OREANDA-NEWS. August 21, 2012. Wal-Mart Stores, Inc. (NYSE: WMT) reported financial results for the quarter ended July 31, 2012. Net sales for the second quarter of fiscal 2013 were USD 113.5 billion, an increase of 4.5 percent from USD 108.6 billion in the second quarter last year. Net sales for this quarter included a negative currency exchange rate impact of approximately USD 2.2 billion. Without the currency impact, net sales would have been USD 115.7 billion. Membership and other income increased 4.7 percent to USD 762 million. Total revenue was USD 114.3 billion, an increase of 4.5 percent from last year.

Income from continuing operations attributable to Walmart for the quarter was USD 4.0 billion, up 5.7 percent from the second quarter last year. Diluted earnings per share from continuing operations attributable to Walmart (EPS) for the second quarter of fiscal 2013 were USD 1.18. By comparison, last year's reported EPS were USD 1.09. The company had several items last year that negatively impacted the second quarter by approximately USD 0.03 per share.

Strong earnings performance

“Walmart had a strong second quarter, and I'm pleased with the earnings and overall results,” said Mike Duke, Wal-Mart Stores, Inc. president and chief executive officer. “We had positive comp sales in Walmart U.S. and Sam's Club, as well as each of our International markets, reinforcing that customers rely on Walmart to help them save money and live better.”

The company leveraged operating expenses for the second quarter, delivering on its commitment to reduce costs, improve productivity and invest in price.

“Our intense focus on delivering productivity initiatives and reducing costs allowed us to invest in lower prices for our customers and to deliver strong profitability for shareholders,” said Duke, who also highlighted the successful performance of the company's three operating segments.

“I'm really pleased with the continued momentum in our Walmart U.S. stores, evidenced, in part, by three consecutive quarters of positive comp traffic and four straight quarters of positive comp sales,” Duke added. “The team is very focused on delivering broad assortment and price leadership. Walmart's low prices drive greater customer loyalty.

“Sam's Club had strong comp sales for the quarter. The quality and innovation behind merchandising and services are contributing to strong comps,” said Duke. “The result of Sam's initiatives is greater value, which helps attract new members and strong renewals.

“We are also pleased with the sales and profitability of Walmart International,” Duke said. “Our goal is to achieve more balance between profitability and returns, and we will do that by improving operational and sales productivity.”

Duke also commented on the economic challenges facing customers.

“The paycheck cycle remains pronounced in the United States and in our International markets,” Duke said. “Given continuing economic pressures, we believe that our price leadership and value are growing in importance to customers across income levels.”

Returns

Walmart delivered free cash flow of USD 6.1 billion for the six months ended July 31, 2012, compared to USD 4.0 billion the previous year. Return on investment (ROI) for the trailing 12 months ended July 31, 2012 was 18.1 percent, compared to 18.4 percent for the prior period. The decline in ROI is attributable to higher levels of average working capital, capital expenditures and the impact of acquisitions.

“We remain committed to providing strong returns to our shareholders,” said Charles Holley, executive vice president and chief financial officer. “Walmart returned USD 3.1 billion to shareholders in the quarter, which included USD 1.3 billion in dividends and USD 1.8 billion in share repurchases.”

Company raises full-year EPS guidance

“We take a variety of factors including sales trends, the global economy and currency into account in providing our EPS guidance. We expect third quarter fiscal 2013 diluted earnings per share from continuing operations to range between USD 1.04 and USD 1.09. This compares to last year's third quarter reported EPS of USD 0.97,” said Holley. “We are raising and narrowing the company's full-year EPS guidance to a range of USD 4.83 to USD 4.93. Our previous range was USD 4.72 to USD 4.92. Last year's full-year EPS was USD 4.54.”