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Wal-Mart Stores, Inc. (WMT)

F2Q2011 Earnings Call Transcript

August 17, 2010 8:30 pm ET


Carol Schumacher – VP, IR

Mike Duke – President and CEO

Charles Holley – EVP, Finance and Treasurer

Bill Simon – President and CEO, Walmart U.S.

Doug McMillon – President and CEO, Walmart International

Brian Cornell – President and CEO, Sam’s Club

Tom Schoewe – EVP and CFO

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Welcome to the Wal-Mart earnings call for the second quarter of fiscal year 2011. The date of this call is August 17th, 2010. This call is the property of Wal-Mart Stores, Inc., and intended solely for the use of Wal-Mart shareholders. It should not be reproduced in any way. You may navigate through this call as follows. (Operator instructions)

This call contains statements that Walmart believes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and intended to enjoy the protection of the Safe Harbor for forward-looking statements provided by that Act. These forward-looking statements generally are identified by the use of the words or phrases anticipate, assumes, expect, forecasting, goal, look forward, may impact, plan, on track, should drive, should moderate, will be, will be able, will benefit, will bring, will broaden and accelerate, will continue, will improve, will not stray, will open, will provide, will put, will reduce, will see, or a variation of one of those words or phrases in those statements or by the use of words and phrases of similar import.

Similarly, descriptions of our objectives, plans, goals, targets, or expectations are forward-looking statements. The forward-looking statements made in this call discuss, among other things, management’s forecasts of our diluted earnings per share from continuing operations attributable to Wal-Mart for the third quarter of fiscal year 2011 and for all of fiscal year 2011, the assumption underlying those forecasts that currency exchange rates will remain at current levels, management’s forecasts for the comparable store sales for our Walmart U.S. segment and comparable club sales without fuel for our Sam’s Club segment, in each case, for the current 13-week period, management’s expectations as to our anticipated tax rate for fiscal year 2011, quarterly fluctuations in that tax rate and factors that will affect that tax rate, management’s goal for a consistently high return on investment and management’s expectation that the application of a new inventory valuation method will reduce reported earnings per share in the third quarter of fiscal year 2011 and for how the comparable period comparison will be affected by that application.

Those forward-looking statements also discuss management’s expectations for consistently strong results in our Sam’s Club segment, our Walmart International segment continuing to be a strong contributor to our growth and overall results, year-over-year pressure from increases in inventory to be seen in the last half of fiscal year 2011, management of inventory to be in line with current business needs, the moderation of our payables to inventory in the second half of fiscal year 2011, future store openings, and construction of our stores in Chicago, Illinois, as well as management’s view that we will not stray from our EDLC-EDLP business model.

In addition, those statements discuss the expectations of management that our Walmart U.S. segment is on a track for improvement in the third quarter of fiscal year 2011, and will have a more relevant inventory assortment and the right mix of new and innovative products, will broaden and accelerate key sustainability initiatives and will see better comparable sales in its apparel business by the fourth quarter of fiscal year 2011, and that changes being made in the segment’s business will improve its top line sales in the fourth quarter; the segment’s inventory will increase modestly, and the segment’s gross margin rate for the second half of fiscal year 2011 will be essentially flat compared to last year.

The forward-looking statements also note management’s plan for our Walmart U.S. segment to win in every category which allow customer purchasing decisions to drive the goods to be included in the segment’s assortment. The forward-looking statements made in this call also address management’s expectations relating to the Netto Food stores our subsidiary, ASDA Group, intends to acquire bringing certain benefits to ASDA’s operations, a new store opening by ASDA, the expected success of our Sam’s Club segment in the back-to-school season and our Sam’s Club segment continuing to look for innovative ways to drive traffic and membership renewals and upgrades.

The forward-looking statements also discuss the anticipation and expectations of Wal-Mart and its management as to other future occurrences, objectives, goals, trends and results. All of these forward-looking statements are subject to risks, uncertainties and other factors, domestically and internationally, including, general economic conditions, geopolitical events and conditions, the cost of goods, competitive pressures, levels of unemployment, levels of consumer disposable income, changes in laws and regulations, consumer credit availability, inflation, deflation, consumer spending patterns and debt levels, currency exchange rate fluctuations, trade restrictions, changes in tariff and freight rates, changes in costs of gasoline, diesel fuel, other energy, transportation, utilities, labor and health care, accident costs, casualty and other insurance costs, interest rate fluctuations, financial and capital market conditions, developments in litigation to which Wal-Mart is a party, weather conditions, damage to our facilities resulting from natural disasters, regulatory matters, and other risks.

We discuss certain of these matters more fully in our filings with the SEC, including our most recent Annual Report on Form 10-K, and the information on this call should be read in conjunction with that Annual Report on Form 10-K, and together with all our other filings, including quarterly reports on Form 10-Q and current reports on Form 8-K, which we have made with the SEC through the date of this call. We urge you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements we make in this call.

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