Wal-Mart Stores, Inc. (WMT)

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Wal-Mart Stores (WMT)

Q2 2012 Earnings Call

August 16, 2011 7:00 am ET


Jeffery Davis - Senior Vice President and Treasurer

Mike Duke - Chief Executive Officer, President, Director, Chairman of Global Compensation Committee and Chairman of Executive Committee

Carol Schumacher - Vice President of Investor Relations

Charles Holley - Chief Financial Officer and Executive Vice President

William Simon - Executive Vice President, Chief Executive Officer of Walmart U S and President of Walmart U S

Brian Cornell - Chief Executive Officer of Sam's Club and President of Sam's Club

Doug McMillon - Executive Vice President, Chief Executive Officer of International Operations and President of International Operations



Welcome to the Walmart Earnings Call for the Second Quarter of Fiscal Year 2012. The date of this call is August 16, 2011. This call is the property of Wal-Mart Stores, Inc. and intended solely for the use of Walmart shareholders. It should not be reproduced in any way. [Operator Instructions] This call will contain statements that Walmart believes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and 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, assume, based on, expect, goal, may be impacted, may see, plan, plans, should be, will see, will also be, will be, will begin, will better equip, will continue, will cover, will create, will drive, will enable, will go, will keep, will lend, will provide, will, will see, and will use 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 made in this call discuss, among other matters, management's forecasts of Walmart's diluted earnings per share from continuing operations attributable to Walmart for the 3 months ending October 31, 2011 and the year ending January 31, 2012 and the assumptions underlying the forecast for such earnings per share including the assumption that currency exchange rates will remain at current levels, as well as management's forecast for the comparable store sales of Walmart to Walmart U.S. operating segment and the comparable club sales without fuel of Walmart Sam's Club operating segment for the 13-week period from July 30, 2011 through October 28, 2011.

The forward-looking statements also include statements that discuss management's expectations regarding Walmart's effective tax rate for fiscal 2012, quarterly fluctuations in that tax rate and the factors that may impact that tax rate. The forward-looking statements also discuss management's plans and expectations with respect to Walmart leveraging operating expenses for the full year, creating 15,000 jobs in Africa over the next 5 years, continuing to advocate policies that make sense for Walmart's customers and business and being relentless in widening the price gap to pass savings along to customers, as well as that EDLP will lead to top line growth as customer traffic improves, that the effects of conversion to SAP will continue into fiscal year 2013 for the time of implementation of SAP in Argentina and Central America and for the use of the productivity loop to deliver on Walmart's EDLC-EDLP model as to the growth and net interest expense in the last 6 months of fiscal year 2012.

Walmart's focus continuing to be investing in companies that can deliver value to Walmart's customers and shareholders as to continued investment in price and that the financial effects of the implementation of SAP into next year should be minimal. The forward-looking statements include statements that discuss management's goals and expectations for Walmart's Walmart U.S. operating segment to have positive comparable store sales by year end, continuing momentum in the operating segments’ comparable store sales and categories relating to back-to-school and ongoing improvement in that operating segment’s apparel sales in the second half of fiscal year 2012, for remodels of stores of that operating segment being completed faster and with significantly less customer disruption as to that operating segment's benefits from an agreement with the Nielsen company as to that operating segment's gross profit in the third quarter and ongoing sales momentum and as to that operating segment continuing to invest in price.

In addition, the forward-looking statements include statements regarding Walmart's -- Walmart International operating segment that discuss management's expectations for sales from new stores in Walmex being seen in the third quarter and the approximate number of new supercenters to be opened by Walmart Canada during fiscal year 2012. Moreover, those forward-looking statements include statements regarding Walmart Sam's Club operating segment discussing management's expectations for the strategy and place positioning the operating segment well for the second 6 months of fiscal year 2012, tobacco being a headwind for comparable Club sales for the rest of fiscal year 2012. The future rollout of items and 3 new product brands by that operating segment, the effect on the operating segment's operating results of a change in how it sells wireless products, continued positive momentum in membership for the operating segment in the third quarter and inflation continuing to be a pressure point for the operating segment for the remainder of fiscal year 2012.

The forward-looking statements also discuss 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, geopolitical events and conditions, the cost of goods, competitive pressures, levels of unemployment, levels of consumer disposable income, changes in laws and regulations, consumer credit availability, inflation, deflation, commodities prices, consumer spending patterns and debt levels, currency exchange rate fluctuations, trade restrictions, changes in tariff and freight rates, changes in costs of gasoline, diesel fuel, other energy, transportation, utilities, labor and healthcare, accident costs, casualty and other insurance costs, interest rate fluctuations, financial and capital market conditions, availability of acceptable sites for the development of new or relocated stores and clubs, regulatory and other legal restrictions on such developments, the availability of qualified personnel in various markets, developments in litigation to which Walmart is a party, weather conditions, the resolution of uncertain tax positions, damage to Walmart's facilities resulting from natural disasters, public health emergencies, civil disturbances, regulatory matters and other risks.

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