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Wal-Mart Results Represent Ongoing Push Into Gathering Headwinds

Thursday February 21st, 2013 - 1:00PM


For the fiscal year ended January 31, Wal-Mart Stores, Inc. today reported that income from continuing operations was $17 billion, a 7.8% increase from the previous year, and that earnings per share reached $5.02 versus $4.54 in the year earlier. Consolidated net sales for the year, fiscal 2013 by Wal-Mart’s reckoning, were $466.1 billion, up 5% versus fiscal 2012.

Without fuel impact, Wal-Mart full year comparable store sales in the United States gained 2.1%. Namesake stores in the U.S. enjoyed a 1.8% comp gain, while Sam’s Club comps increased 3.6%.

Net sales included $4 billion from acquisitions and approximately $4.5 billion of negative impact from currency exchange rate fluctuations, Wal-Mart noted. Membership and other income was $3 billion, the retailer stated, representing a 1.6% year-over-year slide. Total revenue gained 5% to $469.2 billion, the company said.

For the fourth quarter, income from continuing operations gained 7.9% to  $5.6 billion while diluted earnings per share were $1.67 versus $1.51 in last year’s period.

Fourth quarter earnings beat a Thomson Reuters consensus analyst estimate by a dime, although sales were slightly below Wall Street expectations. Observers noted that, in a climate where fuel prices and a greater tax burden have been impacting consumers, Wal-Mart guidance going forward was below expectations.

Fourth quarter net sales were $127.1 billion, up 3.9% from last year’s period.

Without fuel impact, Wal-Mart U.S. comp sales gained 1.2% in the fourth quarter. Namesake stores in the U.S. enjoyed a 1% comp gain while Sam’s Club comps increased by 2.3%.

On a constant currency basis, net sales would have increased 3.7%. Membership and other income was $815 million, Walmart related, down 7.8% due to lower other income. Total revenue advanced 3.9% over the year-earlier period the retailer said. Total revenue for the fourth quarter advanced 3.9% to $127.9 billion, the retailer asserted.

"Walmart topped off a really good year with a solid fourth quarter, and I'm proud of what we accomplished as a team," Mike Duke, Wal-Mart Stores, Inc. president and CEO, said in comments on the company financial results. "Together, we added $22 billion in sales to top $466 billion. Walmart U.S. was a key driver of our 5% net sales increase."

Duke commented that, "Our management team is focused on a few key areas critical to Wal-Mart’s long-term success." He identified them as:

Delivering a strong Walmart U.S. division business.

Improving returns for the International division.

Driving greater efficiency through a disciplined approach to capital allocation.

Continuing investment in Global e-commerce.

Strengthening the company's compliance organization.

Meeting the company’s five-year leverage goal.

Wal-Mart indicated that it leveraged operating expenses for the full year including the $157 million of professional fees and expenses related to the ongoing Foreign Corrupt Practices Act action as regards international operations.

"Fiscal year 2013 was the first year of our five-year plan to reduce operating expenses as a percentage of sales by at least 100 basis points," said Charles Holley, executive vp and CFO. "We made progress toward our five-year goal, reducing expenses for the year by 14 basis points. Walmart U.S. led this effort. The entire company has rallied around this leverage challenge, and we expect we will continue to see progress towards this goal."