Walmart (NYSE: WMT) posted pathetic US numbers, but was saved by its international group as it posted good earnings and revised its forecast for the year upward.
Walmart reports second quarter diluted earnings per share of $0.97, above First Call consensus of $0.96, and within the company’s guidance of $0.93 to $0.98.
The company raised EPS guidance for the full year to a range of $3.95 to $4.05, from its previous range of $3.90 to $4.00.
Operating income for the second quarter was up grew 4.4% to more than $6 billion. Revenue for the second quarter were $103 billion, an improvement of 2.8%Walmart U.S. comparable store sales for the second quarter 13-week period declined 1.8%. Sam’s Club posted a comparable club sales increase, without fuel, of 1.0%. The company appears to have reached a point of saturation in America and is now barely hanging onto its market share. Part of this may be due to its failure to get penetration in the nation’s largest cities.
While the US struggled with flat revenue at Walmart stores of $64.7 billion and Sam’s revenue which rose 2% to $12.5 billion, international sales rose 11% to $25.9 billion.
The company’s forecast for US sales remains very poor. For the 13-week period from Sat., July 31, through Fri., Oct 29, 2010, which is comparable to the company’s third fiscal quarter, Walmart U.S. expects comparable store sales to range between -2.0% and 1.0%. Sam’s Club expects comparable club sales without fuel during the third quarter 13-week period to range from flat to an increase of 2.0%.
The best thing Walmart could do now is spin off its international operations and increase the dividend on its US business Investors in Walmart common could then decide whether to invest in a yield stock or a growth equity. Now, the company is neither, which Wall St. despises.
It will take a radical action like breaking apart the business to help the company’s shares, which have barely outperformed the DJIA over the last 5 years.
Douglas A. McIntyre
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