The world's largest retailer,
Wal-Mart Stores, Inc.
's (
WMT
) second quarter 2013 earnings of $1.18 per share beat the Zacks
Consensus Estimate of $1.17 by a penny and the prior-year quarter's
adjusted earnings by 8%. The second quarter 2013 results were also
at the higher end of the company guidance of $1.13 and $1.18 per
share. Top-line growth coupled with cost savings boosted earnings
in the quarter.
Quarter in Detail
Total revenue of Wal-Mart, the bellwether retailer of a broad
assortment of merchandises at economical prices, climbed 4.5% to
$114.3 billion (including membership and other income). Organic net
sales (excluding membership/other income and impact from
acquisitions and foreign exchange) were $113.8 billion, up 4.7%
driven by positive same-store sales, or sales from stores open for
at least the past 12 months.
However, total revenue missed the Zacks Consensus Revenue
Estimate of $115.6 billion. We believe that currency headwinds of
$2.2 billion and continued economic pressures could be the reason
behind the miss.
Adjusted constant currency consolidated operating income
increased 6.4% to $6.8 billion, increasing faster than sales driven
by productivity improvements and cost savings.
Segment Details
Walmart U.S
.: The segment benefitted from positive same store sales to post
net sales growth of 3.8% to $67.4 billion, including the impact of
fuel sales which are affected by volatility in fuel prices.
U.S. same-store sales increased 2.2%, which was above the
company guidance range of 1% to 2% increase. The retail giant is
reaping benefits of growing traffic trends in its stores which has
helped the company in posting four consecutive quarters of positive
same-store sales. Grocery, general merchandise as well as all
geographic business units saw positive same store sales in the
quarter.
Walmart International
: The segment's net sales, including fuel sales, currency and
acquisitions, increased 6.4% to $32.0 billion. Excluding currency
headwinds, international sales would have been up 7.2%. All
countries delivered positive same store sales. Adjusted constant
currency operating income grew 11.9% to $1.6 billion in the
quarter.
Sam's Club
: The segment, which comprises membership warehouse clubs, posted
net sales growth, excluding fuel, of 4.6% to $12.5 billion. Sam's
membership income increased 4% in the quarter.
Sam's Club's comparable sales, excluding the impact of fuel
sales, increased 4.2% in the quarter. The same store sales growth
was within the guidance range of 4% to 6% and was driven by better
quality and innovative merchandises.
Third Quarter Guidance
For the third quarter of 2013, Wal-Mart expects its earnings to
range between $1.04 and $1.09 per share, lower than second quarter
earnings. In addition, Wal-Mart forecasts U.S. comp sales for the
13-week period from July 28 through October 27 to range between 1%
and 3%. It expects Sam's Club comp sales, without fuel, for this
13-week period to increase in the range of 3% to 5%.
Fiscal 2013 Guidance
For fiscal 2013, Wal-Mart upped its guidance range to $4.83 to
$4.93 from prior forecast of $4.83 to $4.93. The current guidance
reflects an upside from 2012 levels. The Zacks Consensus Estimate
is pegged at $1.06 and $4.92 for the third quarter and fiscal year
2013, respectively.
Our Recommendation
We currently have a Neutral recommendation on Wal-Mart. The
stock carries a Zacks #2 Rank (a short-term 'Buy rating).
WAL-MART STORES (WMT): Free Stock Analysis
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