Bentonville, AR, August 15, 2006--Wal-Mart Stores said its second-quarter earnings fell 26 percent due to a charge related to the pending sale of its German operations, but results were still in line with expectations and the company reiterated guidance for the year.
For the quarter ended July 31, the company posted net income of $2.08 billion, or $0.50 per share, down from $2.81 billion, or $0.67 per share, a year ago. The latest quarter includes a hefty $863 million charge related to the sale of its German stores to rival Metro AG.
Excluding its South Korea and German operations, the sales of which are both pending, Wal-Mart's income from continuing operations grew 5 percent to $2.98 billion, or $0.72 per share, from $2.85 billion, or $0.68 per share, a year ago.
Revenue totaled $85.43 billion, an increase of 11.4 percent from the $76.69 billion posted a year ago.
The earnings results were in line with Wall Street expectations for profit of 72 cents per share, though revenue came in below the $86.24 billion consensus estimate.
"Our sales and earnings from continuing operations for the quarter are up, and we continue to make progress on inventory," said Lee Scott, Wal-Mart Stores president and CEO. "Some of the same issues affecting our customers--higher utility costs and gas prices--are impacting many corporations, including Wal-Mart. We find it encouraging that we continue to grow market share in food and consumables during this time."
Total U.S. same-store sales for the quarter increased 1.7 percent, including a 1.5 percent increase for Wal-Mart Stores and a 2.6 percent increase for the company's Sam's Club stores.
Looking ahead, the company forecasts third-quarter earnings from continuing operations between 59 cents and 63 cents per share, compared with the average analyst estimate of 63 cents. For the year, Wal-Mart reiterated guidance for profit from continuing operations of $2.88 to $2.95 per share. Analysts are currently predicting earnings of $2.92 per share.
