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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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