Walmart Inc. · NASDAQ:WMT
Walmart — Q1 FY2017 Earnings Presentation
27 slides from Walmart's earnings presentation, May 2016
Slide 1: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc.
Slide 2: Safe harbor and non-GAAP financial measures
Safe harbor and non-GAAP financial measures This presentation contains statements as to Walmart management's guidance regarding the diluted earnings per share from continuing operations attributable to Walmart for the three months ending July. 31, 2016, Walmart U.S.'s comparable store sales and Sam'
Slide 3: Guidance
Guidance Total Walmart Sam's company FY17 Q2 EPS: U.S. comps 13-week period1: Club comps 13-week period1: • $0.95 to $1.08 • around +1.0% • Slightly positive 1 13-week period from April 30, 2016 through July 29, 2016, compared to 13-week period ended July 31, 2015. 3
Slide 4: Wal-Mart Stores, Inc. Q1 consolidated results
Wal-Mart Stores, Inc. (Amounts in millions, except share data) Q1 $ Δ1 % Δ1 Total revenue $115,904 $1,078 0.9% Total revenue, constant currency2 $119,426 $4,600 4.0% Net sales $114,986 $984 0.9% Net sales, constant currency2 $118,484 $4,482 3.9% Membership & other income $918 $94 11.4% Operating inc
Slide 5: Wal-Mart Stores, Inc. margins, tax rate and ROI
Wal-Mart Stores, Inc. Q1 bps Δ1 Gross profit rate 24.7% 60 bps Operating expenses as a percentage 21.0% 107 bps of net sales Effective tax rate 31.8% -61 bps Debt to total capitalization2 40.0% 40 bps Return on investment3,4 15.3% -130 bps 1 Basis points change versus prior year comparable period. 2
Slide 6: Receivables, inventories and accounts payable
Wal-Mart Stores, Inc. (Amounts in millions) Q1 $ Δ1 % Δ1 Receivables, net $5,187 -$626 -10.8% Inventories $44,513 -$1,797 -3.9% Accounts payable $37,997 $773 2.1% 1 Change versus prior year comparable period. 6
Slide 7: Cash flow, dividends and share repurchases
Wal-Mart Stores, Inc. (Amounts in millions) Q1 FY17 $ Δ1 Operating cash flow $6,193 $1,747 Capital expenditures $2,209 $6 Free cash flow2 $3,984 $1,741 (Amounts in millions) Q1 FY17 % Δ1 Dividends $1,573 -0.4% Share repurchases3 $2,735 876.8% Total $4,308 131.7% 1 Change versus prior year comparable
Slide 8: Walmart U.S.
Walmart U.S. (Amounts in millions) Q1 Δ1 Net sales $73,295 4.3% Comparable store sales2 1.0% -10 bps • Comp traffic 1.5% 50 bps • Comp ticket -0.5% -60 bps E-commerce impact3 ~0.2% — bps Neighborhood Market ~7.1% -80 bps Gross profit rate Increase 44 bps Operating expense Increase 141 bps Operating
Slide 9: Walmart U.S. - financial highlights
Walmart U.S. - financial highlights Sales • +1% comp sales growth led by comp traffic of +1.5%; 2-year stack basis comp sales +2.1%. • Deflation in food negatively impacted comps by approximately 60 basis points versus last year's Q1 comp. • Strength in health & wellness, apparel, home & seasonal, a
Slide 10: Walmart U.S. - merchandise highlights
Walmart U.S. - merchandise highlights Category Comp Comments Continued deflation in food was partially offset by strong traffic in Grocery1 - low single-digit grocery. Better in-stock levels and a focus on assortment drove stronger consumables results, particularly in beauty and pets. Pharmacy scrip
Slide 11: Walmart International
Walmart International Constant (Amounts in millions) Reported currency1 Q1 Δ2 Q1 Δ2 1 Net sales $28,083 -7.2% $31,581 4.3% Gross profit rate Increase 70 bps NP NP Operating income $1,164 8.8% $1,305 22.0% 1 See press release located at www.stock.walmart.com and reconciliations at the end of presenta
Slide 12: Walmart International - financial highlights
Walmart International - financial highlights Sales • Ten of 11 markets had positive comp sales. Nine of 11 markets had comp sales greater than 4%. • Continued strength at Walmex and in Canada. • Currency exchange rate fluctuations negatively impacted net sales by $3.5 billion, but was a bit lower th
Slide 13: Walmart International - key markets
Walmart International - key markets Comp3 Gross 1,2 Net Operating Country profit Sales Traffic Ticket sales3 3 income3 rate United Kingdom4 -5.7% -5.0% -0.7% -3.6% Increase Decrease Walmex5 8.6% 2.1% 6.5% 9.5% Increase Increase Canada 6.7% 4.6% 2.1% 8.6% Increase Increase Brazil 4.5% -3.7% 8.2% 1.4%
Slide 14: Walmart International - key market highlights
Walmart International - key market highlights Walmex • Strong sales momentum for Walmex continued across all formats, divisions, countries and regions, led by strong performances in food and consumables. • Growth in total sales and comp sales significantly outpaced the rest of the self-service marke
Slide 15: Walmart International - key market highlights (cont.)
Walmart International - key market highlights (cont.) U.K. • Significant, structural shifts in the market driven by growth in hard discounters and intense price competition, led to continued deflation in food that has now lasted for 20 consecutive months. • Project Renewal remains a focus with the a
Slide 16: Walmart International - key market highlights (cont.)
Walmart International - key market highlights (cont.) China • Good overall results despite challenging macro-economic environment. • A strong performance during Chinese New Year, double-digit growth in gift card loading and continued strengthening in the fresh category led to good sales growth and p
Slide 17: Sam's Club
Sam's Club Without fuel1 With fuel (Amounts in millions) 2 Q1 Δ Q1 Δ2 Net sales $12,727 2.9% $13,608 1.0% Comparable club sales3 0.1% -30 bps -1.9% 190 bps • Comp traffic -0.2% — bps NP NP • Comp ticket 0.3% -30 bps NP NP E-commerce impact4 ~0.6% 20 bps NP NP Gross profit rate Increase 18 bps Increa
Slide 18: Sam's Club - financial highlights
Sam's Club - financial highlights Sales • Comp sales1 were in-line with guidance at +0.1%. Deflation negatively impacted comp sales by approximately 50 basis points versus last year's Q1 comp. • E-commerce contributed approximately 60 basis points to comp sales. ◦ Club Pickup sales grew more than 30
Slide 19: Sam's Club - category highlights
Sam's Club - category highlights Category Comp Comments Deflationary trends continued in fresh meat and dairy. Discipline in Fresh / Freezer / Cooler - low single-digit assortment changes and slower business member traffic pressured frozen foods. Improved availability in key items led to strong resu
Slide 20: Third party FCPA and compliance-related expenses
Third party FCPA and compliance-related expenses Q1 (Amounts in millions) FY17 FY16 Ongoing inquiries and investigations $21 $25 Global compliance program and organizational enhancements $4 $8 Total $25 $33 • In fiscal year 2017, we expect our third party FCPA-related expenses to range between $100
Slide 21: Non-GAAP measures - ROI
Non-GAAP measures - ROI Management believes return on investment (ROI) is a meaningful metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term potential strategic initiati
Slide 22: Non-GAAP measures - ROI cont.
Non-GAAP measures - ROI cont. The calculation of ROI, along with a reconciliation to the calculation of ROA, the most comparable GAAP financial measure, is as follows: Wal-Mart Stores, Inc. Return on Investment and Return on Assets Trailing Twelve Months Trailing Twelve Months Ended Ended April 30,
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 $4.0 billion and $2.2 billion for the three months ended April 30, 2016 and 2015, respectively. The i
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 into U.S. dollars. We calculate the effect of changes in currency exchange rat
Slide 25: Non-GAAP measures - fuel impact
Non-GAAP measures - fuel impact The net sales and operating income of Sam's Club for the quarter ended April 30, 2016, the percentage changes in those financial measures from the prior year period, Sam’s Club’s comparable club sales for the 13-week period ended April 29, 2016 and Sam's Club's projec
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 months ended April 30, 2016 and 2015. Three Months Ended April 30, (Dollars in millions) 2016 2015 Percent Change Net Sales: Excluding Fuel $ 12,727 $ 12
Slide 27: 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 and Sam’s Club comparable measures) • Unit counts & square footage • Comparable store sales • Terminology • FY 17 earnings dates