Walmart reported second quarter diluted earnings per share (EPS) from continuing operations of $1.09, up 12.4 percent over the $0.97 per share from continuing operations last year.
The company issued its third quarter EPS guidance range of $0.95 to $1.00 and raised full year EPS guidance range to $4.41 to $4.51.
Net sales for the second quarter were $108.6 billion, an increase of 5.5 percent from last year, with contributions from all segments.
Total U.S. comps, without fuel, for the 13-week period ending July 29 were flat. Sam's Club comparable sales, without fuel, increased 5.0 percent for the same period, at the top of guidance. Walmart U.S. comparable store sales were -0.9 percent, within guidance for the period.
Walmart International increased net sales 16.2 percent to $30.1 billion for the quarter. This included a currency exchange translation benefit of $2.3 billion.
The company completed its acquisitions of the Netto stores in the U.K. and the majority ownership position in Massmart Holdings Ltd. in sub-Saharan Africa.
During the second quarter, the company returned $2.7 billion to shareholders through dividends and share repurchases.

BENTONVILLE, Ark., Aug 16, 2011 (BUSINESS WIRE) -- Wal-Mart Stores, Inc. (NYSE: WMT) today reported financial results for the second quarter ended July 31, 2011. Net sales for the second quarter of fiscal year 2012 were $108.6 billion, an increase of 5.5 percent from $103.0 billion in last year's second quarter. Net sales for the quarter included a currency exchange rate benefit of $2.3 billion.

Income from continuing operations attributable to Walmart for the quarter was $3.8 billion, up 5.7 percent from last year. Diluted earnings per share from continuing operations attributable to Walmart (EPS) for the second quarter of fiscal year 2012 were $1.09. In comparison, last year's EPS was $0.97.

Income from continuing operations included certain pre-tax items in the second quarter, which are described below.


Approximately $49 million from a mark-to-market loss on certain foreign currency derivative positions related to the Massmart acquisition.
Approximately $36 million from acquisition related costs for Netto and Massmart.
Approximately $30 million in expenses related to storm damage from tornados and floods in U.S. operations.
These items totaled approximately $115 million and are included within operating expenses.


Approximately $17 million impact to gross margin for a noncash inventory accounting re-valuation charge at Walmart Mexico as the new SAP system was implemented in the second quarter.
In summary, the combination of the expense and gross margin items totaled $132 million and accounted for approximately a $0.03 impact to the company's EPS for the quarter. In addition, the company benefited from an effective tax rate for the second quarter of 32.2 percent, compared to 34.3 percent last year.

EPS rises 12.4 percent over last year

"We are reporting today $1.09 in earnings per share from continuing operations, a 12.4 percent increase over last year's second quarter," said Mike Duke, Wal-Mart Stores, Inc. president and chief executive officer. "Our EPS is near the top of our guidance.

"I'm encouraged by the sales improvement in our Walmart U.S. stores. Comp sales have increased sequentially month to month within the quarter. In fact, this was the best quarterly performance since the third quarter of fiscal 2010," Duke continued. "We're committed to deliver positive comp sales by widening the gap on price, and we have a specific plan to deliver EDLP to every customer.

"Walmart International reported second quarter net sales growth of more than 16 percent over last year to $30 billion," Duke said. "I'm pleased that we've made so much progress on integrating the acquisitions of the Netto stores in the U.K. and Massmart in sub-Saharan Africa. We look forward to the many opportunities we have in Africa to create jobs and help customers save money and live better."

Duke also recognized the hard work of the Sam's Club team for strong comparable sales performance and expense management.

"This is the sixth straight quarter of comp improvement for Sam's, a testament to the team's execution to drive quality, value and savings for members," he said. "I'm also pleased with the momentum in membership renewals and upgrades."

Committed to full year expense leverage

The company grew sales and operating expenses at the same rate, 5.5 percent.

"We remain committed to driving the productivity loop throughout the organization and we are committed to leverage operating expenses for the full year," said Charles Holley, Wal-Mart Stores, Inc. executive vice president and chief financial officer. "Without the items affecting operating expenses, the company leveraged expenses for the second quarter.

"We continue to deliver strong returns to our shareholders," said Holley. "We returned $2.7 billion to our shareholders during the second quarter through dividends and share repurchases, bringing our total return to shareholders during the first half of this year to $6.1 billion."

During the second quarter, the company repurchased $1.4 billion of shares, representing approximately 26.1 million shares. In addition, the company paid $1.3 billion in dividends.

At the end of the second quarter, Walmart had positive free cash flow of $4.0 billion1, compared to $4.5 billion1 in the prior year. Return on investment (ROI) for the trailing 12 months ended July 31, 2011 was 18.4 percent1, compared to 19.0 percent1 for the prior year. ROI was negatively impacted by the acquisitions and currency exchange translations.

Company raises full year EPS guidance

"Based on our views of the economic and sales environment in the United States and around the world, we expect third quarter fiscal 2012 diluted earnings per share from continuing operations attributable to Walmart to range between $0.95 and $1.00. Last year, we reported EPS of $0.95 for the third quarter, which included a tax benefit of approximately $0.05 per share," Holley said.

"We are narrowing and increasing the company's full year EPS guidance to a range of $4.41 to $4.51. This compares to last year's full year EPS of $4.18, which included approximately $0.11 per share for certain items," said Holley. "Our guidance estimates assume that currency exchange rates remain at current levels. This reflects our confidence in the business for the back half of the year."

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