What to Expect from Walmart’s Fiscal 2Q18

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Part 3
What to Expect from Walmart’s Fiscal 2Q18 PART 3 OF 5

How Walmart’s Segment Sales Are Trending

Walmart US to drive top line growth

Wal-Mart Stores’ (WMT) US segment, which accounts for the majority of its sales and profits, is seeing improved sales trends. The US (SPY) segment has witnessed ten consecutive quarters of positive comparable same-store traffic.

During the last reported quarter, the segment’s sales rose 2.9% YoY (year-over-year) to $75.4 billion, with store traffic improving by 1.5%. Comparable same-store or comps sales rose 1.4% on higher store traffic, which was partially offset by a 0.1% decline in the average ticket, on account of lower sales of big-ticket items and increased price investments.

How Walmart’s Segment Sales Are Trending

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The segment is expected to report healthy top-line growth, driven by the rise in store traffic and higher digital sales. Walmart’s management expects the US segment’s comps to increase in the range of 1.5%–2.0% in fiscal 2018.

By comparison, Target’s (TGT) comps fell during the last reported quarter. However, Target’s management projects modest improvement in comps for its upcoming quarter. Costco Wholesale (COST) is expected to report strong sales numbers driven by industry-leading comps growth.

Foreign exchange to impact Walmart’s international business

Walmart’s International segment is projected to mark a YoY (year-over-year) decline in sales as the improved performance in the Walmex region (Mexico and Central America), and Canada is likely to be offset by currency headwinds. During the last reported quarter, the segment’s sales fell 3.5%, as adverse currency movements took a toll on its top line growth rate. However, Mexico and Central America continued to report positive comps growth.

Sam’s Club to see improved sales

Walmart’s Sam’s Club sales are expected to benefit from the company’s strategic initiatives aimed at driving store traffic and e-commerce. The company’s Club pickup and the direct-to-home offerings are seeing improved trends.

Meanwhile, value pricing and vast offerings have further supported sales growth. The company’s digital initiatives are also picking up the pace and contributing meaningfully to the top-line growth rate.


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