Wal-Mart Q2 profit rises, but sales miss Street
Bentonville, Ark. — Wal-Mart Stores reported Thursday that net income for the second quarter rose 5.7% to $4.02 billion, compared with $3.8 billion in the year-ago period. Total revenue increased 4.5% to $114.3 billion, but missed Wall Street’s forecasted $115.8 billion in revenue.
Same-store sales in the quarter advanced 2.2%, edging Wall Street expectations but trailing last quarter’s 2.6% same-store sales gain.
Price-cutting in the challenging economy has impacted the world’s largest retailer. CEO Mike Duke told investors that U.S. consumers will continue to shop for the lowest prices.
"Given continuing economic pressures, we believe that our price leadership and value are growing in importance to customers across income levels," Duke said in a statement.
Sales in the U.S. rose 3.8% to $67.35 in the quarter. For the overall U.S. business, same-store sales rose 2.5%, including a 4.7% increase at Sam’s Club warehouses. Analysts had expected 2.6%.
Wal-Mart has raised its profit outlook for the year, although it said it would delay store expansion plans in Mexico, as it continues to battle allegations of bribery there.
Dollar Tree grows 77 more stores
Sales for the second quarter ended July 28 increased 10.5% to $1.7 billion thanks to a 4.5% increases in same store sales and the addition of 77 new Dollar Tree stores, the company announced Thursday. Net income increased 25.6% to $119.2 million and earnings per share increased 30.8% to 51 cents. The profit performance met analysts’ estimates, but guidance for the third quarter in the range of 47 cents to 51 cents was a penny less than the 52 cents Wall Street expected and shares of the company sold off sharply after the earnings report.
“I am pleased with our second quarter performance,” said president and CEO Bob Sasser. “Dollar Tree continues to deliver consistently strong sales and earnings. I am particularly proud of the increases in operating margin and inventory turns.”
At the midpoint of the company’s fiscal year, the operating margin rate of 10.9% is 70 basis points higher that the 10.2% figure from the comparable period the prior year.
“We remain focused on providing great values for our customers and superior returns for our shareholders,” Sasser said. “Our stores are well-stocked with a terrific, balanced assortment of relevant merchandise for our customers and we are ready for an exciting fall season.”
Given the current state of the U.S. economy, a lot of retailers would love to produce a mid-single digit same store sales increase on top of a similar increase the prior year gain, but in the case of Dollar Tree the top line performance was regarded as disappointing.
Dollar Tree said it expects full year sales in the range of $7.36 billion to $7.45 billion and same store sales to increase in the low to mid single digit range. Full year profits per share are expected to range from $2.45 to $2.54. The company’s 2012 fiscal year includes and extra week that is expected to add $120 million to $130 million in sales and between seven and eight cents of earnings per share.
Limited raises outlook on 2Q earnings growth
COLUMBUS, Ohio — Limited Brands reported that adjusted earnings per share for the second quarter were 50 cents compared with 48 cents for the same period last year. Adjusted net income was $147.2 million compared with $150.7 million last year.
Comparable-store sales for the second quarter increased 8%, and net sales were $2.4 billion compared with $2.46 billion last year.
The company stated that it expects 2012 third quarter adjusted earnings per share to be 15 cents to 20 cents compared with adjusted earnings per share of 25 cents per share last year.
For 2012, the company expects earnings per share of $2.73 to $2.88 versus its previous guidance of $2.63 to $2.83.