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Walmart Inc
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Greetings and welcome to Walmart's Fiscal Year 2019 First Quarter Earnings Release. [Operator Instructions].
I’d now like to turn the conference over to Kary Brunner. Please go ahead.
Thanks, Rob. Good morning everyone This is Kary Brunner and I'm here with the rest of the Walmart Investor Relations team. Thanks for joining us on the call today. I will begin with a brief overview and then we will open it up for questions. As a reminder our Q1 press release, management commentary and accompanying slide presentation are available on the investor relations portion of our corporate website. We may make forward-looking statements during this call which are subject to certain risks, uncertainties and other factors identified in the Safe Harbor statement on our website at stock.walmart.com and in our quarterly and annual SEC filings. I would like to point out that this quarter the Company revises corporate overhead allocations to the operating segments. Accordingly previous operating income was recast to be comparable to the current period's presentation. So now let me discuss our Q1 results. Overall we had a solid quarter across the company. We are encouraged by the progress made across the business and the continued momentum we are seeing. On a constant currency basis consolidated net sales were up 2.7%.
Adjusted EPS was a $1.14, a 14% increase versus last year. You would have noticed GAAP EPS was $0.72 per share, the main difference versus adjusted EPS is related to the new accounting rule which requires us to recognize gains or losses on some equity investments. During this quarter jd.com stock decreased in price causing the accounting loss but we still have a solid gains in the shares since we acquired our stakes.
Our U.S. comp sales increased 2.1%, our comp was trending higher through early April but general merchandise sales and traffic were somewhat negatively impacted by cool weather in April. This business has picked up again as the weather normalize. We would have seen that our Walmart U.S. e-commerce sales accelerated in the first quarter with 33% growth contributed 100 basis points to the comp. Walmart International had another strong quarter of top and bottom line growth, were eight of 11 markets reported positive comps including our four largest markets. The earlier timing of Easter help pull some sales forward into the first quarter in a few market. Sam's Club comp sales were driven by strong comps traffic. As in past years we will update certain full year guidance with our second quarter release. So in closing we have good momentum in the business. We're focused on distributing customers more effectively and we're executing on our strategy. With that we would be happy to take your questions.
[Operator Instructions]. Our first question today comes from the line of Oliver Chen with Cowen & Company. Please proceed with your question.
Our question is regarding e-commerce and growth in the quarter's ahead. What would you say are some of the main drivers in terms of your guidance in driving and improvements there you showed some nice momentum this quarter and more generally if you could help us focus on the aspects which will improve e-commerce profitability over time or how you're thinking about balancing growth versus profitability that would be helpful. Thank you.
We are really pleased with performance in Q1 for our U.S. e-commerce business with 33% growth. We are seeing good momentum with right assortment and the right pricing supported by marketing. Online grocery is also a contributor to our e-commerce growth and you've seem us introduce a number of initiatives including the expansion of online grocery as well as grocery delivery in the U.S. this year. We think a combination of executing the fundamentals of e-commerce and continue to make progress there will help us achieve our full year net sales school. So we're pretty pleased with where we were in Q1 and we're turning to the right direction to meet our full year goal.
Okay. Just lastly on curbside pick-up that's been impressive the speed at which you're expanding that. Are there any thoughts on the nature of that customer versus your other customer? Are you happy with the economics of that mechanism and also what it may mean for omni-channel customers would love any thoughts there. Thank you.
Sure. Yes we have been very pleased with online grocery. Customers really love the service, it's very convenient for them. Our net promoter scores are still very strong and so as you know it's an important initiative for us. We are rolling out an additional thousand locations this year to reach 2100 locations by the end of this year with online grocery pick-up. We see it as just providing choice for the customer providing the convenience as they can shop Walmart and all the ways they choose to shop.
The next question is from the line of Michael Lasser with UBS. Please proceed with your question.
It's Marco on for Michael Lasser. I wanted to dig into the U.S. business a bit, can you guys quantify any of the weather impacts on the comp and then is accelerating e-commerce growth cannibalizing in-store sales? Thanks.
Yes the U.S. business was kind of really strong quarter. We did have some headwinds we faced at the end of the quarter in April with some seasonally cool weather that impacted some of our general merchandise weather sensitive categories as well as some traffic in those categories. As we've started Q2 some of those categories are turning around as weather has normalized. Overall the health of the business is very strong. Our grocery business continues to have strong traffic and sales you saw that our ticket was good this quarter as well. So overall health of the business is very good.
And then as a follow-up to Oliver's question, how much did the rollout of online grocery pick up to more stores contribute to e-commerce growth and is grocery delivery typically more or less impactful than pick up? Thanks.
Yes, it is a contributing factor to our overall 33% growth in both the contribution of ship to home as well as online grocery pickup.
And then on the delivery versus pick-up?
Yes we are just starting to roll out delivery across the U.S., we think it's an important additional choice we can provide to customers. Clearly the customer has really appreciated the online grocery pickup service and so we think this is just another choice that customers can make more providing for [indiscernible] and shop Wal-Mart.
Thank you. Our next question is from the line of Simeon Gutman with Morgan Stanley. Please proceed with your question.
I want to follow up and maybe put this question to bed on the weather Kary, I guess you're choosing not to sort of quantify and maybe it's hard to quantify the weather impact. I think the important question around it is that you are making price investments so I think you know some would have expected the traffic to be a little bit higher but so if you have any kind comment on that and then if I guess you can whether or not you're not going to quantify the weather impact.
Yes. As you saw in our material this morning, our overall grocery business was very solid with strong traffic and sales, unit growth in grocery categories and then the weather really impacted our general merchandise traffic and sales. So in areas like you know sporting goods, in areas like apparels that are [indiscernible] swinsuits things like that. So really weather was specific to primarily to general merchandise categories in the traffic and sales. We didn't quantify it but we did call it, it was a headwind, comp sales were trending before, this cooler weather hit us [indiscernible].
Okay, and my follow-up is if you look at just e-com acceleration, where does it get captured in the comp, does that get captured in both the traffic and the ticket or is that captured in the traffic alone?
No its traffic and ticket. If it touches the store it will impact our traffic network.
Our next question comes from the line of Chris Horvers with JPMorgan. Please proceed with your question.
I'm going to try my best to ask similar questions, so you know if you look at the past two quarters the back half of '17, you take out the hurricane in the third quarter. You know you're comping in that like 2/3 sort of 2/4 kind of range is that a good approximation of sort of the underlying business did ex-the weather.
Yes, again we are not quantifying the weather impact. We have told you the categories that it impacted, our grocery business was less impacted as a result of been strong with traffic and sales, ticket was stronger, we did see some trip consolidation but we are not going to quantify the weather impact other than say it was an impact and has weather has normalized sales have turned around on those categories.
Also wanted to e-commerce growth, so first a clarification was the 33% all organic and then maybe you could help us put it into context by [indiscernible] the 23 in the fourth quarter versus the 33 in the first quarter here. You know refresh the factors that drove that drop off in 4Q and then bridge it out in -- did you reverse course on any strategy around pricing or assortment that helped you know that you may be turned off in 4Q that drove a really acceleration for 1Q.
Yes you'll recall that in Q4 we talked about a number of factors that impacted our overall growth rate and most of it was planned we plan to be down in Q4 relative to the prior year due to some promotional approach year prior and so really to create a better healthier top and bottom line mix in certain categories in e-Commerce that was the primary driver of the headwinds there. You know the business has accelerated in Q1, we had said that we expected to be higher in Q1 but not reach the 40% growth rate and that's kind of what we saw. We're really pleased really executing the fundamentals better, certainly new initiatives that have been rolled out recently we think are a component to overall reaching our full year goals. Things like the site redesign, the recently announced [indiscernible], think about our online grocery pickup and expanding the locations there as well as the new delivery component. So all these factors will contribute and then it comes down to just executing on the fundamentals Mark talks a lot about scaling the fundamentals and that's just being there to serve the customers so that they can shop you with the right price, the right assortment and the right experience overall online will contribute to our growth goals.
Thank you. Our next question is from the line of Matt Fassler with Goldman Sachs. Please proceed with your question.
My first question relates to the expense ratio in the Walmart U.S. business you spoke about having leverage in the stores but deleveraged overall on some incremental investments and tech and e-commerce. Is this the change you're all on the pace of investment in that business within the U.S.? Or was the deleverage more of a function of the fact the sales slipped at that late in the quarter?
Yes, e-commerce and technology were headwind to our Wal-Mart U.S. business and we are pleased that the store continues to operate very efficiently such that the U.S. store business leverage expenses in the quarter. The work that we've done around operating efficiency and leveraging technology within our stores really contributing to the ability to leverage expenses and we are pleased with that.
And as you think about that digital investment do you have a piece of it, is that something that you'd expect to persist through the year?
We did talk about in Q4 that as a result of tax reform and the benefits that we received there we made some strategic choices to reinvest in the business and one of the components and areas of reinvestment was in e-commerce and technology. So that is a focus area this year as well as a result of those tax benefits.
Our next question is from the line of Chuck Grom with Gordon Haskett. Please proceed with your question.
This is actually John Park [ph] on for Chuck. If we kind of just look at the U.S. business business, is there anyway to decouple the drag in gross margins between the price investments and the headwind?
We do continue to invest in price in the U.S. it's important component of our overall strategy and we expect that to be a headwind to gross margin as we have talked about in the past. We did see a tick up in transportation expenses, we didn’t breakout the quantification between each but we are seeing as a result of increased fuel prices in the U.S. as well as some impact from higher trucking market rates but again we didn't break out the components of the overall decline.
And then just switching gears a little bit, how big was the loss in the disposal of Canadian banking business and then I guess the store closings at Sam's?
Yes, we called out $81 million for the loss related to the Canada Bank.
Our next question is from the line of Edward Kelly with Wells Fargo. Please proceed with your question.
Could you maybe just talk a little bit about the gross margin the improvement in the decline in Q1 versus Q4 and if you were to sort of parse it out what do you think the biggest change was there?
Yes, theirs is a lot of components to go into overall gross margin and if you think about the U.S. specifically the main drivers of gross margin headwinds continue to be our strategy to strategically invest in prices and be thoughtful about that and as well as you know the transportation expense that you see impacting not Walmart U.S. business but also the Sam's Club business as well. [Indiscernible] had some onetime items, unique items within there some headwinds in Sam's Club regarding the club closures and inventory liquidations and you saw that come through a little bit in Q1 as well.
Okay. So quick follow-up on the SG&A side and particular labor. How are you thinking about wage rates at this point given you know what we heard from Target and their desire to go higher over time?
Yes. As we noted we recently increased the starting wage rate for our U.S. associates $11 an hour and you know part of the benefit that we received from tax reform that was one of the components that was reinvested into the business and we're pleased to be able to do that. We're going to be competitive in the markets that we operate in to get the right talent to run our stores.
Our next question is from the line of Bob Drbul with Guggenheim Securities. Please proceed with your question.
Couple of questions, on the online business can you talk about trends in pick up in store outside of grocery and I guess in the last few quarters you talked about the mix impact on the gross margin from e-commerce. Can you just talk about if that had at all a factor, any factor on the gross margin line for this quarter?
Yes your first question Bob around pickup outside of grocery, you know overall if you think about our omni-channel approach in the U.S. online grocery is as we mentioned earlier on this call really pleased with the progress there and pick up as well, non-grocery really pick up. You heard us talk about rolling out additional pick up towers and our stores is fully automated pick up towers where customers can be in and out with their general merchandise order in a matter of minutes and so we're really pleased with that, as you've heard us talk about in the past we think we have a real opportunity to leverage the proximity to customers that we have with our stores to provide convenience and that's exactly what we're doing. So we're pleased overall with the strategy both on the grocery side as well as those non- grocery. What was your second question about?
Mix impact on the gross margin line from e-commerce, you had called it out before but it wasn’t called out this quarter I was just wondering if you could just maybe.
Yes this was one of the primary drivers for this quarter so we called out price investments in the U.S. as well as the higher transportation expense that we experienced those were the primary drivers of the headwind this quarter.
Our next question is from the line of Peter Benedict with Robert Baird. Please go ahead with your questions.
So just on private brand growth it was called out in the U.S. comp section. Remind us kind of the steps you guys have been taking lately to drive that business, is it something you're doing or do you think that consumers just kind of making these decisions kind of absent any major focus by you guys?
Thanks Peter. We have really stepped up our focus on private brands. Wal-Mart has long been a house of national brands and it's important to our overall strategy as its easy to communicate your every day low prices relative to the competition when you have national brands so that's important but we have seen opportunity to increase the quality of our private brands and probably the most recent example is our introduction of new apparel brands. We think there's an opportunity to again extra share of wallet as a result of providing quality private brands so we are focused not only on quality in the grocery and non-grocery areas but also in the quality of price that we offer to the customer.
And then just turning international to the relationship you guys have with JD.com in China, can you talk about some of the capabilities that they have that can be used to help you guys here in the U.S., the comments in the transcript kind of had some indications that there would be some leverage there in terms of taking these capabilities outside of China and just whatever you're comfortable speaking to where could we see maybe next fall to 24 months some of these capabilities in JD.com has showing up here in the United States. Thank you.
Sure. If you think about our portfolio of companies, Wal-Mart has a long history of really sharing best practices and leveraging learning from various markets and certainly on omni-channel front and the building of the customer to be served in an efficient matter as we called out in the script you know 177 stores through JD.com are getting one hour delivery service. I mean we're able to leverage those learnings as we expand omni-channel in the U.S. as well and so its not unlike what we have done in the past in a sense of sharing best practices for the benefit of the whole business, but certainly there's a lot to learn from how our customers serve, there's different density population levels so it's not exact like for like but our shared learning are something that's part of our heritage and something we will continue to leverage in the future.
Our next question is from the line of Paul Trussell with Deutsche Bank. Please proceed with your question.
The Sam's Club business was remarkably better than I think your initial thoughts coming into the year especially with the negative impacts from tobacco, just walk through some of the drivers of the comp out performance and how we should think about that business now on a go forward basis?
Yes, Sam's did have a good first quarter and really across the categories, our food business in Sam's, grocery business worked really well particularly on fresh with strong performances in produce in Delhi and some of the other areas there but really across the board Sam's had a good performance and traffic is good, traffic is good strong at Sam's Club and we just continue to focus on serving the member with value and the right assortment to continue to move the business forward.
And just to circle back on the delivery, you know years ago you guys did a pilot out in Denver, did a number of [indiscernible] and ultimately decided that the economics didn’t work overall in the U.S. for grocery delivery. Just help us understand the economics today and why the model all of a sudden does work for you guys?
Yes, as we have thought about omni-channel and really the maturity of different offerings for the customer to provide convenience for that customer you know Walmart always tests and learn from different approaches and we see the opportunity to serve customers in a variety of ways. Online grocery pick up is something that's been well received leveraging the proximity of our source of the customer and delivery is something that's another choice for the customer because the customers can choose that convenience by paying a fee of $9.95, they can get their grocery order delivered right to their door step.
So we're trying a lot of things and ultimately we're here to serve the customer in the best way that we can and offer them choice and that's really what you see us doing in our omni-channel approach.
Our next question is from the line of Robbie Ohmes with Bank of America Merrill Lynch. Please proceed with your question.
Just a few follow-ups on the us.com business. First is, can you give us the U.S. GMV growth for the quarter and then the second is and I'm sorry if you said this already but can you give us roughly how many online grocery locations you had at the end of the first quarter and then the third the follow up to the Paul's question I think Brett's comments mentioned beginning the rollout of new grocery delivery service was that the roll out you're already doing or was there something even more new that's coming in and maybe remind us how you're thinking about partners for delivery because I know you guys stopped working with Uber and Lyft. So thanks for that.
Sure, Robbie, thanks for the question. So overall online grocery is now in around 1400 locations around the U.S. and as we've mentioned we plan to continue to roll out more locations throughout the year to reach around 2100 locations by the end of the year. For the rule of grocery delivery you know we just started that this year and we will scale that to reach about 40% of the U.S. population by the end of the year. So that’s what the reference was in Brett's remarks.
From a GMV growth perspective we really are focused on driving U.S. e-commerce net sales and that's what our targets that we gave are based upon is net sales growth. So we didn’t report on GMV this quarter.
Our next question is from the line of Karen Short with Barclays. Please proceed with your question.
One housekeeping then a bigger picture question, just on the Sam's comp, how much do the closures benefit the comp I guess overall traffic comp and then I just another bigger picture question.
Sam's Club had a good question, we didn’t call out the specific impact of club closures but we are really pleased with the traffic that we're seeing in our clubs and I think that gets back to having the right merchandise at the right price, so remember couple that with the convenience offerings that we [indiscernible] and other ways to allow the member to get in and out of the club efficiently that’s really our strategy, serve the customer effectively and we are seeing good results from that.
Okay. My real question was just when you look at U.S. operating profit dollars you know the year-over-year numbers kind of not relevant just giving some reallocations but overall the U.S. operating profit dollars came in below our numbers and I would say below consensus. So wondering if U.S. operating profit dollar came in or where they came in relative to your expectations internally?
Overall you see drivers of gross profit as well as operating expense leverage and so you know we're not going to speak to what our plans are but as you look at the business we think about the business as we gave guidance in Q4, you know we expect to invest in price and we expect to continue to invest in e-commerce and those will have impacts on the gross margin line as well as the operating expense line. You know we're very focused on operating efficiently and our business, our order business and we're pleased with the progress that they U.S. physical stores had again this quarter. I think this consecutive quarter the expense leverage from our U.S. stores and that really gets back to what we talked about earlier. You know associates leveraging technology and change in processes to make serving customer more effective and efficient and so we're pleased with the direction that we're headed there.
Our next question is from the line of Ben Bienvenu with Stephens. Please proceed with your question.
The ticket second consecutive quarter really strong ticket. I'm curious if you could parse out the biggest contributing factors to the ticket strains that will be really helpful.
Sure, Ben. Thanks for the question. Again you know there's a number of factors that contribute to that number. Our grocery business has been really strong both on you know the traffic side as well as on tickets with larger baskets more units that business just continues to be very strong. We're particularly pleased with our fresh business and continues to deliver strong comps, it gives back to assortment merchandising and the right prices for the customer and then the other component is our e-commerce business, it is a contributing factor to the growth as well. So nice acceleration from Q4 in e-commerce than Q1 one and that's a contributing factor as well.
And as a quick follow up here to your grocery question commentary you know another positive comp quarter in the U.S., to what extent are you seeing any inflation in that business. I'm just curious about what you're seeing around cost inflation if you have any?
From the cost side we do see, on the sale side it just wasn’t a meaningful impact overall on our comp sales so we didn't call that this quarter but it really gets back to you know manning to the business through different inflationary or deflationary cycles and we've done this for a long time and our merchants are really focused on serving the customer ultimately and inflation and deflation will be what it will be, you know clearly we are focused on every day will cost and every prices and that’s what makes us effective in serving the customer.
Our next question is from the line of [indiscernible] with RBC. Please proceed with your question.
So it makes sense that weather impacted the business for that the latter part of April but it also did coincide with the rise you've seen in gas prices. Can you please tell us how you guys are thinking about the impact of gas prices on both trafficking comps as you think about the balance of the year because it does look like the last big up swing we had in gas prices did seem to have a negative impact on your traffic. Thanks.
We certainly watched the rise in gas prices pretty closely, we saw that we cauht it out as a headwind to our gross margin line, as it relates to our own fleet and transportation costs. You know from a customer perspective you know certainly it's something we watch closely as gas prices reach significant levels maybe in the $4 range you can see strip consolidation and things like that. I think the most recent rise in gas prices probably hasn't had a dramatic impact on our Q1 results but its something we will watch closely.
So the group understands kind of how are you guys thinking about it for the balance of the year, you just kind of assuming that we level off here or just kind of a general trend, that will be helpful. Thanks, guys.
We are not going to predict where the rest of the year will go, its something we will watch closely will manage to manage through the cycle whenever it does.
Our next question is from the line of Dan Binder with Jeffries. Please proceed with your question.
I was wondering if you could help us understand how membership fee income will be affected this year as a result of this 63 closings -- I realize when they close they don’t immediately fall off but I'm just curious what your assumptions are and how we should think about that membership fee growth?
Thanks Dan. We are really focused on adding new members as well as you saw and part of the contributions in Sam's Club business was providing more value with the plus membership and that has allowed members to upgrade to the some plus membership, we're pleased with that and I think as we continue to offer things like the new free shipping offer for plus members on Sam's Club you see members upgrading to the more premium plus level.
My follow-up question, was there a reason in the adjusted earnings that you didn’t pull out the lease [indiscernible] cost for Sam's and the bank charge you mentioned earlier?
Yes, those are all judgment calls and you know ultimately our goal would be not to just out items all the time. So we just called off the large items that we determined we just out quarter, unique items.
Our next question is from the line of Kate McShane with Citi. Please proceed with your question.
Did you see the same weather impact on general merchandise at Sam's as you did in the Walmart stores in April?
Well Sam's business clearly the weather impacts their business as well and as you think about their service to the customer, their categories are a little bit different from a percentage perspective their overall sales relative to the U.S. business and so it wasn't a meaningful call out this quarter.
Okay. And then my second question is I wondered if there was any way for you to quantify or rank the size of the basket for grocery directory versus pick up versus grocery shopping in-store?
Yes so what we have said in the past Kate is that omni-channel customers are really important to us because overall you know their spend if they choose the spend or shop with us in various channels whether it be through pick, whether it be through in-store, online delivery of the home whatever it is if we can get a customer into our ecosystem you know ultimately there's overall spin and that's an in-store customer that's converted since nearly swiped as much and so it's really important to us as its part of our a key part of our overall strategy and you know all in-grocery customers have higher basket sizes than in-store customers do. So you know what's exciting about that is that as you serve a customer effectively through these services where our own personal shoppers are shopping on behalf of a customer, customers are increasingly choosing fresh items in their overall orders which really again speaks to the trust that they have in our shoppers and the job our shoppers are doing on behalf of the customer.
Our next question is coming from the line of Greg Melich with MoffettNathanson. Please proceed with your question.
Just wanted to follow-up on two things, e-commerce we have the growth numbers as we try to back into what it is with percentage of sales now. It looks like it's a little over 3% in the first quarter, is that correct and then the second question is on the cost. You guys talk about cost deleveraging, is the first quarter a good run rate when we think about those incremental costs in technology which I -- it looks like was about a $100 million, is that -- should we expect it should be that sort of year-over-year in each quarter or is that the sort of thing that builds through the year. Thanks, Kary.
Yes, it can vary from quarter to quarter. Thanks, Greg. Technology cost can vary from quarter to quarter so couldn’t give you a much help on the go forward but what we have laid out is our priorities for where we're investing and you know as we've said in our last quarter call the opportunity to reinvest some of our tax reform savings into serving the customer through lower prices or investments in e-commerce including the rollout of grocery deliveries throughout the U.S. that we talked about, supply chain, those areas are going to be the areas of focus and so you would see us, those being called out throughout the year.
Our next question is from the line of [indiscernible] with Credit Suisse. Please proceed with your question.
A couple of follow up questions here, first is on the online growth. If you look at the contribution from online grocery on online growth obviously it's a function of the rollout of more stores but what are you seeing in terms of the ramp in the stores with online grocery for more than a year now that you have critical mass.
We are pleased with what we're seeing. You know important components that we talked about a lot is the net promoter score and it continued to remain high, customers are really pleased with the service, we're providing convenience, you think about a young mom with kids who can come to the store at her convenience and pick up her full grocery order with the kids in the SUV in the back within five minutes and not even have to get out of her vehicle and be on her way, it's just very convenient and customers you know really like it. If you think about the overall approach here and the strategy is we're pleased with the metrics that we're seeing and that's why you see a swing and then adding a thousand additional vocations this year.
And then on the U.S. gross margin been down less than prior quarters, given the pressures that you called out of the investments in transportation costs, it would seem that the offsets were greater this quarter than perhaps in the last couple of quarters, is that right and if so can you elaborate on that and how you're thinking about that for the rest of the year? Thanks.
Sure. And again I know we try to point your attention to an annualized gross margin impact number because there is a lot of shifts from quarter to quarter and there's a lot of puts and takes within that gross margin line. Fourth quarter had a number of unique items in it that we talked about now as you think about gross margin in the quarter kind of the same drivers that you've heard us talk about in the past, things like price investment, we've been very clear that we see an opportunity to invest in price and we're pleased with what we're seeing from the strategies been executed over the last couple of years with strong traffic in our stores as well as overall comp growth. Over the last couple of quarter you've seen transportation expenses called out you know somewhat a function of volatility and overall fuel prices then also you know trucking market rate pressures as well. So overall I would just direct your attention to our annualized impacts there can be some noise in the quarters.
Our next question is from the line of Joseph Selman [ph] with Chelsey Advisor Group. Please proceed with your question.
One question again on the quarter, were there any regional trends to call out through the quarter, you know that we've seen presumably weather related or even not, maybe you can share some thoughts on that?
We did see impacts as we mentioned from the cooler weather in April in certain general merchandise categories, you think about lawn and garden, you think about sporting goods, some apparel categories saw some head-winds and you know as we analyse the overall business in certain areas like the south and in the West they were less impacted in those regions from weather sensitive categories where they have more normalized weather and so overall the business remains strong we have good momentum in the business and you know both in our stores and through ecommerce we're pleased with where we landed in Q1.
If I could follow-up on sort of shifting to Europe with the UK, you guys have had some good success there in the past couple of quarters positive comp trends. Is there something you guys figured out relative to all the legal [ph] because I know they continue to gobble up share but you guys have been doing a better job there and again having positive conscience. Is that something you've been doing there that you could also extrapolate and take to the U.S.?
If you look at our asset business in the UK, I would remind you that there was some Easter calendar shift that benefited sales and comp this quarter so keep that in mind but we continue to make steady progress and we're investing in price to provide the right value and we're also focused on improving the store experience in the UK so you continue to put that business continue that business on the right trajectory and as far as shared learnings as I talked about earlier on the call you know that's really been something because of our global portfolio we're able to share best practices and for overall future growth across the enterprise.
Our next question is from the line of Ed Yruma with KeyBanc Capital Markets. Please proceed with your question.
This is Noah on for Ed. Just to confirm was the negative impact of weather greater than the Easter benefit and then maybe second have the issues related to the e-commerce distribution centers that you experienced last quarter and totally remediated? Thank you.
Sure. So on our U.S. comp business there wouldn't have been any Easter impact there so we called out weather because in certain general merchandise categories due to unseasonably cool temps in April cross country. And what was your second question?
Yes, just related to the e-commerce distribution center issues last quarter. Have those been remediated?
Yes. We're really focused on serving the customer through not only providing the right assortment and delivering on time but also having the right experience on our site and our site redesign is receiving good reviews from our customers already.
Our next question is from the line of Rupesh Parikh with Oppenheimer. Please proceed with your question.
First on Sam's Club, I was curious how if you look at your closed doors how the retention numbers is going versus your expectations?
Yes, Sam's Club has had a good quarter and clearly as we focus on serving the customer effectively in the clubs that are offering you know good assortment and at the right price and providing value to these members are the clubs that we closed just didn't strategically fit into our overall future plans and in the current clubs that we have we're pretty pleased with the result you see strong traffic in our clubs and so there is some there trade off or carryover from some closed clubs.
And then my second question, as we look at your U.S. e-commerce growth is there any more clarity you can provide on growth rates between grocery and non-grocery or even if you look at whether grocery or non-grocery was a bigger contributor during the quarter to the growth rates?
Yes, they really are both contributors to the overall growth rate. We're not going to quantify how much was each but I will tell you they're both important components to driving our overall targets for the year and we've been pleased, we were certainly pleased in Q1 with the 33% that we're able to deliver with contributions from online grocery omni-channel as well as our ship to home business.
Our next question is from the line of Bobby Griffin with Raymond James.
Just actually on Sam's Club again. Backing off the closed stores can you just give any color on what you're actually seeing from new members sign ups now that you guys have been kind of putting in the work with the merchandising and stuff?
Sure I mean I think that's you know as John and the team are focused on drive both new members as well as providing additional value to the customer and plus members we're seeing as we called out the good uptick in plus member sign-ups and I think things like this free shipping offer for Sam's club members plus members is just another example of providing that convenience and the value in that more premium membership. I think about things in making it simple for the member that's another thing it's important, our Scan & Go has been well received allowing the customer to shop on their terms and get in and out of clubs more quickly and even things as simple as the new members sign up process you may have heard John talk about this in October, we've taken steps by leveraging technology to just simplify processes, experiences for customers that are resonating well and you see both growth and membership income as well as in our comp traffic and ticket at Sam's Club. So overall another good quarter for Sam's.
All right. And then lastly just to help us from a modelling standpoint, it was touched on earlier but I don’t think we got the full answer, a 140 basis point impact this quarter from tobacco the original guidance we've spoken to last quarter is maybe 400 or so based upon on headwinds, how should we think about that headwind progressing through the rest of the year on Sam's Club comp?
Just keep in mind that was full year guidance and so you now we're not updating that today, we will provide an update on certain full year guidance metrics in our next quarter release but just keep in mind that's full year and there could be you know varying impacts throughout the year.
Thank you. We've come to the conclusion of our question and answer session today. This will also conclude today's conference. Thank you for your participation.