OREANDA-NEWS.  Wal-Mart Stores, Inc. (NYSE: WMT) today reported financial results for the first quarter ended April 30, 2014.

Consolidated net sales for the first quarter were USD 114.2 billion, an increase of 0.8 percent over last year. This quarter included the negative impact of approximately USD 1.6 billion from currency exchange rate fluctuations. Excluding currency,1 net sales would have increased 2.1 percent to USD 115.7 billion. Membership and other income increased 4.8 percent versus last year. Total revenue was USD 115.0 billion, an increase of approximately USD 0.9 billion, or 0.8 percent.

Consolidated net income attributable to Walmart was USD 3.6 billion, a decrease of 5.0 percent. Diluted earnings per share from continuing operations attributable to Walmart were USD 1.10, or 3.5 percent below last year's USD 1.14. The company estimated that EPS was adversely affected by approximately USD 0.03, due to lower net sales and higher direct costs associated with more severe weather than last year.

Weather impacted sales and expenses

"Walmart's first quarter net sales increased 0.8 percent over last year. Like other retailers in the United States, the unseasonably cold and disruptive weather negatively impacted U.S. sales and drove operating expenses higher than expected," said Doug McMillon, Wal-Mart Stores, Inc. president and chief executive officer.

"Walmart's underlying business is solid, and I'm confident in our long-term strategies. We'll continue to invest in price and enhance our service to improve sales," added McMillon. "We remain focused on growth across the enterprise, especially in small formats like Neighborhood Market in the U.S."

The company continued its significant investment in e-commerce initiatives, including the global technology platform, and sales worldwide rose approximately 27 percent.

"We have the opportunity to create transformative growth through stronger e-commerce capabilities," said McMillon. "Our investments are focused on improving customer experience and fulfillment capacity. We're working to deliver a relevant, personalized and seamless customer experience across all channels to further grow sales."

Returns

The company paid USD 1.55 billion in dividends and repurchased approximately 8 million shares for USD 626 million in the first quarter. In total, the company returned almost USD 2.2 billion to shareholders through dividends and share repurchases.

The company also spent approximately USD 1.5 billion to purchase substantially all of the remaining outstanding shares in Walmart Chile during the first quarter.

Return on investment1 (ROI) for the trailing 12-months ended April 30, 2014 was 16.7 percent, compared to 17.8 percent for the prior comparable period. The decrease in ROI was primarily due to a decrease in operating income, as well as investments in fixed assets.

Free cash flow1 was USD 3.8 billion for the quarter ended April 30, 2014, compared to USD 1.9 billion in the prior year. The increase in free cash flow was primarily due to the timing of income tax payments and lower capital expenditures.

1 See additional information at the end of this release regarding non-GAAP financial measures.

Guidance

The company's financial guidance reflects a view of global economic trends and assumes currency rates remain at today's levels.

"We expect second quarter fiscal year 2015 diluted earnings per share from continuing operations to be between USD 1.15 and USD 1.25. This compares to USD 1.24 last year," said Charles Holley, executive vice president and chief financial officer. "Our guidance assumes incremental investments in e-commerce, headwinds from higher health care costs in the U.S. and increased investments in Sam's Club membership programs. We continue to expect our full-year effective tax rate to range between 32 and 34 percent. We expect our effective tax rate to be at the high end of this guidance for the second quarter."
During the 13-week period, Walmart U.S. comp traffic decreased 1.4 percent, while average ticket increased 1.3 percent. E-commerce sales positively impacted comp sales by approximately 0.3 percent for the 13-week period.

In the first quarter period, excluding fuel,1 Sam's Club comp traffic was down 0.2 percent, and ticket was down 0.3 percent. E-commerce sales positively impacted comp sales by approximately 0.2 percent for the 13-week period.

The company's e-commerce sales impact includes those sales initiated through the company's websites and fulfilled through the company's dedicated e-commerce distribution facilities, as well as an estimate for sales initiated online, but fulfilled through the company's stores and clubs.