Wal-Mart Stores, Inc. (WMT)

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Wal-Mart Stores (WMT)

Q4 2011 Earnings Call

February 22, 2011 7:00 am ET


William Simon - Executive Vice President, Chief Executive Officer of Walmart U S, President of Walmart U S and Chief Operating Officer of U S Wal-Mart Stores Division

Carol Schumacher - Vice President of Investor Relations

Mike Duke - Chief Executive Officer, President, Director, Member of Equity Compensation Committee and Member of Executive Committee

Charles Holley - Chief Financial Officer and Executive Vice President

Jeff Davis - President and COO

Brian Cornell - Executive Vice President, 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 Wal-Mart Earnings Call for the Fourth Quarter of Fiscal Year 2011. The date of this call is February 22, 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 Wal-Mart 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, are expecting, are forecasting, assume, believe, continue to expect, expect, expectations, guidance, guiding, look forward, may affect, may contribute, our goal, plan, should begin, will allow, will be, will be extended, will change, will complete, will continue, will deliver, will grow, will have, will help, will improve, will invest, will leverage, will move forward, will not, will occur, will position, will provide, will reinforce, will set up and will support, 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 Wal-Mart’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 Wal-Mart’s diluted earnings per share from continuing operations attributable to Wal-Mart for the quarter ending April 30, 2011 and the year ending January 31, 2012, and the assumption underlying those forecasts that currency exchange rates will remain at current levels, the anticipated capital expenditures, Wal-Mart and by each of its operating segments in fiscal 2012, the anticipated growth in square footage and in new, expanded and relocated stores and clubs for Wal-Mart as a whole and for its operating segments in fiscal 2012, the anticipated comparable store sales of the Wal-Mart U.S. operating segment and comparable club sales of the Sam’s Club operating segment for the 13-week period ending April 29, 2011, and the anticipated effective tax rate for fiscal 2012, quarterly fluctuations in that tax rate, and factors that will affect that tax rate.

The forward-looking statements also include statements that discuss management’s expectations: that Wal-Mart will continue to address headwinds such as inflation and higher prices; that Wal-Mart will not waver in its commitment to its customers; that Wal-Mart will grow sales and increase comparable store sales; that Wal-Mart will continue to maximize returns to its shareholders through dividends, share repurchase and a stable return on investment, that if opportunities to invest in emerging markets arise, Wal-Mart will do so; that Wal-Mart will continue to leverage its operating expenses through the productivity loop; that Wal-Mart will continue to add square footage and new formats; that the conversion of Wal-Mart’s financial systems to SAP will provide Wal-Mart a common platform to better integrate acquisitions in the future; that planned investments in Global eCommerce will be reflected in unallocated corporate overhead and may contribute to growth of its unallocated corporate expenses; that quarterly fluctuations in ROI will occur based on Wal-Mart’s operations, concerning Wal-Mart’s mid-to-long term goal to maintain a stable ROI; that leveraging expenses will continue to be an important focal point for Wal-Mart in fiscal 2012; and that Wal-Mart will continue to focus on leveraging its cost structure and global footprint along with driving the right balance between growth and returns.

Those forward-looking statements also discuss management’s expectations that the Wal-Mart U.S. segment will: reinforce its commitment to deliver Every Day Low Price; deliver a merchandise assortment and presentation relevant to its customers; continue to grow through supercenters and additional formats; move forward with even greater urgency in opening small stores; complete the segment’s new modular sets in the first quarter of fiscal 2012; have integrated, targeted plans to present a more compelling presentation and product offering for its customers of seasonal merchandise for certain holidays; work throughout fiscal 2012 on reassorting its general merchandise categories; adding back deleted items and categories and making space allocation changes; make meaningful progress on growth as it expands its store format portfolio to continue to grow through supercenters and launch a small format, which will be a new format for both rural and urban locations; continue to convert discount stores to supercenters; and work with suppliers to reduce inflationary pressure where possible and only pass on price increases when they cannot be avoided.

Those forward-looking statements also discuss management’s forecasts for the Wal-Mart U.S. segment regarding gross margin in the first fiscal quarter of fiscal 2012, as well as management’s expectations regarding the Wal-Mart U.S. segment for continued inflation in fresh food categories; that increases in store standards will position the Wal-Mart U.S. segment to enhance its merchandise assortment and implement merchandising initiatives regarding its goal of gaining traction through changes in product cycle times, modular changes and department space allocations before the fourth quarter of fiscal 2012; that eCommerce and multi-channel will play an increasingly important role across the segment’s business; that the segment’s new modular sets will help the segment highlight opening price points and recapture traffic lost to competitors; that average unit retail prices will continue to decrease in electronics, particularly for TVs, hardware and gaming; that the segment will begin to see the sales declines in these categories abate as the segment progresses through the second and third quarters of fiscal 2012, as to the manner in which Wal-Mart U.S. can mitigate such price pressure; that the segment will open its first Wal-Mart Express in the second quarter of fiscal 2012; that the segment’s productivity initiatives can help mitigate higher fuel prices and further increase efficiencies in fiscal 2012; that productivity initiatives can help leverage expenses in the first fiscal quarter of 2012, even on lower sales, and that the segment’s inventory levels will remain higher than in fiscal 2011 through the first half of fiscal 2012.

Those forward-looking statements also discuss management’s expectation that the Wal-Mart U.S. segment’s four-point plan will improve performance in existing stores and in connection with that plan, the Wal-Mart U.S. segment will deliver consistent every day low price on a basket of goods, support the Wal-Mart U.S. messaging with targeted marketing in store and with a variety of media, provide relevant assortment solutions for the segment’s customers, work with its suppliers to deliver the broadest assortment possible at the lowest price in the market, change its remodeling program to right-size merchandise categories and eliminate remodel disruptions, drive efficiencies through its remodeling program to reduce capital costs and expenses, and leverage the Wal-Mart U.S. segment’s strengths to expand multi-channel initiatives.

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