WMT 2009 Q2 Earnings

Announcing before the opening bell on August 13, Wal-Mart Stores Inc. (WMT) confirmed that the world’s largest retailers posted profits that were unchanged during the 2Q, but managed to come in above market expectations.

For the recent period, Wal-Mart booked net earnings of $3.44B, or $0.88 per share, relatively flat from last year’s 2Q profits of $3.45B, or $0.87 per share. Quarterly sales retreated year-over-year, falling from $102.34B to $100.91B, a decrease in revenues of just over 1.3%.

Wal-Mart's President and CEO, Mike Duke commented on the company’s quarterly performance, "Overall, our customers are more disciplined in their spending. There's a new normal of saving more and spending less.”

Analysts, on average, were looking for the mega retailer to record net income of $0.86 per share on total sales figures of $102.9B.

Looking deeper inside the earnings report, Wal-Mart saw same store sales slip 1.2% during the quarter, versus a 4.3% gain during the same period a year ago. Last year’s increases in same store sales were bolstered by the government’s distribution of stimulus checks.

An operating arm of the company, Sam’s Club, witnessed same store sales advance marginally during the quarter, up 0.6%, excluding gasoline sales, compared to last year’s increase of 4.1%. Including the sale of gas, Sam’s Club saw revenues slip 4.3%, versus a 7.6% increase a year ago.

Duke later added, "In a sales environment more difficult than we expected, we managed our operations in a disciplined manner. Our U.S. segments delivered strong inventory performance, which contributed to the company's healthy increase in year-over-year earnings. We are accelerating our focus on reducing our expenses."

U.S. sales netted $64.21B for the quarter, up 0.3% from last year’s tally of $63.99B. Operating income came in at $4.9B, up 5% from the previous year’s results in the 2Q.

Meanwhile, international sales slipped year-over-year, slipping from $25.26B to $23.97B, a drop in revenues of more than 5%. Recent results were affected by an unfavorable exchange rate that cost the company more than $4B in realizable profits. Operating income in the international segment fell more than 6% from last year’s tally to $1.14B.

If analyzed on a consistent currency basis, Wal-Mart would have posted international revenues of $28.16B, up 11.5% from last year’s figures. Operating income would have increased as well, climbing more than 13% to $1.38B.

In a retail environment that has taken its fair share of lumps during the economic turmoil, Wal-Mart has remained one of the few bright spots. The company has benefited from shoppers focusing on buying necessities at discount prices, rather than seeking similar products offered by their competitors at a higher price.

In efforts to garner reluctant shoppers that would not normally frequent Wal-Mart stores, the company has announced plans to remodel a majority of their stores, while making the locations more esthetically appealing. Wal-Mart stated that the company plans to overhaul nearly 600 stores this year, at a cost between $1.6B and $1.7B.

Through the first six months of the year, Wal-Mart has generated net income of $6.46B, or $1.65 per share, in contrast to the same period a year ago in which the company earned $6.47B, or $1.63 per share. Net sales amounted to $193.55B, down marginally from last year’s tally of $195.59B.

Looking ahead to the 3Q, Wal-Mart is anticipating quarterly earnings to range between $0.78 and $0.82 per share, with the company including a negative impact of $0.03 per share related to currency exchange rates. Analysts are looking for 3Q from Wal-Mart to be $0.80 per share.

The company did not offer any guidance related to overall sales projections. However, Wal-Mart did indicate that the company was expecting same store sales to come in flat or up 2% in the 3Q, plus or minus 1%.

For fiscal 2010, Wal-Mart revised their outlook upwards and is now anticipating annual earnings to range between $3.50 and $3.60 per share, up from a previously stated range of $3.45 to $3.60 per share. On average, analysts within the industry were looking for the retailer to post yearly earnings of $3.56 per share.

Heading into the close of the August 13 trading session, shares of WMT were up nearly 3%, adding $1.37 to end the day at $51.88 per share. During the course of a year, shares of Wal-Mart have traded as high as $63.85 and as low as $46.25 per share.

By BetterTrades