Wal-Mart increases profit outlook

BENTONVILLE, Ark. Despite ongoing concerns about the health of the U.S. and global economies, Wal-Mart today increased its full-year profit forecast after reporting record second-quarter results.

Total sales increased 10.4 percent to $101.6 billion and profits increased 9.3 percent to $3.385 billion, during the second quarter ended July 31. Same-store sales for the period increased 4.6 percent, excluding fuel sales, at Wal-Mart’s U.S. stores division and increased 3.7 percent, excluding fuel sales, at the Sam’s Club division.

“We have a great story to tell for this year’s second quarter,” said president and chief executive officer Lee Scott. “We continue to deliver on our mission of saving people money so they can live better. Each operating segment contributed to the quarter’s record sales.”

Wal-Mart’s great story also included mention of the health and wellness business as one of the six major merchandising units Scott said continues to gain market share in the United States.

“Our pharmacy prescription business has sustained high single-digit comparable-store sales growth,” said U.S. stores division president Eduardo Castro-Wright. “The $4 and $10 prescription program continue to drive pharmacy traffic. The $10, 90 day prescription offering resulted in a high double-digit fill rate increases.”

Other pharmacy details shared included what Castro-Wright called a, “substantial increase is pharmacy customers experience and faster checkout scores. The $4 or less price on more than 1,000 OTC products also generated strong customer response.”

Another area of emphasis on the call was about operational improvements that are driving improved financial results. Profits increased 14.6 percent to $0.86 per share from $0.75 the prior year, exceeding the company’s guidance that had been increased to a range of $0.82 to $0.84 on July 10. The company’s outlook for the third quarter calls for same store sales in a range of 1 percent to 2 percent and earnings per share of $0.73 to $0.76. Despite the modest outlook for third quarter comps, Wal-Mart boosted its full year earnings guidance to a range of $3.43 to $3.50 from guidance issued at the end of the last fiscal year of $3.30 to $3.43.

According to Scott, effective inventory management, especially in the United States and markets share gains in each of the company’s six major merchandising units contributed to an improved operational performance.

“Our company continues to manage cash flow in a way that will gives us the opportunity to participate in things that will benefit Wal-Mart long-term,” Scott said. “The combination of our strong operating performance coupled with strong capital efficiency allowed the company to report free cash flow through the first six months of almost $5 billion.”

Wal-Mart has been spending less money on opening new stores and also eased up on share repurchase activity during the second quarter. Wal-Mart added 73 stores worldwide and ended the second quarter with a total of 4,224 stores in the United States, including 2,572 supercenters, 915 discount stores, 594 Sam’s Clubs and 143 Neighborhood Markets. Internationally, Wal-Mart operates 3,192 stores in countries such as Mexico (1,074), Japan (392), the United Kingdom (346), Brazil (318), Canada (309), China (206), Costa Rica (154), Guatemala (147), El Salvador (74), Puerto Rico (55), Honduras (47), Nicaragua (46) and Argentina (24)

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