Walmart Inc. · NASDAQ:WMT
Walmart — Wal-Mart Stores — Q4 FY2017 Earnings Presentation
31 slides from Walmart's earnings presentation, February 2017
Slide 1: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc.
Slide 2: Safe harbor and non-GAAP measures
Safe harbor and non-GAAP measures This presentation contains statements as to Walmart management's guidance regarding earnings per share for the three months ending April 30, 2017, and fiscal year ending January 31, 2018, Walmart U.S.'s comparable store sales and Sam's Club's comparable club sales,
Slide 3: Guidance
Guidance The company's guidance for earnings per share for the first quarter and full fiscal year 2018 assumes currency exchange rates remain at current levels. Additionally, this guidance assumes the full-year effective tax rate will be around 32%. U.S. Q1 FY18 EPS: Comp sales for 13-week Comp sale
Slide 4: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. (Amounts in millions, except per share data) Q4 $ Δ1 % Δ1 FY17 $ Δ1 % Δ1 Total revenue $130,936 $1,269 1.0% $485,873 $3,743 0.8% Total revenue, constant currency2 $133,584 $3,917 3.0% $496,924 $14,794 3.1% Net sales $129,750 $1,066 0.8% $481,317 $2,703 0.6% Net sales, constant
Slide 5: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. Q4 bps Δ1 FY17 bps Δ1 Gross profit rate 24.7% 5 bps 24.9% 36 bps Operating expenses as a percentage of net 20.8% 58 bps 21.2% 88 bps sales Effective tax rate 29.5% 736 bps 30.3% -4 bps Debt to total capitalization2 NP NP 37.1% -120 bps Return on investment3,4 NP NP 15.2% -30 bp
Slide 6: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. (Amounts in millions) Q4 $ Δ1 % Δ1 Receivables, net $5,835 $211 3.8% Inventories $43,046 -$1,423 -3.2% Accounts payable $41,433 $2,946 7.7% 1 Change versus prior year comparable period. 6
Slide 7: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. (Amounts in millions) FY17 $ Δ1 Operating cash flow $31,530 $4,141 Capital expenditures $10,619 -$858 Free cash flow2 $20,911 $4,999 (Amounts in millions) Q4 % Δ1 FY17 % Δ1 Dividends $1,534 -2.0% $6,216 -1.2% Share repurchases3 $2,044 -14.5% $8,298 101.8% Total $3,578 -9.6% $14
Slide 8: Walmart U.S.
Walmart U.S. (Amounts in millions) Q4 Δ1 FY17 Δ1 Net sales $83,747 2.8% $307,833 3.2% Comparable store sales2,3 1.8% 120 bps 1.4% 20 bps • Comp traffic 1.4% 70 bps NP NP • Comp ticket 0.4% 50 bps NP NP E-commerce impact3,4 ~0.4% ~10 bps NP NP Neighborhood Market ~5.3% -~170 bps NP NP Gross profit ra
Slide 9: Walmart U.S. - quarterly financial highlights
Walmart U.S. - quarterly financial highlights Sales • Net sales increased 2.8%, or approximately $2.3 billion. • Comp sales increased 1.8% led by comp traffic of 1.4%. On a 2-year stack basis, comp sales and traffic were up 2.4% and 2.1%, respectively. • Market food deflation negatively impacted foo
Slide 10: Walmart U.S. - quarterly merchandise highlights
Walmart U.S. - quarterly merchandise highlights Category Comp Comments Food and consumables traffic continued to be solid. Market deflation Grocery 1 + low single-digit negatively impacted food comps by 90 bps. Consumables growth continued to be led by beauty/cosmetics and pets, reflecting improved
Slide 11: Walmart International
Walmart International Constant Constant (Amounts in millions) Reported currency1 Reported currency1 Q4 Δ2 Q4 Δ2 FY17 Δ2 FY17 Δ2 1 Net sales $31,025 -5.1% $33,661 3.0% $116,119 -5.9% $127,078 3.0% Gross profit rate Increase 21 bps NP NP Increase 46 bps NP NP Operating income3 $1,513 -8.9% $1,724 3.8%
Slide 12: Walmart International - quarterly financial highlights
Walmart International - quarterly financial highlights Sales • Ten of 11 markets had positive comp sales, and six of 11 markets had comp sales greater than 4 percent. • Strength in key markets of Mexico and China. • Currency exchange rate fluctuations negatively impacted net sales by $2.6 billion. O
Slide 13: Walmart International - key markets quarterly results
Walmart International - key markets quarterly results Comp3 Gross 1,2 Net Operating Country profit Sales Traffic Ticket sales3 3 income3 rate United Kingdom4 -2.9% -1.8% -1.1% -0.6% Decrease Decrease 3¹ Walmex5 7.3% 1.3% 6.0% 8.9% Increase Increase Canada 0.2% -1.1% 1.3% 2.7% Increase Relatively Fla
Slide 14: Walmart International - key market quarterly highlights
Walmart International - key market quarterly highlights Walmex • Walmex comp sales on a two-year stack basis increased 15 percent. • Strong sales momentum continued across all formats, divisions, and countries. ◦ In Mexico, the strongest performance came from Sam's Club. • Comp sales in Mexico incre
Slide 15: Walmart International - key market quarterly highlights (cont.)
Walmart International - key market quarterly highlights (cont.) Canada • Net sales increased 2.7 percent. • Gained 60 basis points of market share in food and consumables and health & wellness for the 12-week period ended January 28, according to Nielsen. • Our cost analytics program made good progr
Slide 16: Walmart International - key market quarterly highlights (cont.)
Walmart International - key market quarterly highlights (cont.) China • Net sales increased 5.4 percent. Performance was broad based across hypermarkets and Sam's Club. • Fresh and grocery were strongest performing product categories. • Inventory grew at a faster rate than sales due to an earlier Ch
Slide 17: Sam's Club
Sam's Club With fuel Without fuel1 With fuel Without fuel1 (Amounts in millions) Q4 Δ2 Q4 Δ2 FY17 Δ2 FY17 Δ2 Net sales $14,978 3.0% $13,944 2.3% $57,365 0.9% $53,289 1.8% Comparable club sales3 3.1% 580 bps 2.4% 290 bps 0.2% 320 bps 1.1% 70 bps • Comp traffic NP NP 1.2% 260 bps NP NP NP NP • Comp ti
Slide 18: Sam's Club - quarterly financial highlights
Sam's Club - quarterly financial highlights Sales • Comp sales1 for the period increased 2.4%, as growth was balanced between traffic and average ticket. • Market deflation abated during the period, yet it negatively impacted comp sales, primarily in food, by approximately 50 basis points. • Tobacco
Slide 19: Sam's Club - quarterly category highlights
Sam's Club - quarterly category highlights Category Comp Comments Commodity deflation continued to pressure results in fresh meat and dairy categories. Fresh / Freezer / Cooler - low single-digit Assortment changes in frozen foods negatively impacted sales. Produce again delivered positive results o
Slide 20: Third-party FCPA- and compliance-related expenses
Third-party FCPA- and compliance-related expenses Q4 YTD (Amounts in millions) FY17 FY16 FY17 FY16 Ongoing inquiries and $12 $25 $80 $95 investigations Global compliance program and 5 8 19 31 organizational enhancements Total $17 $33 $99 $126 • In fiscal year 2018, we expect our third party FCPA- an
Slide 21: Non-GAAP measures - ROI
Non-GAAP measures - ROI We include Return on Assets ("ROA"), which is calculated in accordance with generally accepted accounting principles in the U.S. ("GAAP") as well as Return on Investment ("ROI") as measures to assess returns on assets. Management believes ROI is a meaningful measure to share
Slide 22: Non-GAAP measures - ROI cont.
Non-GAAP measures - ROI cont. The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP financial measure, is as follows: Wal-Mart Stores, Inc. Return on Assets and Return on Investment Trailing Twelve Months Trailing Twelve Months Ended E
Slide 23: Non-GAAP measures - free cash flow
Non-GAAP measures - free cash flow We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. Free cash flow was $20.9 billion and $15.9 billion for the twelve months ended January 31, 2017 and 2016, respectively.
Slide 24: Non-GAAP measures - constant currency
Non-GAAP measures - constant currency The term "currency exchange rates" refers to the currency exchange rates we use to convert the operating results for all countries where the functional currency is not the U.S. dollar ("non-USD entities") into U.S. dollars. We calculate the effect of changes in
Slide 25: Non-GAAP measures - fuel impact
Non-GAAP measures - fuel impact The net sales and operating income of Sam's Club for the three and twelve months ended January 31, 2017, the percentage changes in those financial measures from the respective comparable prior year period, Sam's Club's comparable club sales for the 13-week and 52-week
Slide 26: Non-GAAP measures - fuel impact cont.
Non-GAAP measures - fuel impact cont. The table below reflects the calculation of the fuel impact for net sales and operating income for the three and twelve months ended January 31, 2017 and 2016. Three Months Ended January 31, Twelve Months Ended January 31, (Dollars in millions) 2017 2016 Percent
Slide 27: Non-GAAP measures - adjusted EPS
Non-GAAP measures - adjusted EPS The adjusted diluted earnings per share from continuing operations attributable to Walmart (Adjusted EPS) for each of the three-month periods and fiscal years ended Jan. 31, 2017 and 2016 is considered a non-GAAP financial measure under the SEC's rules because the Ad
Slide 28: Non-GAAP measures - adjusted EPS cont.
Non-GAAP measures - adjusted EPS cont. Adjusted EPS - Fiscal 2017 Three Months Ended January 31, 2017 Diluted earnings per share: Reported EPS $1.22 Adjustment: Pre-Tax Impact Tax Impact1 Net Impact U.S. discontinued real estate projects and severance $0.12 -$0.04 $0.08 Adjusted EPS $1.30 Fiscal Yea
Slide 29: Non-GAAP measures - adjusted EPS cont.
Non-GAAP measures - adjusted EPS cont. As previously disclosed in our fiscal year ended Jan. 31, 2016 press release, we have calculated the Adjusted EPS for the three months and the fiscal year ended Jan. 31, 2016 by adjusting the EPS for each period for the amount of the dilutive impact of: (1) the
Slide 30: Non-GAAP measures - adjusted EPS cont.
Non-GAAP measures - adjusted EPS cont. Adjusted EPS - Fiscal 2016 Three Months Ended January 31, 2016 Diluted earnings per share: Reported EPS $1.43 Adjustments: Pre-Tax Impact Tax Impact1 Net Impact Closure of 269 stores globally $0.29 -$0.09 $0.20 Discrete tax items — -0.14 -0.14 Net adjustments $
Slide 31: Additional resources at stock.walmart.com
Additional resources at stock.walmart.com • Additional information related to reconciliations for our non-GAAP financial measures (ROI, free cash flow, constant currency, Sam’s Club comparable measures, and Adjusted EPS) • Unit counts & square footage • Comparable store sales • Terminology • Fiscal