EMEA & Canada


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Doug McMillon President and CEO of Walmart International

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Today’s presenters

Doug McMillon

Cathy Smith

Eduardo Solorzano

Scott Price

David Cheesewright

President & CEO, Walmart International

SVP, CFO and Strategy, Walmart International

President & CEO, Walmart Latin America

President & CEO, Walmart Asia

President & CEO, Walmart EMEA/Canada

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Strong performance in the first half of the year

Financial Performance Reported

Sales growth

10.5%

Operating income

12.3%

Reported without currency impact

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Sales growth

15.7%

Operating income

18.7%

Delivering on commitments Last year's key takeaways

Aggressive growth with discipline Prioritize emerging markets

First half of FY13 Grew faster than market in all except China Disciplined capital investment – slowed growth to ensure quality

Expense leverage EDLP / EDLC Powered by Walmart

Returns will improve

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Leveraged expenses Operating income grew faster than sales ROI improving excluding acquisitions

Outperformed market except in China 37.2%

WMT Growth

1H of FY13

26.1%

13.3%

14.7% 12.5%

Market Growth

15.1%

13.8%

13.1% 11.2%

10.1%

10.2%

8.9%

6.9% 5.0% 2.9%

2.1%

2.7%

0.5%

Argentina

Brazil

Latam

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Chile

Mexico & Central America

China

Japan

Asia

South Africa

Canada

EMEA & Canada

UK

Customers seek value

Chinese internet users to overtake English language users by 2015

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Portfolio drives growth and returns

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Our business model Common operating principles Common operating principles High Merchandise performance driven talent

Common values and behaviors

Respect for the individual

Service to our customers

Our Purpose EDLP

Save money Live better Striving for Act with integrity excellence

Global leverage

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EDLC

Lead on social and environmental issues

Brazil: Phases of development 1995 – 2003 Greenfield

2004 – 2006 Growth through acquisitions 2007 – 2010 Accelerated store growth 2010 – Today Integration, simplification and EDLP Integration, simplification and EDLP

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Implementing our business model From

10

To

Internally focused

Customer focused

High-low

EDLP

Different systems

Integration

Inconsistent execution

Disciplined execution

Lacked process maturity

Applied best practices

Process maturity – merchandise flow Back room Replenishment

Productivity

Maturity curve

Modular integrity

4 3

2 1

Repeatable results Consistent processes, metrics

Aligned, improvement needed for efficiency

0

Foundation exists

Lacking foundational processes

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Front end

Delivering our business model

Brazil Pacembu Video

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Brazil integration: half-way through a three-year plan From

To

Merchandising

Merchandising

• No standardized modular process • Multiple points of data entry

Supply Chain • Numerous legacy systems • Decentralized inventory management

Finance • Three separate financial systems

Operations

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• Standardized modular process • Single point of data entry

Supply Chain • Global operating platform • Centralized planning and forecasting

Finance • One common financial system

Operations

• Multiple operating systems

• One common operating system

• High percentage of manual replenishment

• Automated replenishment

Our strategy is working Brazil 1H FY13 Performance Expenses

Market share

LY

TY

Gains in market share Source: Nielsen

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LY

TY

Reduction in expenses

Replicating across markets to drive growth and returns Common operating principles Common operating principles High Merchandise performance driven talent

Common values and behaviors

Respect for the individual

Service to our customers

Our Purpose EDLP

Save money Live better Striving for Act with integrity excellence

Global leverage

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EDLC

Lead on social and environmental issues

Winning the next 12 months Disciplined growth • EDLP transition • New store execution • eCommerce capabilities Improve returns • Leverage expenses • Capital discipline Deeper talent

Excellence in compliance Lead in social and environmental issues

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Latam Brazil

Mexico & CAM

Chile

Growth Returns 17

Argentina

Latam Brazil

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Mexico & CAM

Chile

Argentina

Latam Brazil

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Mexico & CAM

Chile

Argentina

Latam Brazil

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Mexico & CAM

Chile

Argentina

Leveraging eCommerce knowledge & assets From San Bruno: Digital assets & page layout From Bentonville: Global fulfillment negotiations with FedEx

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From UK: Grocery home delivery

From Japan: Virtual shelf From Brazil: Endless aisle

From Argentina: Mobile scan

Asia India

Japan

Growth Returns 22

China

Asia India

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Japan

China

Asia India

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Japan

China

Asia India

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Japan

China

Building a foundation for growth in China Customer

Improved assortment, merchandising expertise

Real estate

Disciplined capital investment

Operations

Leveraging global processes

Talent:

• Growth • Retention

Compliance

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Investment in talent and development

Excellence in compliance

EMEA & Canada Canada

Sub-Saharan Africa

Growth Returns 27

UK

EMEA & Canada Canada

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Sub-Saharan Africa

UK

EMEA & Canada Canada

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Sub-Saharan Africa

UK

EMEA & Canada Canada

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Sub-Saharan Africa

UK

EDLC: A best practice from the UK

WO4L • • • • • •

SG&A % of sales

Sponsorship Branding

Visibility Governance Financial accountability

Integration FY08

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FY09

FY10

FY11

FY12

FY13e

Innovating to operate for less

ASDA Tablet Video

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Driving growth and returns International ROI goal (100-200 bps improvement FY13-16) Bubble size = FY16 invested capital

Core Principles

• Grow operating income faster than sales • Leverage expenses

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FY13 ROI FY14 FY15 FY16

• Grow faster than the market

0%

Nominal GDP Growth (2012-15)

Capital discipline New store sq. ft. (in millions)

203

14

21

20

23

21-23

20-22 322-326

Capital expenditures (FY13- FY16)

40% +119-123 million sq. ft.281 ~8.4% CAGR 257 between

FY08

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FY09

FY10

FY11

304

FY12 FY13E FY14P FY14P

60%

Developed

Emerging

We remain disciplined with capital Formats

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Construction

Fixtures & equipment

Efficient engineering

Leverage

Format expertise & evolution • Invest in performing formats

• Less customization

• LED lighting

• Repeatable layout

• Refrigeration

• Stop or slow underperforming formats

• Concrete floors

• Goods not for resale

M&A as a growth tool 1

Expand within existing markets 2

Acquire capabilities 3

Selectively evaluate & enter in new markets 36

Capital expenditures update FY12 Actual

FY13 Estimate (Original)

FY13 Estimate (Revised)

FY14 Projection

New Stores

$3.0B

$2.8-$3.1B

$2.5-$2.7B

$2.2-$2.5B

Remodels

$0.5B

$0.4B

$0.6B

$0.7B

Logistics

$0.3B

$0.5B

$0.4B

$0.6B

Other

$1.5B

$1.3-$1.5B

$1.1-$1.3B

$1.0-$1.2B

Total Walmart International

$5.3B

$5.0-$5.5B

$4.6-$5.0B

$4.5-$5.0B

FY12 Actual

FY13E (Original)

FY13E (Revised)

FY14 Projection

23M

30-33M

21-23M

20-22M

CapEx Detail

Sq. Ft. Detail Additional Walmart Intl. Sq. Ft.

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Key takeaways Disciplined growth • EDLP transition • New store execution • eCommerce capabilities Improve returns • Leverage expenses • Capital discipline Deeper talent

Excellence in compliance Social and environmental leadership

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Appendix

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Appendix

• Slide 5: FY13 H1 sales growth vs. retail market – Sources: Market Growth - Argentina: Nielsen, Brazil (Gross Sales Overall): Abras; Canada: ATRS; China: Government official statistics; Chile: INE; Japan: METI; Mexico: ANTAD and UK: Kantar Worldpanel data; Walmart Growth – Walmart International Finance, except for UK (Source Kantar Worldpanel)

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