Interesting and Confusing Results for Wal-Mart
By George Anderson
Wal-Mart’s chief executive, Lee Scott, in a conference call with analysts yesterday described the company’s recent fiscal quarter as “one of the most interesting and, in some ways, confusing” in recent history.
The retailer’s total sales, while falling below plan, still grew 9.7 percent, and operating income was up 16.3 as a result of accounting changes and purchasing efficiencies.
Jennifer Web, director of investor relations, Wal-Mart announced that the company planned to open “around 210 Supercenters, which is at the high end of our previously announced range.” She added that the company would “reduce the number of Neighborhood Markets to allocate management appropriately.” Wal-Mart now plans to open between 15 and 20 Neighborhood Markets.
Other highlights of the conference call included Tom Coughlin’s account of the McLane sale negotiations with Warren Buffet. “I have never experienced anything like it before. Grady Rosier, Jim Kent and I met with Warren on Thursday April 24th and precisely one week later we were able to announce the sale to the public.”
Mr. Couglin called the McLane deal a win-win situation, allowing Wal-Mart to focus on retailing while eliminating the objections of some to dealing with a Wal-Mart owned company.
International sales were up 14.3 percent and operating profits grew by 13.3 percent.
Moderator’s Comment: What is your analysis of the latest
Wal-Mart financial results?
- Most others would love to be disappointed with sales
growing a measly 10 percent or so. - Despite the acreage needed and fights from local groups,
supercenters are a long way from reaching the saturation point in the US.
Look for Wal-Mart to continue opening supercenters while slowing down new
store openings of other formats. - Wal-Mart should pack its bags and leave Germany. Comparable
store sales were in mid-single digit negative territory. Asian sales were
also off, but SARS has hurt retailing in that area of the world. [George
Anderson – Moderator]