Welcome to the Walmart Earnings call for the Q3 of fiscal year 2013. The date of this call is November 15, 2012. Call is the property of Walmart Stores Incorporated and is intended for the use of Walmart shareholders and the investment community. It should not be reproduced in any way. You may navigate through this call as follows.
Press number 4 to rewind 20 seconds. Press number 5 pause and resume playback press number 6 to fast forward 20 seconds. This call will contain statements that Walmart believes are forward looking statements within the meaning of Private Securities Litigation Reform Act of 1995 as amended and that are intended to enjoy the protection of the Safe Harbor for forward looking statements provided by that act. These forward looking statements generally are identified by the use of the words or phrases anticipate, assumption, based on, estimate, expect, expects, forecast, goal, guidance is expected, may experience, plan, projected to be, to be completed, to deliver, to open, to range, to reduce, will continue, will do, will experience, will generate, will be, will be completed, will continue, will contribute, will drive, will help, will impact, will kick start, will put, will recognize and or a variation of one of those words or phrases in those statements or by the use of words and phrases of similar import. Similarly, descriptions of Walmart's objectives, plans, goals, targets or expectations are forward looking statements.
The forward looking statements in this call include statements relating to management's forecasts for Walmart's diluted earnings per share from continuing operations attributable to Walmart for the quarter the year ending January 31, 2013. For the store sales of the Walmart U. S. Operating segment and the comparable club sales excluding fuel of the Sam's Club operating segment for the 13 week period ending January 25, 2013. The range for Walmart's effective tax rate for fiscal 2013 and the possibility of quarterly fluctuations in such rate, Walmart's capital expenditures for fiscal 2013 and the assumptions on which such forecasts are based.
Those statements also include statements regarding Walmart's goals to grow operating expenses at a rate less than net sales growth and to grow operating income at a rate greater than the net sales growth. And relating to management's expectations that Walmart's operating expenses as a percentage of sales will be reduced by at least 100 basis points over the next 5 years by reducing costs and improving productivity to invest in lower prices in the Walmart U. S. And Sam's Club operating segments and to achieve greater profitability in the Walmart International operating segment. Expenses in the Q4 of fiscal 2013 for reviewing FCPA matters will be in a certain range.
Consolidated sales growth for fiscal 2013 will be around $5,720,000,000,000 over fiscal 2012. Walmart will grow through a variety of formats in all of its markets. Walmart's holiday planning in key markets of Walmart International will drive sales growth in those markets. Walmart will lever operating expenses in the Q4 of fiscal 2013 despite expenses relating to global e commerce initiatives, FCPA matters and leveraging activities. Walmart will make the right investments to strengthen its global e commerce business.
Walmart will continue to invest in global e commerce and global leverage services. Global e commerce and global leverage services will contribute greater growth and improved leverage in the future and that such areas will continue to be a headwind. Walmart will continue to build the anywhere, anytime platform customers want. Walmart will drive sustainability deeper into its operations and Walmart strategies will continue to deliver increases in sales and earnings. Those forward looking statements also include statements of management's expectations for the Walmart U.
S. Segment stores being the number destination in fiscal 2013, Inc. That the segment will recognize most of the $300,000,000 of additional layaway sales made in the quarter ended October 31, 2012 in the quarter ending January 31, 2013 when customers pay for and pick up the merchandise. For the number of store openings in the quarter ending January 31, 2013 that certain initiatives will help the segment reach its savings goal in fiscal 2013 and the future. For the segment's plans for Black Friday, for the number of impressions across social media, the segment will generate in the fiscal 2013 holiday season that the segment will have a strong performance through Thanksgiving and Black Friday and that the segment will continue to deliver consistent core growth.
Such forward looking statements include management's expectations and plans that the Walmart International operating segment will complete a certain number of new projects in Canada by the end of fiscal 2013. For the holiday season, Black Friday and Cyber Monday in the Canadian operations the Cedi segment will continue to demonstrate price leadership on a broad basket of goods in Brazil and that Brazil will complete its conversion to everyday low prices or EDLP by the end of fiscal 2013. For the segment's more disciplined approach to real estate development and new store growth in China, putting the segment on a stronger path to have more ideal locations that the segment's acquisition of the controlling interest in EHoutian will help the segment expand its presence in China and enable the segment to serve more Chinese customers online and that the holiday schedule in China will be a headwind in the quarter ending January 31, 2013. Such forward looking statements include management's expectations that The Sam's Club operating segment's price investment strategy will continue in the Q4 of fiscal 2013. The segment's operating income growth will be challenged in the Q4 of fiscal 2013 and the expected reasons for that challenge.
The segment's price investments will have a greater impact on its gross margin rate in the Q4 of fiscal 2013 and the slower growth in business member traffic seen by the segment in the Q3 of fiscal 20 13 will remain a headwind for the segment in the Q4 of fiscal 2013. The forward looking statements also discuss other goals and objectives of Walmart and the anticipation and expectations of Walmart and its management as to other future occurrences, trends and results. All of these forward looking statements are subject to risks, uncertainties and other factors domestically and internationally, including general economic conditions, economic conditions affecting specific markets in which we operate, competitive pressures, inflation and deflation, consumer confidence, disposable income, credit availability, spending patterns and debt levels, the seasonality of Walmart's business and seasonal buying patterns the United States and other markets, geopolitical conditions and events weather conditions and events and their effects catastrophic events and natural disasters their effects on Walmart's business, public health emergencies, civil unrest and disturbances and terrorist attacks, Commodity prices, the cost of goods Walmart sells, transportation costs, the costs of diesel fuel, gasoline, natural gas and electricity, the selling prices of gasoline, disruption of Walmart supply chain, including transport of goods from foreign suppliers, information security costs, trade restrictions, changes in tariff and freight rates, labor costs, the availability of qualified labor pools in Walmart's markets, changes in employment laws and regulations, the cost of health care and other benefits, casualty and other insurance costs, accident related costs, the cost of construction materials, the availability of acceptable building sites for new stores, clubs and facilities, zoning, land use and other regulatory restrictions, the availability of attractive investment opportunities in the global e commerce sector, adoption of or changes in tax and other laws and regulations that affect Walmart's business, including changes in corporate tax rates, developments in and the outcome of legal and regulatory proceedings to which Walmart is a party or is subject, currency exchange rate fluctuations, changes in market interest rates, conditions and events affecting domestic and global financial and capital markets, The unanticipated need to change Walmart's objectives and plans and other risks, Walmart discusses certain of these matters more fully in its filings with the SEC, including its most recent annual report on Form 10 ks and the information on this call should be read in conjunction with that annual report on Form 10 ks.
And together with all of Walmart's other filings made with the SEC through the date of this call, including its quarterly reports on Form 10 Q and current reports on Form 8 ks. We urge you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward looking statements made in this call. Because of these factors, changes in facts, assumptions not being realized or other circumstances, Walmart's actual results may differ materially from anticipated results expressed or implied in these forward looking statements. The forward looking statements made in this call are made on and as of the date of this call, and Walmart undertakes no obligation to update these forward looking statements to reflect events or circumstances. The comparable store sales for our total U.
S. Operations and comparable club sales for our Sam's Club segment and certain other financial measures relating to our Sam's Club segment discussed on this call exclude the impact of fuel sales of our Sam's Club segment. Those measures as well as our return on investment, free cash flow and amounts stated on a constant currency basis as discussed in this call may be considered non GAAP financial measures. Reconciliations of certain non GAAP financial measures to the most directly comparable GAAP measures are available for review on the Investor Relations portion of our corporate website atwww.stock.walmart.com and in the information included in our current report on Form 8 ks that we furnished and filed with the SEC on November 15, 2012.
Hello. This is Carol Schumacher, Vice President of Investor Relations for Walmart Stores Inc. Thanks for joining us today for our earnings call to review the Q3 of fiscal 2013. All information for this quarter, including our unit count, Square Footage and Financial Metrics is available on our website, new address, stock. Walmart.com.
Please note that while we update unit counts on a monthly basis on our website, in the earnings discussion today, units and square footage referred to as of the quarter end. Our press release is available on the website and a full transcript of this call has already been posted there. Here's the agenda for today's call. Mike Duke, President and CEO of Walmart Stores Inc, will open the call with his thoughts about the quarter as well as highlights of our key results. Jeff Davis, SVP of Finance and Treasurer, will cover the consolidated financial details.
Then we'll cover the operating segments. First, Bill Simon, President and CEO of Walmart U. S. Followed by Doug McMillan, President and CEO of Walmart International and Rosalind Brewer, President and CEO of Sam's Club. We'll close the call with our CFO, Charles Holly.
He'll cover growth, leverage and returns as well as provide our outlook for the remainder of the year. A number of you have asked about the potential impact of a 53 week year on our business. Let me remind you that unlike other retailers, fiscal year coincides with a retail calendar. Walmart's fiscal year ends always on January 31. Walmart only reports comp store sales on a 4x454 basis for the U.
S. Segments. During last year's Q4 call, We stated that we would report fiscal 2013 comp store sales on a 53 week basis with 455 reporting for Q4. But to align with our company's internal operating systems this year, Walmart will now report on a 454 basis, so we will not recognize a 53 week retail calendar this year. Next year, fiscal 2014, will report comp store sales on a 53 week basis with 455 reporting in Q4.
We ask that you please adjust your models accordingly. Within Walmart U. S, we discuss layaway. The revenue and comp sales associated with merchandise put on layaway is not recognized until the merchandise is completely paid for and picked up by the customer. Therefore, the vast majority of 3rd quarter layaway transactions will be recognized in the 4th quarter.
In discussing our operating results, we sometimes refer to the impact of changes in currency exchange rates that we use to convert the operating results for all countries where the functional currency is not the U. S. Dollar. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period's currency exchange rates and the comparable prior year period's currency exchange rates. Throughout our discussion today, we refer to the results of this calculation as the impact of currency exchange rate fluctuations.
When we refer to constant currency operating results, we're referring to our operating results without the impact of currency exchange rate fluctuations and without the impact of acquisitions until those acquisitions are included in both comparable periods. The disclosure of constant currency amounts or results allows investors like you to better understand our underlying performance without the effects of currency exchange rate fluctuations or acquisitions. When we use the term gross profit, We're referring to actual dollars. Gross profit as a percentage of net sales or gross profit rate refers to the percentage obtained by gross profit by net sales dollars. All comparisons are calculated as a change between the current quarter and the prior year quarter, unless we state otherwise.
In all references to earnings per share or EPS conversationally, We really mean diluted earnings per share from continuing operations. One last point before we get to the earnings details. Additional information regarding our company's review of certain matters related to the Foreign Corrupt Practices Act is included in our Form 8 ks dated November 15, 2012 regarding our earnings release. These documents are available on both the Walmart corporate site that I mentioned earlier and the SEC website. So let's get on to our results.
Mike Duke will kick off the news for the Q3. Mike?
Thanks, Carol. Good morning, everyone. We're very pleased with our financial performance for the Q3 and the dedication and hard work of our associates serving Walmart customers and communities around the world. Earnings per share were $1.08 which represents an 11 point 3% increase over the Q3 last year. At our October analyst meeting, you heard me talk about our disciplined approach to operating the productivity loop and making investments.
That discipline enabled the company to deliver really good profitability and expense leverage in a quarter of continued economic uncertainty for our customers. Here are some of the highlights for the quarter. Net sales were $113,200,000,000 a 3.4% increase over last year. On a constant currency basis, net sales would have been almost $1,000,000,000 an increase of roughly 5%. Consolidated operating income was up 4% from last year, again growing faster than sales.
Return on investment was 18% and among the best in the retail industry. These results are a credit to the operating segments that drive our bottom line performance. So now I'll get into their key takeaways. Walmart U. S.
Posted a comp sales increase of 1.5% and delivered approximately $2,300,000,000 in net sales growth. Back to school activities drove sales early in the quarter and the mid September launch of layaway was important in helping customers. Operating income outpaced net sales growth for the quarter and was a key driver of our overall company profit. Bill and his team are executing very innovative plans to drive traffic and to help America's families have a great holiday season. That's what our customers expect and we will deliver.
We announced our extended Black Friday program and customers are already working on their shopping list. Price will continue to be a major factor for customers over the holidays. Our strong price position and broad assortment are clear competitive advantages in an economy where customers may still be cautious with their budgets. Sam's Club posted a comp sales increase of 2.7% for the quarter without fuel. I'm pleased that Sam's delivered a 12.7% increase in operating income for the quarter.
As you heard from Roz at the October meeting, there's still more work to do to accelerate membership income. I like the test the team is conducting in our Texas clubs, and we will continue to evaluate the results over the next several months. Sam's has also launched its price investment strategy, and you can expect to see more of that in the 4th quarter. Walmart International grew net sales 2.4 percent to $33,200,000,000 for the quarter despite a negative impact from currency and a challenging global economy. On a constant currency basis, net sales would increased a healthy 7.6% over last year.
International grew or maintained market share in its major markets except for China. We're maintaining our focus on improving profitability and returns, especially in Brazil and China. The focus that Doug and his teams have on driving comp sales through EDLP, Lowering expenses and delivering leverage is moving us down the path to continue to grow and gain market share. Across all of our markets, we are seeing the same price consciousness as we do in the U. S.
More and more of Walmart's customers are part of a growing global middle class. They're looking for quality, value and a better life. And our EDLP model reinforces our competitive positioning. I recently spent a week visiting 3 of China's major cities, Beijing, Shanghai and Shenzhen. While China's rate of growth has slowed, it's clear that a new generation of consumers is creating an immense retail market, and that includes a significant opportunity in e commerce.
We recently completed our 51% investment in EHoutian, which will enable us to serve more Chinese customers online. We are now well positioned to grow with Chinese consumers whether they shop online or in stores. Global e Commerce sales are growing and we will continue to make the right investments to strengthen an already good business. We've made significant progress this quarter in enhancing our walmart.com site for U. S.
Customers. The walmart.comsearchengine is improving conversion. We are enhancing e commerce opportunities for shoppers in the U. K, Brazil and China, including a global platform that increases the assortment on our key online sites. We will continue to build the anywhere, anytime relationship that customers want.
And that sets us apart from retailers operating only in the e commerce space. I want to thank our associates for being there for our customers. When Superstorm Sandy hit the East Coast, Our associates jumped into action. The Walmart trucks rolled in, delivering water, food, blankets and other needed items. We have pledged $2,000,000 to help with relief efforts.
We will continue to do our part in the recovery, and we appreciate the kind words and the recognition from New York Governor Cuomo and New Jersey Governor Christie. We also continue to demonstrate our commitment to lead on social and environmental issues. At a recent event in Beijing with government officials, NGOs, academics and suppliers, I announced new goals for how we will use the Sustainability Index to design more sustainable products, to make our global supply chain more socially and environmentally responsible and incent merchants to make sustainability a bigger part of their day to day jobs. We will continue to drive sustainability deeper into our operations as this makes us a stronger business. Our fundamentals are strong and we are well positioned for the Q4.
We expect a very competitive holiday season and we are ready for it. Our teams across all three segments have done a great job working with our suppliers around the world to ensure that we are well stocked and offering the broadest assortment at the lowest prices in our stores and online. On behalf of everyone at Walmart, I wish you happy holidays, Merry Christmas and a great New Year. And now I'll turn it over to Jeff for the financial details. Jeff?
Thank you, Mike. As Mike just mentioned, Walmart reported EPS of $1.08 which was within our guidance of $1.04 to guide to 1 0.09 and compared to $0.97 last year. While the current quarter benefited from a 31.3 percent effective tax rate, This benefit was substantially offset by approximately $105,000,000 in pre tax charges, which are included in operating expenses. More specifically, they are an approximately $69,000,000 for charges in estimated contingent liabilities related to employment claims in Brazil and an approximate $36,000,000 for damages from Superstorm Sandy, mainly in our Walmart U. S.
Business. Now let's cover the details on the 3rd quarter's consolidated results. Net sales increased 3.4 percent or $3,700,000,000 $113,200,000,000 for the 3rd quarter. Our net sales included a negative impact from currency exchange rate of approximately $1,700,000,000 Therefore, on a constant currency basis, net sales would have increased 4.9% to $114,900,000,000 Total U. S.
Comp sales without fuel were 1.7% for the week period ended October 26. In a few minutes, Bill and Baraz will discuss the comp performance for Walmart U. S. And Sam's Club. Membership and other income grew 2.1% compared to Q3 of last year.
Therefore, the combination of net sales and membership and other income, which we refer to as total revenue, was $113,900,000,000 up 3.4% from $110,200,000,000 last year. Consolidated gross profit rate was 24.5%, a 13 basis point reduction compared to the same time last year. You will hear more from our segment CEOs regarding their price investment in just a few moments. Now to move our attention to leverage. We have 2 stated goals with respect to leverage.
1st, to grow operating expenses at a rate less than net sales growth and second, to grow operating income at a rate greater than the net sales growth. With respect to operating expenses, The company leveraged expenses by 17 basis points, which covered the 13 basis point investment in gross profit rate. We are pleased to have delivered operating leverage for the quarter despite the $105,000,000 in pre tax items I mentioned earlier. Other unallocated expenses grew 16.4% during the quarter. Recall that other unallocated has 3 components: core corporate, global e commerce and global leverage services.
Now let's take a moment to review the overall increase. Within our core corporate, we recognized approximately $48,000,000 in charges related to 3rd party advisors reviewing matters involving the Foreign Corrupt Practices Act. Please note that this amount is higher than our previously stated quarterly estimate of $35,000,000 to $40,000,000 However, we expect these expenses to continue through the 4th quarter at our previously stated estimate of $35,000,000 to $40,000,000 Excluding this item, core corporate would have decreased by approximately 1.9% And I'm happy to say that year to date, core corporate would only be up 1% versus last year. We will continue to invest in global e commerce and global leverage services as these areas will contribute greater growth and improve leverage in the future. This brings us to consolidated operating income and our 2nd stated leverage goal.
3rd quarter consolidated operating income was $6,100,000,000 an increase of 4%, which is also greater than the rate of net sales growth of 3.4%. Debt to total capitalization was reduced to 43.7 percent versus 46.9 percent last year. This improvement was driven by strong operating cash flows, which allowed us to reduce our leverage. Our balance sheet and credit rating remain very healthy and we continue to have ample access to debt capital markets. As referred to previously, we may experience quarterly fluctuations in our effective tax rate as it may be impacted by a number of factors, including changes in our assessment of certain tax contingencies, valuation allowances, tax law changes, audit results, discrete items and the mix of earnings among our U.
S. And international operations. This was the case with our Q3 effective tax rate. The rate of 31.3% compares to last year's effective tax rate of 34.5%. However, we continue to expect the effective tax rate for fiscal 2013 to be at the lower end of our previous guidance of 32.5% to 33.5%.
This leads us to income from continuing operations attributable to Walmart's acquisition of $3,600,000,000 an increase of 8.7 percent from last year. Capital expenditures were $3,400,000,000 in the 3rd quarter. During the quarter, we added approximately 13,000,000 retail square feet through 173 net new expanded and relocated units. You've heard us talk about capital discipline being an even greater priority. I'm pleased to report today that year to date Capital expenditures are $8,900,000,000 versus $9,500,000,000 last year.
Later on the call, Charles will provide an update on the total company CapEx forecast for fiscal 2013. Free cash flow was $7,000,000,000 for the 9 months ended October 31, 2012. Let me say that again, $7,000,000,000 which was an increase of more than $3,500,000,000 compared to last year. The increase was primarily a result of timing of payments of accrued and disciplined investment. Now let's move to returns.
The company paid $1,300,000,000 in dividends to its shareholders for the quarter and $4,000,000,000 year to date. In addition, the company repurchased approximately 16,600,000 shares for the quarter and 71,000,000 shares year to date, totaling approximately $1,200,000,000 $4,700,000,000 respectively. Through the combination of dividends and share repurchase, Walmart returned $2,500,000,000 to shareholders for the quarter and $8,700,000,000 year to date. Consolidated inventory grew 7.1% compared to last year and you'll hear more about inventory investments from each of our segment CEOs. And finally, return on investment for the trailing 12 months ended October 31, 2012 was 18% compared to 18.2% for the previous 2 year.
It should not surprise you that our capital discipline benefited ROI. However, this benefit was mostly offset by currency exchange rate fluctuations. Now let's turn it over to our operating segments. We'll start with Walmart U. S.
Bill?
Thank you, Jeff. Let me start by saying how pleased I am with the performance of our U. S. Business. We've aligned the business around an effective strategy fueled by the productivity loop and we continue to produce consistent financial results.
During the quarter, we again delivered solid sales across the business. Comp sales increased 1.5% as we lapped a positive 1.3% comp last year. Year to date, we've delivered almost $4,000,000,000 in comp sales growth. The earlier launch of our expanded layaway program generated approximately $300,000,000 in additional third quarter volume versus last year, most of which we will recognize in the 4th quarter when the customers pay for and pick up the merchandise. With average fuel prices up approximately 6% versus this time last year, Some customers are consolidating their shopping trips.
Traffic was up approximately 0.1%, but we were particularly encouraged by the 1.4% lift in ticket given the continued downward inflationary trends in some food and electronics categories. We're also encouraged by the continued increases in market share across food, consumables and over the counter combined, with overall 3rd quarter share in these categories increasing 50 basis points versus last year according to Nielsen. We had positive comps across all geographies and store formats. During the quarter, we focused on being the destination for back to school and Halloween shopping. Our merchants and operators developed a strong cross functional plan, and I'm pleased with our execution and the sales growth achieved this year.
As a reminder, a slightly larger portion of Halloween sales versus last year will fall into the 4th quarter comp period given how the 454 calendar falls this year. Similar to other retailers, we were impacted by Superstorm Sandy. We recognized approximately $35,000,000 of expenses related to inventory damage, cleanup and other miscellaneous items. Our dedicated associates responded quickly to reopen about 75% of approximately 300 impacted stores within 24 hours of closing, with all stores now fully operating. In addition to our $2,000,000 pledge and relief support, We partnered with the governors of New York and New Jersey to bring additional water, food and supplies to those on the East Coast.
We take pride in our ability to aid our customers and their families in these difficult circumstances. I want to thank our associates for their relentless support during this time. I'm inspired by the work of our associates in the field who are behind all of our results. In our annual engagement survey conducted this summer, The Walmart U. S.
Associate engagement scores rose 400 basis points over last year. Our financial results another quarter of strong field incentive payouts for hourly associates. Year to date, our associates will have received over 5 $50,000,000 in quarterly incentive payouts. Also, we continue Walmart's long history of developing talent within our stores. During the last year, we promoted approximately 165,000 associates, affording them additional career advancement.
Our teams are ready for Christmas and the holidays and we appreciate their passionate dedication to date that is serving customers. As you probably know, our associates receive a 10% discount on general merchandise bought at Walmart stores all year long. And each year, we provide our associates with an additional special holiday discount with 10% off most food items during the month of December. This year, we've expanded the program by starting 2 weeks earlier. In addition, many of our associates worked tirelessly to execute our Black Friday event.
This year, we're providing an additional 10% discount on an entire basket of goods for those associates who are giving up a bit of their Thanksgiving holiday to better serve their customers. We started planning early and will provide our customers with an efficient and enjoyable holiday shopping experience. Now let's turn to the financial details of the 3rd quarter. Walmart U. S.
Delivered net sales of $66,100,000,000 an increase of $2,300,000,000 or 3.6 percent over last year. Gross profit increased $443,000,000 versus last year $18,300,000,000 During the Q3, gross profit rate decreased 30 basis points year over year as we continue to reduce margin and execute the strategic price investments. We also continue to significantly leverage expenses. For the quarter, operating expenses grew only 1.8%, half the rate of sales growth. Even with the impact of higher field incentive payouts this quarter, Our team leveraged operating expenses as a percentage of sales by 37 basis points.
Solid sales performance and disciplined expense management helped us deliver $4,800,000,000 in operating income for the quarter, a 4.5% increase year over year and a growth rate of 90 basis points higher than our sales growth rate. Inventory grew at 4.3% over last year as we prepare to serve our customers during the holiday season. As we said, we bought deep in areas that matter to our customers and will have the products they want. We're in a strong inventory position and well prepared for the Q4. Before I cover the results of our merchandise areas, Let me remind you that the vast majority of layaway sales are deferred until the Q4 and are not reflected in our business unit comps discussed here.
Our grocery business, which includes food and consumables delivered a low single digit positive comp. We continue to execute our price investments driving price separation versus our competition. Overall, grocery inflation continued to moderate was approximately 50 basis points versus approximately 400 basis points last year. In food, our broad and localized assortment is resonating with the customer as demonstrated by our continued strength in areas like dry grocery. In addition, strategic initiatives like our USDA steak program continue to produce encouraging results with mid single digit comp sales over 39 week year to date period, exceeding the overall food comp by about 2 50 basis points.
In the Q3, our food business also delivered strong performance across the key seasonal events including Labor Day, back to school and Halloween. Customers also responded well to the consistent execution of our consumables strategy, driving all departments to positive comps for the quarter. Assortment refinement such as an emphasis on larger packs help deliver additional value for our customers. For instance, value pack sizing and other assortment additions helped our market share in pets by about 100 basis points versus last year. Health and wellness continued its trend generating a low single digit positive comp.
Over the counter remained very strong as our broad assortment and continued focus on opening price points drove traffic gains and unit growth. Customers are finding value in our broader assortment of active nutrition products like whey protein and meal supplement bars. As expected, branded generic conversions continue to pressure top line sales, but conversions of Lipitor and other brands continue to improve pharmacy margins. Comp sales in hardlines increased by low single digits. We continue to see steady good performance in stationary, crafts and sporting goods.
Sporting Goods had strong performance due to expanded hunting assortment, including guns and ammunition. The addition of key hardlines categories to layaway was attractive to customers who also purchased items not on the layaway list. In discussing entertainment, It's important to note that layaway plays a big part in sales of this business as many customers look to our assortment of top brands across the categories. An early start to layaway and new items helped drive additional customers to the business. Within entertainment, the interest in layaway resulted in approximately $200,000,000 of incremental layaway volume versus Q3 last year.
Top items on layaway included 50 inches televisions, gaming consoles and tablets. The continued strong industry deflation led to a low single digit negative comp for entertainment. Within wireless, a broader assortment resulted in double digit comp sales growth as customers continue to look at Walmart as a wireless destination. In media and gaming, we're well positioned for a very strong release schedule throughout the Q4. Top releases like Halo and Call of Duty drove customers into our store over the last several weeks.
Layaway drove a great deal of interest in toys, including toy construction, educational ride ons and bicycles. We're well stocked in this season's must have toys and we'll be able to delight our younger customers all season long. Our apparel business posted a low single digit comp increase making this the 3rd straight quarter of positive comps. The consistency of our apparel business and focus on basics, especially in kids, ladies and men's continues to drive growth despite the impact of a warm October across much of the country. We've worked hard on improving item quality, focusing on the elements that our customers appreciate and are optimistic that our current trend will continue into the holiday season.
Home drove a low single digit positive comp benefiting from item merchandising, innovation and assortment refinement. We're seeing consistent results across home making this the 4th straight quarter of positive comps. Home is another area that's benefiting from our expanded offering this year with improved quality in virtually all categories. Our customers are asking for more layaway items, So we added a number of small appliances, including many customizable solutions like the Keurig and SodaStream brands. Walmart.comimprovedcheckoutcapabilitiesandincreased assortmentcontinue to drive sales and strengthen the customer experience.
Polaris, our search engine developed in house by our technology teams is improving conversions by 10% to 15%. In October, we announced our same day delivery pilot in 4 cities with customers receiving their orders within hours of placing an order. Our broader dotcombusiness is also growing as price investment and other initiatives drove additional sales across several categories, including grocery, hardlines, electronics and apparel. In mid October, our financial services team launched an innovative checking and debit alternative called Bluebird, Designed from the ground up with our partner American Express, Bluebird offers our customers premium features and benefits without additional fees. Bluebird is a simple and transparent way to manage your money and another example of how we're providing uniquely Walmart solutions to help our customers live better.
We're encouraged by the positive reception and early adoption of Bluebird among our customers and are tracking above our plan in terms of new accounts and customer activity. We look forward to continuing our momentum together with American Express. As you know, we're proud of our productivity initiatives and our ability to continually improve our business through efficiency and innovation. In the Q3, our logistics team reduced cost per case shipped by 4.2%, excluding the impact of fuel. Our store innovations team also continued to develop and implement initiatives that will help ensure we reach our expense savings goals this year and into the future.
We continue to have a robust pipeline of real estate as we execute our growth strategy across both large and small formats over the next few years. During the Q3, we opened 59 supercenters, including new stores, expansions, relocations and conversions. Super Centers remain a strategic growth vehicle as we continue to develop our core markets. We also continue to accelerate growth in our small formats, which now represent approximately 250 units. In the Q3, we opened another 33 neighborhood markets across the country.
This is in addition to the 23 we opened in the first half of the year. The format's flexibility allows us to grow coast to coast with an eye towards localizing it for the particular community. This quarter, we opened 15 stores in California as well as new units in Atlanta, Milwaukee, Denver, Colorado Springs, Seattle, Portland and Miami, just to name a few. For neighborhood markets, customer traffic and comp stores continue to drive growth, led by sales in Rx, over the counter, adult beverages, meat and consumable areas such as pets. We continue to see the neighborhood market format competing very effectively against multiple channels with a year to date sales comp in the mid single digits.
Our Express pilot also continues to perform well. We'll continue our density test into next year and we'll be actively applying these learnings as we continue to roll small formats. We're on track to deliver approximately 125 supercenters and approximately 80 small stores this fiscal year. During the Q4, we plan to open 40 to 50 total new units, include 20 to 25 small stores. Walmart will be the number one holiday destination this year.
We started planning the day after Christmas last year to win this holiday season. And food, our bake centers and meal trains provide the capacity and convenience our customers need to stock up for entertaining all in one easy trip. Across our general merchandise departments, we're well stocked on the items that matter most and programs like our Ad Match guarantee ensure that customers will get the lowest prices at Walmart. We have a comprehensive marketing plan that's designed to ensure we have the number one share of voice this season. We're increasing our presence across traditional media channels with big increases in TV and radio.
We have some great holiday commercials lined up that will be fun, but more importantly, reinforce our price leadership. Additionally, we'll generate over 2,000,000,000 impressions across social media this holiday, more than 3 times last year's total. Throughout the year, we worked closely with our suppliers to set our stores 3 weeks earlier than last year and engaged our customers and associates like never before. The layaway program is a great example. Our customers gave us great feedback and we improved the program by eliminating the layaway fee, extending the timeframe for payments and expanding the categories.
We're so excited about our annual Black Friday event how it will drive sales throughout the entire holiday season. Our customers asked for an earlier start time, so this year, the event begins at 8 p. M. On Thursday. The first event will have unbeatable deals for the entire family in key areas like toys, gaming, home and apparel.
At 10 p. M. We'll highlight special deals in electronics that will excite our customers. And let me point out that we're far deeper on the quantities of those items than we've ever been before. We'll continue through Friday and into the weekend with more great prices on key gift items across the entire store.
We know that one of the most important things for our customers is getting the items they want under their Christmas tree. That's why in addition to amazing prices backed by our ad match guarantee, we're also offering an exclusive 1 hour guarantee for our Black Friday customers this year. This groundbreaking program ensures that our event shoppers who are in line between 10 and 11 pm that night will be able to buy one of this year's hottest gifts including a 32 inches TV, a Blu Ray player and an iPad all at our special low This is just one more way we're delivering a great holiday season for our customers. We're excited about the Q4 and pleased with the performance of the business so far this year. Our strategy is working and producing results across all geographies and business units.
November sales have started ahead of plan and we expect strong performance through Thanksgiving and Black Friday. For the 4th quarter, We're forecasting comp sales for the 13 week period from October 27, 2012 through January 25, 2013 to range from 1% to 3%, maintaining our recent trend over the past several quarters. As a reminder, we'll continue to lap positive comps with last year's 4th quarter comp being 1.5%. Our business is strong and will continue to deliver consistent core growth. We look forward to seeing you in our stores this holiday season.
Doug is up next with an international update. Doug?
Thank you, Bill. Walmart International had solid results for the 3rd quarter. In some markets, we faced a more challenging economic environment than in the first half of the year. But with the exception of China, we grew share everywhere we operate. I'm proud of the good work our associates are doing to drive those results.
They're managing costs and doing what is necessary to deliver value to our customers and it's as clear as ever that they need it. For the International segment, net sales were $33,200,000,000 up 2.4% over last year's Q3. We're now reporting the results of Massmart and our purchase of the Neto stores in the U. K. In our comparative results.
Currency exchange rate fluctuations decreased sales by approximately $1,700,000,000 Operating expenses were up 3%, and we would have leveraged operating expenses without the expense for the estimated contingent liabilities relating to employment claims in Brazil that Jeff mentioned earlier. Operating income was $1,500,000,000 up 4.8% compared to the Q3 of last year and grew faster than sales. Currency exchange rate decreased operating income by $29,000,000 Let me go through the numbers on a constant currency basis. 1st, 3rd quarter net sales would have been up 7.6 percent to $34,800,000,000 Our Latin American markets made the strongest contribution to our net sales growth with all countries in the region delivering positive comp sales. Overall, 3rd quarter comp store sales increased in 4 of our 6 largest markets.
In general, we're delivering healthy average ticket increases, but comparable store traffic remains CERN and it declined in the Q3 in our major markets. We're focused on improving our customer communications in all of our markets, but we're especially focused on the markets where consumer spending is under the most pressure such as in Japan and the U. K. The second, operating expenses were up 8.3% and without the employment claim contingency, we leveraged operating expenses. And third, on a constant currency basis, operating income was $1,500,000,000 up 6.8%.
Without the Brazilian employment claim contingency, we would have grown operating income 12.5% and faster than the 7.6% sales increase. So our underlying results were solid. Inventory was up 13.5% against our sales growth of 2.4%. On a constant currency basis, inventory grew 10.7 percent on sales growth of 7.6%. Inventory days on hand were well managed in Canada, China, Japan, Central America and Argentina.
We weren't pleased with our inventory in relation to sales in our other major markets. Now let's get into the results for several of our largest markets. The following discussion is on a constant currency basis And unless otherwise stated, sales and comp sales are presented on a calendar basis. Let's begin with EMEA, a region that includes the U. K, Canada and Sub Saharan Africa.
The U. K. Had a solid third quarter in a very challenging market. As others have reported, U. K.
Consumers remain hard pressed economically. Petrol prices remain a factor with average fuel prices in the U. K. At 1 point £38 per liter. In the 3rd quarter, Aza sales rose 2.5% ahead of the market, Comparable sales were down 0.4%, excluding fuel.
Average ticket in the quarter increased by 0.9%, while traffic decreased by 1.3%. Operating income grew slightly slower than sales. We increased our market share in the U. K. 10 basis points to 17.5 percent for the 12 weeks ended September 30, according to the Kantar Worldwide Panel Total Till Roll.
During the quarter, We maintained our commitment to EDLP, investing in price reductions of key food commodities to provide our customers with much needed relief from their financial pressures. At the same time, we've continued to drive strong multi channel growth with a focus on improving the online shopping experience. Customers now have access to the full George and general merchandise offerings at the click of a button with next day delivery available. We've also commenced the rollout of Wi Fi in all stores, allowing customers free access. Online sales increased 16.2% in the quarter versus last year.
We continue to leverage the We Operate for Less program, achieving savings within both SG and A and cost of goods sold. This helped deliver an increase in gross profit rate in the quarter from last year. However, operating expenses grew ahead of sales due to pressures in areas such as property taxation. And with its best ever range of chosen by you and extra special private brand products, we move into the holiday quarter with confidence. Moving to Canada.
Walmart Canada had good sales growth and grew operating income faster than sales. Net sales grew 4.9% in the 3rd quarter compared to last year. Comparable sales increased 0.7% with average ticket up 1.7% and traffic declining 1%. We had strong comp sales in Food and Consumables and Health and Wellness, but weakness in Hardlines and Entertainment. Gross profit rate increased due to improved initial margins and lower markdown activity.
However, expenses grew faster than sales, primarily due to pre opening costs with aggressive real estate expansion plans. We've completed 49 projects to date with 24 projects to be completed by year end. We now have 30 of our 39 Zillow's to Walmart store conversions opened and the early results are encouraging. We're pleased with the way the Canadian leadership team managed this conversion process and it appears our new customers are too. Canada is heading into the golden quarter with plans to make this a memorable season for Canadians.
Canada will kick start the season with Black Friday and Cyber Monday promos as we did last year. Our top 20 toy digest will give customers a best in class offering for the holiday season gift buy And our finest private brand selection, a new Walmart Canada brand that was recently named by Progressive Grocer Magazine as best new product for a mass merchandiser will be a favorite for festive celebrations. Turning to Africa, Massmart continues to deliver strong performance in Sub Saharan Africa. Let me remind you that while Walmart is a majority shareholder, Massmart remains publicly traded and conforms to the Johannesburg Stock Exchange guidelines of reporting results on a 6 month basis. This quarter, we reached the anniversary of our acquisition of Massmart and now report comparable results for the quarter.
For the 14 weeks ended September 30, net store sales increased by 16.6% and comparable store sales increased by 7.8%. We continue to be excited about the opportunities with Massmart and Sub Saharan Africa. We are leveraging best practices and scale advantages in everything from EDLP to supply chain and sourcing strategies. Moving on to Latin America. The following summary includes the consolidated results of Mexico and Central America and is on a U.
S. GAAP basis. Walmex separately reports its earnings under IFRS, so some numbers are different from Walmex reported numbers. WAMEX delivered solid results with consolidated net sales for the 3rd quarter up 10.7% and consolidated operating income growing 14.6% from last Mexico's net sales were up 11% and comparable store sales were up 5%. Average ticket in Mexico increased 5.8% and traffic decreased 0.8% over last year.
Comparable sales in Mexico for self-service formats grew 4.8%. ANTAD's comp store sales report for the rest of the industry, excluding Walmex, grew slower at 4.4%. As a reminder, ANTTAD is the National Association of Supermarkets and Department Stores and provides industry data and market share analysis. In Central America, overall sales increased 9.4% and comp sales were up 3.2%. 3rd quarter consolidated gross profit rate for Walmex increased by 49 basis points, primarily due to seasonal merchandise flow.
Walmex leveraged consolidated operating expenses on store productivity initiatives and operating income grew faster than sales. We are ready for the upcoming start of the Christmas season. This is the 2nd year in which Mexico has its version of Black Friday called El Buen Fin and it starts tomorrow and runs through November 19. We're offering an attractive and differentiated proposition for our customers across our different formats. Our stores and our people are ready to win during this season.
Moving on to Brazil. 3rd quarter sales grew 11% from last year. Comparable sales increased 6.6% with average ticket up 9.8% and traffic down 3.2%. The average ticket increase continues to be an encouraging sign that customers see the value of our price positioning and we'll continue to demonstrate price leadership on a broad basket of goods. Our customers are benefiting from the simplification and efficiencies that EDLP brings to our retail formats.
We're focused on traffic for our retail stores and expected to see more improvement in this area by this time. We believe the full conversion to EDLP will be completed by the end of next year as we continue to roll it out in our wholesale formats. Brazil did not leverage operating in the Q3 primarily due to the employment claim contingencies discussed earlier. The ongoing focus that the management has on reducing expenses is helping to improve Brazil's operating income. Brazil achieved cost reductions in areas including advertising, workforce management and freight optimization.
And without the employment claim contingencies, Walmart Brazil would have been profitable for the quarter. Like Walmex and Massmart, Walmart Chile remains a publicly held company and will release 3rd quarter earnings by November 30. For their previously announced results for the 6 months ending June 30, 2012, Chile had strong performance. Net sales for the 6 months grew 12.9 percent along with a comp store sales increase of 9.5%. Operating income was down as prior year results were impacted by the gain on the sale of an investment.
We also continue to have success with our private brands in Chile and our leadership team has excelled in incorporating a number of our global private brands into their merchandise mix. Great Value, which was launched 2 years ago in our Chilean stores, now is a well recognized value brand in the country. Moving to Asia, we're working on a number of areas in China to strengthen the foundation, centralizing our merchandising organization, developing talent and strengthening our compliance organization. We are focused on clearly establishing price leadership by driving simplicity, improving operational efficiency and reducing costs. The more disciplined approach to our real estate development and new store growth that we discussed last quarter is moving into place and will put us on a stronger path to have more ideal locations to drive sales to traffic and growth.
EDLP is a long term strategy that we know will work in Walmart China grew sales during the Q3, but we had a slight decrease in operating income versus the prior year. Net sales for the Q3 grew 6.1% over last year and the comp sales growth was 0.4%. Average ticket grew 8% in China, but traffic declined 7.6%. The traffic declines in China are not new and we believe customer shopping frequency has shifted in the market. That said, we have room to improve our performance as our assortment and value offering strengthen.
Gross profit rate was down in the quarter and operating expenses grew slower than sales. In September, Walmart and the outstanding contribution in food safety and public health by global food safety management experts of Echolab and China Business News. As Mike mentioned, we successfully closed the transaction to own 51% of eHoutian last month, which again is excellent news for our e commerce business in China. This transaction will help us to expand our presence in China. The Haudium is accelerating growth in grocery and general merchandise sales, and we're excited about how we can help them grow a bit about.
Turning to Japan. After a strong first half, our business is experiencing additional challenges from the broader macroeconomic environment in the country. Simply, consumer sentiment is weakening. We continue to outperform the market in comp store sales through the strength of EDLP and the price gap that we've created over the last couple of years. Walmart Japan's net sales and comp sales were down 1.8% and 1.9%, respectively.
3rd quarter average ticket was down 0.2% and traffic was down 1.7%. Released by the Japanese Ministry of the Economy, Trade and Industry, or METI, overall supermarket comparable sales for the 3rd quarter by 2.5%, indicating that Walmart continues to outperform the market. Japan had a slight operating loss for the Q3 and given the tough sales environment, we did not leverage expenses in this market. Our corporate culture is built on a foundation of acting with integrity and the highest ethical standards. Recently, we made improvements to our compliance programs around the world and have taken a number of actions with respect to our processes, procedures and people.
We aligned our corporate structure to have global compliance, ethics, investigations and legal functions under one organization. We also named the Global Chief Compliance Officer and a Chief Compliance Officer for Walmart International. We take compliance with all laws very seriously and we are working hard and dedicating resources to enhance our programs. The actions I've described are just a few of the things we're doing to make our programs even stronger and more effective where we operate. Looking ahead to the Q4, most of our markets also celebrate Christmas and we're ready to serve customers during this important holiday.
As I mentioned, some countries have adopted various versions of Black Friday events to further drive sales and we believe these will strengthen our brand where they're executed. We'll experience some Q4 headwind in China due to a later Chinese New Year, so we're working to make the most of other holidays, including 3 Kings to drive sales as we finish the year. Our plans are in place and we're excited that the holiday season is finally here. Now I'll turn it over to Ross for the update on Sam's. Ross?
Thanks, Doug. Sam's Club 3rd quarter net sales and operating income continued to grow. Strategic price investments, the membership pilot in Texas and holiday preparation led the focus for the quarter. 7 new clubs opened, the most since the Q4 in fiscal year 2006. Comp sales without fuel were up 2.7% for the 13 week period.
This was achieved on top of a very healthy 5.7 percent comp sales increase last year. Comp traffic was up 1.5% and ticket was up 1.2%. Although we are pleased with the positive results, We are disappointed that comp sales were below our guidance. This miss was driven by several factors. The combination of inflation and deflation across multiple categories affected comp sales.
Inflation in some categories led members to trade down. Deflation in other categories came faster and deeper late in the quarter with October being the lowest inflation we have seen in some time. Finally, our business members continue to experience economic pressure and uncertainty, which led to slower growth in business member traffic. We anticipate this softening could remain a headwind in the 4th quarter. This quarter, we accelerated price investments in traffic driving categories, which led to strong unit growth.
Because of timing of these price investments, we expect them to have greater impact on our 4th quarter margin rate than they did in the 3rd quarter. In October, we announced the introduction of our new membership benefit and fee pilot program to all Texas clubs, which account for approximately 12% of our club base. The pilot includes a fee increase, our first since 2006 and simplifies our cardholder and fee structure. It also provides instant savings and cash rewards for qualifying purchases. We are encouraged by the member response thus far in Texas.
I also mentioned we opened 7 new clubs in the 3rd quarter, totaling 9 new clubs this fiscal year. This is the most openings we've had in a single year since fiscal 2,009. We opened our 1st new club in the Greater Chicagoland area in 12 years in Elgin, Illinois. Together, all 7 clubs provide almost 1,000,000 additional square feet for Sam's Club. So let's cover our reported results, which include fuel sales.
Net sales were $13,900,000,000 a 4.7% increase over last year's Q3. Fuel prices were up 6% compared to last year and gallons sold were up 7.2%, thus creating a boost to overall sales of 1.1%. Gross profit rate was down 5 basis points. Operating expenses as a percentage of net sales decreased by 31 basis points. Operating income increased 12.7 percent to $435,000,000 Now the remainder of our discussion today is focused on our core business, which excludes fuel for comparative purposes unless otherwise noted.
Net sales were $12,200,000,000 up 3.6% from last year. Our strongest divisional performance was in the West with our strongest regional performance in the Great Plains, Mid South and Mid Atlantic. Now I'd like to turn your attention to merchandising. There were 3 major themes during the Q3 price investment, moderation of inflation and new product introduction. In line with our company's core mission, Sam's Club is stepping up investments to drive lower prices and values on key traffic driving items.
One example is rotisserie chicken, which has long been one of the most popular items of our home meal solutions. When there is a rotisserie chicken in the basket, ticket is larger and we're seeing significant increases in units sold since we lowered the price. Additionally, we have reduced prices in several varieties of apples, multiple products in beauty and in baby. To help address the specific needs of our business member, We have lower prices on products critical to them such as condiments, cooking oils and paper products. Inflation is quickly moderating across the club and the effect was most pronounced later in the quarter.
In last year's Q3, we estimated retail inflation across the club was approximately 325 to 3 75 basis points, while this year it was only 70 to 100 basis points. This was down significantly also from our 2nd quarter estimates of 175 basis points to 225 basis points. However, we have seen sharper inflation continue in some categories, most notably in meat. Because price increases for beef are inflating mid single digits, members are switching to different proteins, particularly pork, which is deflationary. Protein related trade down has impacted comp sales.
Key categories like milk, cheese and eggs are also experiencing deflation, which is a headwind for our top line results. Although units are increasing, the deflation has proven to be challenging to overcome in these categories. Sugar and coffee prices are moderating as well. Freezer cooler comp sales increased in the low single digits. Recent introductions in frozen confections and snacks generate excitement with our members.
Fresh sales continue to grow low single digit comps with produce leading the way. Grocery and beverage comp sales were up low single digits. With the expiration of the K Cup patent, Sam's private label version, Daily Chef Single Serve Cups has been popular with our members. In consumables, the baby category is up double digit comps with improvements in distribution. We are improving the assortment and investing in price for diapers, infant formula and baby wipes.
Leveraging our marketing programs and communicating our strong assortment at a great value have been keys to success. Comp sales in technology and entertainment, which continue to experience deflation, were slightly positive this quarter. Wireless up double digit comps performed well and benefited from both the Samsung Galaxy 3 and the Apple iPhone 5. Televisions and home theater comps are up low single digit driven by unit movement and improved availability in large screen television. Average selling prices continue to decrease for TVs and our inventory position for the holidays is very good.
Video games, music and movies continue to experience pressure in the current environment. Early availability of toys in our clubs has driven double digit comp sales. Apparel was up low single digit comps and Home achieved high single digit comps. The continued introduction of new national brands and better assortment have driven sales growth. Recent innovations in mattresses are helping sales as well and we continue to be a destination for this category.
Health and wellness remains a growth category with comps up mid single digits. The sales of over the counter products are benefiting from the introduction of new diet trend products. E Commerce continues to help members access Sam's club anywhere, anytime. During the Q3, traffic was up and more members are utilizing our e commerce solutions. Online sales of electronics and baby care are growing.
Membership and other income was up 2.3% for the quarter. Sam's continues to recognize a profit sharing arrangement with our credit card provider quarterly. Last year, we recognized this benefit in full at year end. Membership income is up 0.8% and our renewal rate remains steady. Gross profit rate increased by 11 basis points compared to the Q3 last year.
The rate improvement is due to shifts in merchandise mix. Pharmacy brand to generic conversions and shifts away from lower margin categories such as tobacco benefited margin rate. Non merchandise related activities such as supplier funds received for the Health and Wellness Magazine also drove the rate increase. As I mentioned earlier, we expect that as we step up price investments, there will be a greater impact on our margin rate in the 4th quarter. Our operations team continues to balance expense leverage with improving member service.
Driven by in club efficiencies, Gain through innovation, we reduced 3rd quarter operating expenses as a percentage of sales by 24 basis points and have seen units per labor hour increased 3.6%. We completed fewer remodels this quarter, which led to expense reduction. Additionally, we received a credit related to overpayment of state excise taxes in prior years. Looking at the bottom line, our 3rd quarter operating income increased to $427,000,000 a 14.2% increase over Q3 last year. We are pleased with this increase, but recognize it is driven by both successful initiatives such as better expense leverage as well as non operating benefits that I previously mentioned.
Our members continue to raise their rating of us in the member experience survey and we continue to benefit from the strong programs put in place last year. Members love our self checkout now in over half of our clubs. In these clubs, 40% of our members have used these quicker lanes. Our new club in Kansas City represents a step change in the way we hope to operate our clubs in the future. This is our 1st club that will have all registers set to be fully convertible, meaning that they can either operate in self checkout mode or in cashier mode.
This is the first test of this concept and will help us understand the member reaction as well as our ability to manage shrink control and member service. Inventory increased 10.8% over last year. While we intentionally built inventory for the holiday season, We find this current level of inventory unacceptable to our business model. Because significant portions of this inventory are highly consumable, We feel certain that any exposure is at a minimum. Similar to Walmart and other retailers, we were impacted by Superstorm Sandy.
We were able to reopen 37 of our 41 impacted clubs within 24 hours and the remaining within 3 days. I'm proud of our associates and the work they are doing to help our members recover from the destruction left in the wake of the storm. Looking toward the future, we are excited about the long term position for the clubs as we add new square footage, invest in price and learn from our membership pilot in Texas. The clubs are well positioned for the Q4 and we announced our Black Friday details last week. Our holiday selling season starts the 2 weeklies prior to Thanksgiving with our holiday taste of Sam's and an invitation only event for select members.
However, operating income growth will be challenged in the 4th quarter. Many of the initiatives that will benefit Sam's long term like price investment and the membership pilot will impact operating income in the short term. Additionally, the timing change in recognition of our credit card provider profit sharing arrangement versus last year along with recent trends of moderating inflation and business member traffic are additional headwinds. We expect to deliver a club comp sales increase without fuel of 1.5% to 3.5% for the 13 week period ending January 25, 2013. Last year, comp sales excluding fuel increased 5.4 percent for the comparable 13 week period.
Now I'll turn the program over to Charles Kloves for a wrap up and guidance. Charles?
Thanks, Ross. We had a very good Q3, once again highlighting both the value we offer our customers and the discipline we continue to drive in how we operate. Granted the economies where we currently operate are still challenging, but our ability to drive productivity in everyday low costs allow us to generate good returns in our businesses. Gross leverage and returns remain our consistent financial priorities. Our strong balance sheet and free cash flow provide flexibility to invest in both growth opportunities and new initiatives like e commerce.
We remain steadfast in our drive to reduce operating expenses as a percentage of sales by at least 100 basis points over the next 5 years. We'll do this by reducing costs and improving productivity to invest in lower prices in Walmart U. S. And Sam's Club and to achieve greater profitability in Walmart International. And last, of course, we strive to deliver strong returns for our shareholders.
Let's start with the details on growth. In the Q3, we added approximately $3,700,000,000 in net sales. This growth includes a negative impact from currency exchange rate fluctuations of approximately $1,700,000,000 On a constant currency basis, our net sales growth would have approached $5,500,000,000 Part of that growth came from the nearly 1,000,000 retail square feet that we added for the quarter. Your takeaway should be that despite softness in the global economy, Walmart is still delivering very meaningful growth from a combination of stores and e commerce. Year to date, net sales of $339,000,000,000 were 5.4% above last year.
We remain on track to deliver consolidated net sales growth of around 5% for the full year. Remember, this includes a negative impact $5,200,000,000 from currency exchange rate fluctuations. We will grow through a variety of formats in all of our markets. And as you heard me say at our October analyst meeting, our capital forecast is between $12,600,000,000 $13,500,000,000 for the current fiscal year. Now let's turn to leverage.
We have now levered our expenses for over 2 consecutive years and we aren't done. We fully expect to lever expenses in the 4th quarter despite headwinds from growth in global e commerce initiatives, expenses related to FCPA matters and increased spending associated with our leverage activities. In fact, let me highlight some of the examples that Roland Ford and his team are having success with. We are driving significant savings in goods not for resale by leveraging our global buys across the markets. We are increasing the volume of direct imports across markets, lowering our cost of goods sold and enhancing the quality of many products on our shelves.
And we are standardizing a global replenishment system and improving inventory flow across our international markets. Let's move on to returns. Operating income grew 4% in the 3rd quarter, which outpaced sales growth. This led to operating cash flow of nearly $16,000,000,000 and earnings per share increased 11.3% over last year. The combination of our strong operating cash flow and our disciplined capital allocation resulted in about $7,000,000,000 of free cash flow at the end of the quarter, a $3,600,000,000 improvement versus the same period last year.
The strength of our free cash flow allows us to continue to provide good returns to our shareholders through dividends and share repurchases. Return on investment for the trailing 12 months ended October 31, 2012 was 18% compared to 18.2% from last year and continues to be one of the highest in retail. As Jeff mentioned earlier, on a constant currency basis, the improvement in ROI driven by capital discipline was offset by currency rate fluctuations. Now let's talk about guidance. As I mentioned, we expect to finish the year with net sales growth of around 5%, which is about $20,000,000,000 on our sales base.
Bill and Roz outlined their 13 week comp sales estimates for the 4th quarter, 1% to 3% for Walmart U. S. And 1.5% to 3.5% for Sam's Club. While we are optimistic about sales, We are also realistic. Current macroeconomic conditions continue to pressure our customers.
The holiday season is predicted to be very competitive, but we are very well prepared to deliver on the value and low prices our customers expect. In fact, both Walmart U. S. And Sam's Club are ready with excellent plans. And in our key international markets, holiday planning is expected to drive sales growth as well.
When providing quarterly guidance, we normally consider a number of factors, including the macroeconomic environment and the competitive landscape. We expect currency exchange rates to remain at the current levels and our full year effective tax rate to be fully at the low end of our range between 32.5 and 33.5%. Our investments in global e commerce and global leverage services along with the FCPA related expenses will continue to be headwinds. Based on these considerations, we expect 4th quarter fiscal year 2013 earnings per share to range between $1.53 $1.58 which compares to $1.51 reported last year. However, let me remind you that last year 4th quarter earnings per share benefited by $0.07 from certain items.
Net of these items, the underlying comparison should be made to 1.44 For the full year, we are tightening our earnings per share guidance to be in the range of $4.88 to $4.93 This compares to our previous guidance of $4.83 to $4.93 and last year's earnings per share of $4.54 Our company delivers consistent strong financial results. The strength of our balance sheet allows us to invest in innovation and growth initiatives that will lay groundwork for an even brighter future. Thank you for listening today and for your interest in our company.