International Gains Boost Wal-Mart Performance, US Sales Dissappoint

Duke pointed out that under the leadership of President and CEO Bill Simon, Walmart U.S. is implementing a four-point plan designed to deliver better results. He acknowledged that it will take some time to see positive comparable store sales.

2/23/2011 --- Wal-Mart Stores, Inc. has reported financial results for the quarter and the year ended Jan. 31, 2011. Net sales for the fourth quarter of fiscal year 2011 were $115.6 billion, an increase of 2.5 percent from $112.8 billion in the fourth quarter last year.

Net sales included a currency exchange rate benefit of $664 million. Income from continuing operations attributable to Walmart for the quarter was $5.0 billion, up from $4.8 billion in the fourth quarter last year.

Diluted earnings per share from continuing operations attributable to Walmart ("reported EPS") for the fourth quarter of fiscal year 2011 were $1.41. The underlying diluted earnings per share from continuing operations attributable to Walmart ("underlying EPS") were $1.34, exceeding consensus estimates and company guidance. Underlying EPS for the fourth quarter represents reported EPS that is adjusted to exclude the effects of certain tax benefits of $243 million, or approximately $0.07 per share. The tax benefits are due primarily to the repatriation of certain non-U.S. earnings that increased U.S. foreign tax credits.

By comparison, underlying EPS for the fourth quarter of fiscal 2010 was $1.213. The amount reflects an adjustment to reported EPS to exclude several restructuring charges totaling $260 million ($162 million net of tax), or approximately $0.04 per share, and a net tax benefit of $372 million or approximately $0.09 per share.

For the fourth quarter, the company recognized in discontinued operations, an approximate $1.0 billion tax benefit in connection with the disposition of its German operations in fiscal 2007. This matter was resolved with the U.S. Internal Revenue Service during the fourth quarter of this fiscal year. Diluted earnings per share attributable to Walmart, inclusive of continuing operations and discontinued operations of $0.29 per share from the recognized tax benefit, were $1.70 for the fourth quarter.

Net sales for the fiscal year were $419 billion, an increase of 3.4 percent over fiscal 2010. Net sales included a currency exchange rate benefit of $4.5 billion. Income from continuing operations attributable to Walmart were $15.4 billion, a 6.3 percent increase from $14.4 billion last year.

For fiscal year 2011, reported EPS and underlying EPS were $4.18 and $4.07, respectively, versus $3.73 per share and $3.67 per share, respectively, in the prior year. Fiscal 2011 reported EPS reflects certain tax benefits recorded in the third and fourth quarters that aggregate to approximately $0.11 per share. Diluted earnings per share attributable to Walmart for fiscal 2011, inclusive of continuing operations and discontinued operations from the recognized tax benefit, were $4.47.

"We are pleased with Walmart's strong earnings performance for both the fourth quarter and the full year across our three operating segments. At the same time, we are disappointed by Walmart U.S. fourth quarter sales," said Mike Duke, Wal-Mart Stores, Inc. president and chief executive officer.

Duke pointed out that under the leadership of President and CEO Bill Simon, Walmart U.S. is implementing a four-point plan designed to deliver better results. He acknowledged that it will take some time to see positive comparable store sales.

"Some of the pricing and merchandising issues in Walmart ran deeper than we initially expected, and they require a response that will take time to see results," Duke explained. "There is no greater priority for Bill or me than getting sales back into positive territory."

"Based on our views of the global economy and our three operating segments, we expect first quarter diluted earnings per share from continuing operations attributable to Walmart to be between $0.91 and $0.96, versus last year's EPS of $0.87," said Charles Holley, executive vice president and chief financial officer. "Further, we are guiding earnings per share from continuing operations attributable to Walmart for fiscal 2012 to a range of $4.35 to $4.50. These estimates assume that currency exchange rates remain at current levels."

Underlying EPS was $4.074 for fiscal year 2011, excluding approximately $0.11 per share of aggregate tax benefits recorded in the third and fourth quarters.

The company also updated the range for capital expenditures for fiscal 2012. Walmart projected on Oct. 13, 2010 that total company capital spending would range from $13.5 billion to $14.5 billion.