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Doug McMillon
President and CEO of Walmart International
1
Today’s presenters
2
President & CEO,
Walmart
International
Doug
McMillon
Cathy
Smith SVP, CFO and
Strategy,
Walmart
International
President & CEO,
Walmart Latin
America
Eduardo
Solorzano
Scott
Price
President & CEO,
Walmart
Asia
David
Cheesewright
President & CEO,
Walmart
EMEA/Canada
Strong performance in the first half of the year
3
Sales growth
Operating income
Operating income
10.5%
18.7%
12.3%
Financial Performance
Sales growth 15.7%
Reported
Reported without currency impact
Delivering on commitments
4
First half of FY13
Grew faster than market in all except
China
Leveraged expenses
Disciplined capital investment –
slowed growth to ensure quality
Last year's key takeaways
Aggressive growth with discipline
Prioritize emerging markets
Expense leverage
EDLP / EDLC
Powered by Walmart
Returns will improve
Operating income grew faster than
sales
ROI improving excluding acquisitions
Outperformed market except in China
5
37.2%
13.3% 14.7%
11.2%
8.9%
2.9%
13.1%
5.0%
6.9%
26.1%
12.5% 13.8%
10.1%
15.1%
0.5%
10.2%
2.1% 2.7%
Argentina Brazil Chile Mexico & Central America
China Japan South Africa Canada UK
WMT Growth
Market Growth
Latam Asia EMEA & Canada
1H of FY13
Customers seek value
6
Chinese internet users to
overtake English language users
by 2015
Portfolio drives growth and returns
7
Our business model
8
Common operating principles Merchandise driven
High performance
talent
EDLP EDLC
Global leverage Lead on social and environmental issues
Respect for the individual
Service to our customers
Act with integrity
Striving for excellence
Common values and behaviors
Common operating principles
Our Purpose
Save money Live better
9
Brazil: Phases of development
Greenfield 1995 – 2003
Growth through acquisitions 2004 – 2006
Accelerated store growth
2007 – 2010
Integration, simplification and EDLP 2010 – Today
Integration, simplification and EDLP
Implementing our business model
10
Internally focused Customer focused
High-low EDLP
Different systems Integration
From To
Inconsistent
execution
Lacked process
maturity
Disciplined execution
Applied best practices
Process maturity – merchandise flow
11
Productivity Replenishment
Modular integrity Front end Maturity
curve
Lacking foundational processes
Foundation exists
Aligned, improvement needed for efficiency
Repeatable results
Consistent processes, metrics
0
1
4 3
2
Back room
Delivering our business model
12
Brazil Pacembu Video
Brazil integration: half-way through a three-year plan
13
Merchandising
• No standardized modular process
• Multiple points of data entry
• Standardized modular process
• Single point of data entry
Merchandising
Finance Finance
• Three separate financial systems • One common financial system
Operations Operations • Multiple operating systems
• High percentage of manual replenishment
• One common operating system
• Automated replenishment
Supply Chain Supply Chain
• Global operating platform
• Centralized planning and forecasting
• Numerous legacy systems
• Decentralized inventory management
From To
Our strategy is working
14
Market share Expenses
Brazil 1H FY13 Performance
Gains in market
share
Reduction in
expenses
LY TY LY TY
Source: Nielsen
Replicating across markets to drive growth and returns
15
Common operating principles Merchandise driven
High performance
talent
EDLP EDLC
Global leverage Lead on social and environmental issues
Respect for the individual
Service to our customers
Act with integrity
Striving for excellence
Common values and behaviors
Common operating principles
Our Purpose
Save money Live better
Winning the next 12 months
16
Deeper talent
Excellence in compliance
• EDLP transition Disciplined growth
• New store execution • eCommerce capabilities
Lead in social and environmental issues
• Leverage expenses
Improve returns
• Capital discipline
Growth
Returns
Latam
17
Chile Argentina
Mexico
& CAM Brazil
Latam
18
Chile Argentina
Mexico
& CAM Brazil
Latam
19
Mexico
& CAM Brazil
Chile Argentina
Latam
20
Chile Argentina
Mexico
& CAM Brazil
Leveraging eCommerce knowledge & assets
21
From Brazil: Endless aisle
From Japan: Virtual shelf
From Argentina: Mobile scan
From Bentonville: Global fulfillment negotiations with
FedEx
From UK: Grocery home
delivery
From San Bruno: Digital assets
& page layout
Growth
Returns
Asia
22
India
Japan
China
Asia
23
India
Japan
China
Asia
24
India
Japan
China
Asia
25
Japan
India
China
Building a foundation for growth in China
26
Customer Improved assortment, merchandising expertise
Talent:
• Growth
• Retention
Investment in talent and development
Excellence in compliance Compliance
Real
estate Disciplined capital investment
Leveraging global processes Operations
Growth
Returns
EMEA & Canada
27
Canada Sub-Saharan
Africa UK
EMEA & Canada
28
Canada Sub-Saharan
Africa UK
EMEA & Canada
29
Canada Sub-Saharan
Africa UK
EMEA & Canada
30
Canada Sub-Saharan
Africa UK
SG&A % of sales
31
• Sponsorship
• Branding
• Visibility
• Governance
• Financial accountability
• Integration
EDLC: A best practice from the UK
WO4L
FY08 FY09 FY10 FY11 FY12 FY13e
32
ASDA Tablet Video
Innovating to operate for less
33
Driving growth and returns
0%
33
Core Principles
• Grow faster than
the market
• Grow operating
income faster
than sales
• Leverage
expenses
FY
13
RO
I FY
14
RO
I FY
15
RO
I FY
16
RO
I
Nominal GDP Growth (2012-15)
International ROI goal (100-200 bps improvement FY13-16)
Bubble size = FY16 invested capital
Capital discipline
34
40%
60%
(FY13- FY16)
Developed Emerging
Capital expenditures
203
322-326
257 281 304
14 20
21 23
21-23 20-22
FY08 FY09 FY10 FY11 FY12 FY13E FY14P FY14P
(in millions)
+119-123 million sq. ft. ~8.4% CAGR between
New store sq. ft.
We remain disciplined with capital
35
Construction
Efficient engineering
• Less customization
• Repeatable layout
• Concrete floors
Formats
Format expertise
& evolution
• Invest in performing
formats
• Stop or slow
underperforming formats
Fixtures &
equipment
Leverage
• LED lighting
• Refrigeration
• Goods not for resale
M&A as a growth tool
Expand within existing markets
Acquire capabilities
Selectively evaluate
& enter in new markets
1
2
3
36
Capital expenditures update
37
CapEx Detail
FY12
Actual
FY13
Estimate
(Original)
FY13
Estimate
(Revised)
FY14
Projection
New Stores $3.0B $2.8-$3.1B $2.5-$2.7B $2.2-$2.5B
Remodels $0.5B $0.4B $0.6B $0.7B
Logistics $0.3B $0.5B $0.4B $0.6B
Other $1.5B $1.3-$1.5B $1.1-$1.3B $1.0-$1.2B
Total Walmart International $5.3B $5.0-$5.5B $4.6-$5.0B $4.5-$5.0B
Sq. Ft. Detail FY12
Actual
FY13E (Original)
FY13E
(Revised)
FY14
Projection
Additional Walmart Intl. Sq. Ft. 23M 30-33M 21-23M 20-22M
Key takeaways
38
Deeper talent
Excellence in compliance
• EDLP transition Disciplined growth
• New store execution • eCommerce capabilities
Social and environmental leadership
• Leverage expenses
Improve returns
• Capital discipline
Appendix
39
Appendix
40
• Slide 5: FY13 H1 sales growth vs. retail market
–Sources: Market Growth - Argentina: Nielsen, Brazil (Gross Sales Overall): Abras; Canada:
ATRS; China: Government official statistics; Chile: INE; Japan: METI; Mexico: ANTAD and UK:
Kantar Worldpanel data; Walmart Growth – Walmart International Finance, except for UK
(Source Kantar Worldpanel)
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