Walmart Sees Q2 Net Sales, Income Rise

Wal-Mart Stores Inc. reported net sales for the second quarter of fiscal year 2012 ended July 31 of $108.6 billion, an increase of 5.5 percent from $103.0 billion in last year’s second quarter. Net sales for the quarter included a currency exchange rate benefit of $2.3 billion. Income from continuing operations attributable to Walmart for the quarter was $3.8 billion, a 5.7 percent rise from last year. Diluted earnings per share (EPS) from continuing operations attributable to Walmart for the quarter were $1.09, vs. 97 cents last year, representing a 12.4 percent increase.

The combination of the expense and gross margin items came to $132 million and accounted for an impact of about 3 cents to the company’s EPS for the quarter, noted the Bentonville, Ark.-based mega-retailer, adding that it benefited from an effective tax rate for the second quarter of 32.2 percent, compared with 34.3 percent last year.

“I’m encouraged by the sales improvement in our Walmart U.S. stores,” said Walmart president and CEO Mike Duke. “Comp sales have increased sequentially month to month within the quarter. In fact, this was the best quarterly performance since the third quarter of fiscal 2010. We’re committed to deliver positive comp sales by widening the gap on price, and we have a specific plan to deliver EDLP to every customer.

“Walmart International reported second-quarter net sales growth of more than 16 percent over last year to $30 billion,” added Duke. “I’m pleased that we’ve made so much progress on integrating the acquisitions of the Netto stores in the U.K. and Massmart in sub-Saharan Africa. We look forward to the many opportunities we have in Africa to create jobs and help customers save money and live better.”

Duke additionally noted that the Sam’s Club division marked its “sixth straight quarter of comp improvement" during the second quarter, which he said was “a testament to the team’s execution to drive quality, value and savings for members.” Duke also praised the division’s forward “momentum in membership renewals and upgrades.”

Walmart International’s net sales included a $2.3 billion currency exchange rate benefit for the quarter ended July 31. On a constant-currency basis, the division’s net sales were up 7.1 percent for the second quarter. Mexico, the United Kingdom, Canada, Brazil and China saw the largest sales increases during the quarter. Net sales for Sam’s Club, excluding fuel, grew to $12.0 billion, a rise of 4.9 percent from the year-ago period.

Walmart International posted operating income that included a currency exchange rate benefit of $110 million for the second quarter. On a constant-currency basis, the division's operating income increased 0.5 percent for the quarter. Sam’s Club operating income for the quarter soared 15.0 percent. Excluding fuel, operating income was up 13.3 percent over last year.

Total U.S. comparable-store sales, without fuel, for the 13-week period ending July 29 were flat. Sam’s Club comps, without fuel, grew 5.0 percent for the same period, while Walmart U.S. comps declined -0.9 percent.

“I’m encouraged by the sales momentum we have from the second quarter,” noted Walmart U.S. president and CEO Bill Simon. “Our grocery and health-and-wellness business, representing two-thirds of our sales continued to deliver positive comps. Our hardlines and apparel businesses are improving. We remain concerned about the economic pressure on our customers and the uncertain impact it can have on their shopping behavior. With this volatility, it is as important as ever to deliver on Walmart’s one-stop shopping promise for broad assortment and everyday low prices.”

“We had an outstanding second quarter, and our sales momentum remains strong,” observed Sam’s Club president and CEO Brian Cornell. “New member signups have been growing. It was in the third quarter last year that our comp performance began to accelerate, so our comparisons for the back half of this year are more challenging, but we are confident in continuing our momentum.”

Walmart operates 9,667 retail units under 69 banners in 28 countries, and employs more than 2 million associates worldwide.