Wal-Mart Stores, Inc. Update Charles Holley Executive Vice President & Treasurer May 1, 2007
Forward-Looking Statements Wal-Mart includes the following cautionary statement to take advantage of the safe harbor provisions of the PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 for any forward-looking statements made by, or on behalf of, Wal-Mart. You are referred to Wal-Mart s SEC filings for additional information regarding the safe harbor. The factors which could cause actual results to differ materially from predicted results include, among other things, cost of goods, competitive pressures, geopolitical conditions, labor and healthcare costs, inflation, consumer spending patterns and debt levels, currency exchange fluctuations, trade restrictions, changes in tariff and freight rates, fluctuations in the costs of gasoline, diesel fuel and other energy, accident and insurance costs, interest rate fluctuations and other capital market conditions, weather conditions, storm related damage to our facilities and customer traffic, regulatory matters and other risks set forth with the company s filings with the SEC.
Wal-Mart Stores, Inc. March 31, 2007 United States 4,046 Canada 290 Mexico 903 Puerto Rico 54 United Kingdom 336 China : 76 Wal-Mart; 101 Trust-Mart Japan 391 Central America 420 140 Costa Rica 135 Guatemala 42 Honduras 40 Nicaragua 63 El Salvador Brazil 299 Argentina 14 International 2,884
Consolidated Income Statement Amounts in millions except EPS YEAR ENDED JANUARY 31 2007 2006 % CHG Net Sales $345.0 $308.9 11.7% Gross Profit $80.8 23.4% $71.3 23.1% 13.4% SG&A Expenses $64.0 18.6% $55.7 18.0% 14.8% Income Before Taxes $19.0 5.5% $17.5 5.7% 8.2% Net Income Cont. Ops. $12.2 3.5% $11.4 3.7% 6.7% Discontinued Ops. ($0.9) ($0.2) Net Income $11.3 $11.2 0.5% EPS (cont. ops) $2.92 $2.72 EPS $2.71 $2.68
FY 07 Business Segments Sales & Operating Profit vs. FY 06 35% 30% Fiscal Year 2007- Continuing Operations 30.2% 25% 21.5% 20% 15% 11.1% 7.8% 9.2% 10% 4.5% 5% 0% Wal-Mart Sam's International Sales Operating Profit
Consolidated Inventory vs. Sales Growth % increase reported 20% 15% 10% 11.3% 5.6% 12.6% 7.8% 11.6% 11.4% 12.0% 9.0% 9.8% 8.5% 11.3% 5.6% 5% 0% FY02 FY03 FY04 FY05 FY06 FY07 Sales Inventory
Wal-Mart s Focus Improve ROI Gross margin Expenses Working & fixed capital Continue to grow via new & existing units Expansion & acquisition Comp store traffic & ticket
March 07 Comp Store Sales Five Weeks Ended 04/06/2007 04/7/2006 Wal-Mart Stores 3.4% 1.6% Sam s Club 7.4% 4.8% Total U.S. 4.0% 2.1%
Sam s Club Strategic Focus Continue to build upon small business foundation Continue to broaden Sam s Club appeal Improve business operations & efficiency FY08 growth plans 20 30 real estate projects in FY 08 10 15 net new Clubs
Relevant Communications
Wal-Mart U.S. Strategic Priorities ROI Drive returns by improving labor & inventory productivity and by enhancing margin People Develop leadership talent and better enable organization to drive customer experience and associate engagement Growth Protect and grow loyal customer base, while capturing new consumer segments and shopping occasions
Wal-Mart U.S. Strategy: Strengthen ROI Chain-wide Rollout Margin Enhancement Producitivity & Margin Enhancement Structure & Leadership Business Planning Labor Productivity Merchandise Flow Space Productivity Year 1 Year 2 Year 3
3-year U.S. Plan: Continued Focus on Customer Relevancy Customer Relevancy Market Research & Segmentation In-Market Pilots Organization Structure Price Leadership Merchandise Assortment Store Experience Layout & Adjacencies Chain-wide Rollout Year 1 Year 2 Year 3
Realigned Wal-Mart U.S. Stores Management Eduardo Castro-Wright, President & CEO Bill Simon, Chief Operating Officer Divisional SVPs Pat Curran, EVP, People John Fleming, Chief Merchandising Officer Stephen Quinn, Chief Marketing Officer Raul Vasquez, CEO, walmart.com Michael Fung, SVP & Chief Financial Officer
Realigned Organization To Focus on Key Consumer Categories Apparel Entertainment Grocery Health & Wellness Home Hardlines
Apparel Completed ~790 apparel special projects in FY 07, with ~350 scheduled for FY 08 Match store of the community demographics to assortment
Entertainment ~1,200 HDTV wall enhancements completed in FY 07 ~370 electronics special projects scheduled for FY 08 Cross-promoting movies with consumables, food, toys, home, apparel
Season s Hottest Picks at Wal-Mart
Grocery Focus on rollbacks Focus on fresh
Health & Wellness $4 Generic Prescription Drug Program In-Store Health Clinics Saved customers $300 million+ on generic prescriptions since October $4 generics now account for 35% of all Rx orders filled at pharmacies 50% of customers using clinics leased in Wal-Mart stores are uninsured & would have otherwise gone to a local hospital emergency room Wal-Mart to contract with local hospitals to open 2,000 clinics within next 5 years
Home 270 home special projects completed in FY 07 ~480 furniture off the floor projects completed in FY 07
Home: Modified Plan
Hardlines Key focus: address store of the community New items, customer solutions
Party Goods & Celebrations Celebrations is replacing fabrics and crafts in most stores Fabrics remain in the best selling 650 stores, and all stores will receive celebrations 277 stores currently have celebrations today
Asda Sales Growth +77% FY00 FY07
Asda Operating Income Growth +67% FY00 FY07
ASDA continues as fastest growing retailer of UK s Big 4 15.0 Overall sales growth (4 weeks) 10.0 5.0 0.0 (5.0) For 3 consecutive months, ASDA shows strongest YoY growth of big 4. (10.0) May 06 Jul 06 Sep 06 Nov 06 Jan 06 Feb 07 Apr 07 Jun 07 Aug 07 Oct 07 Dec 07 Jan 07 Mar 07 Source: TNS 4-week Till Roll to 25 th March 2007
ASDA to Build 18 New Stores FY 08 First ASDA Living opens in Belfast, Northern Ireland
Wal-Mart Mexico Projected 2007 Expansion Program Units 58 15 5 4 11 32 Total 125
Wal-Mex Q1 Results Net sales growth 14% (real terms) Operating income up 15% EDITDA growing 13% over last year Comps up 5.9% EPS up 17%
Brazil Gains Market Share First store in 1995 Acquired Bompreco in 2004 Acquired Sonae in 2005 5 formats 54,000 associates Wal-Mart moved into second place in total sales for 2006* * Supermercada Moderno magazine
Trust-Mart s Store Network: Perfect Fit For Wal-Mart China With 101 hypermarkets and 12 distribution centers, Trust-Mart s presence is strongest in China s South and East regions. There is practically no overlap. Heilongjiang (3) Distribution Centers Stores Liaoning (3) Beijing (4) West (18 stores) South (41 stores) North (10 stores) East (32 stores) Chongqing (3) Sichuan (11) Yunnan (2) Shaanxi (2) Jiangsu (6) Anhui (2) Hubei (2) Jiangxi (1) Hunan (1) Fujian (10) Guangdong (29) Shanghai (9) Zhejiang (13)
Trust-Mart s Store Network: Perfect Fit For Wal-Mart China With 101 hypermarkets and 12 distribution centers, Trust-Mart s presence is strongest in China s South and East regions. There is practically no overlap. Heilongjiang (6) Distribution Centers Trust-Mart Stores Wal-Mart Supercenters TM WMT West (18 12 stores) South (41 25 stores) North (10 16 stores) East (32 15 stores) Tianjin (2) Beijing (7) Jilin (3) Liaoning (8) Shaanxi (3) Shandong (4) Jiangsu (8) Chongqing (6) Anhui (3) Hubei (4) Shanghai (11) Sichuan (13) Jiangxi (3) Zhejiang (17) Guizhou (2) Hunan (4) Guangxi (1) Fujian (17) Yunnan (6) Guangdong (41)
Trust-Mart Has Good Store Locations in Key Cities
Seiyu s FY 07 Initiatives Store remodels Convenience: 24-hour operations now at 273 stores Assortment: merchandise quality & value Supply chain efficiency Strengthen partnership with suppliers Announced Q1 results last week
Wal-Mart s Mission Worldwide We save people money so they can live better.