Walmart Inc. · NASDAQ:WMT
Walmart — Q3 FY2017 Earnings Presentation
28 slides from Walmart's earnings presentation, November 2016
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 January 31, 2017, adjusted earnings per share and our effective tax rate for the year ending January 31, 2017, Walmart U.S.'s comparabl
Slide 3: Guidance
Guidance The company's guidance for earnings per share for fiscal year 2017 assumes currency exchange rates remain at current levels. The adjusted earnings per share guidance excludes the non-cash gain of $0.14, net of tax, from the sale of Yihaodian in China to JD.com in Q2 FY17. Also, this updated
Slide 4: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. (Amounts in millions, except per share data) Q3 $ Δ1 % Δ1 YTD $ Δ1 % Δ1 Total revenue3 $118,179 $771 0.7% $354,937 $2,474 0.7% Total revenue, constant currency2,3 $120,321 $2,913 2.5% $363,340 $10,877 3.1% Net sales $117,176 $578 0.5% $351,567 $1,637 0.5% Net sales, constant cu
Slide 5: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. Q3 bps Δ1 YTD bps Δ1 Gross profit rate 25.3% 34 bps 25.1% 49 bps Operating expenses as a percentage of net 21.8% 103 bps 21.3% 100 bps sales Effective tax rate 29.4% -448 bps 30.6% -295 bps Debt to total capitalization2 NP NP 39.2% -50 bps Return on investment3,4 NP NP 15.0% -9
Slide 6: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. (Amounts in millions) Q3 $ Δ1 % Δ1 Receivables, net $5,344 $332 6.6% Inventories $49,822 -$884 -1.7% Accounts payable $42,990 $2,437 6.0% 1 Change versus prior year comparable period. 6
Slide 7: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. (Amounts in millions) YTD $ Δ1 Operating cash flow $19,644 $4,639 Capital expenditures $7,459 -$764 Free cash flow2 $12,185 $5,403 (Amounts in millions) Q3 % Δ1 YTD % Δ1 Dividends $1,549 -1.4% $4,682 -1.0% Share repurchases3 $1,402 220.8% $6,254 263.6% Total $2,951 47.0% $10,93
Slide 8: Walmart U.S.
Walmart U.S. (Amounts in millions) Q3 Δ1 YTD Δ1 Net sales $74,550 2.5% $224,086 3.3% Comparable store sales2,3 1.2% -30 bps 1.2% -20 bps • Comp traffic 0.7% -100 bps NP NP • Comp ticket 0.5% 70 bps NP NP E-commerce impact3,4 ~0.5% ~35 bps NP NP Neighborhood Market ~5.2% -~280 bps NP NP Gross profit
Slide 9: Walmart U.S. - financial highlights
Walmart U.S. - financial highlights Sales • Net sales increased 2.5%, or approximately $1.8 billion. • Comp sales increased 1.2% led by comp traffic of 0.7% and improved unit sales. On a 2-year stack basis, comp sales and traffic were up 2.7% and 2.4%, respectively. • Market food deflation negativel
Slide 10: Walmart U.S. - merchandise highlights
Walmart U.S. - merchandise highlights Category Comp Comments Continued solid traffic in food and consumables was largely offset by Grocery 1 relatively flat 150 bps of market deflation that negatively impacted food comps. Consumables growth was led by beauty/cosmetics and pets, reflecting improved a
Slide 11: Walmart International
Walmart International Constant Constant (Amounts in millions) Reported currency1 Reported currency1 Q3 Δ2 Q3 Δ2 YTD 1 Δ2 YTD Δ2 Net sales $28,390 -4.8% $30,527 2.4% $85,094 -6.2% $93,417 3.0% Gross profit rate Increase 49 bps NP NP Increase 55 bps NP NP Operating income3 $1,354 1.2% $1,488 11.2% $4,
Slide 12: Walmart International - financial highlights
Walmart International - financial highlights Sales • Ten of 11 markets had positive comp sales. Seven of 11 markets had comp sales greater than 4 percent. • Strength across our focus markets of Walmex, Canada and China. • Currency exchange rate fluctuations negatively impacted net sales by $2.1 bill
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 -5.8% -4.2% -1.6% -3.8% Increase Decrease 3¹ Walmex5 7.0% 0.8% 6.2% 8.6% Increase Increase Canada 1.1% 0.2% 0.9% 3.3% Increase Decrease6 Brazil 8.1% 0.5% 7.6% 3
Slide 14: Walmart International - key market highlights
Walmart International - key market highlights Walmex • Walmex comp sales on a two-year stack basis increased nearly 13 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 increase
Slide 15: Walmart International - key market highlights (cont.)
Walmart International - key market highlights (cont.) Canada • Net sales increased 3.3 percent. • Gained 60 basis points of market share for the 12-week period ended October 22, according to Nielsen. • Our cost analytics program made good progress helping to drive down COGS enabling further investme
Slide 16: Walmart International - key market highlights (cont.)
Walmart International - key market highlights (cont.) China • Comp sales showed improvement driven by performance in hypermarkets, fresh offering and solid performance during the Mid-Autumn Festival. • Focused on driving efficiency, reducing expenses and strengthening our portfolio through ‘We Opera
Slide 17: Sam's Club
Sam's Club Without fuel1 With fuel Without fuel1 With fuel (Amounts in millions) 2 2 2 Q3 Δ Q3 Δ YTD Δ YTD Δ2 Net sales $13,169 1.8% $14,236 1.1% $39,345 1.7% $42,387 0.2% Comparable club sales3 1.4% 100 bps 0.7% 400 bps 0.7% — bps -0.8% 230 bps • Comp traffic -0.5% -20 bps NP NP NP NP NP NP • Comp
Slide 18: Sam's Club - financial highlights
Sam's Club - financial highlights Sales • Comp sales1 for the period increased 1.4%. • Market deflation negatively impacted comp sales, primarily in food, by approximately 110 basis points. • Tobacco performed well, along with health & wellness and home & apparel. • E-commerce sales contributed appr
Slide 19: Sam's Club - category highlights
Sam's Club - category highlights Category Comp Comments Commodity deflation continued to pressure results in fresh meat and dairy categories. Fresh / Freezer / Cooler - mid single-digit Assortment changes in frozen foods negatively impacted sales. Produce again delivered positive results on item ava
Slide 20: Third-party FCPA- and compliance-related expenses
Third-party FCPA- and compliance-related expenses Q3 YTD (Amounts in millions) FY17 FY16 FY17 FY16 Ongoing inquiries and $24 $22 $68 $70 investigations Global compliance program and 5 8 14 23 organizational enhancements Total $29 $30 $82 $93 • In fiscal year 2017, we expect our third party FCPA- and
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 metrics to assess returns on assets. Management believes ROI is a meaningful metric to share wi
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 October 31
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 $12.2 billion and $6.8 billion for the nine months ended October 31, 2016 and 2015, respectively. The
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 quarter ended October 31, 2016, the percentage changes in those financial measures from the prior year period, Sam's Club's comparable club sales for the 13-week and 39-week periods ended October 28, 2016 and Sa
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 nine months ended October 31, 2016 and 2015. Three Months Ended October 31, Nine Months Ended October 31, (Dollars in millions) 2016 2015 Percent 201
Slide 27: Non-GAAP measures - adjusted EPS
Non-GAAP measures - adjusted EPS Forecasted Adjusted EPS (Forecasted Adjusted EPS) is considered a non-GAAP financial measure. Management believes that Forecasted Adjusted EPS for Fiscal 2017 is a meaningful metric to share with investors because that metric, which adjusts EPS for certain items reco
Slide 28: 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