Wal-Mart income up 10%, U.S. sales remain flat

For the third quarter and the first three fiscal quarters of 2010, total revenue for Wal-Mart Stores Inc. is up 2.6% and 3.7%, respectively, with international sales continuing to support relatively flat revenue growth in the U.S.

The global retail giant reported Tuesday (Nov. 16) that its third quarter revenue was $101.951 billion, up 2.6% over the 2009 period, and thanks to almost 10% growth in Wal-Mart International revenue. Net income in the third quarter was $3.59 billion, up 10% compared to 2009. Third-quarter income was boosted by a $191 million tax benefit related to Wal-Mart’s international operations.

The per share net income of 95 cents beat the average estimate of 90 cents.

“Walmart performed well in the third quarter, and we delivered solid earnings per share growth for our shareholders,” Mike Duke, Wal-Mart Stores president and DEO, said in a statement. “Our company now has delivered four consecutive quarters of operating expense leverage, and we continue to grow operating income faster than sales.”

For the first three fiscal quarters of 2010, company revenue is $305.489 billion, up 3.7% over the 2009 period. Net income for the first three quarters is $10.781 billion, up 8.1% over 2009.

Sales gains continue to grow overseas for Wal-Mart. For the first three fiscal quarters of 2010, international net sales were $77.85 billion, up 13.5%; Walmart U.S. sales were $189.156 billion, up 0.4%; and, Sam’s Club net sales were $36.346 billion, up 3.1%.

“Mexico and Brazil continue to contribute strong sales, and Japan and China had solid sales growth,” the company noted in the earnings report.

The company is not overly optimistic about holiday sales, but did provide a wide guidance range on its Walmart U.S. comp store sales. The company expects those sales to range between a 1% decrease to a 2% increase in the period between Oct. 30 and Jan. 28. The comp stores sales were up 2% in the 2009 period.

“Walmart U.S. will be the price leader this holiday season, and I am confident about improving comp trends for the fourth quarter,” Duke added.

Wal-Mart has already moved to lower prices and provide free shipping on certain product categories in an effort to capture sales in the all-important holiday shopping season.

The National Retail Federation expects holiday sales to increase 2.3% in 2010 over a “ho hum 2009.” The increase should represent $447.1 billion in extra sales.

“While that growth remains slightly lower than the ten-year average holiday sales increase of 2.5 percent, it would be a marked improvement from both last year’s 0.4 percent uptick and the dismal 3.9 percent holiday sales decline retailers experienced in 2008,” the NRF noted in its Oct. 6 report.

Full year income guidance for Wal-Mart was increased.

“Our updated fiscal year 2011 guidance of $4.08 to $4.12 earnings per share is an increase from the previous range of $3.95 to $4.05 per share,” Tom Schoewe, executive vice president and chief financial officer, said in the earnings statement. “The full-year increase in our EPS guidance reflects the tax benefit from the third quarter, and our expectations for solid underlying operational performance by our segments in the fourth quarter.”

The company added almost 10 million square feet of retail space this quarter, with 37% of the square footage growth in Walmart International.

Wal-Mart shares (NYSE: WMT) were set to open Tuesday morning near $54. During the past 52 weeks, the share price has ranged from a $56.27 high to a $47.77 low.