Wal-Mart Stores Inc. (WMT) reported better-than-expected first-quarter 2011 results with quarterly earnings of 88 cents per share, beating the Zacks Consensus estimate of 84 cents per share. Management had guided towards an EPS range of 81 cents to 85 cents in February this year.
Wal-Mart’s net sales recorded growth of 6.0% to $99.1 billion from $93.5 billion in the year-ago quarter. The expansion was primarily driven by a robust 21.4% expansion in the International segment, which benefited from favorable currency translations, coupled with a 4.6% growth in the Sam’s Club segment and a 1.1% growth in Wal-Mart’s U.S. segment.
Wal-Mart, widely regarded as a bellwether for the U.S. economy, stated that U.S. same-store sales decreased 1.4% year-over-year, while that for Sam’s Club grew slightly, by 0.7%.
Meanwhile, quarterly operating income grew by 10.6% year-over-year to $5.7 billion, while the operating margin increased by 25 basis points to 5.8%. The growth was primarily caused by lower cost of sales, stringent management control over expenses and favorable foreign currency translations.
For the first quarter of 2011, Wal-Mart had a negative free cash flow of $1.6 billion, compared to positive free cash flow of $964 million in the year-ago period. The decline was mainly due to increased investment in inventory.
Based on the results of first quarter, management provided guidance for the second quarter of fiscal 2011. Wal-Mart expects second quarter earnings from continuing operations to range between 93 cents and 98 cents per share.
For fiscal 2011, the company expects capital expenditures to be at $15 billion compared to $13 billion guided earlier.
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