Company Raises Full-Year Earnings Forecast
BENTONVILLE, Ark., Aug. 14 -- Wal-Mart Stores, Inc. (NYSE: WMT) today reported its sales and earnings for the quarter ended July 31, 2008. Net sales for the second quarter of fiscal year 2009 were approximately $101.6 billion, an increase of 10.4 percent from $92.0 billion in the second quarter last year.
Income from continuing operations for the second quarter was $3.385 billion, an increase of 9.3 percent from $3.097 billion in the second quarter last year. Diluted earnings per share from continuing operations for the second quarter of fiscal year 2009 increased to $0.86 from the previous year's second quarter result of $0.75 per share (after reclassifying for discontinued operations, as noted below). The prior year included a net benefit of $0.04 per share from three items: the net impact of a reduction of general liability and workers' compensation claim accruals, gains from the sale of certain real estate properties, and charges for legal and other contingencies.
Results of Gazeley Limited, an ASDA commercial development subsidiary that was sold in July 2008, have been reclassified for all periods as discontinued operations. The Company anticipates recording a gain from the Gazeley sale in the third quarter. In addition, there was a $63 million benefit to discontinued operations in this second quarter from the successful resolution of a tax contingency related to McLane Company Ltd., a former Wal-Mart subsidiary. The Company also reported a $153 million charge to discontinued operations in the second quarter of fiscal 2008 for a post-closing adjustment from the sale of its German operations in fiscal 2007.
"The combination of solid operating performance and improved capital efficiency gave us record earnings this quarter and nearly $5 billion in free cash flow in the first half of the fiscal year," said Lee Scott, Wal-Mart Stores, Inc. president and chief executive officer. "Our underlying business remains sound as our associates deliver on Wal-Mart's mission to save people money so they can live better."
Net Sales Net sales were as follows (dollars in billions): Three Months Ended Six Months Ended July 31, July 31, Percent Percent 2008 2007 Change 2008 2007 Change Net Sales: Walmart U.S. $64.053 $59.013 8.5% $123.126 $114.450 7.6% International 25.261 21.600 16.9% 49.198 41.227 19.3% Sam's Club 12.284 11.377 8.0% 23.396 21.700 7.8% Total Company $101.598 $91.990 10.4% $195.720 $177.377 10.3%
Price leadership, enhanced customer service and operational improvements remained the primary drivers of sales growth worldwide, and contributed to earnings and free cash flow. Wal-Mart defines free cash flow, a non-GAAP measure, as cash provided by operating activities, less capital expenditures. A reconciliation of free cash flow for the first half of this fiscal year to the most directly comparable GAAP measure for the same period also is available on a Form 8-K furnished today with the Securities and Exchange Commission and at http://www.walmartstores.com/investors.
"We have improved customer traffic and ticket and overall sales growth in our markets," Scott added. "While inflation and higher fuel costs are pressuring suppliers, retailers and customers worldwide, we're confident that Wal-Mart is well-positioned for this economy."
Segment Operating Income
Segment operating income for each operating segment, which is defined as income from continuing operations before net interest expense, income taxes, unallocated corporate overhead and minority interest, was as follows (dollars in billions): Three Months Ended Six Months Ended July 31, July 31, Percent Percent 2008 2007 Change 2008 2007 Change Operating Income: Walmart U.S.* $4.715 $4.256 10.8% $9.077 $8.235 10.2% International 1.202 1.032 16.5% 2.244 1.908 17.6% Sam's Club* 0.432 0.445 -2.9% 0.818 0.815 0.4%
* During the quarter ending July 31, 2007, the reduction of general liability and workers' compensation accruals, gains from the sale of certain real estate properties and charges for legal and other contingencies contributed, on a net basis, $265 million and $16 million of segment operating income of Walmart U.S. and Sam's Club, respectively.
Comparable Store Sales
The Company reports comparable store sales in this earnings release based on the calendar months in the quarters that ended July 31, 2008 and 2007. Comparable store sales for the United States were as follows:
Without Fuel With Fuel Fuel Impact Three Months Three Months Three Months Ended Ended Ended July 31, July 31, July 31, 2008 2007 2008 2007 2008 2007 Walmart U.S. 4.6% 1.2% 4.6% 1.2% 0.0% 0.0% Sam's Club 3.7% 5.9% 7.2% 6.5% 3.5% 0.6% Total U.S. 4.5% 1.9% 5.0% 2.0% 0.5% 0.1% Without Fuel With Fuel Fuel Impact Six Months Six Months Six Months Ended Ended Ended July 31, July 31, July 31, 2008 2007 2008 2007 2008 2007 Walmart U.S. 3.7% 0.6% 3.7% 0.6% 0.0% 0.0% Sam's Club 3.7% 5.3% 6.9% 5.4% 3.2% 0.1% Total U.S. 3.7% 1.3% 4.2% 1.3% 0.5% 0.0% Guidance
"For the third quarter of fiscal year 2009, we estimate the Company's comparable store sales increase in the United States to be between one and two percent, which continues to reflect some sales volatility from week to week," said Tom Schoewe, Wal-Mart Stores, Inc. executive vice president and chief financial officer. "We expect the Company's earnings per share from continuing operations for the third quarter to be between $0.73 and $0.76 and are raising our current forecast for earnings from continuing operations for the full fiscal year to a range of $3.43 to $3.50 per share."
After this earnings release has been furnished to the SEC, a pre-recorded call offering additional comments on the quarter will be available to all investors. Callers may listen to this call by dialing 203-369-1090. The information included in this release and the pre-recorded phone call are available in the investor information area on the Company's Web site at http://www.walmartstores.com/investors.
Wal-Mart Stores, Inc. operates Walmart discount stores, supercenters, Neighborhood Markets and Sam's Club locations in the United States. The Company operates in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom and, through a joint venture, in India. The Company's common stock is listed on the New York Stock Exchange under the symbol WMT. More information about Wal-Mart can be found by visiting http://www.walmartstores.com. Online merchandise sales are available at http://www.walmart.com and http://www.samsclub.com.
Ed. Note: The terms "Wal-Mart" and "Wal-Mart Stores" refer to the corporate entity. "Walmart," expressed as one word and without hyphenation, refers to the brand name of the Company's U.S. operations. This distinction came after the Company announced the introduction of a new logo for its U.S. store operations in June.
This release contains statements as to our management's expectation regarding recording a gain from the sale of Gazeley Limited in the third quarter of fiscal year 2009, our management's belief that the Company is well-positioned for this economy, our management's expectations regarding the comparable store sales increase in the United States in the third quarter of fiscal year 2009 and the Company's expectations for its diluted earnings per share from continuing operations for the third quarter of fiscal year 2009 and for all of fiscal year 2009 that Wal-Mart believes are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements are intended to enjoy the protection of the safe harbor for forward-looking statements provided by that Act. These statements can be identified by the use of the word "anticipates," "estimate," "expect," "well-positioned" or "forecast" in the statements. These forward-looking statements are subject to risks, uncertainties and other factors, domestically and internationally, including, the cost of goods, competitive pressures, geopolitical events and conditions, general economic conditions, consumer credit availability, inflation, consumer spending patterns and debt levels, currency exchange fluctuations, trade restrictions, changes in tariff and freight rates, changes in the costs of gasoline, diesel fuel, other energy, transportation, utilities, labor and health care, accident costs, casualty and other insurance costs, interest rate fluctuations, capital market conditions, weather conditions, damage to the Company's facilities from natural disasters, regulatory matters and other risks. The Company discusses certain of these factors more fully in its additional filings with the SEC, including its last annual report on Form 10-K filed with the SEC, and this release should be read in conjunction with that annual report on Form 10-K, together with all of the Company's other filings, including current reports on Form 8-K, made with the SEC through the date of this release. The Company urges you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this release. As a result of these matters, changes in facts, assumptions not being realized or other circumstances, the Company's actual results may differ materially from the expected results discussed in the forward-looking statements contained in this release. The forward-looking statements made in this release are made only as of the date of this release, and the Company undertakes no obligation to update them to reflect subsequent events or circumstances.
WAL-MART STORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amounts in millions except per share data) SUBJECT TO RECLASSIFICATION Three Months Ended Six Months Ended July 31, July 31, 2008 2007 2008 2007 Revenues: Net sales $101,598 $91,990 $195,720 $177,377 Membership and other income 1,069 1,009 2,241 2,000 102,667 92,999 197,961 179,377 Costs and expenses: Cost of sales 77,642 70,589 149,528 135,900 Operating, selling, general and administrative expenses 19,228 17,127 37,328 33,371 Operating income 5,797 5,283 11,105 10,106 Interest: Debt 450 446 938 852 Capital leases 77 42 149 111 Interest income (71) (84) (135) (169) Interest, net 456 404 952 794 Income from continuing operations before income taxes and minority interest 5,341 4,879 10,153 9,312 Provision for income taxes 1,826 1,676 3,496 3,208 Income from continuing operations before minority interest 3,515 3,203 6,657 6,104 Minority interest (130) (106) (252) (206) Income from continuing operations 3,385 3,097 6,405 5,898 Income (loss) from discontinued operations, net of tax 64 (145) 66 (120) Net income $3,449 $2,952 $6,471 $5,778 Net income per common share: Basic income per common share from continuing operations $0.86 $0.75 $1.62 $1.43 Basic income (loss) per common share from discontinued operations 0.01 (0.03) 0.02 (0.02) Basic net income per common share $0.87 $0.72 $1.64 $1.41 Diluted income per common share from continuing operations $0.86 $0.75 $1.62 $1.43 Diluted income (loss) per common share from discontinued operations 0.01 (0.03) 0.01 (0.03) Diluted net income per common share $0.87 $0.72 $1.63 $1.40 Weighted-average number of common shares: Basic 3,945 4,102 3,951 4,112 Diluted 3,958 4,108 3,962 4,118 Dividends declared per common share $- $- $0.95 $0.88 WAL-MART STORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in millions) SUBJECT TO RECLASSIFICATION July 31, July 31, January 31, 2008 2007 2008 ASSETS Current assets: Cash and cash equivalents $6,907 $6,073 $5,499 Receivables 3,226 2,767 3,654 Inventories 35,382 34,184 35,180 Prepaid expenses and other 3,311 2,915 2,760 Current assets of discontinued operations 708 448 492 Total current assets 49,534 46,387 47,585 Property and equipment, at cost 126,698 116,648 122,642 Less accumulated depreciation (31,591) (26,771) (28,771) Property and equipment, net 95,107 89,877 93,871 Property under capital leases 5,740 5,515 5,736 Less accumulated amortization (2,645) (2,448) (2,594) Property under capital leases, net 3,095 3,067 3,142 Goodwill 16,400 14,655 16,071 Other assets and deferred charges 2,755 2,959 2,841 Non-current assets of discontinued operations 4 4 4 Total assets $166,895 $156,949 $163,514 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Commercial paper $4,347 $8,117 $5,040 Accounts payable 29,933 27,748 30,370 Dividends payable 1,927 1,794 - Accrued liabilities 15,607 14,025 15,724 Accrued income taxes 555 168 1,000 Long-term debt due within one year 2,180 3,176 5,913 Obligations under capital leases due within one year 324 189 316 Current liabilities of discontinued operations 31 33 91 Total current liabilities 54,904 55,250 58,454 Long-term debt 34,168 27,966 29,799 Long-term obligations under capital leases 3,544 3,594 3,603 Deferred income taxes and other 5,410 5,449 5,111 Minority interest 2,076 2,404 1,939 Commitments and contingencies Shareholders' equity: Common stock and capital in excess of par value 3,986 3,412 3,425 Retained earnings 57,883 55,414 57,319 Accumulated other comprehensive income 4,924 3,460 3,864 Total shareholders' equity 66,793 62,286 64,608 Total liabilities and shareholders' equity $166,895 $156,949 $163,514 WAL-MART STORES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in millions) Six Months Ended SUBJECT TO RECLASSIFICATION July 31, 2008 2007 Cash flows from operating activities: Net income $6,471 $5,778 (Income) loss from discontinued operations, net of tax (66) 120 Income from continuing operations 6,405 5,898 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization 3,366 3,060 Other 315 101 Changes in certain assets and liabilities, net of effects of acquisitions: Decrease in accounts receivable 578 255 Decrease (increase) in inventories 95 (64) Decrease in accounts payable (150) (1,134) Decrease in accrued liabilities (626) (1,918) Net cash provided by operating activities 9,983 6,198 Cash flows from investing activities: Payments for property and equipment (5,074) (6,971) Proceeds from disposal of property and equipment 492 319 Investment in international operations, net of cash acquired (74) (467) Other investing activities 129 (61) Net cash used in investing activities (4,527) (7,180) Cash flows from financing activities: (Decrease) increase in commercial paper (639) 5,487 Proceeds from issuance of long-term debt 4,648 3,818 Payment of long-term debt (4,061) (5,435) Dividends paid (1,878) (1,811) Purchase of Company stock (2,184) (2,484) Other financing activities (85) (435) Net cash used in financing activities (4,199) (860) Effect of exchange rates on cash 115 169 Net increase (decrease) in cash and cash equivalents 1,372 (1,673) Cash and cash equivalents at beginning of year (1) 5,569 7,767 Cash and cash equivalents at end of period (2) $6,941 $6,094 (1) Includes cash and cash equivalents of discontinued operations of $70 million and $49 million at January 31, 2008 and 2007, respectively. (2) Includes cash and cash equivalents of discontinued operations of $34 million and $21 million at July 31, 2008 and 2007, respectively.
SOURCE Wal-Mart Stores, Inc. -0- 08/14/2008 /CONTACT: Investors, Carol Schumacher, +1-479-277-1498, or Mike Beckstead, +1-479-277-9558, or Media, John Simley, 1-800-331-0085, all of Wal-Mart Stores, Inc./ /Photo: http://www.newscom.com/cgi-bin/prnh/20070927/WALMARTCOMLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, firstname.lastname@example.org/ /Web site: http://www.walmartstores.com http://www.walmartstores.com/news http://www.walmart.com http://www.samsclub.com http://www.walmartstores.com/investors / (WMT) CO: Wal-Mart Stores, Inc. ST: Arkansas IN: REA SUP SU: ERN ERP CCA GS-EC -- LATH514 -- 9503 08/14/2008 06:16 EDT http://www.prnewswire.com