Income up 8.6% for Wal-Mart, company raises full-year guidance on the ‘positive momentum’

Fiscal second quarter net income for Wal-Mart Stores rose more than 8%, with adjusted per share earnings of $1.07 topping the consensus estimate of $1.02. Quarterly revenue of $120.854 billion also beat expectations.

Walmart U.S. same-store sales rose 1.6%, marking the eighth consecutive quarter of positive comps with the closely watched financial metric.

Net income in the quarter was $3.773 billion, up 8.6% compared to the $3.475 billion in the same quarter of 2015. Total revenue of $120.854 billion was up 0.5% compared to the same quarter in 2015 and was better than the consensus estimate of $120.16 billion. Earnings per share was $1.21, but 14 cents was from the sale of Yihoadian, a gain of $568 million on a constant currency basis.

Wal-Mart President and CEO Doug McMillon said the company remains focused on being a “seamless shopping experience” for consumers.

“We’re pleased with the positive momentum in our business,” McMillon said in the earnings statement posted early Thursday (Aug. 18). “Our strategy in the U.S. is working as we delivered an eighth consecutive quarter of positive comps, and international also performed well. We remain focused on building e-commerce capabilities globally and executing our omni-channel plan, as evidenced by our recent alliance with JD.com in China and agreement to acquire Jet.com in the U.S. Walmart is uniquely positioned to provide customers with a seamless shopping experience where we save them time and money.”

For the first six months of the company’s fiscal year (ended July 31), the company posted net income of $6.852 billion, up 0.5% compared to the same period in 2015. Total revenue in the six months was $236.758 billion, up 0.7% compared to the same period in 2015.

EARNINGS GUIDANCE BOOST
Based on the momentum McMillon mentioned, the company also raised earnings per share guidance for fiscal 2017. The new range is $4.15-$4.35 per share, up from previous guidance of $4-$4.30.

“This guidance also includes an estimated dilutive impact to EPS of approximately $0.05, primarily in the fourth quarter, as a result of expected operating losses and one-time transaction expenses related to the planned acquisition of Jet.com, assuming the transaction is closed near the beginning of the fourth quarter of FY17,” the company noted in the earnings report.

The announced $3.3 billion acquisition of Jet.com will likely be a big part of the company’s earnings call – held later today – with analysts. Talk Business & Politics will update this report or post a new report following the call.

DIVISION PERFORMANCE
Total sales at Walmart U.S. during the second quarter was $76.421 billion, up 3.1% compared to the same quarter in 2015. Traffic in stores was up 1.2%, just below the 1.3% gain in the second quarter of 2015. The average ticket was up 0.4%, better than the 0.2% gain in the second quarter of 2015.

Operating income at Walmart U.S. was $4.519 billion, down 6.2% compared to the 2015 quarter.

Net sales at Walmart International was $28.621 billion, down 6.6% compared to the same quarter in 2015. However, in constant currency – accounting for the impact of exchange rates courtesy of the strong U.S. dollar – the net sales were $31.309 billion, up 2.2% compared to the 2015 quarter. Operating income – on a constant currency basis – for the division was $1.884 billion, up 47.5%. However, much of the gain is attributable to the sale of Yihoadian.

Sam’s Club continues to lag the other divisions. Net sales totaled $14.543 billion in the quarter, down 1.3%. Comp-store sales were up 0.6%, a decline from the 1.3% gain in the same quarter of 2015. Traffic was down 0.4% compared to a 0.5% gain in the 2015 quarter. On the positive side, the average ticket was up 1%, and operating income in the division was $472 million, up 10.3% compared to the same quarter in 2015.

Operating income for the three divisions totaled $6.165 billion, up 1.6% compared to the same quarter of 2015. However, adjusting for the Yihoadian sale, a one-time boost, the consolidated operating income picture wasn’t as rosy.

“Consolidated operating income increased 1.6%, including a gain of $535 million from the sale of Yihaodian. Excluding this gain, consolidated operating income declined 7.2%. As expected, investments in people and technology, as well as currency exchange rate fluctuations negatively impacted results,” the company noted in the statement.

Wal-Mart shares (NYSE: WMT) closed Wednesday (Aug. 17) at $72.93, up 4 cents. During the past 52 weeks the share price has ranged from a $74.80 high to a $56.30 low. In pre-market trading, the share price was rising above the 52-week high.