Wal-Mart Stores, Inc. (WMT)

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Wal-Mart Stores (WMT)

Q3 2012 Earnings Call

November 15, 2011 7:00 am ET

Executives

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

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

Charles M. Holley - Chief Financial Officer and Executive Vice President

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

Presentation

Operator

Welcome to the Walmart earnings call for the third quarter of fiscal year 2012. The date of this call is November 15, 2011. This call is the property for Wal-Mart Stores Inc. and is intended for the use of Walmart shareholders and the investment community. 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 that are 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 forecasting, assumed, continue to see, continuing, expect, goal, guidance, is not expected, may be impacted, plan, planned, plans, will allow, will be, will continue, will ensure, will expand, will fall, will feature, will have, will help, will improve, will keep, will have leveraged, will lead, will leave, will make, will recruit and develop, will reduce, will remain, will see and hear and will take 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 and the year ending January 31, 2012; and the assumption underlying such forecasts, the currency exchange rates will remain at current levels. And the comparable store sales of Walmart's Walmart U.S. operating segment and the comparable club sales, without fuel, of Walmart's Sam's Club operating segment for the 13-week period from October 29, 2011, through January 27, 2012.

The forward-looking statements include statements discussing management's expectations regarding Walmart's effective tax rate for fiscal 2012 and the factors that may impact that tax rate. Walmart's capital expenditures in fiscal 2012, Walmart's capital allocation program ensuring net sales growth within a certain range, Walmart leveraging operating expenses for the full year, Walmart leveraging SG&A expenses for 2 consecutive years and the goal to further reduce those expenses as a percentage of sales by a certain amount, plans for Walmart to drive strong free cash flow and growth in Walmart's net interest expense. The forward-looking statements also discuss management's plans and expectations regarding Walmart's women's empowerment initiative helping Walmart attract and develop great talent, continuation of U.S. comparable store sales momentum, improvement in the profitability of Walmart's international markets, the reduction in Walmart's SG&A expenses in using those savings to lower prices, making progress in building Walmart's eCommerce businesses, recruiting and developing stronger talent, Walmart being an even stronger company a year from now, Walmart's plans leading to greater shareholder value, carrying leverage momentum into the fourth quarter of fiscal 2012 and keeping expenses low and leveraging expenses allowing Walmart to invest in prices going forward and improving returns in Walmart's emerging markets.

The forward-looking statements discuss management's plans and expectations as to the following matters regarding the Wal-Mart U.S. operating segment: Continuing its price investment strategy during the upcoming holiday season; having ongoing improvement in its merchandise; being well positioned with inventory in the fourth quarter of fiscal 2012; seeing an increase in brand to generic conversions in the pharmacy area in the fourth quarter of fiscal 2012 and in fiscal 2013 and reasons for that increase; having ongoing improvement in comparable sales for its entertainment category in the fourth quarter as a result of its layaway program; continuing to drive expense leverage; having a lower gross profit rate for the fourth quarter of fiscal 2012 and the anticipated reasons for that change; having its customers seeing and hearing Walmart advertising in the holiday season; having programs that make holiday shopping easier and attractive and leaving no doubt that Walmart is the clear price leader; its plans for marketing during the Thanksgiving holiday; and the majority of revenue from the segments layaway sales being recognized in the fourth quarter of fiscal 2012 and in the comparable sales of the segment for the fourth quarter of fiscal 2012.

The forward-looking statements discuss management's plans and expectations as to the following matters regarding the Wal-Mart International operating segment: Improvement in its operating profit and returns in creating the segment as a growth engine for Walmart; the segment taking more costs out of its business and improving its return on investment through various initiatives; store growth in its Canadian operations and factors relating thereto; completion of conversion to EDLP in the Brazilian operations; continuing to rebrand Trust-Mart stores in the fourth quarter of fiscal 2012 and early in fiscal 2013; and the impact of certain temporary stores closures in China.

The forward-looking statements discuss management's plans and expectations as to the following matters regarding the Sam's Club operating segment: The segment having more than $50 billion of net sales in fiscal 2012; tobacco being a headwind for the balance of fiscal 2012; its comparable sales for televisions; the benefit of tablet and smartphone applications to the segment; the introduction of new items in the clubs and positive momentum in membership.

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