First-quarter net income increased 3.8% to $3.4 billion, or $0.97 per share. Revenue increased 4.4%, to $103.4 billion. However, Wal-Mart's U.S. same-store sales figure, the metric we've all been focused on, fell 1.1%. This marks the eighth consecutive quarter in which Wal-Mart's U.S. comps have decreased.
If you're looking for a bright spot, Wal-Mart's international sales jumped 11.5%, to nearly $28 billion. The company described its international business as a "growth engine." That's good, since the U.S. engine appears to have stalled, and doesn't want to start up again.
As much as Wal-Mart's international growth is helpful, ongoing attempts to add fuel to that particular growth engine won't always work out as planned. For example, it's currently grappling with difficult terms related to purchasing South Africa's Massmart, and it might retreat from that market.
The U.S. has its share of economic difficulties right now, including commodity inflation, nosebleed gas prices, and other grim realities that require thinking twice before investing in grocers and other retail stalwarts. Wal-Mart's tendency toward deep discounting doesn’t help it compete very well domestically these days.
Wal-Mart's misery doesn't really have company, though. Back in March, warehouse discounter Costco
Costco's a formidable rival, but it's hardly the only one vying for bargain-hunting consumers. Family Dollar
Furthermore, for some time now Wal-Mart's been warning that its core customers are living paycheck to paycheck more than ever. Apparently the company's most frequent shoppers simply aren't well-insulated to the skyrocketing U.S. cost of living right now. That doesn't help any of the other discount players, either.
You'd think economic hard times would make things easy for the retailer, but Wal-Mart's recent sad U.S. sales performance says otherwise. Investors should steer clear until it shows clear signs of revving up its U.S. sales engine once again.