This post describes our model of
Wal-Mart's (NYSE:
WMT) Income Statement for fiscal 2011's fourth quarter, which will end on 31 January 2011.
The purpose of the model is to establish a baseline for identifying surprises, positive or negative, in the quarterly results the company will report. Estimates for each line of the
Income Statement are derived from management's guidance, the company's historical financial results, and other publicly available data.
We begin by reviewing background information about Walmart and the business environment in which it is currently operating.
Retailing behemoth
Wal-Mart Stores, Inc., operates 4404 stores in the U.S. (including
Sam's Club) and 8838 worldwide, at
last count.
In
fiscal 2010, which concluded in January 2010, Walmart earned over $14 billion on net sales of $405 billion. Although net sales rose only 1.0 percent, income continuing operations increased 8.8 percent.
These financial results enabled Walmart to regain the top position from
Exxon Mobil (NYSE:
XOM) on the
Fortune 500 list of America's largest corporations. A drop in energy prices in 2009 cut into the oil giant's revenue.
Economies of scale and
ruthless efficiencies allow Walmart to sell many products for prices lower than competitors, which include
Target (NYSE:
TGT),
Kohl's (NYSE:
KSS), and
Sears Holdings (NASDAQ:
SHLD). Walmart also purchases goods