Total Walmart International $4.6 $4.5 - $5.0 $4.0 - $4.5 $4.0 - $4.5
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1 International Doug McMillon President & Chief Executive Officer 2 International leadership team Enrique Ostalé Scott Price David Cheesewright Judith McKenna Cathy Smith Latin America Asia UK, Canada, Africa Strategy & Development Finance Tom Waldron Maggie Sans Daniel Trujillo Tim Cheatham People Corporate Affairs Chief Compliance Officer General Counsel 3 Delivering on commitments Last year’s key takeaways Progress YTD Disciplined growth Disciplined growth . EDLP transition . EDLP progress in every market . New store execution . New store performance improving . E-commerce capabilities . E-commerce capabilities developing Improve returns Improve returns . Leverage expenses . Did not leverage in the first half . Capital discipline . Slowed new store growth to improve quality Deeper talent Improved depth and strengthened capabilities Excellence in compliance Global organization and foundation in place Social and environmental leadership Progress on energy, waste and supply chain 4 FY14 first half financial performance Sales growth Operating income growth 4.7% (2.9%) 0.1% 2.9% Reported Excl. Currency Adjusted Reported Excl. Currency Adjusted China & Brazil impact China & Brazil impact eCommerce eCommerce 5 Winning market share FY14 first half Walmart Growth 25.8% 24.0% Market Growth 13.6% 9.9% 10.4% 8.1% 8.3% 8.9% 6.7% 6.1% 6.1% 4.7% 4.5% 3.7% 2.5% 0.8% Argentina Brazil Chile Mexico & China -0.8% -0.4% South Canada UK Central Japan Africa America 6 Expense leverage performance 20.0% 20.0% 19.7% 19.7% 19.6% 19.5% 19.4% 19.0% FY09 FY10 FY11 FY12 FY13 7 FY14 first half expense leverage performance X X X X X China Japan South Africa Chile India UK Mexico & Canada Brazil Argentina & Sub-Saharan Central Africa America Units per labor hour improvement vs. LY . Property, health & welfare taxes . eCommerce investments UK . Customer experience investments . eCommerce investments Canada 8 Strong return on investment Wal-Mart Stores, Inc. Notes: The ROIs above are non-GAAP measures and are based on information as of December 31, 2012. The ROI information above is based on public information and internal data for Wal-Mart Stores, Inc. and Walmart International. Our information for Walmart’s competitors is based on public information and information from Capital IQ. ROIs for Walmart’s competitors above have been calculated utilizing Walmart’s ROI methodology. 9 FY13 ROI by market Mexico Canada Walmart International ROI China Central UK Chile America South Africa & Argentina Sub-Saharan Japan Brazil Africa Best-in-class in market Moderate improvement opportunity Greater improvement opportunity Source: Information for the countries above is based on the company's internal data. Certain Walmart International segment overhead expenses have not been allocated to the markets and are not reflected in the ROI by market presented above. ROI information is a non-GAAP measure. 10 Building a great business 11 Building a great business Disciplined growth World-class compliance Systems capabilities Operational process improvement Purpose, culture, operating principles 12 Disciplined growth . Reset India . Sale of VIPS restaurants in Mexico . Close underperforming stores in Brazil . FY15 operating income benefit of +20 bps . Close underperforming stores in China . FY15 operating income benefit of +30 bps 13 Plan to win Be in good Portfolio businesses Management Growth Leverage Be the best-in-class operator Returns 14 Be in good businesses Invest in good . markets Portfolio Management . formats . channels . store locations 15 Be in good businesses – Mergers & Acquisitions Focus on existing markets Acquire capabilities Selectively enter new markets 16 20+ year history of growth Zellers (Canada) ($ in B) Yihaodian (China), Massmart (Africa) and Netto (UK) $160 Newly acquired sales D&S (Chile) Trust-Mart (China) and JV Bharti (India) $140 Cumulative acquisition sales $135 Organic sales Sonae (Brazil), CARHCO (Central America), and $126 $120 Seiyu (Japan), Sold S. Korea and Germany $109 Cifra $97 $100 Wertkauf (Germany) $96 (Mexico) Bompreco (Brazil) $91 Mexico Makro (S. Korea) $77 $80 Argentina Interspar (Germany) and Brazil ASDA (UK) $59 $60 $53 $48 Woolco China $41 $40 (Canada) $32 $35 $23 $20 $8 $12 <$1 <$1 <$1 $1 $4 $5 $0 17 Disciplined growth Net store sq. ft. Capital expenditure (in millions) (FY14 - FY17) 374-376 14 12-14 19 42 21 21 245 45% 362 ~ 130 million 329 sq. ft. 348 ~ 7.3% CAGR between 55% FY09 FY10 FY11 FY12 FY13 FY14E FY15PFY15E FY15EFY15P Developed Emerging 18 Capital expenditure update [PlaceholderFY14 – Capex numbersFY14 being FY13 FY15 CapEx detail ($ in B) reviewedEstimate with Cathy TuesdayEstimate 8am (10/1)] Actual Projection (Original) (Revised) New stores $2.5 $2.2 - $2.5 $1.9 - $2.1 $1.7 - $1.9 Remodels $0.5 $0.7 $0.7 $0.8 Logistics $0.4 $0.6 $0.4 $0.5 Other $1.2 $1.0 - $1.2 $1.0 - $1.3 $1.0 - $1.3 Total Walmart International $4.6 $4.5 - $5.0 $4.0 - $4.5 $4.0 - $4.5 Sq. ft. detail (millions) Net new store sq. ft. 19.4 20 - 22 14 12 - 14 19 Be the best-in-class operator Drivers of growth and returns Foundations for growth and returns 20 Drive growth with innovation – eCommerce Grocery Home Shopping Global Walmart.com UK lead market Offsite Offsite drive through pick up At store pick up Mobile “Click & pop up Collect” One Store Open to Shop in Delivery the World Store to home Connecting with Stores Online Mobile Tablet Social customers 21 A healthy core – fresh food Chile Canada Produce Events Your Fresh Market Launch 22 A healthy core – private brand Japan - food UK - food UK - apparel Chosen by You Chosen by Kids George – kidswear 23 Aggressively drive the productivity loop The Four Ws: Grow sales Operate We Operate For Less for less EDLP journey We Move For Less Sell We Construct For Less for less We Buy For Less Buy for less 24 Productivity loop – We Operate for Less Process Foundations Innovation Workforce Tunnel Management Scanning 25 Productivity loop We Buy for Less We Move for Less We Construct for Less UK Japan IPL leverage - global Mexico network Pre-fabricated olive oil buy design - consolidation restroom 26 Continuing on our EDLP journey Recognized as EDLP Competitive Achieve Lowest Cost Base Lowest Basket Price Advantage Canada Japan High inflation UK limiting effectiveness Learning and Brazil testing concepts China Mexico & Time Chile Central America Argentina India Cost structure too high; retail divisions implemented, Strong cost position; Using EDLC and wholesale still EDLP largely EDLP as an Early stages implementing implemented advantage South Africa & Sub-Saharan Africa Stage of maturity 27 Be the best-in-class operator Drivers of growth and returns Foundations for growth and returns 28 Connecting people to purpose Merchant Culture and Leadership Depth Expertise Engagement and Diversity 29 Building leadership depth and capability Steve Gian Carlo Michiko John Jesica Breen Nucci Otsubu Furner Duarte Brazil Chile Japan China Chile Gary Guilherme Steve Ann Karina Severson Loureiro Smith Bordelon Awad Japan Brazil UK Asia Mexico 30 Compliance is part of our culture 31 Global compliance leadership Jay Jorgensen Daniel Trujillo Phyllis Harris Seth Beal Global Chief Chief Compliance Officer Chief Compliance Global Chief Compliance Officer Compliance Officer International Officer, U.S. eCommerce & Leverage Tom Gean Jan Saumweber Jon Avila Global Anti-Corruption Ethical Sourcing Chief Privacy Officer Compliance Officer 32 Global compliance resources Global Chief Compliance Officer International Chief U.S. Chief Compliance Officer Global Anti-Corruption Officer Compliance Officer UK/Canada/ Asia Latin America U.S. Compliance UK China Mexico & Africa CCO CCO CCO Organization Central America UK China Mexico & South Africa & Japan Central America Sub-Saharan Chile Africa South Africa & Japan Sub-Saharan Chile India Brazil Africa Canada India Brazil Canada Argentina Argentina 33 Compliance as a competitive advantage 14 global compliance Financial control subject areas enhancements Anti- Ethical Licenses & Corruption Sourcing Permits . Strengthening our financial Anti-Money Food Safety Privacy controls to support a world- Laundering class anti-corruption Health & Product Antitrust compliance program Safety Safety Consumer Health & Trade . Standardizing processes and Protection Wellness controls across markets Labor & Environment Employment 34 Case study: China China’s rapid growth 1980 3300% China 2013 G5 120% 1980 1985 1990 1995 2000 2005 2010 2015 2018 Projections G5: US, UK, France, Germany, Japan 35 China – global leadership talent China US UK Canada New Zealand Singapore Hong Kong Australia Germany 36 Growth in China Strengthening and expanding the portfolio ` Beijing Wuhan Shanghai Chengdu-Chongqing Fuzhou-Xiamen Kunming Guangzhou–Shenzhen 37 China – fresh food Delivering fresh quality Delivering fresh excitement 38 China – compliance Ensuring quality through compliance 39 Case study: China Increasing growth, performance and profits . Building a strong foundation . Reducing costs . Strengthening EDLP . Growing the portfolio We make money in China. We believe in China. We will win in China. 40 Plan to win Be in good businesses Growth . Actively manage our portfolio Be the best-in-class operator . Drive new growth with innovation . Sustain a healthy core Leverage . Aggressively drive the productivity loop . Build leadership depth . Make compliance a competitive advantage Returns 41 Appendix 42 Appendix A Market Growth Sources: Argentina: Nielsen, Brazil Nielsen, Canada: Statistics Canada ATRS, China (FMGC only): Nielsen; Japan: Ministry of Economy, Trade and Industry (METI); Chile: INE; Mexico & CAM: ANTAD (Retail and Departmental Stores Association) & Nielson (for CAM); South Africa: Government official statistics, and UK: Kantar World panel data-24 weeks ending 7th July 43 .