How fast is Wal-Mart growing and is that growth coming from existing stores?

Net sales grew 22% in fiscal 1995, but only 7 points came from comparable store sales. The rest came from new units, including 139 new stores and clubs, 69 store conversions or expansions into Supercenters, and the Canadian Woolco acquisition, so a significant share of growth depends on continued unit expansion.

Is Wal-Mart's rising debt a concern for investors?

Debt and capital lease obligations rose relative to equity, with the debt-to-equity ratio increasing to 0.77:1 from 0.75:1 and 0.56:1 two years earlier. Interest costs on debt jumped to $520 million from $331 million. Management says cash flow and external financing are sufficient, but higher borrowing costs and continued expansion will pressure interest expense in fiscal 1996.

What were the main international risks in fiscal 1995?

The Mexican peso's sharp decline reduced shareholders' equity by about $235 million through a currency translation adjustment in the CIFRA joint venture. Management is evaluating hedging strategies and has slowed the Mexican expansion. Canadian operations also had a translation loss of about $21 million, and new operations in Brazil and Argentina had not yet begun.

What is the outlook for fiscal 1996?

Management plans 90 to 100 new Wal-Mart stores, 12 new Supercenters, 9 new Sam's Clubs, about 70 store expansions or relocations, and conversion of roughly 80 to 85 stores into Supercenters. Planned capital expenditures are about $4 billion, and the company expects borrowings and operating cash flow to fund the program. It also plans to sell up to $1.05 billion in public debt under existing shelf registrations.

WMT 10-K FY1995 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed April 27, 1995. Cited figures are marked; the original filing is the authoritative source.

Wal-Mart Stores, Inc. reported fiscal 1995 (year ended January 31, 1995) net sales of $82.5 billion^a, up 22% from $67.3 billion in fiscal 1994, with comparable store sales up 7%.

Net income rose 15% to $2.68 billion^b, and earnings per share reached $1.17, up from $1.02. Growth was driven by 111 new Wal-Mart stores, 6 new Supercenters, 22 new Sam's Clubs, the conversion or expansion of 69 stores into Supercenters, and the acquisition of 122 Woolco stores in Canada. The Company ended the year with 1,990 Wal-Mart stores, 428 Sam's Clubs, and 143 Supercenters, and it describes itself as America's largest retailer.

The balance sheet expanded considerably to fund this growth. Total assets rose to $32.8 billion^c from $26.4 billion, and long-term debt climbed to $7.9 billion from $6.2 billion. The debt-plus-capital-lease-to-equity ratio increased to 0.77:1 from 0.75:1, and shareholders' equity grew to $12.7 billion.

Capital expenditures were $3.7 billion^d, and planned fiscal 1996 capital spending is about $4 billion. Operating cash flow was $2.9 billion, which covered the bulk of the investment needs alongside new borrowings.

Key risks flagged in the filing include rising interest costs (interest on debt rose to $520 million from $331 million), a 1995 Mexican peso devaluation that cut shareholders' equity by about $235 million through translation adjustments, and a planned slowdown of Mexican expansion. Management expects continued expansion in fiscal 1996 with 90 to 100 new Wal-Mart stores, 12 new Supercenters, and nine new Sam's Clubs, and it states that it foresees no difficulty funding working capital and expansion needs.

02—Key points

Key Highlights

Net sales of $82.5 billion, up 22% year over year; comparable store sales rose 7%.
Net income of $2.68 billion (up 15%) and EPS of $1.17 versus $1.02 in fiscal 1994.
Return on shareholders' equity fell to 24.9% from 26.6%, and return on assets fell to 10.1% from 11.3%, as the asset base grew faster than earnings.
Total assets grew to $32.8 billion, and long-term debt rose 28% to $7.9 billion, increasing leverage.
Store footprint reached 1,990 Wal-Mart stores, 428 Sam's Clubs, and 143 Supercenters, with the Canadian market entered via 122 Woolco store acquisitions for about $352 million.
Quarterly dividend raised to $0.0425 per share from $0.0325, a total of $0.17 per share for the year.
Fiscal 1996 plans call for about $4 billion in capital expenditures and additional store openings, with a slowed Mexican expansion following the peso devaluation.

03—Questions

Frequently Asked Questions

How fast is Wal-Mart growing and is that growth coming from existing stores?
Net sales grew 22% in fiscal 1995, but only 7 points came from comparable store sales. The rest came from new units, including 139 new stores and clubs, 69 store conversions or expansions into Supercenters, and the Canadian Woolco acquisition, so a significant share of growth depends on continued unit expansion.
Is Wal-Mart's rising debt a concern for investors?
Debt and capital lease obligations rose relative to equity, with the debt-to-equity ratio increasing to 0.77:1 from 0.75:1 and 0.56:1 two years earlier. Interest costs on debt jumped to $520 million from $331 million. Management says cash flow and external financing are sufficient, but higher borrowing costs and continued expansion will pressure interest expense in fiscal 1996.
What were the main international risks in fiscal 1995?
The Mexican peso's sharp decline reduced shareholders' equity by about $235 million through a currency translation adjustment in the CIFRA joint venture. Management is evaluating hedging strategies and has slowed the Mexican expansion. Canadian operations also had a translation loss of about $21 million, and new operations in Brazil and Argentina had not yet begun.
What is the outlook for fiscal 1996?
Management plans 90 to 100 new Wal-Mart stores, 12 new Supercenters, 9 new Sam's Clubs, about 70 store expansions or relocations, and conversion of roughly 80 to 85 stores into Supercenters. Planned capital expenditures are about $4 billion, and the company expects borrowings and operating cash flow to fund the program. It also plans to sell up to $1.05 billion in public debt under existing shelf registrations.

04—Continue

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