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New York -- Walmart overcame a meager 1% same stores sales increase at U.S. stores to deliver better than expected fourth quarter profits on Thursday.
The company said total sales increased 3.9% to $127.1 billion compared to $122.3 billion last year. Without the benefit of a favorable currency exchange situation, sales would have increased a lesser 3.7% to $126.8 billion. Full year sales increased by 5% to $466.1 billion compared to last year’s total of $443.8.
Fourth quarter profits increased 7.9% to $5.6 billion and earnings per share of $1.67 were 10.6% higher than the $1.51 reported the prior year and well ahead of the company’s guidance and analysts’ consensus estimate. Walmart had forecast profits in a range of $1.53 to $1.58 and analysts were looking for $1.57.
"Walmart topped off a really good year with a solid fourth quarter, and I'm proud of what we accomplished as a team," said Mike Duke, president and CEO of Wal-Mart Stores, Inc. Every day our associates around the world deliver on our mission to help customers save money so they can live better. Together, we added $22 billion in sales to top $466 billion. Walmart U.S. was a key driver of our 5% sales increase."
The 1% U.S. comp increase was at the low end of a forecast range which called for a 1% to 3% increase and a slow start to the first quarter has the company forecasting flat same store sales.
To offset the deceleration in U.S. comps, which can be attributed to a range of external economic pressures, Walmart highlighted its volume growth and market share gains. The company said its U.S. division added more than $10 billion in net sales last year, including $4.7 billion as a result of same store sales growth. The company said it gained share in categories such as food, consumables, health and wellness, entertainment and toys.
"Despite comps at the low end of the guidance, our market share gains, as noted by Nielsen and NPD, along with our two-year positive comp trend indicates the underlying strength of Walmart’s business," said Walmart U.S. president and CEO Bill Simon. "Comp sales grew by 1% for the quarter, lapping a solid 1.5% comp last year. This represented $743 million in comp growth for the quarter."
Looking ahead, Walmart faces a challenging comparison against a first quarter 2012 U.S. comp increase of 2.6% and a variety of headwinds such as increased gas prices and reductions in take home pay. Against this backdrop, Simon expressed confidence that the company’s familiar low price strategy will continue to resonate with shoppers.
However, a slow start to February caused largely by a delay in tax refunds has dimmed enthusiasm for the first quarter and resulted in a flat same store sales forecast.
"We continue to monitor economic conditions that can impact our sales, such as rising fuel prices, changes in inflation and the payroll tax increase," Simon said.