Walmart turned in a robust performance for its fiscal 2013 first quarter, posting strong revenue growth and earnings that beat financial analysts' projections.


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Retail News Breaks

Walmart's sales, profit climb in first quarter

May 17th, 2012

BENTONVILLE, Ark. – Walmart turned in a robust performance for its fiscal 2013 first quarter, posting strong revenue growth and earnings that beat financial analysts' projections.

Though the Walmart International unit was the primary growth catalyst during the quarter, the Walmart U.S. and Sam's Club segments also generated solid revenue gains.

The discount store giant said Thursday that for the three months ended April 30, net sales rose 8.6% to $112.3 billion from $103.4 billion a year earlier. The company noted that the sales figures for the quarter reflect a negative impact of about $800 million in the currency exchange rate.

By segment, sales at Walmart U.S. climbed 5.9% year over year to $66.34 billion in the first quarter, and Sam's Club saw a 7.9% rise in revenue to $13.85 billion. Sales at Walmart International jumped $15% to $32.08 billion.

Overall U.S. same-store sales, based on based on 13-week periods ended April 27, 2012, and April 29, 2011, rose 3% excluding fuel business and were up 3.2% including gasoline sales. Comparable-store sales grew 2.6% at Walmart U.S. and 6.2% at Sam's Club (5.3% excluding fuel).

Walmart noted that the first-quarter comp-store results exceeded its guidance, which projected same-sales sales growth of flat to 2% at Walmart U.S. and 3% to 5% excluding fuel at Sam's Club.

All three retail segments posted strong increases in operating income during the first quarter. Walmart U.S. operating income gained 8.1% to $5.03 billion, which the company attributed mainly to higher sales, its price investment strategy and its focus on productivity and expense management. Operating income was up 7.7% to $490 million at Sam's Club and 21.2% to $1.32 billion at Walmart International, including a negative impact of $50 million from currency exchange rate fluctuations.

Total operating income for the first quarter was $6.4 billion, up 8.3% from a year ago. Excluding the $50 million of net pretax items in last year's first quarter, consolidated operating income rose 9.2%, according to Walmart.

On the earnings side, income from continuing operations attributable to Walmart came in at $3.74 billion, or $1.09 per diluted share, in the fiscal 2013 first quarter, a gain of 9.2% from $3.43 billion, or 98 cents per diluted share, in the prior-year period. The company said several pretax items in the fiscal 2012 quarter netted to a 1 cent benefit to earnings per share (EPS).

Analysts, on average, had estimated Walmart's fiscal 2013 first quarter adjusted EPS at $1.04 per share, with their forecasts running from a low of $1.02 to a high of $1.08, according to Thomson Financial.

"We are very pleased that Walmart delivered earnings and comparable sales above guidance for the first quarter. Despite a negative impact from currency, we grew sales and operating profit over last year," Walmart president and chief executive officer Mike Duke said in a statement. "Our overall performance reflects the success of Walmart's business model: driving the productivity loop, leveraging expenses and investing in price leadership. We believe that the momentum throughout our business positions us very well for the rest of the year."

Walmart U.S. is increasing price separation across categories and steering higher traffic to the grocery and general merchandise areas, according to Duke. "That strategy was reflected in the 2.6% comp [growth]," he stated. "Customers count on us for one-stop shopping, and our merchandising priorities are aligned with that in mind. Walmart U.S. also grew operating income faster than sales this quarter."

Meanwhile, Sam's Club continues to show strength in traffic and ticket size, Duke noted. "Membership engagement scores are at record highs, membership income is growing, and renewals and upgrades are strong," he added.

Revenue growth in the quarter was robust at Walmart International, and operating income grew faster than sales, climbing over 20%, noted Duke. "We are very focused on improving profitability and returns, and with greater transitions to everyday low price in more markets, we have stronger customer traffic, which contributed to net sales growth," he explained.

Looking ahead to the fiscal 2013 second quarter, executive vice president and chief financial officer Charles Holley forecast diluted EPS from continuing operations of $1.13 to $1.18, compared with $1.09 in the fiscal 2012 quarter.

"We are committed to continued sales momentum," Holley stated. "Expense leverage will continue to be a key focus as it drives both growth and returns."

On average, analysts estimate Walmart's second-quarter EPS at $1.16, with their projections ranging from a low of $1.13 to a high of $1.19.

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