Wal-Mart Stores, Inc. (NYSE: WMT) today (August 14) reported its sales and earnings for the quarter ended July 31, 2007.
Net sales for the second quarter of fiscal year 2008 were $91.99 billion, an increase of 8.8 percent over the second quarter of fiscal year 2007. Income from continuing operations for the quarter was $3.11 billion, an increase of 4.1 percent from $2.98 billion in the second quarter of fiscal year 2007.
Earnings per share from continuing operations were $0.76, up from $0.72 per share in the same prior year quarter. Earnings per share from continuing operations for the second quarter were impacted by three items that provided a net benefit of $171 million after tax, or $.04 per share. Accruals for general liability and workers’ compensation claims were reduced by $196 million after tax. The Company also recognized $41 million in after tax gains from the sale of certain real estate properties. These benefits were offset by charges of $66 million after tax for legal and other contingencies.
“Although some people will report that Wal-Mart has had record sales and earnings, our underlying operating performance this quarter is not what we expect of ourselves, and not what our shareholders expect of us,” said Lee Scott, Wal-Mart Stores, Inc. president and chief executive officer. “For the remainder of this year, our management team is focused on inventory improvements, delivering quality products at low prices, and store execution at the highest standards.”
Scott pointed out that consumers continue to be under pressure economically.
“Many customers around the world continue to be under economic pressure and they expect Wal-Mart to be their advocate,” Scott continued. “We will continue to be the undisputed price leader, from Asda in the United Kingdom, to every market in the United States.”
Segment Operating Income
As the Company discussed in the first quarter of fiscal 2008, the above measurement of segment operating income was changed starting in the first quarter to be consistent with certain changes to internal management reporting. Therefore, certain direct segment costs that were previously retained and managed as corporate overhead costs are now allocated to the appropriate operating segment.
Comparable Store Sales
The Company reports comparable store sales in this earnings release based on the calendar months in the quarters and the six-month periods ended July 31, 2007 and 2006.
Guidance
For the third quarter of fiscal 2008, the Company estimates the comparable store sales increase in the United States to be between 1 and 3 percent.
The Company estimates earnings per share from continuing operations for the third quarter of fiscal 2008 to come in between $0.62 and $0.65. In addition, the Company is updating its full year guidance for earnings per share from continuing operations for the full year of fiscal 2008, which it estimates to be between $3.05 and $3.13. The Company’s initial forecast for earnings per share from continuing operations for fiscal year 2008 was between $3.15 and $3.23 per share.
“The Company’s current earnings guidance reflects the need to continue to improve our underlying operating performance,” said Tom Schoewe, Wal-Mart Stores, Inc. executive vice president and chief financial officer. “This guidance also reflects the economic trends that have developed in many of our major markets.”
After this earnings release has been furnished to the SEC, a pre-recorded call offering additional comments on the quarter will be available to all investors. Callers may listen to this call by dialing 203-369-1090. -Wal-Mart Stores, Inc.
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