Wal-Mart Stores, Inc. (WMT)

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Wal-Mart Stores (WMT)

Q1 2012 Earnings Call

May 17, 2011 12:00 am ET


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

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 First Quarter of Fiscal Year 2012. The date of this call is May 17, 2011. This call is the property of Wal-Mart Stores Inc. and intended solely for the use of Wal-Mart 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 committing, continue, expect, expectation, goal, intend, is scheduled to begin, may impact, may require, plan, will be, will carry, will continue, will enable, will grow, will include, will influence, will not, will not be, will not repeat, will open, will return, will see and would expect 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 July 31, 2011, and the assumption underlying that forecast that currency exchange rates will remain at current levels as well as management's forecast for the comparable store sales of Wal-Mart's Wal-Mart U.S. Operating segment and the comparable club sales without fuel of Wal-Mart's Sam's Club Operating segment for the 13-week period from April 30, 2011, through July 29, 2011.

The forward-looking statements also include statements that discuss management's expectations regarding Wal-Mart'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 made in this call also discuss, among other matters, management's expectations that the transition in the area of general merchandise in connection with the 4-point plan of the company's Wal-Mart U.S. Operating segment will not be completed until the second half of fiscal 2012; that it will take time to shift the culture in Wal-Mart's Brazilian operations to the Every Day Low Price model and improve the profitability of those operations; that Wal-Mart's Sam's Club Operating segment will add even more value to Wal-Mart's overall portfolio; that there will be ongoing activity in the e-commerce area around the world; that Wal-Mart will continue to manage the business for the short term and long term; and that Wal-Mart will continue to grow comps and open new stores.

These forward-looking statements also include statements that discuss management's forecasts with respect to the Sam's Club Operating segment; that the segment will continue with its strategy around fuel; that tobacco products will be a headwind for the rest of fiscal 2012 regarding the range of inventory growth rates during the second quarter fiscal 2012; that membership income will continue its positive momentum during the second quarter of fiscal 2012 and regarding continued headwinds for the segment's business memberships throughout fiscal 2012.

These forward-looking statements also discuss the management's expectations that the Wal-Mart International Operating segment will complete the in-store conversions of Netto stores during fiscal 2012 and in connection therewith invest more than GBP 100 million and create more than 1,500 jobs; finalize the remaining regulatory approvals and complete the acquisition of the remaining interest in Trust-Mart by the end of fiscal 2012; continue to provide assistance, monitor the situation and look for additional ways to help in Japan following the earthquake and tsunami in that country; experience some pain during the period in which Brazil converts to EDLP; invest approximately $775 million to upgrade logistics and technology and open 80 new stores in Brazil; enter the Quebec, Canada grocery market and begin in the second quarter fiscal 2012 the first phase of converting its existing stores in Quebec, Canada into supercenters, which supercenters will carry a full range of fresh food and general merchandise; open the segment's first 5 supercenters in the province of Manitoba, Canada in the second quarter of fiscal 2012; and open 40 new supercenters, including conversions and expansions, in Canada during 2012.

These forward-looking statements also include statements that discuss management's expectations with respect to the Wal-Mart U.S. Operating segment; that the addition of more SKUs throughout all categories will result in further traction and improve both traffic and ticket; that the new Humana program in the Pharmacy area will drive positive results in the coming months; that results across the Hardlines business will improve; that adding back deleted items in more categories will continue to take time; that momentum with respect to the indoor categories will pick up during the second quarter of fiscal 2012; that the segment will open 140 to 160 new and converted units and, in certain areas, between 30 and 40 new Neighborhood Market stores in fiscal 2012.

Regarding the segment's commitment to small-format stores, the several Wal-Mart Express pilot stores will initially be opened in rural and urban areas with a goal to have 15 to 20 stores by the end of fiscal 2012; that the Wal-Mart Express stores will include the Site to Store program; that there will be differences among the pilot stores as to the assortments and services offered to determine the right model for such format; that the segment will complete its store remodels in less time than in the past 2 years; and that such remodels will be less disruptive to customers and associates; that the segment's Pick Up Today program will be in 3,000 of the segment stores by the end of the second quarter of fiscal 2012 and will have continued growth as more items become available in that program; that the segment will not repeat its deep rollback programs; that changes in gas prices and inflation will influence the actual performance of the segment concerning the effect of the segment's continued focus on productivity initiatives; that the segment's inventory levels will return to normal Wal-Mart levels by the end of the third quarter of fiscal 2012; and regarding Wal-Mart's commitment to be there to help communities affected by natural disasters.

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