outperformed the rest of the food business by approximately 300 basis points.

The company attributed this performance to the USDA Choice steaks programme, which offers customers USDA-certified steaks, packaged fresh and have a 100% money-back guarantee.

“The unmatched combination of quality and value has resonated with a large number of our customers, including many who had not previously shopped our meat department,”​ said Walmart US president Bill Simon.

However, Walmart International was the biggest driver behind sales growth and profitability, with net sales for Q2 up 6.4% and operating income up 5.4%. The company said its three major markets – the UK, Mexico and Canada – “collectively delivered stable growth, solid margins and expense leverage, despite challenging environments”.

Looking to the future, Duke said he was confident in the company’s continued performance, despite challenging market conditions. “The paycheck cycle remains pronounced in the US and in our international markets. Given continuing economic pressures, we believe that our price leadership and value are growing in importance to customers across income levels.”

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