Walmart Posts ‘Solid’ Q4

Wal-Mart Stores Inc. reported net sales for the fourth quarter ended Jan. 31, 2013, of $127.1 billion, a 3.9 percent increase from the $122.3 billion posted in the year-ago period. On a constant-currency basis, net sales would have risen 3.7 percent to $126.8 billion. Membership and other income fell 7.8 percent to $815 million, because of lower other income. Total revenue for the fourth quarter was $127.9 billion, a 3.9 percent rise from last year.

Income from continuing operations attributable to Walmart for the fourth quarter of fiscal 2013 was $5.6 billion, up 7.9 percent. Diluted earnings per share (EPS) from continuing operations for the quarter were $1.67.

Consolidated net sales for the full fiscal year were $466.1 billion, an increase of 5 percent from fiscal 2012. Net sales included about $4.0 billion from acquisitions and about $4.5 billion of negative impact from currency exchange-rate fluctuations. Membership and other income was $3.0 billion, a dip of 1.6 percent from the year-ago period. Total revenue was $469.2 billion, an rise of 5 percent, or $22.2 billion. Income from continuing operations attributable to Walmart was $17.0 billion, a 7.8 percent increase from the $15.8 billion logged last year. For fiscal 2013, EPS were $5.02 versus last year’s EPS of $4.54, a 10.6 percent increase.

“Walmart topped off a really good year with a solid fourth quarter,” noted Mike Duke, president and CEO of the Bentonville, Ark.-based company. “Every day, our associates around the world deliver on our mission to help customers save money so they can live better. Together, we added $22 billion in sales to top $466 billion. Walmart U.S. was a key driver of our 5 percent net sales increase.”

Duke then outlined the “key areas critical to Walmart’s long-term success” for the mega-retailer’s management team: delivering a strong Walmart U.S. business, improving returns for International, driving greater efficiency through disciplined capital allocation, meeting the company’s five-year leverage goal, investing in global e-commerce, and continuing to strengthen the company's compliance organization.

“We have high expectations for fiscal 2014, and I’m optimistic as I look ahead,” he added. “Walmart is operating in markets that offer continued opportunity for growth, both in our stores and online. With our core Walmart U.S. business operating so well, our investments in e-commerce and our international markets focused on growth and improving returns, we are truly the best-positioned global retailer.”

The company leveraged operating expenses for the full year, including the $157 million of professional fees and expenses connected with the ongoing Foreign Corrupt Practices Act (FCPA) matter involving stores in Mexico, India and elsewhere.

“Fiscal year 2013 was the first year of our five-year plan to reduce operating expenses as a percentage of sales by at least 100 basis points,” said EVP and CFO Charles Holley. “We made progress toward our five-year goal, reducing expenses for the year by 14 basis points. Walmart U.S. led this effort. The entire company has rallied around this leverage challenge, and we expect we will continue to see progress towards this goal.”

Walmart U.S. added more than $10 billion in net sales during fiscal year 2013, including approximately $4.7 billion in comp sales. For the fourth quarter, the division reported a 1 percent comparable-store sales increase, gaining market share in “food, consumables, health and wellness/OTC,” as well as in the entertainment categories and in toys, according to Nielsen.

During the 13-week fourth quarter of fiscal 2013, Walmart U.S. comp sales were driven by an increase in average ticket of 1.1 percent, and a traffic decline of 10 basis points. “Despite comps at the low end of the guidance, our market share gains, as noted by Nielsen and NPD, along with our two-year positive comp trend, indicate the underlying strength of Walmart's business,” said Bill Simon, Walmart U.S. president and CEO. “Comp sales grew by 1.0 percent for the quarter, lapping a solid 1.5 percent comp last year. This represented $743 million in comp growth for the quarter.”

Added Simon: “We are confident that our low prices will continue to resonate, as families adjust to a reduced paycheck and increased gas prices.”

Sam’s Club’s comps for the 13-week period were up 2.3 percent excluding fuel, benefiting from a 1.6 percent increase in traffic and a 0.7 percent increase in average ticket. “Overall, we are proud of the accomplishments this year at Sam’s Club, but also recognize the mounting economic concern from both small businesses and consumers,” said Rosalind Brewer, Sam’s Club president and CEO. “Our primary growth for fiscal 2014 will come from comp sales.”

“We know there are challenges ahead, but we believe our strong financial position, along with our EDLC and EDLP operating model, will continue to produce strong sales and returns for our shareholders,” said Holley.

With 10,773 stores under 69 banners in 27 countries and e-commerce websites in 10 countries, Walmart employs more than 2 million associates worldwide.