Walmart 2011 Annual Report Download - page 23

Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Walmart 2011 Annual Report 21
Consolidated Results of Operations
Fiscal Years Ended January 31,
2011 2010 2009
Net sales
(1)
$418,952 $405,132 $401,087
Percentage change from
comparable period 3.4% 1.0% 7.3%
Total U.S. calendar comparable
store and club sales -0.6% -0.8% 3.5%
Gross prot margin as
a percentage of sales 24.7% 24.9% 24.2%
Operating income
(1)
$ 25,542 $ 24,002 $ 22,767
Operating income as a
percentage of net sales 6.1% 5.9% 5.7%
Income from continuing
operations
(1)
$ 15,959 $ 14,962 $ 13,734
Unit counts 8,970 8,459 7,909
Retail square feet
(2)
984,949 952,237 918,044
(1)
Dollar amounts in millions
(2)
Amounts in thousands
Our consolidated net sales increased by 3.4% and 1.0% in scal 2011 and
2010, respectively. Net sales in scal 2011 primarily increased due to our
continued expansion activities as we added 3.4% of additional retail
square feet during the year. In addition, $4.5 billion of the increase in net
sales during scal 2011 resulted from currency exchange rate uctuations,
oset by a 0.6% decline in U.S. comparable store and club sales. Net sales
in scal 2010 increased due to the growth in customer trac, continued
global expansion activities and the acquisition of D&S in January 2009,
oset primarily by a $9.8 billion unfavorable currency exchange rate
impact in our Walmart International segment and price deation in
certain merchandise categories in our Walmart U.S. segment. Volatility
in currency exchange rates may continue to impact the Company’s net
sales in the future.
Our gross prot, as a percentage of net sales (our “gross prot margin”),
was 24.7%, 24.9% and 24.2% in scal 2011, 2010 and 2009, respectively. Our
Walmart U.S. segment and Walmart International segment net sales yield
higher gross prot margins than our Sam’s Club segment, which operates
on lower margins as a membership club warehouse. In scal 2011, gross
prot margin was relatively at compared to scal 2010. In scal 2010, gross
prot margin increased primarily due to enhanced merchandising strategies
in our Walmart U.S. and Sam’s Club segments.
Operating expenses, as a percentage of net sales, were 19.3%, 19.7% and
19.3% for scal 2011, 2010 and 2009, respectively. In scal 2011, operating
expenses as a percentage of net sales decreased primarily due to improved
labor productivity and organizational changes implemented at the end of
scal 2010 designed to strengthen and streamline our operations, as well
as a reduction in certain incentive plan expenses. In scal 2010, operating
expenses increased primarily due to higher health benet costs, a pre-tax
charge of $260 million relating to the restructuring of U.S. operations, and
higher advertising expenses.
Operating income was $25.5 billion, $24.0 billion and $22.8 billion for scal
2011, 2010 and 2009, respectively. Operating income in scal 2011 was aided
by $231 million due to the eects of currency exchange uctuations.
Operating income in scal 2010 was reduced by $540 million due to the
eect of currency exchange rate uctuations. Volatility in currency
exchange rates may continue to impact the Company’s operating income in
the future.
Our eective income tax rate was 32.2%, 32.4% and 34.2% for scal 2011,
2010 and 2009, respectively. The scal 2011 and scal 2010 provision for
taxes include certain tax benets that caused the eective tax rates for
each of those two years to be less than the eective tax rate in scal 2009.
During scal 2011 and 2010, we recorded certain tax benets totaling
$434 million and $372 million, respectively, primarily from the repatriation
of certain non-U.S. earnings that increased our U.S. foreign tax credits.
We expect the scal 2012 annual eective tax rate to be approximately
33.5% to 34.5%. Signicant factors that may impact the annual eective
tax rate include changes in our assessment of certain tax contingencies,
settlement of tax contingencies and the mix of earnings among our
U.S. and international operations.
As a result of the factors discussed above, we reported $16.0 billion,
$15.0 billion and $13.7 billion of income from continuing operations for
the scal years ended January 31, 2011, 2010 and 2009, respectively.
Walmart U.S. Segment
Fiscal Years Ended January 31,
2011 2010 2009
Net sales
(1)
$260,261 $259,919 $256,970
Percentage change from
comparable period 0.1% 1.1% 7.6%
Calendar comparable store sales -1.5% -0.7% 3.2%
Operating income
(1)
$ 19,914 $ 19,313 $ 18,310
Operating income as
a percentage of net sales 7.7% 7.4% 7.1%
Unit counts 3,804 3,755 3,703
Retail square feet
(2)
617,067 605,852 592,256
(1)
Dollar amounts in millions
(2)
Amounts in thousands
Walmart U.S.
unit counts
3,804
3,755
3,703
FY09 FY10 FY11