Walmart U.S. Continues to Gain Market Share in Food and Consumables

On a constant currency basis, net sales would have increased 1.8 percent to $114.2 billion. Membership and other income increased 1.6 percent versus last year, due primarily to an increase in membership income. Total revenue for the first quarter was $114.2 billion, a 1.0 percent increase over last year.

 

Consolidated net income attributable to Walmart for the first quarter was $3.8 billion, up 1.1 percent. Diluted earnings per share attributable to Walmart (EPS) were $1.14, a 4.6 percent increase, compared to $1.09 last year. 

 

"In a quarter marked by considerable headwinds to top line sales, Walmart delivered solid EPS growth of 4.6 percent," said Mike Duke, Wal-Mart Stores, Inc. president and chief executive officer. "Walmart's mission is simple and focused -- to help people save money so they can live better. When we simplify and focus our execution against this mission, it's easy for our associates to prioritize what they have to do to serve our customers. 

 

"I'm confident about our long-term strategy and the direction Walmart is headed," Duke added. "Our expectations about our U.S. businesses' performance, coupled with more discipline in International, will allow us to improve our performance throughout the year." 

 

Duke also noted that e-commerce sales grew more than 30 percent in the first quarter versus last year. 

 

"There is no doubt that our company is making the right investments in e-commerce to differentiate ourselves and become a better Walmart," said Duke. "And with our sales growth in the first quarter, we believe our investments are paying off." 

 

The company's operating expense leverage was relatively flat for the first quarter, but the commitment to leverage for the full year remains a priority. 

 

"We are proud that our U.S. segments leveraged operating expenses in the first quarter, and we expect them to continue leveraging," said Duke. "To operate in a difficult sales environment requires disciplined expense and productivity management, the core of EDLC and EDLP. We are committed to have the total company achieve expense leverage for the year." 

 

"Although we believe our company will leverage expenses for the year, the second quarter will be challenging, given expense pressures in International and our corporate area," said Charles Holley, executive vice president and chief financial officer. "Expense leverage may not be delivered evenly across the quarters, but we believe that by executing our plans, we will continue to reduce expenses and improve productivity." 

 

"We deployed cash to grow our business and return value to shareholders," said Holley. "Despite the multiple headwinds during the quarter, we grew operating profits ahead of sales growth. Our balance sheet is strong, and we continue to grow." 

 

During the first quarter, the company repurchased approximately 30 million shares for $2.2 billion. In addition, the company paid $1.6 billion in dividends. As previously announced, the company increased its dividend by 18 percent for fiscal 2014 to $1.88 per share. 

 

Return on investment1 (ROI) for the trailing 12 months ended April 30, 2013 was 17.8 percent, compared to 18.1 percent for the prior trailing 12 months ended April 30, 2012. The decline was primarily the result of acquisitions, along with an increase in fixed assets within Walmart's base business. 

 

Walmart ended the quarter with free cash flow1 of $1.9 billion, compared to $3.1 billion in the prior year. An increase in income tax payments due primarily to changes in federal bonus depreciation rules and an increase in capital expenditures contributed to the free cash flow decline. 

 

"Given current business and economic trends, including currency, we expect second quarter EPS to be in the range of $1.22 to $1.27," said Holley. "Investments in Global eCommerce initiatives were forecast to have an incremental $0.09 impact for fiscal 2014, and this remains in our guidance. We expect the Q2 impact to be in line with the $0.02 per share we had in the first quarter. In addition to eCommerce initiatives, expenses related to FCPA matters are expected to range from $65 to $70 million for the second quarter."