Wal-Mart sales hit by exchange rates; profits beat estimates

Wal-Mart has reported that net sales for the second quarter were USD100.08 billion, a decrease of 1.4% from USD101.55 billion in the second quarter last year. Without the negative impact of currency exchange rates, net sales for the quarter increased 2.7% to approximately USD104.28 billion on a constant currency basis (which assumes currency exchange rates remained the same as the prior year). Income from continuing operations increased to USD3.449 billion from USD3.4 billion in the same period last year.

In the US, the Walmart division saw sales increase 0.3% to USD64.21 billion, while Sam’s Club saw sales slide by 3.2% to USD11.91 billion. In terms of comparable store sales (excluding fuel), Walmart US saw a 1.5% sales dip, while Sam’s Club posted 0.6% growth (a 4.3% decline if fuel is included). Operating profits at Walmart US were up 5.0% to USD4.9 billion, while Sam’s Club saw earnings slide 5% to USD419 million. Reported International sales for the quarter were down 5.1%, reduced by the effect of currency exchange rates equal to approximately USD4.19 billion. On a constant currency basis, International sales increased 11.5% to USD28.164 billion in the second quarter, compared to the same quarter in 2008. International operating earnings dropped 6.2% to USD1.143 billion.

"Our earnings exceeded consensus estimates and were at the top of our guidance," said Mike Duke, Walmart President and Chief Executive officer. "We are pleased with the performance of our operations around the world. We believe that our comparable store sales continued to outperform the retail sector almost everywhere we do business. In a sales environment more difficult than we expected, we managed our operations in a disciplined manner. Our US segments delivered strong inventory performance, which contributed to the company's healthy increase in year-over-year earnings," Duke said. "We are accelerating our focus on reducing our expenses. Customers around the world are forced to do more with less and they rely on Walmart to help them save money," Duke added. "The improvements in our stores are attracting new customers and keeping the loyalty of the millions who shop with us. We are confident about Walmart's long-term future and ability to build on its leadership position."

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