Walmart posted sales and earnings gains for the fiscal 2013 third quarter, but its shares dropped after the company gave a cryptic outlook for the fourth quarter, including the critical holiday shopping season.

Walmart, third quarter, fiscal 2013 sales, earnings, same-store sales, comparable-store sales, Walmart U.S., Sam's Club, Walmart International, Mike Duke, Charles Holley, holiday shopping season, fourth quarter, holiday season, Russell Redman

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Walmart reports 3Q gains, gives uncertain outlook

November 15th, 2012

BENTONVILLE, Ark. – Walmart posted sales and earnings gains for the fiscal 2013 third quarter, but its shares dropped after the company gave a cryptic outlook for the fourth quarter, including the critical holiday shopping season.

The retail giant said Thursday that net sales for the third quarter ended Oct. 31 rose 3.4% to $113.2 billion from $109.5 billion a year earlier. Excluding a negative currency exchange rate impact of $1.7 billion, net sales would have been $114.9 billion, the company noted.

For the 13 weeks ended Oct. 26, overall same-store sales excluding fuel edged up 1.7%, including gains of 1.5% for Walmart U.S. and 2.7% for Sam's Club. With gasoline sales, total comparable-store sales were up 1.9%, reflecting increase of 1.5% at Walmart U.S. and 3.8% at Sam's Club.

Net sales (including fuel) for the three months ended Oct. 31 rose in all three of Walmart's operating segments, increasing 3.6% to $66.13 billion at Walmart U.S., 2.4% to $33.16 billion at Walmart International and 4.7% to $13.92 billion at Sam's Club.

Operating income was up as well across segments, climbing 4.5% to $4.84 billion at Walmart U.S., 4.8% to $1.46 billion at Walmart International and 12.7% to $435 million at Sam's Club in the third quarter.

Earnings for the third quarter were in line with Wall Street's forecast. Income from continuing operations attributable to Walmart for the third quarter was $3.6 billion, or $1.08 per diluted share, compared with $3.3 billion or 97 cents per diluted share, a year before.

Financial analysts, on average, had projected per-share earnings of $1.07, ranging from a low of $1.05 to a high of $1.10, according to Thomson Financial.

"We're very pleased with our financial performance for the third quarter and the dedication and hard work of our associates serving Walmart customers and communities around the world," Walmart president and chief executive officer Mike Duke said in a statement. "Earnings per share were $1.08, which represents an 11.3% increase over the third quarter last year."

He noted that in the quarter, the company delivered on its commitment to pare costs, boost productivity and invest in price.

"Our disciplined approach to operating the business and to the productivity loop drove profitability and expense leverage," Duke stated. "Our fundamentals are strong, and we are well-positioned for the fourth quarter, including innovative plans to drive traffic, especially in our U.S. stores.

"Price will continue to be a major factor for U.S. customers over the holidays. Our strong price position and broad assortment are clear competitive advantages," he added. "Across all of our markets, we are seeing the same price consciousness as we do in the United States. More customers are part of a growing global middle class, looking for quality, value and a better life, and our EDLP [everyday low price] model matters to these customers."

Despite the positive results, Walmart's share price as of mid-morning trading Thursday was down about 4%, or $2.79, to $68.50. It had closed at $71.31 on Wednesday.

The decrease appeared to reflect Wall Street's concern with Walmart's uncertain outlook, given the company's standing as an economic bellwether.

"Current macroeconomic conditions continue to pressure our customers," stated Charles Holley, executive vice president and chief financial officer. "The holiday season is predicted to be very competitive, but we are well-prepared to deliver on the value and low prices our customers expect.

"We consider the competitive retail environment and economic factors, among others, when we provide guidance. Based on these considerations, we expect fourth-quarter fiscal 2013 diluted earnings per share from continuing operations to range between $1.53 and $1.58. This compares to last year's fourth quarter reported EPS of $1.51, which benefitted $0.07 from certain items," according to Holley. "Net of those items, earnings per share for last year’s fourth quarter would have been $1.44."

On average, analysts forecast Walmart's fourth-quarter EPS at $1.59, with projections running from a low of $1.55 to a high of $1.65.

For the full 2013 fiscal year, Walmart tightened and reaffirmed the top end of its guidance to a range of $4.88 to $4.93, compared with its previous outlook of $4.83 to $4.93. Fiscal 2013 EPS came in at $4.54.

Wall Street projects Walmart's fiscal 2013 EPS at $4.94, ranging from a low of $4.89 to a high of $5.02.