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Walmart Tops Expectations As U.S. Turnaround Continues


Retail giant Wal-Mart Stores, Inc. (WMT) reported Thursday a profit for the first quarter that increased 10 percent from last year, reflecting the continued strength overseas and rebounding U.S. sales.

Earnings per share and quarterly revenues topped analysts' expectations. The company provided earnings guidance for the second quarter.

"We are very pleased that Walmart delivered earnings and comparable sales above guidance for the first quarter. Despite a negative impact from currency, we grew sales and operating profit over last year," President and CEO Mike Duke said in a statement.

Walmart International net sales continued its strong run with a growth of 15.0 percent and operating income grew faster than sales at 21.2 percent. Brazil, Mexico and the U.K. were the strongest contributors to the sales growth.

Walmart U.S. net sales grew 5.9 percent, and reported positive comparable store sales of 2.6 percent, without fuel, in the first quarter - the third consecutive quarter of positive comp sales.

The company attributed the domestic growth to increased traffic into stores to both the grocery and general merchandise areas. Walmart U.S. also grew operating income faster than sales this quarter.

The company said Sam's Club is also off to a great start, with continued strength in traffic and ticket. Sam's Club net sales grew 7.9 percent, with comparable sales, without fuel, increasing 5.3 percent.

"Our overall performance reflects the success of Walmart's business model: driving the productivity loop, leveraging expenses and investing in price leadership," Duke noted.

The world's largest retailer reported net income of $3.74 billion or $1.09 per share for the first quarter, higher than $3.40 billion or $0.97 per share in the year-ago quarter.

Income from continuing operations for the quarter grew to $3.74 billion or $1.09 per share from $3.43 billion or $0.98 per share in the prior-year quarter.

On average, 23 analysts polled by Thomson Reuters expected earnings of $1.04 per share for the first quarter. Analysts' estimates typically exclude special items.

Walmart's revenues for the quarter increased 8.5 percent to $113.02 billion from $104.19 billion in the same quarter last year, and topped fifteen Wall Street analysts' consensus estimate of $110.43 billion.

Total company net sales rose 8.6 percent to $112.27 billion from last year, and included a negative currency exchange rate impact of $800 million. Constant currency sales grew 7.5 percent.

Looking ahead to the second quarter, the company expects earnings from continuing operations in a range of $1.13 to $1.18 per share. Street is looking for earnings of $1.16 per share for the quarter.

The company also projects comparable store sales growth for the quarter at Walmart U.S. of 2 to 3 percent, and at Sam's Club, without fuel, of 4 to 6 percent.

"We are committed to continued sales momentum. Expense leverage will continue to be a key focus as it drives both growth and returns," CFO Charles Holley stated.

WMT closed Wednesday's regular trading session at $59.19, down $0.34 on a volume of 10.84 million shares. In the past 52 weeks, the stock traded in a range of $48.31 to $62.63.

by RTTNews Staff Writer

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