Latin Music Week

Big Box Retailers Report Quarterly Earnings, Move on Without Much Music

Slaven Vlasic/Getty Images for Target
Nick Jonas during his performance at Target Studio on June 9, 2016 in New York.

But the impact of music sales is unclear.

In a weak retail environment, Walmart managed to eke out gains in earnings and sales for the three-month period ending July 31, when it produced $3.77 billion in net income ($1.21 per diluted share) on sales of $20.85 billion. That compares with the $3.48 billion in earnings ( $1.08 per share) on $20.23 billion in sales for the corresponding three-month period in 2015, which means the company had a slight 0.5 percent gain in sales and an 8.6 percent gain in net income.

Meanwhile, Walmart’s main brick-and-mortar rival, Target, saw net income fall 9.7 percent to $680 million ($1.16 per share) on sales of $16.17 billion for the three-month period ending July 30. That contrasts with the $753 million ($1.18 per share) for the same period last year, when sales were $17.43 billion.

To compare, Amazon's second-quarter results from this year saw that company making $30.4 billion in net sales and $847 million in net income.

Neither Walmart or Target break out individual inventory lines, let alone music. In order to see how they are doing in music we have to look at alternative data from  Nielsen Music, which  indicates that mass merchant sales are down a whopping 24 percent, as the segment has produced album sales of 21.22 million album units so far this year, versus 28.02 million last year.

In addition to the overall decline in music sales as consumers switch to streaming, both chains have been consistently reducing their presence in music, which has also impacted the music industry.

Walmart attributed the increase in its sales volume to the company’s eight consecutive quarters of gains, with U.S. stores open for more than a year producing a 1.6 percent increase in sales. That was offset by a drop in international sales, which fell to $28.6 billion from $30.6 billion. The company’s net income for the first half of 2016 is $6.85 billion ($2.18 per share) on $234.4 billion in sales, versus the corresponding period in 2015 when it produced $6.82 billion ($2.11 per share) on sales of $233.33 billion.

A bright spot for Target is that its online stores produced a 16 percent increase in sales, although the amount was not broken down in the financials. Yet, overall the brick-and-mortar stores account for 96.7 percent of sales, while digital accounts for 3.3 percent, amounting to $544.6 million. That’s up from $470 million, or 2.7 percent of total sales, in the same period last year.

Wall Street reacted negatively to the Target results with its per share price dropping 6.4 percent to $70.63 from $75.50. Today, Wall Street is responding positively to the Walmart earnings report with shares trading up 2 percent at $74.24 at 11:30am EDT, versus its prior day close of $72.93.