Wal-Mart Reports First Quarter Financial Results; Earnings per Share of $0.77 at High End of Forecasted Range
Pre-Recorded Phone Call
BENTONVILLE, Ark., May 14 -- Wal-Mart Stores, Inc. (NYSE: WMT) today reported diluted earnings per share for the first quarter of fiscal year 2010 of $0.77 , at the high end of the company's guidance of $0.72 to $0.77 . Currency exchange rates negatively impacted earnings by approximately $0.04 per share. Wal-Mart earned $0.76 per share in the first quarter last year.
Net sales for the first quarter were $93.471 billion , a decrease of 0.6 percent from $94.042 billion in the first quarter last year. Without the negative impact of currency exchange rates, equal to $4.836 billion , net sales for the quarter increased 4.5 percent to approximately $98.307 billion on a constant currency basis. In addition, this year's first quarter contained one less selling day than the same quarter last year, because 2008 was a leap year . Income from continuing operations for the first quarter of $3.030 billion was relatively flat compared to the same period last year.
"We're pleased to report that fiscal year 2010 is off to a very good start," said Mike Duke , Wal-Mart Stores, Inc. president and chief executive officer. "These results were achieved in the face of a very challenging global economy.
"When economic conditions improve, we believe customers who shop Wal-Mart today will stay with us, because of the business improvements we're making and continue to make," Duke said. "Across the company, we are building our brand by reducing costs, sharpening our merchandising and updating our stores.
"Customers trust Wal-Mart ," Duke continued. "As a result of the increasing shift to value, they have long term loyalty to the Wal-Mart brand because we save them money."
Net sales were as follows (dollars in billions):
2009          2008      Change
Net Sales:
Walmart U.S.          $61.244       $58.991       3.8%
International          21.263        23.927     -11.1%
Sam's Club             10.964        11.124      -1.4%
Total Company       $93.471       $94.042      -0.6%
Reported International sales were negatively affected by currency translations to the U.S. dollar equal to $4.836 billion . On a constant currency basis (assuming currency exchange rates remained the same as the prior year), International sales increased 9.1 percent to $26.099 billion in the first quarter, compared to the same quarter last year.
Segment Operating Income
Segment operating income, which is defined as operating income for each operating segment, was as follows (dollars in billions):
2009      2008     Change
Segment Operating
Walmart U.S.          $4.464    $4.320      3.3%
International          0.880     1.050    -16.2%
Sam's Club             0.393     0.393      0.0%
Reported International operating income for the three months ended April 30, 2009 also was negatively affected by $252 million as a result of currency translations to the U.S. dollar. On a constant currency basis (assuming currency exchange rates remained the same as the prior year), International operating income increased 7.8 percent to $1.132 billion in the first quarter.
Comparable Store Sales
The company reports U.S. comparable store sales in this earnings release based on its 13-week retail calendar, as follows:
Without Fuel         With Fuel          Fuel Impact
Thirteen Weeks      Thirteen Weeks      Thirteen Weeks
Ended               Ended               Ended
05/01/09  05/02/08  05/01/09   05/02/08 05/01/09   05/02/08
Walmart U.S.     3.6%       1.9%     3.6%       1.9%     0.0%       0.0%
Sam's Club       4.2%       2.8%    -0.5%       5.6%    -4.7%       2.8%
Total U.S.     3.7%       2.0%     2.9%       2.5%    -0.8%       0.5%
When reporting earnings in prior quarters, the company also reported comparable store sales on a monthly calendar basis. Effective this quarter, the company now will report comparable store sales for the most recently completed 13-week period, on its 4-5-4 retail calendar.
Data in the condensed consolidated financial statements included in this news release are based on the calendar quarters ending April 30 .
"We expect earnings per share from continuing operations for the second quarter of fiscal year 2010 to be between $0.83 and $0.88 ," said Tom Schoewe , Wal-Mart Stores, Inc. executive vice president and chief financial officer. "Our guidance takes into account Wal-Mart's strong underlying performance and the difficult economic environment. Plus, our U.S. businesses will be up against the economic stimulus checks in the second quarter last year.
"The company is in a great financial position, and we're proud of our strong balance sheet and the free cash flow generated by our operations," Schoewe added. "We're doing an excellent job taking care of our customers and we'll continue to help them save money so they can live better long after the economy recovers."
The company announced last week that it will no longer report monthly comparable store sales. The 13-week comparable store sales results will be reported as part of quarterly earnings news, as noted above. Effective with this quarter, the company will provide 13-week comparable store sales guidance separately for Walmart U.S. and Sam's Club .
Walmart U.S. and Sam's Club each expect their comparable store sales during the 13-week period from May 2 through July 31 to be between flat and three percent. Wal-Mart will report each operating segment's comparable store sales result and the total U.S. aggregate comparable store sales result for that period when it reports second quarter earnings on Aug. 13 .
Effective Feb. 1, 2009 , the company adopted Statement of Financial Accounting Standards No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51." This standard requires modifications to financial statement presentation for minority interests in subsidiaries, now referred to as noncontrolling interests. These changes are reflected in Wal-Mart's first quarter condensed consolidated financial statements included in this release. As a result, all references to income from continuing operations or earnings per share from continuing operations in this release refer to income from continuing operations attributable to Wal-Mart , or diluted income per share from continuing operations attributable to Wal-Mart , respectively.
In addition to these changes, beginning Feb. 1, 2009 , the company changed the classification of certain revenue and expense items within the financial statements. These changes are reflected in the first quarter Condensed Consolidated Statements of Income for all periods presented and did not have an impact on the company's consolidated operating or net income.
After this earnings release has been furnished to the SEC, a pre-recorded call offering additional comments on the quarter will be available to all investors. Callers may listen to this call by dialing 203-369-1090. The information included in this release, including reconciliations, and the pre-recorded phone call is available in the investor information area on the company's Web site at www.walmartstores.com/investors.
Wal-Mart Stores, Inc. (NYSE: WMT) serves customers and members more than 200 million times per week at more than 7,900 retail units under 55 different banners in 15 countries. With fiscal year 2009 sales of $401 billion , Wal-Mart employs more than 2.1 million associates worldwide. A leader in sustainability, corporate philanthropy and employment opportunity, Wal-Mart ranked first among retailers in Fortune Magazine's 2009 Most Admired Companies survey. Additional information about Wal-Mart can be found by visiting www.walmartstores.com. Online merchandise sales are available at www.walmart.com and www.samsclub.com.
This release contains statements as to Wal-Mart management's expectations regarding customers continuing to shop at Wal-Mart and Wal-Mart continuing to help customers save money so they can live better long after the economy recovers and statements as to Wal-Mart management's forecasts of the company's earnings per share for the fiscal quarter ending July 31, 2009 and the comparable store sales of each of the Walmart U.S. and Sam's Club segments of the company for the 13-week period ending July 31, 2009 , that Wal-Mart believes are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements are intended to enjoy the protection of the safe harbor for forward-looking statements provided by that Act. These statements can be identified by the use of the word or phrase "expect," "we'll continue" or "will stay" in the statements. These forward-looking statements are subject to risks, uncertainties and other factors, domestically and internationally, including general economic conditions, the cost of goods, competitive pressures, geopolitical events and conditions, levels of unemployment, levels of consumer disposable income, changes in laws and regulations, consumer credit availability, inflation, consumer spending patterns and debt levels, currency exchange fluctuations, trade restrictions, changes in tariff and freight rates, changes in the costs of gasoline, diesel fuel, other energy, transportation, utilities, labor and health care, accident costs, casualty and other insurance costs, interest rate fluctuations, financial and capital market conditions, developments in litigation to which the company is a party, weather conditions, damage to the company's facilities from natural disasters, regulatory matters and other risks. The company discusses certain of these factors more fully in its additional filings with the SEC, including its last annual report on Form 10-K filed with the SEC, and this release should be read in conjunction with that annual report on Form 10-K, together with all of the company's other filings, including current reports on Form 8-K, made with the SEC through the date of this release. The company urges you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this release. As a result of these matters, changes in facts, assumptions not being realized or other circumstances, the company's actual results may differ materially from the expected results discussed in the forward-looking statements contained in this release. The forward-looking statements made in this release are made only as of the date of this release, and the company undertakes no obligation to update them to reflect subsequent events or circumstances.
Wal-Mart Stores, Inc.
SUBJECT TO RECLASSIFICATION
(Amounts in millions except per share
data)                                                 2009        2008
Net sales                                          $93,471     $94,042
Membership and other income                            771         898
94,242      94,940
Cost of sales                                       70,388      71,372
Operating, selling, general and
administrative expenses                            18,637      18,251
Operating income                                       5,217       5,317
Debt                                                   448         488
Capital leases                                          70          72
Interest income                                        (51)        (64)
Interest, net                                          467         496
Income from continuing operations before
income taxes                                          4,750       4,821
Provision for income taxes                             1,603       1,670
Income from continuing operations                      3,147       3,151
Loss from discontinued operations, net of
tax                                                      (8)         (7)
Consolidated net income                                3,139       3,144
Less consolidated net income attributable
to noncontrolling interest                             (117)       (122)
Consolidated net income attributable to
Wal-Mart                                             $3,022      $3,022
Income from continuing operations
Income from continuing operations                   $3,147      $3,151
to noncontrolling interest                           (117)       (122)
attributable to Wal-Mart                         $3,030      $3,029
Basic net income per common share:
Basic income per share from continuing
operations attributable to Wal-Mart                 $0.77       $0.77
Basic loss per share from discontinued
operations attributable to Wal-Mart                     -       (0.01)
Basic net income per share attributable to
Wal-Mart                                          $0.77       $0.76
Diluted net income per common share:
Diluted income per share from continuing
Diluted income per share from discontinued
operations attributable to Wal-Mart                     -           -
Diluted net income per share attributable
to Wal-Mart                                       $0.77       $0.76
Weighted-average number of common shares:
Basic                                                3,920       3,957
Diluted                                              3,930       3,967
Dividends declared per common share                    $1.09       $0.95
(Amounts in millions)
April 30,     January 31,
2009      2008      2009
Cash and cash equivalents              $6,578    $8,042    $7,275
Receivables                             3,356     3,249     3,905
Inventories                            34,391    35,521    34,511
Prepaid expenses and other              3,266     2,990     3,063
Current assets of discontinued
operations                               155       955       195
Total current assets               47,746    50,757    48,949
Property and equipment, at cost:
Property and equipment, at cost     127,472   124,256   125,820
Less accumulated depreciation       (34,145)  (29,926)  (32,964)
Property and equipment, net        93,327    94,330    92,856
Property under capital lease:
Property under capital lease            5,394     5,808     5,341
Less accumulated amortization          (2,617)   (2,680)   (2,544)
Property under capital lease,
net                                2,777     3,128     2,797
Goodwill                               14,882    16,428    15,260
Other assets and deferred charges       3,358     2,840     3,567
Total assets                     $162,090  $167,483  $163,429
Commercial paper                     $1,457    $5,924    $1,506
Accounts payable                     28,541    29,027    28,849
Dividends payable                     3,234     3,322         -
Accrued liabilities                  15,263    14,882    18,112
Accrued income taxes                  1,810     1,699       677
Long-term debt due within one
year                                 5,731     5,864     5,848
Obligations under capital leases
due within one year                    318       321       315
Current liabilities of
discontinued operations                 45        90        83
Total current liabilities          56,399    61,129    55,390
Long-term debt                         32,480    32,379    31,349
Long-term obligations under
capital leases                         3,185     3,584     3,200
Deferred income taxes and other         5,835     5,284     6,014
Redeemable noncontrolling
interest                                 277         -       397
Common stock and capital in
excess of par value                    4,048     3,628     4,313
Retained earnings                      61,556    55,257    63,660
Accumulated other comprehensive
(loss) income                         (3,373)    4,345    (2,688)
equity                            62,231    63,230    65,285
Noncontrolling interest                 1,683     1,877     1,794
Total equity                       63,914    65,107    67,079
Total liabilities and equity     $162,090  $167,483  $163,429
Consolidated net income                              $3,139     $3,144
Loss from discontinued operations, net of tax             8          7
Income from continuing operations                     3,147      3,151
Adjustments to reconcile income from continuing
operations to net cash provided by operating
Depreciation and amortization                       1,700      1,628
Other                                                (192)       139
Changes in certain assets and liabilities, net of
effects of acquisitions:
Decrease in accounts receivable                     419        450
Decrease (increase) in inventories                  153       (213)
Decrease in accounts payable                       (315)    (1,191)
Decrease in accrued liabilities                  (1,341)      (185)
Net cash provided by operating activities               3,571      3,779
Payments for property and equipment                  (2,607)    (2,447)
Proceeds from disposal of property and equipment        132        126
Investment in international operations                 (436)         -
Other investing activities                             (208)        88
Net cash used in investing activities                  (3,119)    (2,233)
(Decrease) increase in commercial paper, net           (266)       892
Proceeds from issuance of long-term debt              1,453      2,521
Payment of long-term debt                               (63)      (361)
Dividends paid                                       (1,067)      (940)
Purchase of company stock                              (886)    (1,375)
Other financing activities                             (238)        54
Net cash used in (provided by) in financing
activities                                            (1,067)       791
Effect of exchange rates on cash                          (82)       166
Net (decrease) increase  in cash and cash
equivalents                                             (697)     2,503
Cash and cash equivalents at beginning of year(1)       7,275      5,569
Cash and cash equivalents at end of period(2)          $6,578     $8,072
(1) Includes cash and cash equivalents of discontinued operations of
SOURCE Wal-Mart Stores, Inc.
John Simley
or Investor Relations
Carol Schumacher
or Mike Beckstead
1-479-277-9558, all of Wal-Mart Stores, Inc.
Web Site: http://www.walmartstores.com
http://www.walmart.com
http://www.samsclub.com