BENTONVILLE, Ark., Nov. 13 -- Wal-Mart Stores, Inc. (NYSE: WMT) today reported its sales and earnings for the quarter ended Oct. 31, 2008. Net sales for the third quarter of fiscal year 2009 were $97.6 billion, an increase of 7.5 percent from $90.8 billion in the third quarter last year.
Income from continuing operations for the third quarter was $3.033 billion, an increase of 6.6 percent from $2.846 billion in the third quarter last year. Diluted earnings per share from continuing operations for the third quarter of fiscal year 2009 increased to $0.77 from the previous year's third quarter result of $0.70 per share. The prior year included a net benefit of $0.01 per share due to the recognition of $46.5 million in after-tax gains from the sale of certain real estate properties.
During the third quarter of fiscal year 2009, the Company recorded a $107 million after-tax charge related to store closures and property divestitures at Seiyu in Japan and a $212 million after-tax gain on the disposal of Gazeley Limited which was sold in July 2008. These operations have been accounted for as discontinued operations for all periods presented.
"We are very pleased with our results this quarter," said Lee Scott, Wal- Mart Stores, Inc. president and chief executive officer. "Despite economic difficulties around the world, we achieved solid sales and earnings growth and we are optimistic about the upcoming holidays. At a time when our customer is feeling the pressure of a tough economy, Wal-Mart's price leadership is more important than ever.
"Improved operating performance and capital efficiency contributed to stronger earnings and free cash flow," Scott added. "The credit for our performance goes to the more than 2 million associates serving more than 175 million customers in 14 countries every week."
Net Sales Net sales were as follows (dollars in billions): Three Months Ended Nine Months Ended October 31, October 31, Percent Percent 2008 2007 Change 2008 2007 Change Net Sales: Walmart U.S. $61.155 $57.651 6.1% $184.281 $172.101 7.1% International 24.857 22.349 11.2% 73.949 63.472 16.5% Sam's Club 11.622 10.826 7.4% 35.018 32.526 7.7% Total Company $97.634 $90.826 7.5% $293.248 $268.099 9.4%
"Our sales results reflect the improved customer experience and sharper merchandising presentation at Walmart U.S., as well as higher traffic at Sam's Club among both Business and Advantage members," Scott said. "International remains Wal-Mart's fastest-growing business, proving that our mission of saving people money so they can live better resonates with customers everywhere we do business."
Free cash flow increased to approximately $2.0 billion for the first nine months of fiscal year 2009, compared to a deficit of $1.3 billion for the same period last year. 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 nine months of this fiscal year to the most directly comparable GAAP measure for the same period is available on Form 8-K furnished today with the Securities and Exchange Commission and at http://www.walmartstores.com/investors.
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 Nine Months Ended October 31, October 31, Percent Percent 2008 2007 Change 2008 2007 Change Segment Operating Income: Walmart U.S. $4.286 $3.995 7.3% $13.363 $12.230 9.3% International 1.182 1.069 10.6% 3.450 2.986 15.5% Sam's Club 0.365 0.359 1.7% 1.183 1.174 0.8%
Comparable Store Sales
The Company reports comparable store sales in this earnings release based on the calendar months in the quarters that ended Oct. 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 October 31, October 31, October 31, 2008 2007 2008 2007 2008 2007 Walmart U.S. 2.7% 1.0% 2.7% 1.0% 0.0% 0.0% Sam's Club 4.5% 3.9% 6.7% 3.8% 2.2% -0.1% Total U.S. 3.0% 1.5% 3.3% 1.5% 0.3% 0.0% Without Fuel With Fuel Fuel Impact Nine Months Nine Months Nine Months Ended Ended Ended October 31, October 31, October 31, 2008 2007 2008 2007 2008 2007 Walmart U.S. 3.4% 0.7% 3.4% 0.7% 0.0% 0.0% Sam's Club 4.0% 4.8% 6.8% 4.8% 2.8% 0.0% Total U.S. 3.5% 1.4% 3.9% 1.4% 0.4% 0.0%
For the fourth quarter of fiscal year 2009, the Company estimates the comparable store sales increase in the United States to be between one and three percent, according to Tom Schoewe, Wal-Mart Stores, Inc. executive vice president and chief financial officer.
"We estimate diluted earnings per share from continuing operations for the fourth quarter will be between $1.03 and $1.07," Schoewe said. "The rapid changes in currency exchange rates during the last few weeks are projected to negatively affect this year's fourth-quarter results by approximately six cents per share. In U.S. dollar terms, strong operating performance in International may be overshadowed by these currency fluctuations.
"For the full year, ending January 31, we have tightened and modestly reduced our guidance and now forecast diluted earnings per share from continuing operations to be within a range of $3.42 to $3.46," he said.
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.
This release contains statements as to our management's expectations regarding the comparable store sales increase in the United States in the fourth quarter of fiscal year 2009, the Company's expectations for its diluted earnings per share from continuing operations for the fourth quarter of fiscal year 2009 and for all of fiscal year 2009, and our management's expectation that currency exchange rates and related issues will be detrimental to comparisons between results for the fourth quarter of fiscal year 2009 and those for the fourth quarter of fiscal year 2008 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 "anticipate," "estimate," "may be," forecast" or "projected" in the statements. These forward-looking statements are subject to risks, uncertainties and other factors, domestically and internationally, including general economic conditions, the cost of goods, competitive pressures, geopolitical events and 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, financial and 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. Condensed Consolidated Statements of Income (Unaudited) (Amounts in millions except per share data) SUBJECT TO RECLASSIFICATION Three Months Ended Nine Months Ended October 31, October 31, 2008 2007 2008 2007 Revenues: Net sales $97,634 $90,826 $293,248 $268,099 Membership and other income 1,008 1,039 3,243 3,034 98,642 91,865 296,491 271,133 Costs and expenses: Cost of sales 74,114 69,251 223,557 205,073 Operating, selling, general and administrative expenses 19,236 17,653 56,513 50,984 Operating income 5,292 4,961 16,421 15,076 Interest: Debt 464 474 1,402 1,326 Capital leases 73 63 222 174 Interest income (81) (77) (216) (246) Interest, net 456 460 1,408 1,254 Income from continuing operations before income taxes and minority interest 4,836 4,501 15,013 13,822 Provision for income taxes 1,690 1,556 5,186 4,764 Income from continuing operations before minority interest 3,146 2,945 9,827 9,058 Minority interest (113) (99) (365) (305) Income from continuing operations 3,033 2,846 9,462 8,753 Income (loss) from discontinued operations, net of tax 105 11 146 (118) Net income $3,138 $2,857 $9,608 $8,635 Net income per common share: Basic income per common share from continuing operations $0.77 $0.70 $2.40 $2.14 Basic income (loss) per common share from discontinued operations 0.03 0.01 0.04 (0.03) Basic net income per common share $0.80 $0.71 $2.44 $2.11 Diluted income per common share from continuing operations $0.77 $0.70 $2.39 $2.14 Diluted income (loss) per common share from discontinued operations 0.03 - 0.04 (0.03) Diluted net income per common share $0.80 $0.70 $2.43 $2.11 Weighted-average number of common shares: Basic 3,931 4,051 3,944 4,092 Diluted 3,944 4,056 3,956 4,097 Dividends declared per common share $- $- $0.95 $0.88 Wal-Mart Stores, Inc. Condensed Consolidated Balance Sheets (Unaudited) (Amounts in millions) SUBJECT TO RECLASSIFICATION October 31, October 31, January 31, 2008 2007 2008 ASSETS Current assets: Cash and cash equivalents $5,920 $5,518 $5,492 Receivables 3,250 3,062 3,642 Inventories 40,416 39,535 35,159 Prepaid expenses and other 3,245 2,880 2,760 Current assets of discontinued operations 25 511 532 Total current assets 52,856 51,506 47,585 Property and equipment, at cost: Property and equipment, at cost 125,173 120,396 122,256 Less accumulated depreciation (31,467) (27,537) (28,531) Property and equipment, net 93,706 92,859 93,725 Property under capital lease: Property under capital lease 5,420 5,690 5,736 Less accumulated amortization (2,581) (2,563) (2,594) Property under capital leases, net 2,839 3,127 3,142 Goodwill 15,416 14,898 16,071 Other assets and deferred charges 2,789 3,031 2,748 Non-current assets of discontinued operations 237 238 243 Total assets $167,843 $165,659 $163,514 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Commercial paper $7,932 $9,126 $5,040 Accounts payable 30,782 31,376 30,344 Dividends payable 993 896 - Accrued liabilities 15,343 14,773 15,725 Accrued income taxes 355 - 1,000 Long-term debt due within one year 4,753 4,412 5,913 Obligations under capital leases due within one year 314 309 316 Current liabilities of discontinued operations 128 50 116 Total current liabilities 60,600 60,942 58,454 Long-term debt 30,803 30,070 29,799 Long-term obligations under capital leases 3,268 3,520 3,603 Deferred income taxes and other 5,575 5,590 5,087 Minority interest 2,034 2,432 1,939 Non-current liabilities of discontinued operations 24 23 24 Commitments and contingencies Shareholders' equity: Common stock and capital in excess of par value 4,219 3,421 3,425 Retained earnings 59,809 55,522 57,319 Accumulated other comprehensive income 1,511 4,139 3,864 Total shareholders' equity 65,539 63,082 64,608 Total liabilities and shareholders' equity $167,843 $165,659 $163,514 Wal-Mart Stores, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (Amounts in millions) Nine Months Ended SUBJECT TO RECLASSIFICATION October 31, 2008 2007 Cash flows from operating activities: Net income $9,608 $8,635 (Income) loss from discontinued operations, net of tax (146) 118 Income from continuing operations 9,462 8,753 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization 5,054 4,656 Other 749 321 Changes in certain assets and liabilities, net of effects of acquisitions: Decrease in accounts receivable 394 31 Increase in inventories (5,655) (5,037) Increase in accounts payable 914 1,450 Decrease in accrued liabilities (745) (551) Net cash provided by operating activities 10,173 9,623 Cash flows from investing activities: Payments for property and equipment (8,174) (10,896) Proceeds from disposal of property and equipment 779 478 Proceeds from (payments for) disposal of certain international operations, net 838 (257) Investment in international operations, net of cash acquired (74) (461) Other investing activities (166) (87) Net cash used in investing activities (6,797) (11,223) Cash flows from financing activities: Increase in commercial paper 2,949 6,481 Proceeds from issuance of long-term debt 5,568 7,967 Payment of long-term debt (5,064) (6,671) Dividends paid (2,814) (2,707) Purchase of company stock (3,521) (5,279) Other financing activities 88 (669) Net cash used in financing activities (2,794) (878) Effect of exchange rates on cash (231) 258 Net increase (decrease) in cash and cash equivalents 351 (2,220) Cash and cash equivalents at beginning of year (1) 5,569 7,767 Cash and cash equivalents at end of period (2) $5,920 $5,547 (1) Includes cash and cash equivalents of discontinued operations of $77 million at January 31, 2008, and $51 million at January 31, 2007 respectively. (2) Includes cash and cash equivalents of discontinued operations of $29 million at October 31, 2007.
SOURCE Wal-Mart Stores, Inc. -0- 11/13/2008 /CONTACT: Investor Relations, John Simley, 1-800-331-0085, or Media Relations, Carol Schumacher, +1-479-277-1498, or Mike Beckstead, +1-479-277-9558, or Pre-recorded Conference Call, +1-203-369-1090, 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.walmartstores.com/investors/ (WMT) CO: Wal-Mart Stores, Inc. ST: Arkansas IN: REA SU: ERN KQ-JC -- LATH017 -- 7911 11/13/2008 06:15 EST http://www.prnewswire.com