10-QPeriod: Q2 FY2011

Walmart Inc. Quarterly Report for Q2 Ended Jul 31, 2010

Filed September 1, 2010For Securities:WMT

Summary

Walmart Inc. reported solid results for the second quarter of fiscal year 2011, with a 2.8% increase in net sales year-over-year, reaching $103.0 billion. This growth was driven by a 3.2% expansion in retail square footage and favorable currency exchange rates, which contributed $857 million to net sales for the quarter. While overall net sales grew, comparable store sales in the U.S. experienced a slight decline of 1.1%, attributed to decreased customer traffic, deflationary pressures, and increased competition. Operating income saw a healthy increase of 4.4% to $6.2 billion, demonstrating effective cost management and expense leverage. The company's international segment performed strongly, with net sales up 11.0%, bolstered by operations in Mexico and expansion in Brazil and China. Sam's Club also reported a 2.2% increase in net sales. Management remains focused on growing operating income faster than net sales, a strategy that appears to be yielding positive results despite challenging U.S. domestic sales trends. The company also continued its robust share repurchase program and dividend payouts, signaling confidence in its financial position.

Financial Highlights

49 data points
Beta

Revenue

$103.02B

24.8% Gross Margin

Net Income

$3.60B

3.5% Net Margin

EPS (Diluted)

$0.32

Total Assets

$176.94B

Cash & Equivalents

$10.20B

Free Cash Flow

$6.05B

Financial Statements
Beta
Revenue$103.02B
Cost of Revenue$77.44B
Gross Profit$25.58B
SG&A Expenses$20.10B
Operating Income$6.19B
Interest Expense$477.00M
Net Income$3.60B
EPS (Basic)$0.32
EPS (Diluted)$0.32
Shares Outstanding (Basic)11.09B
Shares Outstanding (Diluted)11.12B

Key Highlights

  • 1Net sales increased by 2.8% to $103.0 billion for the three months ended July 31, 2010.
  • 2Operating income increased by 4.4% to $6.2 billion for the three months ended July 31, 2010.
  • 3Walmart International segment net sales grew by 11.0%, driven by strong performance in Mexico and expansion efforts.
  • 4U.S. comparable store sales decreased by 1.1% for the quarter, indicating a challenging domestic retail environment.
  • 5The company repurchased approximately $7.1 billion of its stock during the six months ended July 31, 2010.
  • 6Walmart announced an increase in its annual dividend to $1.21 per share, an 11% increase.
  • 7An accounting change related to inventory valuation was implemented, with retrospective application affecting prior periods.

Frequently Asked Questions

Walmart's net sales increased by 2.8% to $103.0 billion for the three months ended July 31, 2010, compared to the same period in the prior year. This growth was supported by an increase in retail square footage and favorable currency exchange rates.

The Walmart U.S. segment reported flat net sales for the quarter, with comparable store sales declining by 1.1%. In contrast, the Walmart International segment showed robust growth, with net sales increasing by 11.0% due to strong performance in Mexico and expansion in other global markets.

Management expressed confidence in their strategy to grow operating income faster than net sales through expense leverage. The company continued its commitment to returning capital to shareholders by increasing its annual dividend and actively engaging in share repurchases, indicating a positive outlook on its financial health and ability to generate cash.

Yes, Walmart implemented an accounting change related to the retail method of inventory valuation, with retrospective application impacting prior periods. Additionally, the company is involved in several significant legal proceedings, including wage-and-hour class actions, gender discrimination cases (such as Dukes v. Wal-Mart Stores, Inc.), and investigations into hazardous materials handling, the outcomes of which could materially affect financial results.