(WMT) Walmart Stores Beats The Street – Exceeds Guidance

Wal-Mart Stores Inc. (WMT) has delivered robust first quarter 2013 earnings of $1.09 per share, which surpassed the Zacks Consensus Estimate by 5 cents and the prior-year earnings by 11 cents per share. The first quarter 2013 results also exceeded the company's guidance of $1.01 to $1.06 per share.

The better-than-expected first quarter earnings improved on the back of top-line results. Same-store sales also surpassed the prior-year quarter’s comparable sales, as well as the company’s guidance.

Quarter in Detail

Despite the negative impact from currency exchange translation of $800 million in the quarter, Walmart’s consolidated net sales, including fuel, climbed 8.6% to $112.3 billion from $103.4 billion in the year-ago quarter. It also exceeded the Zacks Consensus Revenue Estimate of $110.6 billion. On a constant currency basis, sales increased 7.5% to $111.2 billion in the quarter.

Membership and other income increased 3.2% in the quarter, excluding $51 million from the sale of an investment owned by Walmart Chile during the prior year’s quarter.

Excluding the $50 million of net pre-tax items realized in first quarter 2012, consolidated operating income increased 9.2%. On a constant currency basis, consolidated operating income rose 8.6% to $6.4 billion.

Segment Details

Walmart U.S.: The segment posted net sales growth of 5.9% to $66.3 billion in the first quarter of 2013. Operating income grew 8.1% to $5.0 billion in the quarter.

Walmart International: The segment’s net sales, including fuel and acquisitions, increased 15.0% to $32.1 billion in the first quarter of 2013. Operating income grew 21.2% to $1.3 billion in the quarter.

Sam’s Club: The segment posted net sales growth, including fuel, of 7.9% to $13.9 billion in the first quarter of 2013. Sam’s membership income increased 2% in the quarter. Operating income grew 7.7% to $0.49 billion in the quarter, with minimum impact of fuel.

Same-Store Sales Details

Walmart, widely regarded as a bellwether for the U.S. economy, stated that U.S

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. same-store sales, with and without fuel, increased from a negative 1.1% to a positive 2.6% in the first quarter of 2013 results. The results also exceeded the company’s guidance of flat to positive 2.0%.

Sam’s Club's comparable sales, without fuel, increased from 4.2% to 5.3% in the reported quarter for the current 13-week period, and were above the guidance of 3% – 5%. It decreased from 8.5% to 6.2% in the current quarter, including fuel. The comps were driven by improved traffic and merchandise offerings.

Other Financial Update

Walmart ended the quarter with cash and cash equivalents of $8.1 billion, compared with $6.6 billion in the prior quarter. Long-term debt was $43.0 billion in the first quarter of 2013, as compared with $44.1 billion in the prior quarter.

ROI for the trailing 12 months ended April 30, 2012 was 18.1%, compared to 18.5% in the prior year. ROI was negatively impacted by capital expenditures and acquisition-related activities, partially offset by positive currency exchange rate fluctuations.

During the quarter, the company’s board of directors has hiked its dividend by 8.9% to $1.59 to be paid in fiscal 2013 which ends on January 13, 2013. The dividend will be paid in four equal quarterly installments of $0.3975 per share. The first installment was paid on April 4 to shareholders of record on March 12.

Guidance

For the second quarter of 2013, Walmart expects its earnings to range between $1.13 and $1.18 per share, higher from the earnings of $1.09 per share in first quarter of fiscal 2013. In addition, Walmart forecasts U.S. comp sales for the 13-week period from April 28 through July 27, is expected to range from 1% – 2%. It expects Sam’s Club comp sales, without fuel, for the above 13-week period to increase in the range of 4% to 6%.

Walmart, which competes with Target Corp (TGT), has a Neutral recommendation. The stock carries a Zacks #3 Rank (a short-term Hold rating).

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