2015 Shareholders Meeting Financial Update

June 05, 2015

Remarks as Prepared for Charles Holley

Good morning!  Wow! What a great kick-off to the meeting!

Before I get into the financials, I would like to talk about the impact that YOU, our associates, are making for our customers… and even the world.

If you think about our business, it all starts with our customers, whether they are selecting items from the shelf in the store or clicking through our website; we are serving our customers almost 13.5 billion times per year. …….13.5 billion times

Now that's roughly twice the population of the entire planet!

If you do the simple math, that equates to each and every associate engaging with customers more than 6,000 times per year.

And, we are all part of the 2.2 million Walmart associates around the globe serving our customers.  Associates just like you and me!

That's the opportunity WE have to improve people's lives around the globe.

You are helping our customers save money and live better.

All of you should be proud.  And when we work together, it makes a big difference for our customers and our company.  Look back 20 years ago, our customers were calling for the convenience of a place they could go and find the broadest assortment of general merchandise AND food at the lowest prices.

And how did your company respond? With the supercenter!

Today, we are in a very similar situation.

Our customers are redefining convenience.

They want more access to an even broader assortment and the same great low prices.  Not only that, they want to shop whenever, wherever and however it's convenient.

So how have we responded? 

We have stepped up our investments in small formats and we are focused on creating a world class experience for our customers that integrates their shopping experience between stores and eCommerce.


Financials Introduction:

You may have read in a recent Walmart World magazine where Greg Penner, our Vice Chairman of the Board said  "Financially, we are rock   solid".

And you know what, that is a great way to describe the financial strength of your company.   …We ARE rock solid!

I can tell you that our financials are rock solid in all major aspects; - sales - profit - cash flow - balance sheet and - returns to shareholders.

Sales:

Last year, we grew our sales $9 billion dollars to $482 billion dollars

And remember, I mentioned we are evolving our investments to meet our customer's needs just like we did twenty years ago.

And over that twenty year period, we have grown our sales $400 billion dollars!

In fact, we have grown our sales every single year since the inception of the company in 1962!

You know, our sales are almost half a trillion dollars……….  Half a trillion dollars!  ... Wow! That's incredible.

But just like Mr. Sam said, it is not just about being big; it is about being the best.  Sales come from serving customers every day.

One associate, one click, one customer at a time.

Our sales growth cannot be achieved without YOU taking care of our customers.

Let's see what's behind that $482 billion of sales.  International, let's start with you.

Last year, while you are serving customers in 26 countries, you lead the company in performance. Your sales reached $136 billion dollars.

And if you look at sales in the local currency of those countries, that's an increase of 3.6% AND... you grew your profit faster than sales!

You know, on your own, your sales would make you the second largest retailer in the world  ...that is amazing.

We are very proud of you, thank you International!

Sam's club, you achieved record sales of $58 billion dollars last year.  ....Outstanding!

But not only that, your profit was also a record high.

With more than 600 clubs and 110,000 associates, you continue to show you are committed to creating THE most valued membership organization.  Thank you Sam's club!

Walmart US… you also achieved a record, $288 billion dollars in sales last year. 

That is an increase of over 3%, from the prior year, and it is one of the best years of growth since the financial crisis.

You are now operating in over 4,500 units with multiple formats.

In fact, Neighborhood Markets drove a comp sales increase of over 6%.

Your traffic has been positive for the last two quarters.

And during fiscal 2015 you turned the overall comp sales positive for the first time in seven quarters.

That is a great performance you should all be proud of.    ... Thank you Walmart US!

And Global eCommerce....

Now, it's important to remember that all of our eCommerce sales are embedded within the business segments.

Last year, your sales reached $12.2 billion dollars.

That was a growth of 22% and that increase outpaced the global market.

And as you work with the stores to test innovations, like order pick up and grocery home shopping, you are positioning Walmart to become THE global leader in providing a seamless shopping experience for our customers around the world.

Thank you for an outstanding year Global Ecommerce!

Operating Income:

Now, I have to tell you upfront that last year wasn't an easy year for us.

We were hit by a surge in U.S. healthcare benefit costs and currency headwinds just to name a couple of items.

But you should be proud, because despite those headwinds, we were able to generate $27 billion dollars in operating profit last year

On an absolute basis our bottom line is STRONG. 

In fact, again, if you compare it to twenty years ago, you can see how much we have been able to increase our profits over that period of time.

Profit grew around 1% over last year, but let me emphasize here; there are no other retailers and not many companies out there, who could weather major headwinds and still grow profit without compromising investments for future growth. 

Cash Flow from Operations:

Now, sales and profit are important as they help us generate cash, which leads us to cash flow.

Our company generated $29 billion dollars in operating cash flow last year. 

That is another strong number. 

And by the way, that's another record and ten times more than we were able to generate twenty years ago.

So how do we generate such strong cash flow? 

It all starts with the profits in our stores and clubs, and next, our working capital, which is basically how we manage inventory in our stores and clubs and how we pay for that inventory.

So, you are probably asking yourself, how do we use our cash?

First, we always want to invest in growth, second, we want to pay a good dividend to our shareholders, and then, with what is leftover, we repurchase shares of stock, which is another way we reward our shareholders.

All of this is based on the foundation of a double A credit rating, which is a measure of the strength of our cash flow and balance sheet.

In fact, we have the highest credit rating in the retail sector and also one of the highest ratings among corporations worldwide.

I don't know what else to say but….. that's rock solid.  

So, let's talk a little about our first priority for how we use our cash…GROWTH.

So how much did we spend on growth last year?

We spent $14 billion dollars on investing in our stores and clubs, distribution centers and technology assets, as well as acquiring the remaining shares in Walmart Chile.

In today's changing retail environment, we also need to change the way we use our cash to ensure we meet the customers' needs.

That is why, we are also focused on more small formats and e-commerce initiatives.

Over time, our investments have grown to $117 billion dollars which represent over 11,000 stores and clubs around the world along with all of our technology investments.

That is a strong balance sheet.

But that's not all. I am going to add a line here  We are investing more in YOU, our associates this year and going forward.

For example, I know many of you are aware of the billion dollar investment for wages and training in the US, this year.

Whether our company invests in stores or in wages and training, we do this to better serve our customers, which in turn, drives sustainable growth for the company, generates more opportunities for you, and creates more  value for our shareholders.  ...That is a "win, win, win"!

Which brings us to the next priority; returns to our shareholders.

Last year, we paid out over $6 billion dollars in dividends to our shareholders and purchased one billion dollars of our own shares.

And as you can see, Walmart has a great history of increasing dividends.  The year-over-year increase has averaged almost 15 percent over the last 20 years.

In fact, we have increased our dividend every year since we started to pay dividends 42 years ago

I think that speaks volumes about our commitment to shareholders

Conclusion:

So we have covered some of our key financial metrics and as the Chief Financial Officer of our company, let me give you my take aways……

  • We had record sales with Positive comps, giving us good momentum for this year
  • Modest growth in profit, but we still grew despite major headwinds
  • Our cash flow was a record high
  • Our balance sheet is one of the strongest in the world
  • And we have a history of dependable returns to our shareholders.

These are the results of a company that is Rock SOLID.
This strength allows us to make investments to meet our customer's needs, not only for today, but into the future.

Your Walmart is a remarkable company, and whether you are in the stores, clubs, distribution centers, ecommerce operations, or in any of our home offices, each and every one of you makes the difference

Thank you for all that you do!

 

 

 

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