Walmart's Profits Jump 5.7% in Q2 as Frugal Customers Return

By ANNE D'INNOCENZIO

NEW YORK -- Walmart's second-quarter net income rose 5.7 percent as the world's largest retailer wooed back frugal shoppers by doubling down on low prices.

The discounter also is raising its full-year profit outlook.

But quarterly revenue that came in short of expectations disappointed investors, who sent the company's stock down 3 percent to $71.99 in premarket trading.

Walmart's (WMT) results are considered a bellwether of consumer spending because the company draws nearly 10 percent of nonautomotive retail spending in the U.S. The latest report card from the discounter shows that low-income shoppers are willing to buy -- if it's at rock-bottom prices.

Walmart has had to work hard to get shoppers back. The business had been struggling as its core low-income customers were hard hit by joblessness and other challenges in the down economy. Adding to that, Walmart's U.S. stores, which account for 60 percent of the company's revenue, had made some mistakes by veering away from its "everyday low prices" strategy and getting rid of popular merchandise.

But Walmart last year began adding back 10,000 products and refocused on keeping prices low throughout the store. As a result, revenue at Walmart's U.S. division rose 3.8 percent to $67.35 billion.

Revenue at stores open at least a year -- considered a key measure of a retailer's health because it excludes the impact from stores that open and close during the year -- rose 2.2 percent in the division, excluding fuel. The figure, which beat the 2.1 percent Wall Street estimate, marks the fourth consecutive quarterly gain for the division after nine straight quarters of declines.

For the overall U.S. business, revenue at stores opened at least a year rose 2.5 percent, including a 4.7 percent increase at the company Sam's Club warehouses.

"Given continuing economic pressures, we believe that our price leadership and value are growing in importance to customers across income levels," Mike Duke, Walmart's president and CEO, said in a statement.

Walmart's international business, which produces more than a quarter of its revenue, has remained strong, but the company is striving to make it more profitable. Walmart is focusing on improving its business in Brazil and China. The company's international business increased 6.4 percent to $32.01 billion in the quarter.

The company reported net income of $4.02 billion, or $1.19 per share, for the quarter ended July 31. That compares with $3.80 billion, or $1.09 per share, a year ago.

Revenue excluding membership fees at Sam's Club rose 4.5 percent to $113.53 billion.

Analysts had expected earnings of $1.17 per share on revenue of $114.63 billion.

The company said it expects third-quarter net income between $1.04 per share and $1.09 per share. Analysts had expected $1.05. For the full year, the company now expects earnings per share to be in the range of $4.83 to $4.93. That compares with its original forecast of $4.72 to $4.92 per share. Analysts had expected $4.93.

The company continues to deal with allegations of bribery in its Mexico operations, which surfaced in late April and could threaten momentum in its international business, Walmart's fastest-growing division. The company has launched its own internal investigation into the matter and is working with government officials in the U.S. and Mexico. At the company's annual meeting in June, company officials pledged that they will get to the bottom of the allegations. Walmart has also been overhauling its compliance program.

Still, investors, who pushed the stock down right after the allegations surfaced in late April, had sent shares up 25 percent since mid-May.

• <p> <a href="http://www.huffingtonpost.com/2012/02/17/naked-man-steals-socks_n_1284139.html">A man was thrown in jail after trying to steal socks </a>from a Walmart store in Exton, Pa. But it seems socks weren't the only article of clothing he needed, as he was buck naked.<br /> <br /> Store surveillance footage caught the 6-foot-4, 300-pound man walking around the store in the buff. No word on why the man was nude or what style of socks he tried to lift.</p> <p> <em>AP Video below slide show.</em></p>
• <p> Plenty of people use Walmart as their drugstore -- but not all the drugs being sold there are found in the pharmacy department.<br /> <br /> A janitor found <a href="http://www.gadsdentimes.com/article/20120409/NEWS/120409824/1016/NEWS?Title=Meth-lab-found-in-restroom-at-Boaz-Walmart-">a &quot;shake and bake&quot; methamphetamine lab in the women's restroom at a Walmart store in Boaz, Ala</a>. The custodial worker discovered a Nestle water bottle and five empty packets of pseudoephedrine -- the makings of the psychostimulant drug also known as &quot;the poor man's cocaine&quot; -- in a bathroom stall.<br /> <br /> Curiously, the pseudoephedrine wasn't a brand sold at Walmart, so the chemists couldn't have gotten it in house. But apparently, they thought Walmart would make a good meth den.</p>
• <p> At a Walmart in Lexington, N.C., a man loaded his cart with $476 worth of merchandise that included a vacuum cleaner and a microwave oven. <a href="http://www2.journalnow.com/news/2011/dec/31/wsmain01-lexington-man-charged-with-making-a-fake--ar-1765473/">He then tried to pay at the register with a fake $1 million bill,</a> insisting to the cashier that it was real. (The largest U.S. bill in circulation is $100 -- not even close.)<br /> <br /> Store staff called the police, and the man was charged with two felonies: attempting to obtain property under false pretenses, and presenting a phony document as a legitimate form of payment.</p>
• <p> A shopper looking for a new wallet at a Walmart store in Falmouth, Mass., <a href="http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20090304/NEWS/903040311">discovered 10 human teeth </a>in the zipper compartment of the billfold he was about to buy. One of the adult teeth had a filling, according to police. Save for its toothy contents, the wallet appeared new, complete with merchandise tags.</p>
• <p> In one of the more creative attempts at shoplifting, an 18-year-old man outfitted in a cow suit <a href="http://www2.insidenova.com/news/2011/apr/27/walmart-cow-suit-milk-shoplifting-ar-1000251/">swiped 26 gallons of milk f</a>rom a Walmart in Garrisonville, Va. The man was seen crawling as he exited the store in an effort to emulate an ambling bovine.<br /> <br /> The cow impersonator was at least generous with his dairy loot: Witnesses told the sheriff's deputies that he was handing out the stolen milk jugs to passersby outside the store. Law enforcement officials later caught the milk thief at a nearby McDonald's.</p>
• <p> A man was glued to his seat -- literary,<a href="http://www.newarkpostonline.com/news/local/article_0409ba23-adb3-5230-a656-41bfcfc1876e.html"> in the men's bathroom at a Walmart store</a> in Elkton, Md. In what appeared to be an April Fool's prank that went way too far, the 48-year-old victim got stuck to a toilet seat smeared with glue and couldn't get up.<br /> <br /> The man called for help and emergency workers tried in vain to unstick the man. Eventually, they gave up and unbolted the seat from the toilet, then took the man to the hospital with it still attached to him. There, the seat was removed from his ... er, seat. The man was said to have suffered only minor injuries to his derriere.</p>
• <p> To conclude with an episode that is equal parts strange and sweet, Wayne and Susan Brandenburg first met at a Walmart in Brunswick County, North Carolina, when Susan was a cashier and Wayne was a shopper.<br /> <br /> Love blossomed, and when the time came to tie the knot, the couple opted to exchange their wedding vows where their courtship began. In front of family and friends, <a href="http://www.wect.com/story/16935252/couple-weds-in-local-walmart">the Brandenburgs said 'I do,' in the layaway section</a><span style="text-decoration: underline;">.</span></p> <p> <em>Youtube.com Video below slideshow</em></p>
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