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17/08/2010 15:53 (543 Day 12:31 minutes ago) | |||||
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The FINANCIAL -- Wal-Mart Stores,Inc. (NYSE: WMT) on August 17 reported second quarter sales and earnings for the period ended July 31, 2010.
Wal-Mart Stores,Inc. (NYSE: WMT) on August 17 reported second quarter sales and earnings for the period ended July 31, 2010.
"Net sales for the second quarter of fiscal year 2011 were $103 billion, an increase of 2.8 percent from $100 billion in the second quarter last year. Net sales for the second quarter included a currency exchange rate benefit of $857 million. On a constant currency basis, consolidated net sales increased 2.0 percent. Income from continuing operations attributable to Walmart for the quarter increased to $3.6 billion from $3.5 billion in the second quarter last year," Wal-Mart informs.
Effective with the second quarter of fiscal year 2011, Walmart changed the methodology for valuing its inventory to allow for more granularity. As a result, the change in the inventory value adjusts the financial results reported last fiscal year. The company is providing adjusted financial statements on its website to reflect these changes.
"We continue to focus on our priorities of growth, leverage and returns. Despite the ongoing challenges of the global economy, we continue to grow our earnings and are reporting $0.97 per share today," said Mike Duke, Wal-Mart Stores, Inc. president and chief executive officer. "We are raising our full year guidance to a range of $3.95 to $4.05. Our teams leveraged operating expenses for the third consecutive quarter, through their commitment to the productivity loop."
"The slow economic recovery will continue to affect our customers, and we expect they will remain cautious about spending," Duke added. "Walmart is committed to our mission of saving people money so they can live better."
Walmart continues to grow around the world, and the company added almost 5 million square feet of retail space this quarter, with more than 60 percent of the square footage growth in Walmart International.
"Our international business continues to be an impressive growth engine, and Walmart International grew operating income faster than sales," Duke said.
The company ended the second quarter with free cash flow² of approximately $4.5 billion, compared to $4.2 billion in the prior year. ROI for the trailing 12 months ended July 31, 2010 was 19.0 percent, up from 18.4 percent for the comparable period last year.
"Our goal is to provide a consistently high return and ROI is extremely healthy," said Tom Schoewe, executive vice president and chief financial officer. "We continue to deliver solid operating performance."
Earnings Guidance
For the third quarter of this fiscal year, the company forecasts diluted earnings per share from continuing operations attributable to Walmart to range from $0.87 to $0.91, as compared to an as adjusted $0.82 per share last year. The company's updated full year guidance of $3.95 to $4.05 earnings per share is an increase from the previous range of $3.90 to $4.00 per share. This new guidance assumes that currency exchange rates remain at current levels.
"We are raising full year EPS guidance today due to the strength of our underlying operating performance of our first two quarters, despite the challenges facing Walmart U.S. in the short term, and the current economy," said Schoewe. "In the second quarter, we delivered on our promise to leverage expenses, and this commitment remains a strategic priority throughout the company. We plan to continue leveraging expenses."
"Through the first half of this fiscal year, we have returned more than $9.4 billion to shareholders in the form of share repurchase ($7.1 billion) and dividends ($2.3 billion)," Schoewe said.
The company's board of directors approved a new $15 billion share repurchase program June 4, which replaced the previous $15 billion plan. Walmart repurchased $4.1 billion in shares during the second quarter of this fiscal year. Operating Segment Details
Data in the condensed consolidated financial statements included in this news release are based on the fiscal quarters ended July 31, 2010 and 2009. As part of an operational realignment, the Walmart units and Sam's Clubs in Puerto Rico moved from the Walmart International segment to the respective Walmart U.S. and Sam's Club segments, effective this fiscal year. Walmart International now consists of the company's operations outside the United States and Puerto Rico. Walmart International net sales were $25.9 billion, an increase of 11.0 percent from last year's second quarter, with strong underlying sales in Mexico, and new store growth in Brazil and China. The increase in Walmart International net sales includes an $857 million positive impact from currency exchange rate fluctuations. The International segment continues to drive growth for the company. On a constant currency basis, Walmart International net sales were up 7.3 percent to $25.0 billion from last year's second quarter results.
Net sales for Sam's Club, excluding fuel, increased to $11.4 billion, an increase of 0.6 percent over last year's second quarter.
Consolidated operating income, which includes unallocated corporate overhead, was $6.2 billion for the second quarter, up 4.4 percent from last year and up 3.6 percent on a constant currency basis.
Operating income was down 22 basis points for Walmart U.S. for the second quarter versus last year.
Walmart International reported operating income for the second quarter that included a currency exchange rate benefit of $46 million. On a constant currency basis, Walmart International operating income increased 12.7 percent in the second quarter of fiscal 2011, compared to the same period in fiscal 2010. On a reported basis, Walmart International operating income increased 16.8 percent, to $1.3 billion, compared to the same prior period.
Excluding the impact of acquisitions, Walmart International leveraged constant currency operating expenses for the sixth consecutive quarter. Under the leadership of President and CEO Doug McMillon, Walmart International continues to drive sales and unit growth in its 14 markets, as well as leveraging its scale and resources to improve productivity. Sam's Club's second quarter operating income was up 2.4 percent to $428 million, including a $16 million contribution from fuel profit.
Comparable store sales figures for Walmart U.S. improved by the end of the 13-week period ended July 30, 2010, with traffic trends showing sequential improvement during the period.
The Walmart U.S. operating segment, now led by President and CEO Bill Simon, remains focused on improving sales and customer traffic. The leadership team is working to ensure that the merchandise assortment is relevant for their customers, that Walmart will lead the market on price, and that they will strengthen their relationships with suppliers. For the 13-week period from Sat., July 31, through Fri., Oct 29, 2010, which is comparable to the company's third fiscal quarter, Walmart U.S. expects comparable store sales to range between -2.0 percent and 1.0 percent, as compared to a 0.5 percent decline for the comparable period last year.
Sam's Club delivered 1.0 percent comparable club sales without fuel for the 13-week period ended July 30, 2010, with average ticket, excluding fuel, for this 13-week period increased for both Business and Advantage members.
Sam's Club expects comparable club sales without fuel during the third quarter 13-week period to range from flat to an increase of 2.0 percent, which compares to a 0.1 percent increase without fuel in the comparable period last year. Brian Cornell, president and CEO of Sam's Club, and his leadership team remain focused on driving sales through ongoing improvement in merchandise quality and relevance, as well as continued focus on generating higher membership. Both Walmart U.S. and Sam's Club will report comparable sales for the 13-week period on Nov. 16, 2010, when the company reports third quarter results.
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