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    Walmart Sees Higher Q3 Net Sales, Comps

    Company returned $2.7B to shareholders through dividends, share repurchases

    Wal-Mart Stores Inc. reported net sales for the third quarter of fiscal year 2012 ended Oct. 31 of $109.5 billion, an increase of 8.2 percent from $101.2 billion last year. Net sales for the quarter included $2.1 billion in sales from acquisitions in the United Kingdom and South Africa, and a currency exchange translation benefit of $1.3 billion.

    Income from continuing operations attributable to Walmart for the quarter was $3.3 billion. Diluted earnings per share (EPS) from continuing operations attributable to Walmart for the third quarter of fiscal year 2012 were 97 cents. Last year’s third-quarter EPS of 95 cents included a $191 million tax benefit, which was about 5 cents per share, related to a favorable adjustment to transfer pricing policies after negotiations with a foreign tax jurisdiction.

    “Every business segment is stronger today than it was a year ago, and we delivered solid earnings growth for our shareholders in the third quarter,” noted Mike Duke, Walmart president and CEO. “Both Walmart U.S. and Sam’s Club exceeded comp sales guidance, and I’m pleased that the sales momentum positions us exceedingly well for the holidays. We also are pleased with the growth in both sales and operating income for Walmart International.”

    Continued Duke: “The company leveraged operating expenses this quarter, with all three operating segments achieving that goal as well. We are committed to leveraging expenses again this year. Our overall performance reflects Walmart’s strategy of driving the productivity loop, reducing expenses and investing in price.”

    As the economy continues to weigh on Walmart U.S. customers, the stores are continuing a strategy of investing in low prices for the holidays, according to Duke, who added, “Beyond everyday low price, Walmart U.S. has a number of additional programs in place for the fourth quarter, including the Christmas price guarantee, holiday layaway services and free online shipping options.”

    “Walmart remains committed to delivering strong returns to our shareholders,” said Charles Holley, Walmart EVP and CFO. “During the third quarter, we returned $2.7 billion to our shareholders through dividends and share repurchases, bringing our total year-to-date return to $8.8 billion.” In the third quarter, the company repurchased $1.4 billion worth of shares, representing about 27 million shares, and paid $1.3 billion in dividends.

    Walmart International’s net sales included a $1.3 billion currency exchange rate benefit for the quarter ended Oct. 31. On a constant-currency basis, Walmart International net sales were up 15.3 percent for the third quarter compared to last year. All markets experienced constant currency sales growth, with China, Mexico and Argentina providing the strongest increases in the third quarter. Acquisitions additionally provided a $2.1 billion benefit to net sales.

    Sam’s Club’s net sales, excluding fuel, grew to $11.8 billion, an increase of 6.2 percent from last year’s third-quarter results.

    Sales growth was due to comparable-store sales, new stores and acquisitions. The company added 8.7 million square feet of retail space via 159 net new retail units this quarter, with 130 units attributable to Walmart International.

    The company posted U.S. comparable-store sales based on its 13-week and 39-week retail calendar periods ended Oct. 28, 2011, and Oct. 29, 2010, as follows: During the 13-week period, Walmart U.S. comp sales were spurred by a rise in average ticket, partly offset by a decline in traffic from last year. However, comp traffic improved 160 basis points over the second quarter of fiscal 2012. Grocery, health and wellness and hardlines, which represent about 75 percent of Walmart U.S. annual revenues, all reported positive comps.

    “Three key elements drove the comp improvement in the third quarter,” explained Bill Simon, Walmart U.S. president and CEO. “Our focus on expanded assortment, product innovation and local relevance improved merchandise offerings throughout the store, and customers responded. Productivity initiatives improved in-stock levels, and we continue to drive price leadership in all our stores.”

    For the period from Oct. 29, 2011 through Jan. 27, 2012, Walmart U.S. expects comps to increase from flat to 2 percent. Walmart U.S. 13-week comps for the fourth quarter of fiscal 2011 fell 1.8 percent.

    “We will continue to execute our price investment strategy,” said Simon. “The holiday season is underway and we’re aggressively going after the business this season. We have been open on Thanksgiving for several years, and this year, we kick off event sales at 10 p.m. that day. Walmart has the assortment customers are looking for, both in store and online. We have the inventory they need. And our ad match and Christmas price guarantee will leave no doubt that Walmart is the clear price leader this holiday season.”

    For Sam’s Club, comparable traffic and ticket, excluding fuel, were both higher than the they were last year, and grew for both Business and Advantage members for the 13-week period.

    “Consistent with the overall club channel, Sam’s performance for the third quarter was exceptional, with comp sales, excluding fuel, increasing 5.7 percent,” noted Brian Cornell, Sam’s Club president and CEO. “This is our seventh quarter of sequentially increasing comps, and we expect that sales momentum to remain strong.”

    Sam’s Club expects comps, without fuel, for the current 13-week period from Oct. 29, 2011 through Jan. 27, 2012 to increase between 4 percent and 6 percent. Last year, the division’s comp sales, without fuel, for the fourth quarter grew 2.7 percent.

    Bentonville, Ark.-based Walmart operates 9,826 retail units under 69 banners in 28 countries, and employs more than 2 million associates worldwide.
     

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