Wal-Mart profits up on international growth; U.S. sales disappoint

Strong international growth boosted Wal-Mart Stores Inc. second-quarter results, but dismal same store sales in the U.S. could signal to investors and stock market watchers that the lackluster U.S. economy is still slumping.

For the period ended July 31, 2010, the Bentonville-based retail giant reported net income of $3.59 billion, or 97 cents per share, versus $3.47 billion, or 89 cents per share, in the same period a year ago. Net sales for the quarter grew to $103 billion, an increase of 2.8% from $100 billion in the second quarter last year.

Wall Street analysts expected the world’s largest retailer to report second quarter earnings of 96 cents per share on sales of $105.4 billion, according to the average estimate of analysts surveyed by Thomson Reuters. Sales are expected to rise to $105.4 billion from $100.9 billion.

Despite the struggling economy, Wal-Mart President and CEO Mike Duke said the company will continue to “focus on our priorities of growth, leverage and returns.”

“The slow economic recovery will continue to affect our customers, and we expect they will remain cautious about spending,” Duke said in the earnings statement released Tuesday morning (Aug. 17). “Walmart is committed to our mission of saving people money so they can live better.”

Going forward, Wal-Mart is raising its full year earnings guidance to a range of $3.95 to $4.05 per share. Duke said Walmart continues to grow around the world, and the company added almost 5 million square feet of retail space this quarter, with more than 60% of the square footage growth in Walmart International.

“We are raising full year EPS guidance today due to the strength of our underlying operating performance of our first two quarters, despite the challenges facing Walmart U.S. in the short term, and the current economy,” Tom Schoewe, executive vice president and chief financial officer, said in a statement.

Duke add that the “slow economic recovery” continues to cause consumers to remain cautious about spending.

Overall, Walmart International remains the fastest-growing segment of the retail giant’s base, with net sales of $25.9 billion, an increase of 11% from last year’s second quarter. That growth was propelled by strong underlying sales in Mexico, and new store growth in Brazil and China.

Meanwhile, company officials said Wal-Mart’s U.S. operations, now led by President and CEO Bill Simon, is working to ensure the merchandise assortment is relevant for their customers, remains the price leader, and strengthen their relationships with suppliers.

For the third quarter, Walmart U.S. expects comparable store sales to range between -2% and 1%, as compared to a 0.5% decline for the comparable period last year.

Still, Walmart U.S. net sales of $64.7 billion were flat for the second quarter with the prior year. Net sales for Sam’s Club, excluding fuel, increased to $11.4 billion, just above last year’s year results.

Wal-Mart shares (NYSE: WMT) were up more than 50 cents early Tuesday, trading around $51 a share. During the past 52 weeks, the share price has ranged from a $56.27 high to a $47.77 low.