wal-mart profile

Wal-Mart Stores, Inc.

Company Profile

Publication Date: 18 Jun 2010

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Wal-Mart Stores, Inc. © Datamonitor

Wal-Mart Stores, Inc.

TABLE OF CONTENTS

Company Overview..............................................................................................4

Key Facts...............................................................................................................4

Business Description...........................................................................................5

History...................................................................................................................7

Key Employees...................................................................................................11

Key Employee Biographies................................................................................12

Major Products and Services............................................................................20

Revenue Analysis...............................................................................................22

SWOT Analysis...................................................................................................23

Top Competitors.................................................................................................31

Company View.....................................................................................................32

Locations and Subsidiaries...............................................................................35


Wal-Mart Stores, Inc.TABLE OF CONTENTS

COMPANY OVERVIEW

Wal-Mart Stores (Wal-Mart or "the company") operates retail stores in various formats across theworld. In the US, the retail formats operated by Wal-Mart include discount stores, supercenters,neighborhood markets, marketside, and Sam's Clubs. Internationally, the company operates inArgentina, Brazil, Canada, Chile, China, Costa Rica, El Salvador, Guatemala, Honduras, India,Japan, Mexico, Nicaragua, Puerto Rico and the UK. Wal-Mart is headquartered in Bentonville,Arkansas and employs 2.1 million people.

The company recorded revenues of $408,214 million during the financial year ended January 2010(FY2010), an increase of 0.9% over 2009. The operating profit of the company was $23,950 millionin FY2010, an increase of 5.1% over 2009.The net profit was $14,335 million in FY2010, an increaseof 7% over 2009.

KEY FACTS

Wal-Mart Stores, Inc.Head Office702 Southwest 8th StreetBentonvilleArkansas 72716USA

1 479 273 4000Phone

Fax

http://www.walmartstores.comWeb Address

408,214.0Revenue / turnover(USD Mn)

JanuaryFinancial Year End

2,100,000Employees

WMTNew York StockExchange Ticker


Wal-Mart Stores, Inc.Company Overview

BUSINESS DESCRIPTION

Wal-Mart Stores (Wal-Mart or “the company”) is the largest retail company in the world.The companyoperates retail stores in various formats worldwide.Wal-Mart offers a wide assortment of merchandiseat every day low prices (EDLP). In addition, Wal-Mart offers its products through various e-commercewebsites including walmart.com and samsclub.com.

Wal-Mart operates three business segments: Wal-Mart US, the international segment, and Sam’sClub. The company also generates revenues from a fourth, non-operating segment named "others"which includes a variety of income categories such as Sam's Club membership fee revenues, tenantincome and financial services income.

Wal-Mart US operates three different retail formats in the US discount stores, supercenters andneighborhood markets. The segment has retail operation in all the 50 states in the US. Wal-Martoperates 803 discount stores, each with an average store size of 108,000 square feet, in 47 states.The company also operates 2,747 supercenters (average size of 185,000 square feet) in 48 USstates and 158 neighborhood markets (average sixe of 42,000 square feet) in 16 US states. Inaddition, the segment also markets its products through its e-commerce website walmart.com.

The stores operated by Wal-Mart US offer branded and private label merchandise in various productcategories including grocery, entertainment, electronics, apparel, health and wellness, and homefurnishing and housewear. These stores also offer financial services such as money order sales,wire transfers, check cashing and bill payment.

To support the retail operations of the Wal-Mart US segment, Wal-Mart operates 120 distributionfacilities across the US, of which the company owns 105; the remaining are owned and operatedby third parties. A few of these distribution centers also service Wal-Mart's Sam's Club for certainitems. During FY2010, these distribution centers shipped approximately 79% of the merchandizesold by Wal-Mart US. The remaining merchandise was shipped directly by the suppliers to thecompany's stores.

The international segment comprises wholly owned subsidiaries operating in Argentina, Brazil,Canada, Japan, Puerto Rico and the UK. Wal-Mart's majority-owned subsidiaries operate in fivecountries in Central America, Chile and Mexico; the company's joint venture operations in India andChina; and other controlled subsidiaries in China.The operating formats vary from country to country,and include discount stores, supermarkets, supercenters, hypermarkets and other formats whichcomprise Sam’s Club, combination discount and grocery stores, cash-n-carry stores, departmentstores and restaurants.

To support the international segment's retail operations, Wal-Mart utilizes a total of 132 distributionfacilities located in Argentina, Brazil, Canada, Chile, China, Costa Rica, El Salvador, Guatemala,Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the UK and two export consolidation facilitiesin the US. The company owns and operates 34 of these facilities, 37 are leased and operated and


Wal-Mart Stores, Inc.Business Description

the remaining facilities are operated by third parties. Wal-Mart distributes both import and domesticproducts to the international retail stores through these distribution facilities. During FY2010,approximately 83% of the international segment's purchases were shipped from these distributionfacilities.

Sam's Club operates Wal-Mart's warehouse membership clubs in the US; it also operates the website,www.samsclub.com.Wal-Mart operates 596 Sam's Club (average store size of 133,000 square feet)in 48 US states. Sam's Club serves both individuals and businesses. Sam's Club offers bulk displaysof brand name merchandise including hard goods, some soft goods, institutional-size grocery items,and selected private-label items under the Member's Mark, Bakers & Chefs and Sam's Club brands.A significant number of Sam's Club warehouses offer photo processing services, pharmaceuticals,optical departments and gasoline stations.

The company operates 26 distribution facilities across the US to support Sam's Club retail operation,of which the company owns eight and the remaining are third party owned facilities. During FY2010,approximately 63% of Sam's Club non-fuel purchases were shipped from these distribution centers;the balance merchandize was shipped directly by the suppliers to the warehouses. Sam's Club usesa combination of private fleet and common carriers to transport non-perishable merchandise fromdistribution centers to Sam's Club.


Wal-Mart Stores, Inc.Business Description

HISTORY

Wal-Mart Stores Inc. (Wal-Mart or “the company”) was established in 1969. In the following year,the company became a publicly-held company and started selling shares over the counter. In 1972,Wal-Mart got listed on the New York Stock Exchange.The company diversified into grocery (Wal-MartSupercenters), international operations, and membership warehouse clubs (Sam's Clubs) duringthe 1980s. In 1983, Wal-Mart opened Sam's Wholesale Club, a concept based on the cash-and-carry,membership-only warehouse format pioneered by the Price Company of California (now CostcoWholesale Corporation). The company started Hypermart*USA in 1987 as a joint venture with theDallas-based supermarket chain Cullum Companies (now Randall's Food Markets). Hypermart*USA outlets later became the company's Wal-Mart Supercenters. In 1989, Wal-Mart acquired CullumCompanies.

The company acquired a wholesale distributor, McLane Company, in 1990.Wal-Mart entered Mexicoin 1992 through a joint venture with Mexico's largest retailer, Cifra, to open Sam's Clubs. Furthermore,it acquired 122 former Woolco stores in Canada in 1994.Wal-Mart continued to expand internationally,and established Chinese operations in 1996. The company also acquired the German hypermarketchain, Wertkauf, in 1997. In Brazil, Wal-Mart acquired a stake in the retailer Lojas Americanas, in1998. During the same year, the company began testing the neighborhood market format, a40,000-square-foot grocery and drug combination store. In 1999, Wal-Mart purchased 74German-based Interspar hypermarkets and acquired ASDA Group, the UK's third-largest supermarketchain.

In 2000, the company began selling household appliances in selected stores. Wal-Mart launchedits "No Boundaries" private label cosmetics brand in 2001. The company started operating in Japanby acquiring a 6% stake in one of Japan's top retailers, Seiyu in 2002. Later that year, Wal-Martincreased its stake in Seiyu to 36%. The company also acquired Supermercados Amigo in PuertoRico in the same year. In 2002, Wal-Mart started 107 international units, with two in Brazil, 22 inCanada, eight in China, two in Germany, three in South Korea, 59 in Mexico, two in Puerto Rico,and nine in the UK.The company's attempt to open a state industrial bank in California in 2002 failedowing to legal problems.

Wal-Mart sold its McLane subsidiary, a US grocery distributor, in 2003. The company sold thesubsidiary to Berkshire Hathaway to concentrate on its core retail activities. In 2004, Wal-Mart Brazilacquired Bompreco, a retail chain in northeastern Brazil with 118 units (hypermarkets, supermarketsand mini markets) from a Dutch retailer, Royal Ahold. During the same year, Wal-Mart launched itsonline music store.

In early 2005, the company entered a joint venture with CITIC Pacific to open hundreds of stores inChina over the following five years. Wal-Mart held a 65% share of the venture. During the sameperiod, Wal-Mart Canada closed one of its two Quebec stores in Jonquiere because of the weakfinancial performance. The company increased its stake in Seiyu (Japan) to 42% in mid 2005. Inthe same year, Wal-Mart purchased a one-third interest in Central American Retail Holding(CARHCO), an operator of supermarkets in Guatemala, El Salvador, Honduras, Nicaragua, and


Wal-Mart Stores, Inc.History

Costa Rica. In late 2005, Wal-Mart also acquired about 140 stores in Brazil from Sonae, a Portugueseretailer, for about $757 million, increasing the number of outlets it operates in Brazil to nearly 300.

The company acquired an additional 17.7% interest in CARHCO from Royal Ahold in 2006 increasingits stake in the Central America supermarket operator to 51%. Shinsegae Company, South Korea'sleading retailer, agreed to purchase Wal-Mart’s South Korean retail business for KRW825 billion inthe same year.The company sold its German retail business to Metro in 2006. Later in 2006, Eaglesand Wal-Mart entered a long-term strategic marketing agreement, including sponsorship, exclusiveaudio and video releases, and product visibility.

Wal-Mart purchased a 35% interest in Bounteous Company which operated hypermarkets in Chinaunder the Trust-Mart banner, in 2007. The company introduced the neighborhood market conceptto Naples with a new company design in 2007. During 2007, Wal-Mart partnered with Skype to bringInternet communications to the masses. As part of a pilot project to determine solar power viability,the company purchased solar power from three providers, BP Solar, SunEdison, and SunPower’ssubsidiary PowerLight during the same period.

Fendi and Sam's Club resolved the dispute regarding sale of counterfeit bags and other productsunder the Fendi label in 2007. Under the agreement, Sam's Club had to pay a confidential amountfor settlement to Fendi. In tandem with the intended roll-out of a financial center, Wal-Mart announcedthe introduction of pre-paid debit card catering to low-income US customers.

The company completed the final phase of its Site to Store national rollout to more than 3,300 storesacross the country in 2007.This service allowed customers to order products online at Walmart.com,most of which were also available in its stores. Wal-Mart entered a 50:50 joint venture agreementwith Bharti Enterprises to establish Bharti Wal-Mart (Private Limited) in 2007. The joint venture wasmeant for establishing wholesale cash-and-carry and back-end supply chain management operationsin India. In the same year, Wal-Mart announced the addition of two new Home brands.

In 2008, the company reopened its store at Oakland Park Boulevard and University Drive whichwere damaged by Hurricane Wilma two years ago. In the same month, Wal-Mart entered a long-termagreement with 1-800 CONTACTS to provide contact lenses at lower prices in its stores.

The company became the first nationwide US grocery chain to adopt Global Food Safety Initiative(GFSI) standards in 2008. As per the standards, Wal-Mart’s suppliers of private label and other foodproducts such as meat, fish, poultry and ready-to-eat foods would have their factories certified againstGFSI standards.

The company introduced "Canopy" private label brand for home furnishings category in 2008. Also,Wal-Mart opened 81 new stores and clubs across the country. The company launched six coffeeproducts under its Sam's Choice brand in 2008. Wal-Mart partnered with the South CarolinaDepartment of Agriculture (SCDA) to promote locally grown produce at Wal-Mart stores across SouthCarolina in the same year.



In 2008, Wal-Mart unveiled the new Walmart Smart Network that would provide shoppers relevantand useful information via in-store TV. The company became the first retailer in the US to rolloutthis retail media network powered by Internet Protocol Television (IPTV). The technology wouldallow the company to monitor and control more than 27,000 screens in more than 2,700 storesacross the country. Wal-Mart also established a new Asia regional headquarters in Hong Kong. Theregional headquarters would have strategic responsibilities for managing the company's currentoperations and business development in Asia.

Wal-Mart opened its first four Marketside stores at Chandler, Gilbert, Mesa and Tempe in Phoenix,Arizona in 2008. The company describes these stores as "community grocery" stores. These storesare designed to offer restaurant-quality food at everyday low prices.

Bharti Wal-Mart in a Memorandum of Understanding (MoU) with the State Government of Punjab(Punjab is a state in India) established a special skills training centre in Amritsar, Punjab in 2008 tobridge the shortage of skilled workers for cash-and-carry and organized retail formats in India.

During FY2009, Wal-Mart sold Gazeley Limited, an ASDA commercial property developmentsubsidiary in the UK to Economic Zones World (EZW), a Dubai World company to further focus onthe company's retail operations.

The company opened its first neighborhood market (45,000-square-foot) in Virginia in January 2009.In the same month, the company acquired 58.2% of the outstanding shares Distribucion y ServicioD&S (D&S). D&S operates 197 stores, 10 shopping centers and 85 PRESTO financial servicesbranches throughout Chile. In March 2009, Wal-Mart acquired additional 16.4% of the outstandingshares of D&S for approximately $430 million.

In February 2009, Bharti Wal-Mart Private Limited named its self-service wholesale stores in Indiaas "BestPrice Modern Wholesale". During the same month, Wal-Mart announced agreements withCoxHealth and Northwest Health System to open clinics in its stores. While the former will open“The Clinic at Walmart” in one store in Springfield and the latter will reopen clinics (formerly RediClinicsites) in two northwest Arkansas Walmart stores under the banner of The CareExpress.

Expanding its home portfolio, the company launched Your Zone, a new home furnishings collectionfor teens in stores nationwide and on Walmart.com in March 2009. In a test aimed at expandingpharmacy sales, Wal-Mart started free mail-order delivery of generic prescription drugs in Michiganin May 2009.Wal-Mart also announced plans to revamp the electronics departments in its US storesduring the same month in a battle with Best Buy and Amazon.com for customers of the closed CircuitCity Stores.

In October 2009, Walmart.com further expanded the products available online and has launched awide assortment of personal care products, including health and beauty items, diapers andover-the-counter medication, which are available for home delivery.

The company collaborated with FIFA’s exclusive worldwide master licensee, Global Brands Group(GBG) in December 2009, to operate 2010 FIFA World Cup Official Event Stores in nearly all of its



retail markets around the world. Wal-Mart will feature FIFA branded shops inside select stores thatwill offer exclusive FIFA World Cup official licensed products and host special events leading up tothe games.

In February 2010, the company’s Walmart Canada announced plans to open 35 to 40 supercentresin 2010. The projects will include new stores, relocations of existing stores, store expansions andstore remodels, representing a combined investment of almost half a billion dollars in Canadiancommunities.

The company announced the opening of its 1,000th Walmart MoneyCenter in March 2010 atChalmette, centers that give customers affordable solutions on basic money services, including theWalmart MoneyCard.Wal-Mart also announced plans to add Wal-Mart MoneyCenters in 500 additionalstores during the year.

In May 2010, Wal-Mart’s UK subsidiary, Asda announced an agreement with Dansk Supermarkedto purchase its fully owned subsidiary, Netto Foodstores. The transaction, which remains subject toregulatory approval, will enable Asda to convert Netto’s UK locations into Asda stores and integratethem into its new supermarkets division for units smaller than 25,000 sq ft. This acquisition is aimedat increasing Wal-Mart’s presence in Europe. Netto was established in the UK in 1990 and operates193 stores with an average size of 8,000sq ft. Netto is the market leader in Denmark and amongthe fastest growing discounters in Germany, Poland and Sweden.



KEY EMPLOYEES

CompensationBoardJob TitleName

19234268 USDExecutive BoardPresident and Chief ExecutiveOfficer

Michael T. Duke

Executive BoardChairmanS. Robson Walton

Executive BoardChairman of the ExecutiveCommittee

H. Lee Scott

220000 USDNon Executive BoardDirectorAida M. Alvarez

235000 USDNon Executive BoardDirectorJames W. Breyer

225273 USDNon Executive BoardDirectorM. Michele Burns

220219 USDNon Executive BoardDirectorJames Cash

292604 USDNon Executive BoardDirectorRoger C. Corbett

224042 USDNon Executive BoardDirectorDouglas N. Daft

220000 USDNon Executive BoardDirectorGregory B. Penner

220000 USDNon Executive BoardDirectorAllen I. Questrom

220000 USDNon Executive BoardDirectorArne M. Sorenson

220809 USDNon Executive BoardDirectorJim C. Walton

260000 USDNon Executive BoardDirectorChristopher J. Williams

245000 USDNon Executive BoardDirectorLinda S. Wolf

13942274 USDSenior ManagementVice ChairmanEduardo Castro- Wright

Senior ManagementExecutive Vice President, PeopleDivision

M. Susan Chambers

Senior ManagementExecutive Vice President, CorporateAffairs and Government Relations

Leslie A. Dach

Senior ManagementExecutive Vice President, ChiefInformation Officer

Rollin L. Ford

Senior ManagementExecutive Vice President, Legal,Ethics and Corporate Secretary

Thomas D. Hyde

11229880 USDSenior ManagementPresident and Chief ExecutiveOfficer, International Division

C. Douglas McMillon

7216307 USDSenior ManagementExecutive Vice President and ChiefFinancial Officer

Thomas M. Schoewe

Senior ManagementSenior Vice President and ControllerSteven P. Whaley

14322200 USDSenior ManagementPresident and Chief ExecutiveOfficer of Sam’s Club

Brian C. Cornell

Senior ManagementPresident and Chief ExecutiveOfficer for Wal-Mart Asia

Scott Price


Wal-Mart Stores, Inc.Key Employees

KEY EMPLOYEE BIOGRAPHIES

Michael T. Duke

Board: Executive BoardJob Title: President and Chief Executive OfficerSince: 2009Age: 60

Mr. Duke has been the President and Chief Executive Officer at Wal-Mart since 2009. He previouslyserved as Wal-Mart's Vice Chairman and was responsible for the international division during2005–09. Mr. Duke was the Executive Vice President, President and Chief Executive Officer ofWalmart US from 2003 until 2005. Prior to that, he served as Executive Vice President, Administrationat Wal-Mart during 2000–03.

S. Robson Walton

Board: Executive BoardJob Title: ChairmanSince: 1992Age: 65

Mr. Walton has been the Chairman at Wal-Mart since 1992. Since joining Wal-Mart in 1969, he hasserved as Senior Vice President, Secretary and General Counsel and Vice Chairman. Prior to joiningthe company, Mr. Walton was in private law practice as a Partner with the law firm, Conner andWinters in Tulsa, Oklahoma.

H. Lee Scott

Board: Executive BoardJob Title: Chairman of the Executive CommitteeSince: 2009Age: 61

Mr. Scott has been the Chairman of the Executive Committee at Wal-Mart since 2009. He servedas the President and Chief Executive Officer of Wal-Mart from 2000 until 2009.

Aida M. Alvarez

Board: Non Executive BoardJob Title: DirectorSince: 2006


Wal-Mart Stores, Inc.Key Employee Biographies

Age: 60

Ms. Alvarez has been a Director at Wal-Mart since 2006. She is the former Administrator of the USSmall Business Administration and was a member of President Clinton's Cabinet during 1997–2001.Ms. Alvarez is the founding Director of the Office of Federal Housing Enterprise Oversight and wasthe financial regulator of Fannie Mae and Freddie Mac from 1993 to 1997. She also serves on theBoard of Directors of UnionBanCal and is a member of the Diversity Advisory Board for Deloitte &Touche.

James W. Breyer

Board: Non Executive BoardJob Title: DirectorSince: 2001Age: 48

Mr. Breyer has been a Director at Wal-Mart since 2001. He is a Managing Partner at Accel Partners,a venture capital firm. Mr. Breyer also serves as a Director of RealNetworks, Marvel Entertainment,and several other private companies.

M. Michele Burns


Ms. Burns has been a Director at Wal-Mart since 2003. She is the Chairman and Chief ExecutiveOfficer of Mercer Human Resource Consulting, a subsidiary of Marsh & McLennan Companies. Ms.Burns also served as the Executive Vice President and Chief Financial Officer of Marsh & McLennanCompanies in 2006. She is the former Executive Vice President, Chief Financial Officer, and ChiefRestructuring Officer of Mirant Corporation during 2004–06. Ms. Burns served as the Executive VicePresident and Chief Financial Officer of Delta Air Lines from 2000 until 2004. Currently, she is aDirector of Cisco Systems.

James Cash


Mr. Cash has been a Director at Wal-Mart since 2006. He is a retired James E. Robison Professorof Business Administration at Harvard Business School and former Senior Associate Dean and



Chairman of HBS Publishing. Mr. Cash is a Director of The Chubb Corporation, General Electric,Phase Forward, ITM Software Corporation and Microsoft.

Roger C. Corbett


Mr. Corbett has been a Director at Wal-Mart since 2006. He is a retired Chief Executive Officer andGroup Managing Director of Woolworths, an Australian retailer. Mr. Corbett currently serves as aDirector of The Reserve Bank of Australia, Fairfax Media Limited, and is the Chairman of the boardof directors ALH Group Pty Limited.

Douglas N. Daft


Mr. Daft has been a Director at Wal-Mart since 2005. He was the Chairman and Chief ExecutiveOfficer of The Coca-Cola Company from 2000 until 2004. Mr. Daft served in various capacities atThe Coca-Cola Company since 1969. He currently serves as a Director of The McGraw-HillCompanies.

Gregory B. Penner


Mr. Penner has been a Director at Wal-Mart since 2008. He has been a General Partner of MadroneCapital Partners since 2005. Earlier, Mr. Penner served as Wal-Mart's Senior Vice President andChief Financial Officer at Japan from 2002 until 2005. Prior to joining the company, he was a GeneralPartner at Peninsula Capital and a Financial Analyst for Goldman, Sachs & Co. Mr. Penner currentlyserves as a Director of Baidu.com, 99Bill Corporation, Cuill, and Global Hyatt Corporation.

Allen I. Questrom

Board: Non Executive Board



Job Title: DirectorSince: 2007Age: 70

Mr. Questrom has been a Director at Wal-Mart since 2007. He served as the Chairman and ChiefExecutive Officer at JC Penney Company during 2000–04. Mr. Questrom served as the Chairman,Chief Executive Officer and President of Barneys New York from 1999 until 2000. He was previouslythe President and Chief Executive Officer of The Neiman Marcus Group and has served as theChairman and Chief Executive Officer of Federated Department Stores from 1990 until 1997. Mr.Questrom is a Director of Sotheby's and is a partner with Lee Equity Partners.

Arne M. Sorenson


Mr. Sorenson has been a Director at Wal-Mart since 2008. He has been Executive Vice Presidentand Chief Financial Officer of Marriott International since 1998. Mr. Sorenson joined Marriott in 1996as Senior Vice President of Business Development. Prior to joining Marriott, he was a Partner withLatham & Watkins in Washington, DC.

Jim C. Walton


Mr. Walton has been a Director at Wal-Mart since 2005. He is the Chairman and Chief ExecutiveOfficer of Arvest Bank Group. Mr. Walton also serves as Chairman of Community Publishers.

Christopher J. Williams


Mr. Williams has been a Director at Wal-Mart since 2004. He is the Chairman and Chief ExecutiveOfficer of The Williams Capital Group, an investment bank. Mr.Williams has also been the Chairmanand Chief Executive Officer of Williams Capital Management since 2003. He currently serves as aDirector of Harrah's Entertainment.



Linda S. Wolf


Ms.Wolf has been a Director at Wal-Mart since 2005. She is the former Chairman and Chief ExecutiveOfficer of Leo Burnett Worldwide, an advertising agency and division of Publicis Groupe. Ms. Wolfserved in various positions with Leo Burnett Worldwide and its predecessors from 1978 to 2005.She currently serves as a trustee for investment funds advised by the Janus Capital Group.

Eduardo Castro- Wright

Board: Senior ManagementJob Title: Vice ChairmanSince: 2008Age: 55

Mr. Castro-Wright has been the Vice Chairman at Wal-Mart since 2008. During 2005–08, he servedas Executive Vice President and President and Chief Executive Officer of Walmart US division.Previously, Mr. Castro-Wright was the Executive Vice President, Chief Operating Officer of WalmartUS division. He previously served as the President and Chief Executive Officer of Wal-Mart deMexico during 2002–05.

M. Susan Chambers

Board: Senior ManagementJob Title: Executive Vice President, People DivisionSince: 2006Age: 52

Ms. Chambers has been the Executive Vice President, People Division at Wal-Mart since 2006. Shepreviously served as Executive Vice President of Risk Management, Insurance and BenefitsAdministration of the company during 2003–06. Ms. Chambers was the Senior Vice President ofInsurance and Benefits Administration of Wal-Mart from 2002 to 2003.

Leslie A. Dach

Board: Senior ManagementJob Title: Executive Vice President, Corporate Affairs and Government RelationsSince: 2006Age: 55



Mr. Dach has been the Executive Vice President, Corporate Affairs and Government Relations atWal-Mart since 2006. From 1997 until 2006, he served as Vice Chairman of Daniel J. Edelman.

Rollin L. Ford

Board: Senior ManagementJob Title: Executive Vice President, Chief Information OfficerSince: 2006Age: 47

Mr. Ford has been the Executive Vice President, Chief Information Officer at Wal-Mart since 2006.He joined the company in 1983 and during 2003–06, he served as the Executive Vice President,Logistics and Supply Chain of the company. Mr. Ford is currently a member of the Board of Directorsof Thurgood Marshall College Fund and Mercy Health System of Northwest Arkansas. He also is aboard member of The Seiyu and the GS1 Management Board. Mr. Ford graduated from TaylorUniversity with a bachelor's of science degree in business administration and systems analysis.

Thomas D. Hyde

Board: Senior ManagementJob Title: Executive Vice President, Legal, Ethics and Corporate SecretarySince: 2005Age: 61

Mr. Hyde has been the Executive Vice President, Legal, Ethics and Corporate Secretary at Wal-Martsince 2005. He served as Executive Vice President, Legal and Corporate Affairs and CorporateSecretary of the company during 2003–05. Mr. Hyde previously served as Executive Vice Presidentand Senior General Counsel of Wal-Mart from 2001 until 2003. He joined Wal-Mart in 2001 afterserving as Senior Vice President and General Counsel of Raytheon Company. Mr. Hyde graduatedfrom the University of Kansas in 1970 with an English degree and pursued law degree from theUniversity of Missouri in 1975 and earned a master of business administration in finance from theUniversity of Kansas in 1981.

C. Douglas McMillon

Board: Senior ManagementJob Title: President and Chief Executive Officer, International DivisionSince: 2009Age: 43

Mr. McMillon has been the President and Chief Executive Officer, International division at Wal-Martsince 2009. He served as Executive Vice President, President and Chief Executive Officer of Sam'sClub division during 2005–09. Mr. McMillon earlier served as the Executive Vice President,Merchandising and Replenishment of Sam's Club Division during 2002–05.



Thomas M. Schoewe

Board: Senior ManagementJob Title: Executive Vice President and Chief Financial OfficerSince: 2000Age: 57

Mr. Schoewe has been the Executive Vice President and Chief Financial Officer at Wal-Mart since2000. Prior to joining the company, he served as Senior Vice President and Chief Financial Officerof Black and Decker during 1993–99. Prior to that, Mr. Schoewe served for four years as Black andDecker's Vice President of Finance. He joined Black and Decker in 1986, after serving atChicago-based Beatrice Companies, where he held the position of Chief Financial Officer andController of Beatrice Consumer Durables.

Steven P. Whaley

Board: Senior ManagementJob Title: Senior Vice President and ControllerSince: 2007Age: 50

Mr. Whaley has been the Senior Vice President and Controller at Wal-Mart since 2007. He held theposition of Vice President and Controller of the company during 2005–07. Mr. Whaley served asVice President and Assistant Controller at Wal-Mart in 2005. Prior to that, he was the Vice Presidentand Controller at Southwest Airlines since 2001. Mr. Whaley also worked with KPMG for sevenyears.

Brian C. Cornell

Board: Senior ManagementJob Title: President and Chief Executive Officer of Sam’s ClubSince: 2009Age: 51

Mr. Cornell has been the President and Chief Executive Officer of Sam’s Club, a division of Wal-Martsince 2009. Prior to joining the company he was the Chief Executive Officer for Michaels Stores.Previously, Mr. Cornell served as the Executive Vice President and Chief Marketing Officer forSafeway and also held senior management positions at PepsiCo, including President of Pepsi-ColaNorth America’s Food Services Division and President of Tropicana International. He holds bachelor’sdegree from the University of California Los Angeles and attended its Anderson Graduate Schoolof Management.

Scott Price



Board: Senior ManagementJob Title: President and Chief Executive Officer for Wal-Mart AsiaSince: 2009

Mr. Price has been the President and Chief Executive Officer for Wal-Mart Asia since 2009. Priorto joining the company, he most recently served as Chief Executive Officer of DHL Express Europe,before which he was Chief Executive Officer of DHL Express Asia Pacific. Mr. Price also served asthe President of DHL Express Japan. Before joining DHL, he spent a decade with the Coca-ColaCo. Mr. Price holds a Bachelor of Arts degree in business administration from the University of NorthCarolina and pursued MBA and a Master of Arts in Asian studies from the University of Virginia.



MAJOR PRODUCTS AND SERVICES

Wal-Mart Stores (Wal-Mart or "the company") operates retail stores in various formats across the world. In the US, the retail formats operated by Wal-Mart include discount stores, supercenters, neighborhood markets, marketside, and Sam's Clubs. The company's key products and services include the following:

Products:

Dry and wet groceryBeveragesFrozen foodsFlowersHealth and beauty productsHousehold productsPet suppliesFabrics and craftsStationery and booksAutomotive accessoriesHardware and paintHorticulture productsSporting goodsApparelShoesJewelryToysHome furnishingsHousewaresMajor and minor home appliancesCamerasCellular phones

Services:

Photo processing servicesCellular service planMoney order servicesWire transfers

Brands:

Wal-MartGreat ValueEquate


Wal-Mart Stores, Inc.Major Products and Services

Ol' RoySam's ChoiceSpring ValleyParent's ChoiceEverstartFaded GloryNo BoundariesGeorgeAthletic WorksSecret TreasuresPuritanDurabrandHomeTrendsMainstaysOzark TrailWhite StagCanopy


Wal-Mart Stores, Inc.Major Products and Services

REVENUE ANALYSIS

The company recorded revenues of $408,214 million during the financial year ended January 2010(FY2010), an increase of 0.9% over 2009. For FY2010, the US, the company's largest geographicmarket, accounted for 75.3% of the total revenues.

Wal-Mart generates revenues through three business divisions: Wal-Mart US (63.8% of the totalrevenues during fiscal year 2010), international (24.7%) and Sam’s Club (11.5%).

Revenues by Division*

In FY2010, Wal-Mart US division recorded revenues of $258,229 million, an increase of 1.1% over2009.

The international division recorded revenues of $100,107 million in FY2010, an increase of 1.3%over 2009.

The Sam's Club division recorded revenues of $46,710 million in FY2010, a decrease of 0.4%compared to 2009.

Revenues by Geography*

The US, Wal-Mart's largest geographical market, accounted for 75.3% of the total revenues inFY2010. Revenues from the US reached $304,939 million in 2010, an increase of 0.9% over 2009.

International accounted for 24.7% of the total revenues in FY2010. Revenues from internationalreached $100,107 million in 2010, an increase of 1.3% over 2009.

** The difference in total revenues is because of membership fees which is not included in thebreakdown by division or geographies.


Wal-Mart Stores, Inc.Revenue Analysis

SWOT ANALYSIS

Wal-Mart Stores (Wal-Mart or "the company") operates retail stores in various formats across theworld. In the US, the retail formats operated by Wal-Mart include discount stores, supercenters,neighborhood markets, marketside, and Sam's Clubs. The company is the largest retailer withunprecedented scale and clout which will enable it to maintain its market position and continue togain market share from competitors. However, with over two million employees, rising labor andhealthcare costs will significantly affect Wal-Mart’s profitability.

WeaknessesStrengths

Big box retailing format led to lowpenetration into urban areas

A market leader with unprecedented scalegives a competitive advantage

Litigations affect labor relations adverselyLow cost leadership enabling Wal-Mart tooffer products at low price points Target’s superior merchandising capabilities

to appeal more to the customers as the USeconomy revives

Internationalization strategy—a strongfoundation for growth as the US marketmatures

ThreatsOpportunities

Two million employees increases exposureto increasing wages and high healthcarecosts

Outperformance of the retail sectors inemerging marketsConcentration on grocery and food willbenefit as eating at home, health andwellness trends continue to emerge

Volatility in commodity prices and costinflation will pressurize margins

Growth in internet retailing to serve largermarket

Increasing resistance to expansion fromlocal organizations and authorities

Strengths

A market leader with unprecedented scale gives a competitive advantage

Wal-Mart is the largest retailer in the world. By the end of January 2010, Wal-Mart had more than$400 billion in revenue, $24 billion in operating income, 8,500 stores, and nearly 1 billion squarefeet of space.The scale of its operations is unprecedented and there is no competitor of comparablesize. The company has been expanding its clout; international operations contribute between onefourth and one half of these metrics. At about 10% and 20% of total retail and grocery sales in theUS, respectively, according to figures from the U.S. Census Bureau, Wal-Mart US is an integral partof consumers' budgets.The company dominates the US retail landscape and is growing internationallyat a fast pace. Wal-Mart, being a market leader, is able to replicate its best practices constantly on


Wal-Mart Stores, Inc.SWOT Analysis

an unmatched scale both in the US and across the world. Wal-Mart’s large scale relative to mostvendors leads to favorable terms on everything from the products on its shelves to store leases anddistribution agreements. These competitive advantages generate positive economic returns andmarket share gains. Also, Wal-Mart offers a large variety of products. Its dominant position and rangeof products allows the company to quickly shift the product mix to meet demand and benefit fromincreased sales. For example, by changing floor space allocation, Wal-Mart can benefit fromlow-income consumers' growing preference for consumable staples instead of discretionary items.Such flexibility and clout will enable the company to maintain its market position and continue tocapture market share from competitors.

Low cost leadership enabling Wal-Mart to offer products at low price points

Wal-Mart is a price leader and its low cost operations are enabling the company to maintain theposition. The company offers its grocery products at prices about 12% lower than the market.Wal-Mart constantly flexes its bargaining muscle to lower prices. This strategy ensures a steady,recurring stream of customers for its goods, making Wal-Mart synonymous with inexpensive andthis keeps constant pressure on competitors. Sam's Club also enjoys a similar reputation but on aper-unit basis, as most of its goods are sold in bulk. The company receives favorable pricing fromand systematic integration with most of its suppliers which is a large part of Wal-Mart’s crucial low-costadvantage. The company generally requires suppliers to tie in to its own inventory managementsystem and to deliver goods in the manner and timing Wal-Mart dictates, leading to impressiveinventory turns (especially considering that half of revenue is from non-grocery categories).Furthermore, a no-frills store environment also improves total asset turns and limits maintenancecapital investment. In addition, as a low-cost general retailer, Wal-Mart has built a reputation withconsumers as a one-stop shop for good deals on a huge spectrum of merchandize. The companyhas been aggressively trying to further reduce stock-keeping units and lower prices. Most costsavings are likely to be passed to consumers, making Wal-Mart's low-price leadership even moredifficult to surpass.

Macro economic conditions have pressurized customer’s spending severely. Amid such a situation,customers are more attracted to low price value retailers. The prominence of warehouse clubs hasbeen increasing and according to a survey conducted, 36% of the customers are shopping moreoften in warehouses while 43% are shopping more often in supercenters. Despite indications ofsome trading up, economic recovery is estimated to be relatively mild, suggesting that Wal-Mart'slow-price strategy will continue to resonate with lower-income consumers. Due to its positioning, thecompany has benefited more than most peers from consumers trading down. Wal-Mart primarilyserves less-affluent consumers, but the recession has put more people in that bucket, and manyare drawn to Wal-Mart’s low-cost leadership. The company’s price leadership ensures a largeaddressable market, which will drive top-line growth.

Internationalization strategy—a strong foundation for growth as the US market matures

Wal-Mart has been increasingly focusing on establishing its presence strongly in the internationalarena. The company operates 4,068 units in 14 countries. Wal-Mart opened its first internationalstore in Mexico in 1991 and has grown both through acquisitions and its own innovation. Though it



is synonymous with the big-box stores in the US, the company has nine international store formatsranging from relatively tiny Bodega Aurrera Express stores in Mexico to a cash-and-carry warehousein India to the traditional box in Canada. It operates under 55 different banners-Acuenta in Chile,Asda in the UK and Seiyu in Japan. Wal-Mart’s focus on international growth has enabled it toachieve a milestone by surpassing the $100 billion net sales mark for the year.Wal-Mart's internationaldivision is its fastest growing segment and this is expected to continue at an aggressive pace throughstrong organic growth and acquisitions. In FY2010, Wal-Mart added more than 500 units, all fromorganic growth.

As the markets in the US saturate for Wal-Mart, the international strategy helps the company toimprove returns. The risk profile of more mature markets like the UK helps provide the balance forsignificant growth opportunities in emerging markets like Brazil, China and India. International revenuegrowth more than offset a modest decrease in the US comparable-store sales. International segmentrevenue (25% of total) grew 9% on a currency-adjusted basis, and similar growth rates are expectedfor medium term as Wal-Mart redirects capital spending from the US to faster-growing markets suchas Latin America and China. As it expands at the international level, not only will the company beable to replicate the business model and leverage on the expertise, but also will leverage on theglobal scale through global brand and supplier relationships and merchandising efficiencies.Wal-Martis effectively participating in the high growth of emerging markets as its competitors like Target lackthe advantage. International strategy gained prominence for Wal-Mart as the opportunities for growthin the core US markets slowed.

Weaknesses

Big box retailing format led to low penetration into urban areas

Wal-Mart is a big box retailer and operates supercenters which require large space for every newstore. This is limiting expansion of Wal-Mart stores in urban areas where there is limited spaceavailable and limited commercial spaces which can provide such large spaces. Wal-Mart’s massivestores can combine a grocery store and a discount store under one roof. Building huge stores madesense when suburban landscapes were wide open and baby boomers were moving away from cities.Easy access to credit fueled customer demand for larger homes and all the trappings that went withthem. But trends now suggest that big stores are less attractive. Baby boomers are scaling back,moving into smaller homes closer to urban areas. The housing market crash also means newneighborhoods are not springing up to support retail centers. With the latest urban focus, retailersare expected to invent formats that differ dramatically from current ones.

Although the company’s management believes that there are several opportunities to grow in themetropolitan areas in the US, the availability of space limits such scope for expansion. The strengthof Wal-Mart’s business model lies in operating large retail stores and smaller formats might not beable to complement the current business model.Wal-Mart has earlier experimented with new formatand opened convenience-sized grocery stores called Marketside in 2008. But the concept is on hold,indicating the company is yet to find a suitable format. Furthermore, as the company expands itslarge format stores, it is leading to cannibalization of existing stores. The negative impact on



comparable store sales as a result of opening new stores was approximately 0.6% in 2010 and 1.1%in 2009. To avoid such negative effects, Wal-Mart planned slower new store growth, once againlimiting the scope for expansion. Therefore, it has become increasingly important for Wal-Mart toinnovate a format that can use its current strengths and is more suitable to the urban locations. Itscompetitors like Target and Costco are also focusing on inventing new sustainable smaller formats,and success with the new formats will be a competitive disadvantage for Wal-Mart.

Litigations affect labor relations adversely

Wal-Mart has been facing several charges and law suits with respect to labor relations. In FY2009,the company settled 63 wage-and-hour class action lawsuits. As a result of the settlement, Wal-Martrecorded a pre-tax charge of approximately $382 million during Q4'2009.Wal-Mart also is still involvedin the Duke’s gender discrimination suit, which was filed by its female retail employees alleging thatthe company has paid them less and has promoted them less often than male employees. In thiscase as many as 1.5 million women who have worked at Wal-Mart's US stores anytime sinceDecember 26, 1998 will be represented and compensated in case it is proven. Wal-Mart has beensuffering the ill-effects of such law suits which divert large amounts of money towardscounterproductive activities. Additionally, the company’s reputation is tarnished and will find itselfshort of skilled and qualified employees. The employees might demand higher compensation andwill also lead to skilled employees choosing to work with competitors, which will be a key competitivedisadvantage.

Target’s superior merchandising capabilities to appeal more to the customers as the US economyrevives

Target has over the years focused on differentiating itself against the competition, specifically againstWal-Mart, through the merchandise it offers. Target benefited from the image of being a purveyorof affordable yet stylish products. It made deals with well-known designers who made frugal,fashionable clothes for the company, which were viewed as little bit more upscale than that ofWal-Mart’s. In a study conducted by William Blair and Company, it was observed that Target had asuperior merchandise selection compared to Wal-Mart across various parameters. Target led in thedepth of merchandise assortment across several product categories. It also has considerableadvantage in the product assortment in home and hardlines. In both of these categories, Target alsoled Wal-Mart inbrand variety and brand assortment available in its stores.Target offers merchandiseacross several price points and offers a wider range of price points between the opening price andhighest-end items. In this parameter of the merchandise available in several parameters, Target ledacross several categories including home, hardlines, apparel and electronics. Although, customersin recent times have been trading down and Target has found it increasingly difficult to compete withWal-Mart, the strong merchandising is a key differentiator as consumer spending starts increasing.The strong assortment and its strategy to stock brands and products at different price points is likelyto be a strength as the economy recovers, as Wal-Mart will be able to increasingly sell higher endproducts. Also, its merchandising is enabling Target to charge a premium and increase its margins.Wal-Mart has geared up efforts to compete with Target on merchandising. However, Target stillleads in merchandising and Wal-Mart’s product assortment although available at lower prices mightbe less appealing to the customers as the economy recovers and consumers start spending.



Opportunities

Outperformance of the retail sectors in emerging markets

Wal-Mart has presence in several emerging economies and the positive retail trends in theseeconomies will positively impact revenue growth. Asia’s retail sales are estimated to increase withChina driving the growth. China's retail sales are estimated to grow at 16% in 2010. China's retailsales rose 17.9% and stood at CNY2.5052 trillion ($366.9 billion) in January and February of 2010according to latest figures released by the National Bureau of Statistics (NBS). On a year-over-yearbasis, Brazilian retail sales have risen 12.3% in February 2010 and the sales are expected to growat a fast pace for rest of 2010. Similarly, modern retail in India is estimated to make up just 5% ofthe market but is growing at 30% a year.

Economists have long predicted that consumers in emerging economies would not only manufacturemost of the world's goods but also buy them. Foreign sales account for roughly 30% of revenue ofS&P 500 companies, up from 20% a decade ago. By 2014, the IMF forecasts, emerging economieswill contribute more to the world economy than developed nations. Wal-Mart’s bigger focus duringthe downturn has been on wringing out costs to drive down prices. That has eaten away at revenue,and gas prices have hurt traffic. Although other retailers have seen consumers begin to relax,Wal-Mart’s low-income, core customers are paying with food stamps and unemployment benefitsthan a year ago. In contrast to this uncertainty in the US, growth in emerging economies indicatestrong returns. Though other countries in which Wal-Mart operates also were hit by the recession,the downturn was not as severe and the recovery has been more robust. The IMF expects the USeconomy to grow 3.1% in 2010. During the same time, Mexico's is predicted to expand 4.2%, Brazilto rise 5.5%, and China to hit 10% indicating strong growth rates in all countries in which Wal-Marthas invested heavily. For developing countries accustomed to informal markets, such as mom-and-popshops and street vendors where prices can change daily, Wal-Mart and its likes are expected tomeet a resistance among the customers. However, the company is accustomed to such environmentsas experts believe that Wal-Mart's early strategy of building stores in a rural America neglected byother retailers is in similar lines and its experience will provide it with necessary expertise to penetratein these emerging markets. These outperforming sectors in the emerging markets will drive thegrowth for Wal-Mart as its core US market matures.

Concentration on grocery and food will benefit as eating at home, health and wellness trends continueto emerge

Eating at home and eating healthy are important trends that are likely to increase the demand forgrocery. For the year ending (Y/E) in February 2009, Americans prepared and consumed nearly twothirds of their meals at home, which is up five meals per person compared to the prior year. Theeconomic downturn, the perception that home-prepared foods are much healthier—a view held by92% of grocery shoppers, according to an industry study—and an unmet desire to enjoy affordable,restaurant-style foods at home have given food marketers the opportunity to recapture mealtime.With 84% of food shoppers cooking more at home in 2009 and 40% planning to do so more often



in 2010, basic ingredients like rice, breakfast meats, frozen poultry, oils/shortening, and frozenvegetables are estimated to enjoy brisk sales.

Despite the economy, industry reports suggest that the perishable department is growing faster thanall retail sectors in the total market. Household deli spending for the year ending September 2009was up 5% over last year; bakery, up 3%; fresh meat/seafood, up 4%; and produce, up 3%. Salesof frozen foods are estimated to grow and are projected to reach $65 billion by 2013. This growthis driven by the consumer’s perception of healthy food, increasing working population with lessertime to cook and also increased meal options provided. These trends suggest a large potentialmarket, the spending in which is not entirely discretionary.

Additionally, self-care has emerged as a key money-saving strategy, which is driving the health andwellness trend in the US. Another industry report suggests that nearly three-quarters of consumersrate nutritious/wholesome meals as a major consideration when planning food and beverage shoppingtrips and that two-thirds are eating to manage specific health conditions. Also, sales of food carryinga natural claim reached $20.4 billion for year ending April 2009, up 6.6%; sales of products with a“no preservatives” callout reached $13 billion, up 8%. This indicates a growing demand for healthyand natural food products. Customers in the US have are more health conscious now than beforeand the trend has impacted the preference of food products. It has been observed that 77% ofconsumers read ingredient statements on packaging and are using nutritional information to maketheir purchasing decisions.

Additionally, the food and grocery segment will increase the guest traffic into the stores convertinginto higher sales. The net sales of Wal-Mart US increased in FY2010, owing partly to the strengthof company’s grocery and health and wellness categories. Similar increases have been witnessedin the fresh food and consumables and certain health and wellness categories in Sam’s Club. Also,gross profit margin for Sam’s Club increased 0.6 percentage points during 2010 compared to theprior year due to continued strength in sales of consumable, fresh food and other food-relatedcategories. Although, Wal-Mart has been a multi-line retailer it has pro-actively increased the shareof groceries and food products in the total sales. The positive trends in the market will lead toincreased sales in the segment which have higher margins driving the profitability as well.

Growth in internet retailing to serve larger market

Online retailing has been increasing at a fast pace in the US. Although in 2009 growth stalled in thecountry, and recorded a low growth rate of 2%, the online retail sales still contributed to 7% of thetotal retail sales in 2009 and are expected to further increase. The US market, by 2014 is expectedto reach a value of $13.55 billion, which represents an increase of almost 75% compared with levelsin 2009, according to industry reports. Although, the share of grocery in the total online sales isestimated to be 2%, the high growth market gives Wal-Mart an opportunity to reach out to wideraudience and increase customer base. In addition, the online channel has several counterrecessionary characteristics like low infrastructure costs which can be passed on to the consumers,and convenience. Walmart.com’s traffic exceeded one billion visits in 2009, growing more than 15%over the previous year through Site-to-Store and home delivery. In saturated markets where itsformat has limited expansion models, online channel will be a crucial expansion. With the help of



technology, Wal-Mart aims at achieving its long-term target of serving over a billion customers in aweek in the coming 20 years, compared with the 200 million customers it now serves every week.The company has been focusing on establishing a strong presence in the online segment and thegrowing popularity of the channel will facilitate such expansion.

Threats

Two million employees increases exposure to increasing wages and high healthcare costs

The labor costs for companies have been rising as the healthcare costs and wages increase in therecent times.Tight labor markets, increased overtime, government mandated increases in minimumwages and a higher proportion of full-time employees are resulting in an increase in labor costs,which could materially impact the company's results of operation. In the US, the government increasedthe minimum wage rate from $6.55 per hour in 2008 to $7.25 an hour in July 2009. The governmentrevised the labor rates for the third year in a row. Furthermore, many states and municipalities inthe country have minimum wage rate even higher than $7.25 per hour due to higher cost of living.In addition to this, the health care costs for employers in the US are increasing. According to industryestimates, health-care costs for the US employers are estimated to increase by 9% in 2010. Themedical cost increases continue to outpace inflation and wage increases, and is even higher thanthe health-care inflation rate for the nation as a whole, at 6.9% in 2009. One of the key driversexpected to increase medical costs in 2010 is that the workers are concerned about losing their jobsand potentially their health insurance and therefore are using their health care more while they stillhave it. The new healthcare reforms are bringing more people under the gamut of insurance furtherincreasing the costs for employers.These trends have several negative implications for the company.Foremost is Wal-Mart's huge employee base of just over 2 million, which leaves the firm susceptibleto wage and health-care cost trends, discrimination lawsuits. With 2 million people on the payroll,overall wage and benefit cost trends are large drivers of the company’s profitability. Over the past10 years, selling, general, and administrative costs have outpaced revenue growth, offset by otherefficiencies, leading to roughly stable operating margins. If revenue growth were to fall below totallabor cost inflation or Wal-Mart could no longer squeeze savings out of its supply chain, the risingcosts will materially impact the profitability of Wal-Mart. During the next five years, the companyfurther expects to create 500,000 jobs and the rising costs pose considerable threat for the companydue to its large employee base.

Volatility in commodity prices and cost inflation will pressurize margins

The inflation for producers has been increasing at a faster pace than consumer’s inflation leadingto higher costs for the producers. The cost inflation returned and the food and grocery industry haslittle pricing power, the factors which have been pressurizing margins. Although the retailers havebeen witnessing cost they have not been able to fully pass through the price increases. The spreadbetween Consumer Price Index (CPI) and Producer Price Index (PPI) is at the largest negativespread in over twenty years, indicating high PPI compared to CPI, underscoring the margin pressurein the grocery industry. For the month of March 2010 PPI was up 6.8% while CPI was down -0.7%



creating a spread of -7.5%, the highest in the past twenty years. Rapid inflation and fluctuations cancause gross margin shortfalls as grocers have difficulty passing through cost increases.

Commodity prices in meat, milk and eggs are showing enormous volatility, and as customers areprice sensitive it is not always possible to pass on the rise in costs. Price wars between competitorswill ensure that customers are offered products at the lowest price possible. As inflation increasedand the shelf price increased, some demand destruction was seen.Therefore, volatility in commodityprices and rising cost inflation will affect margins adversely. Deflation in grocery could have a negativeimpact on Wal-Mart and it increases the reliance on continually wringing efficiency out of operationsand forces lower selling prices from suppliers, which might not be possible for the company. As theUS economy is slowly recovering, Wal-Mart has once again resorted to price cuts and announcedprice rollbacks on 10,000 SKUs in April 2010. The manufacturers are expecting requests fromWal-Mart for price relief to support the pricing plans, and this might not materialize as PPI increasesfor grocery and food products manufacturers.This is estimated to further increase an already existingquiet battle between grocery retailers and consumer packaged goods manufacturers over retail shelfprices. The weak pricing environment for Wal-Mart, increasing PPI and deflation at the consumer'send will severely affect margins for Wal-Mart.

Increasing resistance to expansion from local organizations and authorities

For several years now, Wal-Mart has been facing severe resistance from several groups when itplans to open new stores. Several of these reports have been affecting the decisions made by localauthorities which is deterring the expansion plans of Wal-Mart. A review and analysis by an industryrelated report suggested that on the average, a Wal-Mart store gets 84% of its business from existingstores. Another report documented that Wal-Mart has received more than $1 billion in subsidiesfrom state and local governments through tax breaks and paying for roads and utility connectionsat many of its new stores. A market analysis report estimated that for every new Wal-Mart supercenter that opens, two local supermarkets will close. The Wall Street Journal reported that 51% ofWal-Mart’s sales come from groceries, which do not generate any sales tax revenue for the city.Additionally, several labor issues that Wal-Mart is involved in is leading to severe opposition fromthe unions. In many cases, the pitched battles with the local organizations and authorities have morethan doubled the amount of time it takes Wal-Mart to open a store. And the fights generate negativepublicity as well. Local authorities have been forced to consider giving permits on several occasionsdelaying the projects. For instance in 2010, the City Council Zoning Committee in Chicago, short onvotes, once again deferred a vote on a massive development on the Far South Side that wouldinclude Chicago's second Wal-Mart, to give Chicagoans more time to analyze this study, on Wal-Martbefore the council takes a decision. The Milpitas City Council denied Wal-Mart’s bid for a nearly18,500-square-foot expansion at its Ranch Drive location that would also have allowed liquor sales,groceries and 24-hour operation. It is becoming increasingly difficult for Wal-Mart to open new storesas the resistance increases. This is affecting the new investments and the time to open new storesfor the company.



TOP COMPETITORS

The following companies are the major competitors of Wal-Mart Stores, Inc.

Target CorporationSafeway Inc.Sears Holdings CorporationJ. C. Penney Corporation, Inc.Kroger Co., TheTesco PLCCarrefour S.A.Metro AGCostco Wholesale CorporationAmazon.com, Inc.CVS Caremark CorporationKohl's CorporationLowe's Companies IncPPR SAOffice Depot, Inc.Seven & I Holdings Co. Ltd.Staples, Inc.SUPERVALU INC.Walgreen Co.


Wal-Mart Stores, Inc.Top Competitors

COMPANY VIEW

A statement by Michael T. Duke, President and Chief Executive Officer of Wal-Mart is given below.The statement has been taken from the company’s 2010 annual report.

Our Priorities: Growth. Leverage. Returns

One of the most gratifying days for me during the past year was the important sales day afterThanksgiving in the United States. As I walked through one of our stores, the engineer in me lovedseeing the efficiency and smoothness of how our operations executed and performed. But I lovedeven more hearing from customers who were going to be able to afford an enjoyable Christmas fortheir families.They were so thankful for Walmart, and we were so thankful for the opportunity to helpthem.

Customers all around the world trust us to fulfill our mission of saving people money so they canlive better. They expect quality, low prices and the absolute best value. Last year, we delivered onthose expectations. By doing so, we showed how much we care about our customers, especially indifficult times. And just as important, we produced strong results for our shareholders. I want to thankour two million associates around the world for this success. I appreciate them for all they do everyday to serve our customers and uphold our company’s beliefs and values.

Financial and operating results

Throughout my career, I’ve always emphasized performance. And I’m really proud of the performanceof our team around the world and the results Walmart delivered for fiscal year 2010 in a yearchallenged by a difficult economy in all of our markets. Our results reflect the underlying strength ofour business and our strategies to improve shareholder value.

For the full year, Walmart reported earnings per share of $3.72. Net sales were more than $405billion this year, with International net sales exceeding $100 billion for the first time in Walmart’shistory. Our free cash flow performance continues to be impressive, closing the year with $14.1billion in free cash flow. We also posted a pre-tax return on investment (ROI) of 19.3 percent for theyear, equal to last year’s ROI performance.

We strongly believe that Walmart is the best positioned global retailer and that we can continue tobuild on our momentum. As amazed as I’ve been by the global growth I’ve seen during my 15 yearsat Walmart, I’m even more impressed by the opportunities that are ahead both in the United Statesand around the world.

Specifically, we’re focused on enhancing shareholder value by driving three important priorities:growth, leverage and returns.

Growth


Wal-Mart Stores, Inc.Company View

First, we continue to have aggressive growth plans. I believe that no other global retailer can deliverthe kind of growth that Walmart can over the next several years. In the United States, we haveconsiderable opportunities in major metropolitan markets, with innovative new formats and by makingour existing assets more productive. We also have lots of opportunities in Walmart International byaccelerating square footage growth, entering new markets and making acquisitions. Sam’smembership initiatives will attract new members. We’ll continue to expand into new channels, socustomers can shop and experience Walmart when, where and how they want.

Leverage

Second, we are committed throughout the organization to leverage expenses and improve productivity.Our goal remains very clear: we will grow operating expenses slower than sales and grow operatingincome faster than sales. By lowering expenses, passing those savings on to customers, bringingmore customers in our doors, and selling more merchandise, we’re reenergizing the “productivityloop” that’s been so vital to Walmart throughout our history. We will do even more to leverage thescale, expenses and expertise of our total company all around the world. We’ll continue to makeinvestments in technology that are clearly driving greater efficiency throughout our company. Andwe plan to move even quicker and be a more innovative company.

Returns

Third, we have a track record of generating solid returns at Walmart. Each operating segment hasa long-term plan to contribute to strong company returns. Our goal is also to continue to producesignificant free cash flow to drive our ROI performance and deliver greater shareholder value.

Live better

Throughout my first year in this new role, I was continually impressed with Walmart’s opportunity tolead on big issues in the world. We are proud of our work to be a more sustainable company, tomake health care in the United States more affordable and accessible, and to create economicopportunity through jobs and investments in our communities. With our reach and the people,communities and customers we represent, we must continue to make a difference on the issuesthat matter.

Looking ahead, we will expand our commitment to providing even more career opportunities toassociates. We’ll also build on our leadership in sustainability through progress on the SustainableProduct Index and our commitment to reduce the greenhouse gas emissions in the life cycle of theproducts on our shelves. The fact is our leadership has helped people and communities think evenbetter of Walmart, as well as drive innovation and change throughout our company.

This time and this world

We live at a time and in a world that I believe truly calls out for Walmart and the work that our twomillion associates do every day. Sam Walton may not have been able to guess the specific challengeswe’ve all faced over the past year or the challenges we’ll face in the future. But he had a vision for



a company that would help people “save and do better” in life. And he believed that vision couldapply everywhere. It’s up to us to fulfill this vision to the greatest extent possible. That’s ourresponsibility. When I speak with customers, I know this is what they expect from Walmart – nomatter how good or challenging the economy.

At the same time, we will live and uphold our extraordinary values and beliefs that are the foundationof everything we do. We’ll show that we respect individuals and always put our customers first, whiledriving the changes needed to be an even better company.

We will make the absolute most of our opportunity and capacity to lead as a retailer, as a company,and as people who truly care about serving and helping other people around the world.



LOCATIONS AND SUBSIDIARIESHead Office

Wal-Mart Stores, Inc.702 Southwest 8th StreetBentonvilleArkansas 72716USAP:1 479 273 4000http://www.walmartstores.com

Other Locations and Subsidiaries

Wal-Mart Supercenter Store #3795Wal-Mart Store #35202100 88Th St400 Park PlNorth BergenSecaucusNew Jersey 07047New Jersey 07094USAUSA

Wal-Mart Store #3562Wal-Mart Store #5447189 Route 46 West150 Harrison AveSaddle BrookKearnyNew Jersey 07663New Jersey 07032USAUSA

Neighborhood Market Store #3578Wal-Mart Store #52937960 Long Point Rd77 Green Acres RdHoustonValley StreamTexas 77055New York 11581USAUSA

Wal-Mart Supercenter Store #2066Wal-Mart Store #27182727 Dunvale Rd9555 So. Post Oak RoadHoustonHoustonTexas 77063Texas 77096USAUSA

Wal-Mart Supercenter Store #2724Neighborhood Market Store #50941107 South Shaver Street9700 Hillcroft StreetPasadenaHoustonTexas 77506Texas 77096USAUSA


Wal-Mart Stores, Inc.Locations and Subsidiaries

Wal-Mart Store #2204Wal-Mart Store #54021300 Des Plaines Aveue4650 W North AveForest ParkChicagoIllinois 60130Illinois 60639USAUSA

Wal-Mart Store #2816Wal-Mart Store #19385630 Touhy Avenue7050 South Cicero AvenueNilesBedford ParkIllinois 60714Illinois 60638USAUSA

Store #1782Wal-Mart Store #5485701 Grand Central Ave2500 W 95Th StViennaEvergreen ParkWest Virginia 26105Illinois 60805USAUSA

Wal-Mart Supercenter Store #2078Wal-Mart Supercenter Store #2823804 Pike Street2900 Pike StreetMariettaParkersburgOhio 45750West Virginia 26101USAUSA

Wal-Mart Supercenter Store #2849Wal-Mart Supercenter Store #3486320 Mallard Lane929 East State StreetMasonAthensWest Virginia 25260Ohio 45701USAUSA


Wal-Mart Stores, Inc.Locations and Subsidiaries

wal-mart profile

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