Walmart Reports Q3 Results
Wal-Mart Stores, Inc., reported financial results for the third quarter ended October 31, 2011. Net sales for the third quarter of fiscal year 2012 were $109.5 billion, an increase of 8.2 percent from $101.2 billion in net sales in last year’s third quarter. Net sales for the quarter included $2.1 billion in sales from acquisitions in the U.K. and South Africa and a currency exchange translation benefit of $1.3 billion.
Income from continuing operations attributable to Walmart for the quarter was $3.3 billion. Diluted earnings per share from continuing operations attributable to Walmart (EPS) for the third quarter of fiscal year 2012 were $0.97. Last year’s third quarter EPS of $0.95 included a $191 million tax benefit, which was approximately $0.05 per share, related to a favorable adjustment to transfer pricing policies after negotiations with a foreign tax jurisdiction.
In the third quarter, the company repurchased $1.4 billion worth of shares, representing approximately 27 million shares. In addition, the company paid $1.3 billion in dividends.
At the end of the third quarter, Walmart had positive free cash flow of $3.4 billion, compared to $2.9 billion in the prior year. Return on investment for the trailing 12 months ended October 31, 2011, was 18.2 percent, compared to 18.6 percent for the same period during the prior year. ROI was negatively impacted primarily by the acquisitions completed in the second quarter.
Walmart International’s net sales included a $1.3 billion currency exchange rate benefit for the quarter ended October 31, 2011. On a constant currency basis, Walmart International net sales were up 15.3 percent for the third quarter compared to last year. All markets had constant currency sales growth, with China, Mexico, and Argentina providing the strongest growth in the third quarter. Acquisitions also provided a $2.1 billion benefit to net sales.
Net sales for Sam’s Club, excluding fuel, grew to $11.8 billion, an increase of 6.2 percent from last year’s third quarter results.
Sales growth comes from comparable store sales, new stores, and acquisitions. The company added 8.7 million square feet of retail space through 159 net new retail units this quarter, with 130 units coming from Walmart International. In addition, Walmart International’s total includes 77 Netto stores converted to ASDA supermarkets in the U.K.
Walmart International’s reported operating income included a currency exchange rate benefit of $48 million for the third quarter. On a constant currency basis, operating income grew 10.3 percent.
Excluding fuel, Sam’s Club operating income for the third quarter was $378 million, up 3.3 percent compared to last year’s third quarter.
Consolidated operating income for the third quarter, which included the currency exchange rate benefit, was $5.9 billion, up 4.8 percent, compared to the prior year. On a constant currency basis, consolidated operating income rose 3.9 percent to $5.8 billion.
During the 13-week period, Walmart U.S. comp sales were driven by an increase in average ticket, partially offset by a decline in traffic versus last year. However, comp traffic improved 160 basis points over the second quarter of fiscal 2012. Grocery, health and wellness, and hardlines, which represent approximately 75 percent of Walmart U.S. annual revenues, all had positive comps.
For the period from October 29, 2011, through January 27, 2012, Walmart U.S. expects comparable store sales to increase from flat to two percent. Walmart U.S. 13-week comp sales for the fourth quarter of fiscal 2011 declined 1.8 percent.
For Sam’s Club, comparable traffic and ticket, excluding fuel, were both higher than the comparable period last year and increased for both business and advantage members for the 13-week period.
Sam’s Club expects comp sales, without fuel, for the current 13-week period from October 29, 2011, through January 27, 2012, to increase between 4 percent and 6 percent. Last year, Sam’s Club comp sales, without fuel, for the fourth quarter rose 2.7 percent.
Thanksgiving Dinner Costs on the Rise
Thanksgiving is one week from today and according to the American Farm Bureau Federation (AFBF), this year’s Thanksgiving meal is expected to cost 13 percent more than last year. This year’s average meal cost for a group of 10 is $49.20. That is a $5.73 price increase from last year’s average of $43.47.
The AFBF says that its survey shopping list includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, pumpkin pie with whipped cream, and beverages of coffee and milk, all in quantities sufficient to serve a family of 10—and allowing for some leftovers.
The big-ticket item, which is, of course, the 16-pound turkey, is expected to cost $21.57 this year. This is an increase of 25 cents per pound from 2010.
The AFBF, which first conducted its survey in 1986, says it is meant to be an informal gauge of price trends around the nation. A total of 141 volunteer shoppers from 35 states participated in this year’s survey. Farm Bureau’s survey menu has remained unchanged since 1986 to allow for consistent price comparisons. In 1986, this same meal mentioned above cost $28.74. In 1996 it was $31.66. In 2006 the meal was $38.10.