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Walmart fourth quarter profit up, sales outlook wary
February 21st, 2013
BENTONVILLE, Ark. – Walmart posted a 7.9% increase in net profit from continuing operations to $5.61 billion for the final quarter of fiscal 2013.
On a per-share basis, earnings rose 11.3% to $1.67 thanks to share repurchases made during the year. That was more than good enough to beat the average estimate of $1.57 per share among analysts polled by Thomson Reuters.
Sales for the fourth quarter rose 3.9% to $127.1 billion, as the company’s core Walmart U.S. division posted a 2.6% gain to $74.67 billion. Combined comparable-store sales for the United States (comprised of results from Walmart U.S. and Sam’s Club) grew 1.2% excluding fuel, compared with a 2.1% increase last year. Comp-store results for Walmart U.S. advanced 1%, below the 1.5% expected by analysts, while Sam’s Club achieved a 2.3% gain without fuel.
Investors had been alarmed recently after a Bloomberg report cited internal e-mails from Walmart executives that pointed to weak January sales and described sales for the first half of February as a “total disaster.” In a prerecorded call Walmart U.S. president and chief executive officer Bill Simon acknowledged that sales have been slower than planned, and he attributed the fact mainly to delays in income tax refunds.
Simon also pointed out that Walmart U.S. gained 40 basis points of market share in food, consumables, and health and wellness/O-T-C during the fourth quarter, according to Nielsen. He also cited NPD Group research that indicated Walmart gained share in the toys and entertainment categories.
However, Simon also acknowledged that the modest comp-store sales growth was driven by a 1.1% increase in average transaction, as customer traffic slipped by 10 basis points. That slight decrease followed three consecutive quarters of traffic growth.
In that context management has forecast that the division’s comp-store sales for the first quarter of fiscal 2014 will be nearly flat, compared with a 2.6% increase in the first quarter of fiscal 2013. First quarter earnings are projected to range between $1.11 and $1.16 per share, while fiscal 2014 earnings are expected to total between $5.20 and $5.40 per share, including increased costs of about 9 cents per share for e-commerce operations.
Looking at full-year results for fiscal 2013, income from continuing operations for the full 2013 fiscal year grew 7.8% to $17 billion as sales rose 5% to $466.11 billion. Walmart International again produced the strongest growth, as sales expanded 7.4% to $135.2 billion and operating profit increased even faster, rising 8.3% to $6.69 billion. The Sam’s Club division turned in another solid year, with operating profit up 6.2% to $1.96 billion on a 4.9% gain in sales to $56.42 billion.
"Walmart topped off a really good year with a solid fourth quarter, and I’m proud of what we accomplished as a team," said Mike Duke, president and CEO. "Walmart U.S. is as strong as it has ever been, and we continue to build on that position. We have positive comp performance and grew market share in a number of categories, and I fully expect that trend to continue in this new year."