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International remains the key growth driver for Walmart
May '11
Wal-Mart Stores Inc reported financial results for the first quarter ended April 30, 2011. Net sales for the first quarter of fiscal year 2012 were $103.4 billion, an increase of 4.4 percent from $99.1 billion in the first quarter last year. Net sales for the quarter included a currency exchange rate benefit of $1.3 billion.

For comparative purposes, in addition to the impact of currency translation, the company had certain discrete, pre-tax items in the first quarter of this year which are described below:

• Approximately $117 million from mark-to-market gains on certain foreign currency derivative positions.
• ASDA recorded approximately a $67 million charge for the realization of expenses in the current period related to the removal of future benefit accruals and the effect of future pay increases associated with its defined benefit plan.
• Walmart Japan recorded approximately a $51 million charge for casualty losses related to the March earthquake and tsunami.
• Walmart Chile recorded approximately a $51 million gain from the sale of an investment.

Strong earnings performance

“Walmart is reporting first quarter earnings from continuing operations of $0.98 per share, which was above guidance,” said Mike Duke (Michael Terry Duke), Wal-Mart Stores Inc president and chief executive officer. “This reflects the stability and strength of our global operations.

“Walmart U.S. comp sales for the first quarter were within our guidance range,” Duke continued. “We recognize we still have work to do and comp sales growth remains the greatest priority for me and the entire Walmart U.S. team. The good news is that the plan Bill Simon and his team are executing is gaining traction. We're focused on delivering every day low price and a wide assortment.”

Walmart International grew first quarter net sales by 11.5 percent over last year to almost $28 billion, with all countries except Japan showing sales increases. The March 11 earthquake and tsunami negatively affected sales in Japan. Because of the calendar shift, the majority of Easter holiday sales for International will fall in the company's second quarter.

“International remains the key growth driver for our company, and the segment is seeing continued growth through a combination of comp sales and new stores,” Duke said. “Mexico, China and Chile had the highest percentage sales increases for the first quarter compared to last year.”

“Sam's Club delivered really good results this quarter, with a 4.2 percent comp that was well above our guidance,” he explained. “Sam's momentum is reflected in comp sales and increases in new members. The warehouse channel is increasing in importance in the retail landscape and Sam's is gaining further momentum. We expect Sam's to add even more value to the company's overall portfolio.”

“Based on our views of the economic and sales environment in the United States and around the world, we expect second quarter fiscal 2012 diluted earnings per share from continuing operations to range between $1.05 and $1.10, compared to last year's reported EPS of $0.97. These estimates assume that currency exchange rates remain at current levels,” said Holley. “We are committed to growing sales throughout all our businesses. Leverage will continue to be a key focus, as it drives both growth and returns.”

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