Retailer Presentation · • In March 2007, Wal-Mart launched Site to Store, a service that allows Wal-Mart shoppers to shop for products online and have them delivered to store free

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Retailer Presentation


Contents

Retailer Summary

Strategy

Management Structure

Countries of Operation

Global Retail Index

Financial Information

Key Formats

SWOT


Summary

• Domestic Market: US

• Operating countries: 14

• Turnover (Fiscal 2008): $378,799m

• Store Numbers: 7,262

• Sales Area: 869,341,000 sq. ft

• Number of Formats: 6

• Ownership: Public

• CEO: Lee Scott


Corporate Strategy

Long-Term Strategy

• Low prices (Every Day Low Price - EDLP)

• In-stock positions

• Customer service

Short-Term Priorities

• Reducing US Supercenter roll-out to improve ROI: Wal-Mart will now aim to open 185 ne Supercenters

this fiscal year, instead of 265-270 stores announced in October 2006.

• Efforts to continue to improve store productivity: A three-year plan has been drawn up to drive returns

and sales through customer segmentation, with Fiscal 2008 marking the second year of the three-year

plan.

• Reduction in capital expenditure: Total capital expenditure is expected to decline from $17bn to $15bn

this year.

In September 2007, Wal-Mart unveiled its new

slogan “Save Money. Live Better.”


Operating Model

Lower retail prices

Increased customer traffic

Reduced costs and expenses

Higher sales volumesImproved operating

efficiency


Private Label Strategy

• In the US, Wal-Mart is highly loyal to national brands. According to Wal-Mart, this can help establish the value proposition in a category.

• Private label penetration is highest in the UK, where over 50% of grocery sales are now being generated from own brands (Source: TNS).

• Approximately one third of Wal-Mart’s private label brands are used in more than one market.

• Wal-Mart’s most international private label brands include:

• Great Value – Grocery (US, UK, Canada, Mexico, Brazil, Argentina, Japan)

• Equate – Health & Beauty (US, Argentina, Canada, Brazil, Mexico)

• Old Roy – Pet Food (US, UK, Brazil, Argentina)

• George - Clothing (US, UK, Mexico, Canada, Japan, Puerto Rico


E-commerce

• Wal-Mart operates e-commerce sites in US, UK, Canada, Japan,

Mexico and Puerto Rico.

• In May 2007, Raul Vazquez was named as President and CEO

of Walmart.com.

• In March 2007, Wal-Mart launched Site to Store, a service that

allows Wal-Mart shoppers to shop for products online and have

them delivered to store free of charge.

• The roll-out was complete in July 2007. The service is now

readily available across more than 3,300 Wal-Mart stores in the

US.

• Site to Store aims to give the Wal-Mart shopper:

1. Greater Value

2. Added convenience

3. New assortments


Board of Directors

Lee ScottChief Executive Officer

Thomas M. SchoeweExecutive Vice President and

Chief Financial Officer

Eduardo Castro-Wright

President & Chief Executive,

Wal-Mart Stores Division

Doug McMillonPresident &

Chief Executive, Sam’s Club

Michael T. Duke:Vice Chairman,

International


Wal-Mart’s Store Numbers by Region (Fiscal 2008)

NAFTA(85% of sales)

5,523 storesHypermarkets, Supermarkets,

Discount, Cash & Carry, General Merchandise,

Convenience

South/Central America(4% of sales)

791 storesHypermarkets, Supermarkets,

Discount, Cash & Carry, General Merchandise, Convenience

Asia(2% of sales)

596 storesHypermarkets,

Supermarkets, Cash & Carry, Department stores, General

Merchandise

Europe

(9% of sales)352 stores

Hypermarkets, Supermarkets, Discount, Other

Note: Consolidated % of sales only.

Market entry announced for

end of 2008


IGD Global Retail Index 2007

Delhaize Group1213

Costco1112

Groupe Casino 811

Aldi 910

Rewe Gruppe109

Lidl & Schwarz 138

Auchan 77

Seven & I66

Ahold 55

Metro Group44

Tesco33

Wal-Mart Stores22

Carrefour11

RetailerGRI

2006GRI

2007 RetailerGRI

2006GRI

2007

Cora Louis Delhaize2425

Marks & Spencer2724

Coop Norden2223

Kroger2122

Woolworths Ltd2321

Safeway Inc.2020

Edeka Gruppe1919

Leclerc1718

Intermarche1817

Tengelmann1616

Aeon1515

Spar International1414Leading global

operators

Leading international

retailers (potential to

be global)

International retailers

(less of a global focus)

Leading domestic retailers

(potential to internationalise

their operations)

See penultimate slide for definitions.


Top Ten Operating Markets (2008)

H, S/S, D, GM, O27,868,00035234,3991999UK

H, S/S, D5,8681491,2392005Costa Rica

H, S/S, GM, O26,425,0003944,2782002Japan*

1995

1996

1992

1994

1994

1991

-

Year of Entry

H6,3001451,068Guatemala

H, S/S, C&C, GM3,829,000543,445Puerto Rico

H, S/S, C&C36,391,0002023,440China*

H,S/S, D, C&C, C/F, O24,958,0003138,621Brazil

H, C&C, GM36,590,00030511,001Canada

H, S/S, C&C, D, C/F, O56,804,0001,02320,550Mexico

H, S/S, C&C, GM644,8654,141283,886USA

FormatsSales Area (‘000 sq.ft)

Store Numbers

Turnover ($m)

H = Hypermarket C&C = Cash & Carry S/S Superstores/Supermarkets

D=Discount C/F=Convenience/Forecourt GM = General Merchandise

O = Other


Last Full Year: FY 2008 Results

Fiscal 2008, 19th February 2008

Highlights:

• Total US comparable store sales growth reached 1.7% (excl. fuel), slightly up on the same figure reported for Fiscal 2007.

• Wal-Mart International posted sales of $90.6bn for Fiscal 2008, an increase of 17.5%. This is the result of rising comps, aggressive organic growth and additional sales through an increased stake in Seiyu and the acquisition of Trust Mart in China.

• Wal-Mart’s Return on Investment (ROI) in Fiscal 2008 stood at 19.3%, below the goal of 20%, but an improvement compared to Fiscal 2007.

5.8%11,28412,731Total Income ($m)

7.3%20,49721,996EBIT ($m)

8.6%348,650378,799Total Revenue ($m)

16.8%3,6584,273Other Income ($m)

8.6%344,992374,526Net Sales ($m)

% Change

Fiscal 2007Fiscal 2008


Five Year Review

*US Comparative store sales only. Comparative stores are considered to be those that were open as of February 1st of the prior fiscal year, and have not been expanded or relocated since that date.

**Restated to exclude operations in South Korea and Germany which are accounted for as discontinued operations

Source: IGD, Wal-Mart, at 31/01/08

7,189 (e)6,7226,1415,2894,906Number of Stores

5.80%5.88%5.99%5.99%5.86%EBIT Margin %

7.3%9.5%9.4%13.8%13.0%EBIT Growth

21,99620,49718,71317,09115,025EBIT US$ million

1.4%2.1%3%3%4%LFL Sales %*

8.6%11.7%9.4%11.3%11.6%Total Turnover Growth

378,799348,650312,101285,222256,329Turnover US$ million

200820072006**20052004


Turnover

99,627112,005

130,522156,249

180,787204,011

229,616

256,329

285,222

312,101

348,650

378,799

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006* 2007 2008

Fiscal Year

Tu

rno

ve

r ($

m)

0%

5%

10%

15%

20%

25%

% A

nn

ua

l ch

an

ge

Turnover $ million % annual change


Turnover Split by Division

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Fiscal Year

Tu

rno

ve

r ($

m)

Wal-Mart Stores Sam's Club International


Turnover Segmented by Division

11.8% (12.1)64.0% (65.6)

Wal-Mart Stores

Sam's Club

International

24.2%(22.3)

Note: Fiscal 2007 figures are shown in brackets

Fiscal 2008


Operating Profit (EBIT)

20,497

21,996

8,061

10,105

11,490

18,713

17,091

15,025

13,644

12,077

1,8011,570

0

5,000

10,000

15,000

20,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Fiscal Year

EB

IT (

$m

)

0%

10%

20%

30%

40%

% A

nn

ua

l Ch

an

ge

Operating Profit % Annual change


Store Numbers

1,960 1,921 1,869 1,801 1,736 1,647 1,568 1,478 1,353 1,209 1,075 971

344 441 564 721 888 1,066 1,258 1,471 1,713 1,980 2,256 2,447436 443 451 463 475 500 525 538 551 567 579 591

4 7 19 31 49 64 85 100 112 132

314601 715

1,004 1,071 1,1701,288 1,355

1,6032,285

2,7573,121

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Fiscal Year

Sto

re N

um

bers

Wal-Mart Discount Stores (US) Supercenters (US)Sam's Club (US) Neighborhood Markets (US)International stores


Store Numbers By Format

437 475 504 584 615 637

278 289 306 312442 434 456386

436503

558

621 702760

222217

210

332

150148

147

141

491466

436280

259245

346339

339

544

335

330329

142

142141

0

500

1,000

1,500

2,000

2,500

2002 2003 2004 2005 2006 2007 2008e

Sto

re N

um

be

rs

Cash & Carry Hypermarkets Consumer Electronics OtherDepartment Stores Supermarkets DIY Stores

Includes discontinued operations. DIY chain, Praktiker, divested in 2005. Extra supermarkets divested in 2007.


Hypermarkets

• 3,122 hypermarkets at year end Fiscal 2008• 13 markets• Estimated Net Turnover (Fiscal 2008): $218,723m*

143,29114,185,780995,550Brazil

188,99618,143,60096 (excl. Trust-Mart)3,300*China

180,00020,520,0001141,618*Japan

186,562456,516,0002,447194,600USA

Mexico

Market

93,61612,731,8001365,741

Store Numbers

Av. Sales Area (sq.ft)

Sales Area (sq.ft)

Net Turnover($m)

Top 5 Markets


Hypermarket (cont.)

US stores are aiming to be built around 5 “Power Categories”1.Fresh2.Electronics3.Home4.Apparel5.Health & Wellness

Wal-Mart has cut the number of new Supercenters it plans to open during Fiscal 2008. Wal-Mart now aims to open 185 new Supercenters this year.

Supercenters continue to drive Wal-Mart’s growth in key international markets including China, Brazil and Mexico.

In October 2006, Wal-Mart opened its first Supercenterstores in Canada. The stores trade under the ‘Your Fresh Market’ banner, and are being rolled-out fairly quickly.

Wal-Mart is currently reviewing ways to cut the costs involved with the development of new Supercenters.


Supermarket

• 1,057 supermarkets/superstores at year end Fiscal 2008• 12 markets• Estimated Net Turnover (Fiscal 2008): $40,806m*

39,93211,021,2002761,941*Japan

42,0615,552,000 1324,300USA

41,1046,247,8301521,090Brazil

44,70013,320,60029829,582UK

18,8031,203,370 641,061Mexico

Market Store Numbers


Sales Area (sq.ft)

Net Turnover

($m)

Top 5 Markets


• Because Wal-Mart is firmly focussed on rolling out its larger

Supercenter stores in the US, there is a much smaller focus on

opening new Neighborhood Markets.

• Wal-Mart plans to open between 15 and 20 new

Neighborhood Markets in Fiscal 2008.

• Asda in the UK remains Wal-Mart’s largest supermarket

business worldwide.

• The acquisition of CARHCO in September 2005 helped boost

Wal-Mart’s scale in the Central American supermarket sector.

• Many of Wal-Mart’s supermarket chains were gained as part

of a wider acquisition i.e. Asda, CARHCO, Seiyu, Sonae and

Brompreço.

Supermarket


Discount Stores

• 583 stores at year end Fiscal 2008

• 8 markets

• Estimated Net Turnover (Fiscal 2008): $8,790m*

44,06213,703,3023116,751Mexico

100,0002,100,00021720Brazil

16,000640,0004040Nicaragua

20,0001,940,00097408Guatemala

Costa Rica

Market

19,8002,198,240111510

Store Numbers


Sales Area (sq.ft)

Net Turnover

($m)

Top 5 Markets


Discount Stores

Up until the acquisition of a stake in CARHCO in September 2005, Wal-Mart’s global discount portfolio was fairly limited.

However, Wal-Mart now operates over 280 hard/soft discount stores in Central America through Wal-Mart Central America – formerly known as CARHCO.

Asda in the UK launched a discount format, AsdaEssentials, in spring 2006. A second trial store has followed in Pontefract, West Yorkshire.

However, in January 2007 Asda took the decision to close its Northampton store. Instead, it aims to focus more on the Pontefract site. There are no new Essentials trial stores set to open in the short term.

New discount store openings are not a current priority for Wal-Mart going forward, although the central American format may in time be exportable.


Wholesales

• 728 stores at year end Fiscal 2008

• 7 markets


97,444 877,0009770Puerto Rico

139,754,748,950341,260Brazil

81,8706,795,210835,592Mexico

132,37978,236,00059144,357USA

Canada

Market

100,000 600,0006400

Store Numbers


Sales Area (sq.ft)

Turnover($m)

Top 5 Markets


Wholesales

Sam’s Club remains Wal-Mart’s core members club

cash & carry format both in the US and internationally.

Wal-Mart aims to open 20-30 Sam’s Club stores in the

US during Fiscal 2008.

Wal-Mart is planning to broaden the appeal to female

shoppers at Sam’s in the US.

By broadening its appeal beyond small business

owners, Sam's Club moves ever closer to the strategy

implemented by main rival Costco.

Sam's Club continues to undergo new merchandising

initiatives in the US, has already delivered a number of

new merchandising initiatives in the US which includes

an improved offer in electronics and wine.


General Merchandise

• 1,264 stores at year end Fiscal 2007

• 5 markets


30,692399,00013381UK

111,000888,0008350Puerto Rico

80,000320,0004719Japan

114,44930,672,2002689,351Canada

107,684104,561,00097140,629USA



Sales Area (sq.ft)

Turnover($m)

Top 5 Markets


General Merchandise

The format incorporates 53 general merchandise departments, including clothing, health and beauty, household and kitchenware, electricals, toys, fabrics and crafts, garden products, sports and shoes.

Since Fiscal 2001, there has been a decline in the number of general merchandise stores in the US market. This is because stores continue to be converted into the more profitable Supercenter format.

However, the general merchandise stores remain an important part of the Wal-Mart portfolio, accounting for 26.7% of all Wal-Mart stores in the US at the end of Fiscal 2007.

The roll-out of the general merchandise format in Canada gave Wal-Mart a strong presence in Canada. Some of the stores in Alberta and Ontario are being converted into the larger Supercenter format.

Outside of North America, Wal-Mart’s general merchandise portfolio is limited to Japan and the UK.


Convenient Store

• 4 stores at year end Fiscal 2007• 1 market

4,99419,9774UnconsolidatedMexico



Sales Area (sq.ft)

Turnover$m

Markets

• Despite speculation in the press, Wal-Mart has not yet announced any plans to launch a convenience

format in either the US or UK.


SWOT Analysis

Deterioration in French trading environment.

Inflated acquisition costs

The effects of deflation in the US & Asia

Union opposition and public opinion

Restrictive planning environment in some international markets

Its ability to grow at historical rates, given the restraints of personnel and recruitment.

Rollout of ‘multi-format, single-brand’ strategy

Huge growth potential of the Chinese market

Leverage scale advantage from US integration

Penetrate urban markets in the US

Train more Senior International Associates

Continued US Supercenter roll-out both in the US and internationally, especially Canada.

Launch of a convenience format in the US

ThreatsOpportunities

International experience limited in relation to peers

Lack of assortment for upscale customers

Transparency of EDLP strategy

Profitability of Seiyu in Japan

Wal-Mart’s ROI in recent months ahs fallen below 20%

Performance of key home and apparel departments in the US.

Scale

Size of ‘home market’

Clear business model

Logistics and systems expertise

Dominance in opening price points

Lean cost structure (EDLC) which translates into EDLP.

WeaknessesStrengths

Documents

Retailer Presentation · • In March 2007, Wal-Mart launched Site to Store, a service that allows Wal-Mart shoppers to shop for products online and have them delivered to store free