wal-mart stores, inc. (nyse: wmt)

Wal-Mart Stores, Inc. (NYSE: WMT)1

Wal-Mart Stores, Inc. (NYSE: WMT)

Bank of America Merrill Lynch Consumer & Retail ConferenceMarch 11, 2014

Charles HolleyExecutive Vice President & CFO


Forward-looking statement

Walmart includes the following cautionary statement so that any forward-looking statements made by, or on behalf of, Walmart will enjoy the safe harbor protection of the PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, as amended. Such forward-looking statements, which will describe our objectives, plans, goals, targets or expectations, can be identified by their use of words or phrases such as “anticipate,” “estimate,” “expect,” “forecast,” “plan,” “projected,” “will be” or words or phrases of similar import. Statements of our expectations for FY15, and any subsequent fiscal years are forward-looking. Walmart’s actual results might differ materially from those expressed or implied in a forward-looking statement as a result of factors including, among others, recessionary economic environment, cost of goods, competitive pressures, availability of credit, geopolitical conditions and events, labor and healthcare costs, inflation, deflation, consumer spending patterns, debt levels and credit access, currency exchange fluctuations, trade restrictions, tariff and freight rate changes, fluctuations in fuel, other energy, transportation and utility costs, health care and other insurance costs, accident costs, interest rate fluctuations, other capital market conditions, weather conditions, storm-related damage to facilities, customer traffic, factors limiting our ability to construct, expand or relocate stores, regulatory matters and other risks set forth in our SEC filings. Our most recent Annual Report on Form 10-K and our other filings with the SEC contain more information concerning factors that, along with changes in facts, assumptions not being realized or other circumstances, could cause actual results to differ materially from those expressed or implied in a forward-looking statement. Walmart undertakes no obligation to update any forward-looking statement to reflect subsequent events.


Net Sales($ Billions)

FY10 FY11 FY12 FY13 FY14

$24.0

$25.5

$26.6

$27.7 $27.8 $B


$405$419

$444

$466$473

$B

Strong sales growth5-yr. CAGR: 3.4%

Continued op inc growth 5-yr. CAGR: 4.1%

EPS


$3.73

$4.18

$4.54

$5.01 $5.11

Returned value (EPS)5-yr. CAGR: 8.8%

FY 14 underlying consolidated results


Financial priorities Metrics FY 14

guidance FY 14 actual Report card

Growth

Sales growth 2 - 3%* 1.6% X

Square footage growth 3 - 4% 3%

Leverage

Operating expense < sales 2.0% vs. 1.6% X

Operating income growth > sales 0.2% vs. 1.6% X

Returns Free cash flow Strong Strong

FY 14 guidance vs. report card

*Revised FY 14 Q2 earnings call Aug. 15, 2013


Net sales

~$279.4B Increase of 2% or $5B

Operating expenses

18 bps of leverage4 consecutive years

Operating income

~$22.4BIncrease of 4% or $860M

Grew profit faster than sales

Gross profit rate -1 bps

Priceinvestment

Walmart U.S. delivered a strong FY 14


Net sales

~$50.6B Increase of 1.6% or $785M

Operating expenses

14 bps of deleverage

Operating income

~$2.0BIncrease of 5.0%

Grew profit faster than sales


Priceinvestment

Membership income

5.9%

Sam’s Club increased membership income in FY 14

Note: All data is without fuel


Net sales

~$136.5B Increase of 1.3% or $1.8B

Operating expenses

18 bps of deleverage

Operating income

~$6.3Bdecrease of 4.7%


Priceinvestment

Walmart International invested in price in FY 14


Financial priorities Metrics FY 15 guidance* Updated FY 15

guidance**

GrowthSales growth 3 - 5% At low end

Square footage growth 33 - 37M sq. ft. 35 - 39M sq. ft.

Leverage

Operating expense < sales < sales

Operating income growth > salesMay not grow

faster, or at the same rate as sales

Returns Free cash flow Strong Strong

FY 15 guidance

*October 15, 2013**February 20, 2014


Keys to Walmart’s success in FY 15

Strengthen global compliance & ethics

model

Continue strong financial position

Increase comp sales

Drive EDLC & EDLP

Develop associate talent

Grow e-commerce & m-commerce


Headwinds

Macroeconomic headwinds Weather

Priorities

Increase comp sales Drive productivityProduct and brand innovation

Small format acceleration E-commerce

Bottom 10%

Inconsistentexecution

Deflation

Walmart U.S. FY 15 agenda


Headwinds

Macroeconomic headwinds Weather

Priorities

Merchandise differentiation

Personalize with Big Data

Enhance member experience

Increase member access/e-commerce

Deflation

Sam’s Club FY 15 agenda

Small business challenges


Headwinds

Macroeconomic headwinds

Priorities

Increase comp sales in each market

Improve capital discipline

Drive productivity loopInvest in price

Extending credit

International FY 15 agenda

Wholesale formats Key market challenges


• Continue incremental investments• Add strategic acquisitions

• Launch Pangaea• walmart.com enhancements

• Increase fulfillment capabilities• Drive greater sales in 4 key markets

– Launch, expand others

Priorities

Global Ecommerce FY 15 agenda


Driving innovation to combine physical & digital

Walmart’s full assortment

Convenient mix of assortment & services

Express

Supercenter walmart.comGM & fresh Endless aisle

Leveraging global best practices


Accelerated roll-out of Walmart U.S. small stores

Total Neighborhood Market & Walmart Express Total units by year

FY 11 – FY 15Up to ~645

Expansive growth to continue in the next 3 years

+320% growth in 4 years

◄Walmart Express


153 168241

34610

13

20 ~500 to

525

Up to120

◄Neighborhood Market

Based on fiscal year -end unit counts


(US$ billions)

Segment Actual FY14 FY 15 guidance* Updated FY 15 guidance**

Walmart U.S. $6.4 $5.8 - $6.3 $6.4 - $6.9

Sam’s Club $1.1 $1.0 $1.0

Walmart International $4.4 $4.0 - $4.5 $4.0 - $4.5

Corporate and Support $1.2 $1.0 $1.0

Total $13.1 $11.8 - $12.8 $12.4 - $13.4

Capital expenditure detail

Additional $600M in Walmart U.S.

small store growth

*October 15, 2013**February 20, 2014


1. Grow the businesso Organic growth

• Stores• e-commerce• Leverage

o Acquisitions

2. Dividends

3. Share repurchases

Cashfrom

operations

AA-rated Balance Sheet

Disciplined capital allocation drives efficiency


Cash flow from

operations

&

net debt growth

$26.3

$13.1

$12.8

FY 14

AA rated balance sheet

$12.4 - $13.4

FY 15 E

Sources of cash* Uses of cash

CapEx

Share repurchases, dividends & acquisitions

AA rated balance sheet

Sources of cash Uses of cash

CapEx

Share repurchases & dividends

ExcesscashCash flow

from operations

&

net debt growth

Capital allocation priorities

*Not drawn to scale


Lead on issues important to Walmart customers

Associate opportunity- Veterans

Healthy eating/nutritionCommunity giving

U.S. manufacturing- Suppliers

Women’s economic empowermentSustainability


Key takeaways for Walmart this year

Grow comp sales

Drive operational efficiencies, productivity

Deliver disciplined capital allocation

Continue investing in Global eCommerce

Deliver strong shareholder returns


Q&A


Appendix


Underlying EPS

The underlying diluted earnings per share from continuing operations attributable to Walmart (“Underlying EPS”) for the three months and the fiscal year ended Jan. 31, 2014 is considered a non-GAAP financial measure under the SEC’s rules because the Underlying EPS for each such period includes certain amounts not included in the diluted earning per share from continuing operations attributable to Walmart calculated in accordance with GAAP (“EPS”) for the three months and the fiscal year ended Jan. 31, 2014. Management believes that the Underlying EPS for the three months and the fiscal year ended Jan. 31, 2014 is a meaningful metric to share with investors because that metric, which adjusts EPS for each of such periods for certain items recorded in the three months and fiscal year ended Jan. 31, 2013, respectively. In addition, the metric affords investors a view of what management considers Walmart’s core earnings performance for the three months and the fiscal year ended Jan. 31, 2014 and also affords investors the ability to make a more informed assessment of such core earnings performance for each of such periods when compared to Walmart’s earnings performance for the three months and the fiscal year ended Jan. 31, 2013 respectively.

We have calculated the Underlying EPS for the three months and the fiscal year ended Jan. 31, 2014 by adjusting the EPS for each period for the amount of the dilutive impact of (1) Brazil non-income tax contingencies (“Brazil Taxes”); (2) Brazil employment claim contingencies (“Brazil Employment Matters”); (3) the closure of 54 underperforming Brazil and China stores (“Store Closures”); (4) China store lease expense charges (“Lease Matters”); (5) the India transaction (“India Transaction”); and (6) Sam’s Club U.S. staff restructuring and club closure (“Sam’s Restructuring”).


Underlying EPS impacts

Fiscal Year Ended January 31, 2014

Diluted net income per common share:

Underlying EPS $5.11

Adjustments to underlying EPS

Brazil taxes (0.06)

Brazil employment matters (0.05)

Store closures (0.06)

Lease matters (0.03)

India transaction (0.05)

Sam’s restructuring (0.01)

Total impact (0.26)

EPS $4.85


Underlying performance FY14Q4 D D FY’14 D D

Wal-Mart, Inc.Operating expenses percent to sales 18.23% n/a 2bps 19.12% n/a 8bps

Operating income $8,258 ($322) (3.8%) $27,783 $58 0.2%

Income from continuing operations $5,408 ($455) (7.8%) $17,415 ($289) (1.6%)

Diluted EPS $1.60 ($0.7) (4.2%) $5.11 $0.10 0.2%

Walmart InternationalOperating expenses percent to sales 18.35% n/a 11bps 19.42% n/a 18bps

Operating income $2,162 ($254) (10.5%) $6,306 ($311) (4.7%)

Diluted EPS $1.60 ($0.7) (4.2%) $5.11 $0.10 0.2%

Sam’s ClubOperating expenses percent to sales 11.84% n/a 46bps 11.75% n/a 14bps

Operating income $471 ($18) (3.7%) $2,008 $95 5.0%

Diluted EPS $1.60 ($0.7) (4.2%) $5.11 $0.10 0.2%

wal-mart stores, inc. (nyse: wmt)

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