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CAROL SCHUMACHER, IR, WAL-MART STORES, INC.: Hi and thanks for calling Wal-Mart for the December 2008 sales release. The sales reporting period included the five weeks ended Friday, January 2 and compares with the five weeks ended Friday, January 4 last year.
For this year’s five-week period, comparable store sales were up 1.9% in the Wal-Mart US Tiffany Rings and up 0.1% in the Sam’s Club segment without fuel. Total US comp store sales increased 1.7% without fuel for the five-week period. Our nonfuel comp excludes all fuel sales, not just the impact of inflation on fuel sales.
The overall net sales results were total company, $46.5 billion, down 0.1%; Wal-Mart US, $30.9 billion, up 4.3%; Sam’s Club, $4.9 billion, down 2.1%; and Wal-Mart International, $10.7 billion, down 10.4%.
We should note that for the third month in a row currency exchange rate fluctuations had a significant impact on international sales in US dollar terms. The higher value of the US dollar against most currencies in the December period reduced Wal-Mart International sales as reported in US dollar terms by 18.7 percentage points. On a constant currency basis, meaning using the same exchange rates as the December period last year, total international sales increased 8.3% over the December period last year.
In Wal-Mart US, comp store sales were influenced by the difficult economy and severe winter weather in some regions. Grocery and health and wellness were the primary drivers for the period with comp increases in the mid single digits. Electronic sales were solid, particularly in flat-panel TVs, laptops, video games, MP3 players and GPS units. Toys also were positive. Apparel and jewelry were soft.
Wal-Mart US had positive traffic for the third straight month and we believe we continue to gain marketshare due to our price leadership and improvements in customer experience. At the same time, severe winter weather slowed sales, especially in the week before Christmas, forcing the closure of 40 stores for periods of a few hours to nine days.
At Wal-Mart.com, sales were significantly ahead of last year, led by sales of entertainment and home products, particularly furniture, as well as the site-to-store program. Bicycles and ride-on toys also did well.
During the period, sales were stronger in the West and Northeast regions and softer in the Southeast and Central. On Wednesday, Wal-Mart US announced a new round of rollbacks following the holiday season. The first round, which was launched in early November and dubbed Operation Main Street, gave customers more than $400 million since its launch. These latest rollbacks will build upon that, emphasizing products that help people live healthier lives, including exercise equipment.
Sales at Sam’s Club were below expectations, though sales were stronger in the last two weeks of the period. Winter weather also negatively affected traffic and sales in some markets. Fresh food, dry grocery and consumables drove Club sales, while jewelry and home-related products were softer. Toys also did well at Sam’s. Members were clearly more selective in their purchases and small businesses were spending more cautiously.
Fuel prices were lower when compared to the same period last year and had a negative effect on Tiffany Bangles comps for the second month in a row. Deflation in fuel prices lowered Sam’s comp sales results by 3.3 percentage points.
In International, comp store sales increased in the UK, Mexico, Canada, Brazil, Japan and China. Despite this, International sales did not meet our expectations as customers around the world continue to feel pressure from the economy. In addition, foreign exchange rates reduced International’s reported results in dollar terms as we noted earlier.
Wal-Mart expects comp store sales in the United States for the January four-week period to be between flat and 2%. The January period runs from Saturday, January 3, 2009 through Friday, January 30, 2009.
We have updated our fourth-quarter guidance for earnings per share from continuing operations. There are a number of considerations which CFO, Tom Schoewe, noted in the press release. First, the negative impact of $0.06 per share from the currency effect we announced November 13; second, an additional $0.06 stemming from the after-tax charge for the settlement of lawsuits we announced on December 23; third, fourth-quarter sales are trending below expectations for Wal-Mart International and Sam’s; and last, higher expenses are expected in the fourth quarter.
We now expect earnings from continuing operations for the fourth quarter of fiscal 2009 to be tiffany bracelet $0.91 and $0.94 per share. Considering the impact of the currency and litigation charges, we continue to expect our underlying operating performance for the quarter to be at or above the same quarter last year. The usual comp updates are posted on our website at www.walmart stores.com/investors. Thanks for your interest in our Company and have a great day.