Walmart 2010 Annual Report Download - page 23

Consolidated Results of Operations
Operating Income
% Change from Operating as a Percentage Square
Fiscal Year Net Sales
(1)
Prior Fiscal Year Income
(1)
of Net Sales Comp Sales Unit Counts Footage
(2)
2010 $405,046 1.0% $23,950 5.9% -0.8% 8,416 952,204
2009 401,087 7.3% 22,798 5.7% 3.5% 7,863 918,008
2008 373,821 8.4% 21,952 5.9% 1.6% 7,239 867,448
(1) Amounts in millions
(2) Amounts in thousands
Walmart U.S. Segment
Operating Income
% Change from Operating as a Percentage Square
Fiscal Year Net Sales
(1)
Prior Fiscal Year Income
(1)
of Net Sales Comp Sales Unit Counts Footage
(2)
2010 $258,229 1.1% $19,522 7.6% -0.7% 3,708 602,908
2009 255,348 6.9% 18,562 7.3% 3.2% 3,656 589,299
2008 238,915 5.6% 17,383 7.3% 1.0% 3,550 566,629
(1) Amounts in millions
(2) Amounts in thousands
Our consolidated net sales increased by 1.0% and 7.3% in fiscal 2010 and
2009, respectively, when compared to the previous fiscal year. Net sales in
fiscal 2010 increased due to increased customer traffic, continued global
expansion activities and the acquisition of D&S in January 2009, offset
primarily by a $9.8 billion unfavorable currency exchange rate impact
in our International segment and price deflation in certain merchandise
categories in our Walmart U.S. segment. Net sales in fiscal 2009 increased
due to our global store expansion activities, comparable store sales
increases, offset by a $2.3 billion unfavorable currency exchange rate
impact. Volatility in currency exchange rates may continue to impact
the International segment’s net sales in the future.
Our gross profit, as a percentage of net sales, (our “gross profit margin”)
was 24.8%, 24.2% and 24.0% in fiscal 2010, 2009 and 2008, respectively.
Our Walmart U.S. and International segment sales yield higher gross
profit margins than our Sam’s Club segment. In fiscal 2010, gross profit
margin increased primarily due to the continued focus on enhanced
merchandising strategies and better inventory management in our Walmart
U.S. and Sam’s Club segments. The gross profit margin increase in fiscal
2009 compared to fiscal 2008 was primarily due to lower inventory
shrinkage and less markdown activity as a result of more effective mer-
chandising in the Walmart U.S. segment.
Operating expenses, as a percentage of net sales, were 19.7%, 19.3%
and 19.0% for fiscal 2010, 2009 and 2008, respectively. In fiscal 2010,
operating expenses increased primarily due to higher health benefit
costs, a pre-tax charge of $260 million relating to the restructuring of
U.S. operations and higher advertising expenses. In fiscal 2009, operat-
ing expenses increased primarily due to higher utility costs, a pre-tax
charge of approximately $382 million resulting from the settlement of
63 wage-and-hour class action lawsuits, higher health benefit costs and
increased corporate expenses compared to fiscal 2008.
Our effective income tax rate was 32.4% for fiscal year 2010 and 34.2%
for fiscal years 2009 and 2008. The fiscal 2010 effective tax rate decreased
compared to fiscal 2009 due to $372 million in net tax benefits that
primarily resulted from the repatriation of certain non-U.S. earnings
that increased our utilization of U.S. foreign tax credits.
As a result of the factors discussed above, we reported $14.9 billion,
$13.8 billion and $13.3 billion of income from continuing operations
for the fiscal years ended January 31, 2010, 2009 and 2008, respectively.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Walmart 2010 Annual Report 21
The segment net sales growth in fiscal 2010 resulted from an increase
in customer traffic and strength in our grocery and health and wellness
categories, as well as our continued expansion activities. In fiscal 2009,
the segment net sales growth resulted from a comparable store sales
increase of 3.2%, in addition to our expansion activities. Strength in
the grocery, health and wellness and entertainment categories, as well
as strong seasonal sales throughout the year also contributed to the fis-
cal 2009 net sales increase.
The segment net sales growth in fiscal 2010
resulted from an increase in customer traffic
and strength in our grocery and health and
wellness categories, as well as our continued
expansion activities.