Walmart Global 2H, FY 2016 Results and 2017+ Expectations

Kantar Retail Research Team March 2017 Copyright © 2017 Kantar Retail. All Rights Reserved.

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The analyses and conclusions presented in this seminar represent the opinions of Kantar Retail. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion.

This seminar is not endorsed or otherwise supported by the management of any of the companies covered during the course of the workshop or within the following slides.

2 Overview 3

1 Overview

2 Looking Ahead to 2017+

3 United States

4 Latin America

5 Asia

6 Appendix Overview

4 Greg Penner Walmart Inc. Chairman Doug McMillon President & CEO Org chart Walmart Stores, Inc.

Jacqui Canney Jeff Gearhart Dan Bartlett Greg Foran John Brett Biggs Marc Lore David Cheesewright EVP, Global EVP, Corp. Secretary EVP, Corp. Affairs President & CEO Furner EVP & CFO President & CEO, President & CEO People Division & General Counsel & Gov. Relations Walmart US Walmart U.S. President Walmart International Stores eCommerce & CEO Karen Roberts Sam’s Steven Whaley General Counsel Club Kathleen SVP, Controller Jay Jorgensen McLaughlin Chief Sustainability Global Chief Lori Flees Officer & President, Compliance Officer SVP, Corporate Walmart Foundation Scott Hilton Strategy Daniel Trujillo Tony Jeremy Clay Judith McKenna SVP, Chief Chief Compliance Steve Bratspies Rogers King Johnson, EVP, Chief EVP, U.S. Revenue Officer, Laura Phillips Officer, Wmt Int’l EVP, Chief Merch Chief Enterprise Claire Babineaux- Technology eCommerce SVP, Operating Officer Officer Marketing Fontenot Officer and Chief Sustainability Officer SVP, Treasurer Global Seth Beal Information Julie Murphy Charles Redfield Platforms EVP, Incubation Officer EVP, Neighborhood EVP, Food Markets and Strategic Carol Schumacher Partnerships VP, Investor Relations Chris Sultemeier Andy Barron EVP, Logistics, Supply EVP Softlines, Chain General Merch Nate Faust SVP, U.S. Mark Ibbotson Scott Huff eCommerce EVP, Central EVP, Consumables, H&W, Supply Chain TBD Operations and US Manufacturing EVP, Merchandising Jamie Iannone Mike Moore George Reidl Operations President & CEO EVP, Supercenters SVP, President H&W Samsclub.com

Source: Kantar Retail analysis, research, Walmart reports (as of January 2017) 5 6 Walmart International: Shuffles Outside of Latin America

Clay Johnson, David Cheesewright Enterprise Chief Information President & CEO Officer Walmart International

Scott Price Enrique Ostalé Dirk Van Den Berghe Richard Mayfield TBD EVP & Chief Administrative President & CEO President EVP & Chief Financial Officer, President & CEO Officer, Walmart Latin America, Africa, Walmart Asia Walmart International UK & Canada Walmart International and India

Replaced Sean Clarke Sean Clarke moved and moved Horacio Barbeito from China on July Dirk Van Den Berghe Guilherme Loureiro Krish Iyer Sean Clarke President & CEO President & CEO 11, replacing Andy from China President & CEO President & CEO President & CEO Walmart China Chile Clarke Aug. 22 Walmex-Centro America Walmart India Asda Walmart UK

Takeshi Kamigouchi Iyer and Hayward report to Ostalé as of February 2016 Lee Tappenden President & CEO President & CEO Walmart Japan/Seiyu Canada Guy Hayward Agustín Beccar Varela Flavio Cotini President & CEO General Manager President & CEO Replaced Dirk Van Den Berghe Walmart RSA/ Massmart Argentina Brazil when he moved to China on Aug. 22

Note: Modified August 2016 Change within <1 year

Source: Kantar Retail research and analysis; Walmart reports Walmart’s Global Retail Presence in 28 Countries

11,573 total units

United Kingdom: 631

Canada: 391 Canada: 410

China: 439 Walmart US: 4,672 Sam’s Club: 660 Japan: 341 India: Mexico: 2,411 20

India: 20 Central America: 721 Costa Rica (234) Guatemala (220) El Salvador (90) Honduras (95) Brazil: 498 Nicaragua (92)

Africa: 412 Chile: 363 South Africa (373) Namibia (4) Botswana (11) Nigeria (5) Argentina: 107 Ghana (1) Swaziland (1) Kenya (1) Tanzania (1) Lesotho (3) Uganda (1) 100% Walmart ownership Malawi (2) Zambia (4) Walmart majority ownership in a publicly traded company Mozambique (5)

Note: As reported January 31, 2017

Source: Kantar Retail research and analysis; Walmart reports 7 Walmart Global Q3 Financial Results

Jet.com acquisition and JD.com partnership are signs of Walmart’s commitment to eCommerce

Walmart Inc. had a solid third quarter, with sales and comps positive on a constant currency basis across all markets except the U.K. Total sales grew 0.5% (or 2.3% on a constant currency) to USD117.2 billion (USD119.3 constant currency). Global eCommerce sales and GMV increased 20.6% and 16.8%, respectively. The company’s investment into wages and technology pulled operating income down 10.4% (or -7.9% on constant currency). During the quarter, Walmart finalized its acquisition of Jet.com, with its founder joining Walmart to head eCommerce in the U.S. The company also divested its Chilean malls and its Mexican Suburbia banner.

Total Walmart Sales Q3 (USD Millions) Total Walmart Operating Income Q3 (USD Millions) Walmart US Sam's Club Walmart International Walmart US Sam's Club Walmart International

+1.2% -4.8% $28,390 $1,354 +2.5%

$13,449 $454 $74,550 +7.8% $3,999 +0.4% -11.3%

Outside % indicates year-over-year Δ in sales or operating income for segment. All financials use reported and not constant currency.

“We had a solid third quarter. Our ecommerce growth accelerated, operations in the U.S. continued to strengthen and international delivered another solid performance.” – Doug McMillon, Walmart Stores, Inc. CEO, November 2016

Source: Company documents; Kantar Retail research and analysis 8 Q3 International Results – Strength of Core Markets of Canada, Mexico, and China

Brazil showed solid double-digit sales growth though UK is still in turnaround mode

Source: Company documents; Kantar Retail research and analysis 9 Walmart Global Q4 Financial Results

Extremely strong US segment results dovetail with continued growth in Sam’s and International

Walmart ended the year with very strong performance. Sales for the total company grew 0.8% to USD129.8 billion (or 2.9% and USD132.4 billion on a constant currency, respectively). Global eCommerce sales grew 15.5% and GMV grew 17.5% on a constant currency basis. As with previous quarters during the year, operating income was negatively impacted by labor and technology investments, further compounded by the USD390 million cost for discontinued real estate projects and severance in the U.S. Inventory continued to grow slower than sales.

Total Walmart Sales Q4 (USD Millions) Total Walmart Operating Income Q4 (USD Millions) Walmart US Sam's Club Walmart International Walmart US Sam's Club Walmart International

-8.9% -5.1% $31,025 $1,513 +2.8% -8.5% $390 $13,449 $83,747 $4,995 +0.4% -2.5%

Outside % indicates year-over-year Δ in sales or operating income for segment. All financials use reported and not constant currency.

“We’re moving with speed to better serve our customers every day and progressing against our four key objectives.” – Doug McMillon, Walmart Stores, Inc. CEO, February 2017

Source: Company documents; Kantar Retail research and analysis 10 Q4 International Results - Walmex and Canada Show Their “Core” Strength

Even as UK is focused on turning things around and China continues to develop

“Our international business again delivered solid sales growth in constant currency last quarter.”

- David Cheesewright, CEO Walmart International, February 2017

Source: Company documents; Kantar Retail research and analysis 11 Walmart Global Full Year 2016 Financial Results

Strong performance as company focuses on core operations and capabilities

In 2016, Walmart was able to grow total sales 0.6% (2.9% constant currency), reaching $481.3 billion. eCommerce sales increased 15.5% on a constant currency basis, even as GMV accelerated 17.5% (or 29.7% excluding Yihaodian). However, operating income declined due to canceled real estate projects and associated severance in the U.S. Inventory management was disciplined as it grew slower than sales.

Total Walmart Sales (USD Millions) Total Walmart Operating Income (USD Millions) Walmart US Sam's Club Walmart International Walmart US Sam's Club Walmart International -7.7%

-5.9% $5,758 $116,119 +3.2% -8.2% $1,671 $57,365 $17,745 0.9% $307,833 -7.0%

Outside % indicates year-over-year Δ in sales or operating income for segment. All financials use reported and not constant currency.

“We expect the underlying stores business, in most parts of the world, to continue to deliver solid top line results along with increased growth in our e-commerce business.” – Brett Biggs, Walmart Inc. CFO, February 2017

Source: Company documents; Kantar Retail research and analysis 12 2016 Sales, Stores, Operating Margin

International contributing smaller share than previous years to sales, operating income from exchange rates

Stores 46% 12% 35% 7% EMEA & US Total Latin America Asia Canada

Sales 75% 11% 10% 3% EMEA & Latin US Total Asia Canada America

Operating Income 77% 23% International US Total Total

Source: Kantar Retail research and analysis 13 Food Pricing Will Impact Spending Unevenly Across Markets

Food prices are soaring in Brazil and South Africa, even as it deflates in other markets

Food Price Inflation Year-to-Year Percent Change, 2016 YTD Through October

Source: OECD, government sources, Kantar Retail analysis 14 Looking Ahead to 2017+

15 Walmart Refines Its Strategy for Future Growth

Acknowledging growth will come from eCommerce and same store sales

Walmart will continue to manage its global holdings from a portfolio perspective, with an emphasis on its core focus markets in North America – the U.S., Canada, and Mexico. Walmart will also prioritize other markets that have scale and the conditions for robust acceleration – particularly China. Nevertheless, its mature markets of the U.K. and Japan, while challenged, continue to focus on refining the value proposition for its shoppers. Globally, there will be an increased emphasis on private label to drive both differentiation and value, with brands cross-pollinating across different markets. Digital technologies will accelerate Walmart’s eCommerce growth, with an eye towards greater convenience. Expect more in- store and mobile integration to aid the shopper. Convenience may also take different forms to suit individual markets – an O2O partnership with JD in China versus grocery delivery in the US and U.K. While the world’s largest retailer, Walmart will also link its operations more concretely to its local markets. Efforts such as women entrepreneurship programs, food safety compliance, energy savings efforts, and local sourcing of merchandise will be pushed to build greater trust in Walmart.

“We expect the underlying stores business, in most parts of the world, to continue to deliver solid top line results along with increased growth in our e-commerce business. We’re focused on driving strong efficient growth by opening fewer new stores overall, particularly in the U.S., while prioritizing comp sales and accelerating ecommerce growth, including the third-party marketplace.” – Brett Biggs, Walmart Inc. CFO, February 2017

Source: Kantar Retail research, analysis, company documents 16 Walmart Inc.’s “Plan to Win”

‒ Be merchants ‒ Winning baskets and ‒ Progress in ‒ Strong, efficient growth leveraging costs sustainability ‒ Save them time ‒ Operating discipline (Productivity Loop) ‒ Creating opportunity ‒ Accelerate ‒ Strategic capital and making a allocation eCommerce growth difference

Source: Company documents 17 A “New” Financial Framework

Balancing cost discipline with necessary investments

What Does This Mean?

• Fewer new stores • More pressure on comparable store sales • Faster eCommerce growth

Source: Company documents, Kantar Retail research and analysis 18 Longer Term Sales Growth Depends on Comps and eCommerce Growth

Essential to boost productivity of existing stores

Walmart, Inc.’s Estimated Sales Growth

Source: Company presentation, Kantar Retail analysis 19 Walmart’s Guidance for 2017

Shifting towards greater investment in International and digital

‒ Sales are expected to grow 2-3%, or 3-4% without the impact of an expected $3 billion exchange rate hit ‒ Capex is still in line with earlier estimates of $11 billion ‒ Q1: US is expected to grow comps 1-1.5%, Sam’s Club to grow 1% ‒ eCommerce will experience accelerated development, particularly through third party marketplace

“We’re focused on driving strong efficient growth by opening fewer new stores overall, particularly in the U.S., while prioritizing comp sales and accelerating ecommerce growth, including the third-party marketplace.” Brett Biggs, Walmart Inc. CFO, February 2017

Source: Kantar Retail research and analysis 20 Walmart International Strategy Aligns With Corporate, With a Twist

Unifying a diverse set of markets, formats, and banners under a set of management principles

Source: Kantar Retail research and analysis 21 More Unified Approach to Managing Resources

Picking the right winners, and collaborating across markets

Exit Non-Core

Source: Kantar Retail research and analysis, company documents 22 Four Key Elements of Focus Across the Markets

Source: Company documents, Kantar Retail research and analysis 23 Be the Lowest Cost Operator

Using savings to drive the productivity loop

Source: Company documents; Kantar Retail research and analysis 24 Build Strong Foundations

Stronger operations, digital capabilities, workforce, and trust in communities

Source: Kantar Retail research and analysis, company documents 25 United States

26 27 Walmart US: Solid H2 Ramps Up to Strong Holiday Season

‒ Walmart ended the fiscal year on a strong note, posting comps in Q4 of 1.8%, Walmart US Financial Results Q3 Q4 FY driven by traffic growth, in a quarter that challenged competitors. Sales 2.5% 2.8% 3.2% ▪ Following a quarter when eCommerce contributed nearly half the comp (50 basis points in Q3), Walmart US reported domestic eCommerce performance for Comps 1.2% 1.8% 1.4% the first time in Q4: sales grew 29%, while GMV (which includes third party Traffic 0.7% 1.4% NP sales) increased by 36%--both figures including all Jet banners as well as Ticket 0.5% 0.4% NP Walmart.com.

▪ Neighborhood Market’s comps were 5.2% and 5.3% for Q3 and Q4, respectively. ‒ During the back half of the fiscal year, Walmart took steps to enhance its service and experience in stores, and also took ‒ The grocery comp ticked positive in Q4 (following a flat Q3) even as deflation important steps to integrate its store and digital operations: negatively impacted the food comp by 90 basis points. Comps were positive for both health and wellness (mid-single-digit) and general merchandise (low single- ▪ In services, the retailer hosted its second annual wellness digit) in Q4. fair in October. Separately, Walmart made it less costly and easier to conduct money transfers in the U.S., and across ‒ Following five straight quarters of increases, the gross margin rate decreased in borders. Q4, by eight basis points, largely as a result of the retailer’s broadening price investments. Profits remain a challenge: operating expenses increased 4.6% and ▪ Then to end Q4, Walmart announced changes to its US operating income declined by 2.5% (when excluding certain items, the decline is eCommerce leadership to better align stores and digital. 10.4%). Marc Lore also marked the first big initiative of his tenure with the announcement of free two-day shipping from ‒ Inventory declined in Q4, marking the fourth straight quarter of decreases: 3.1% Walmart.com. overall, and by 7.2% in comp stores.

NP – Not provided Source: Company reports, Kantar Retail research and analysis Walmart US Expectations for 2017

Forging ahead on growth initiatives

2017 will mark the crystallization of Walmart US’ goals to mine growth from its existing assets at the same time that it elevates new sources: ‒ Store remodels will proceed. Walmart plans to remodel 500 or so stores this year, with the majority of those efforts likely to go towards the Supercenter (some Neighborhood Markets will also be revamped). Even as it invests in the store experience—and looks to suppliers to help boost excitement—the retailer will also scrutinize its operations and decision- making to ensure efficiencies, as it continues to face profit pressures. ‒ Online grocery pickup will steadily expand. In its key measure to align with shoppers’ digital habits and demands for convenience, Walmart will also continue to broaden the reach of its online grocery pickup service, likely to about a quarter of its stores (~1000) by the end of the year. As Jet’s capabilities and ideas gradually reach into more of the organization (see below), suppliers should look for more opportunities to stretch muscles in marketing via the screen, building the online basket, and learning about driving impulse online. ‒ Jet’s integration will continue. The retailer will continue to build connections between its Bentonville, San Bruno, CA (Walmart.com), and now Hoboken (Jet) operations, following on integration already in process among fulfillment networks, assortment, and marketing. It’s likely that Jet’s and Walmart’s operations and banners will remain separate for much of the year, but suppliers should move immediately to allocate thinking and resources toward the basket-efficiency thinking that Jet will elevate across the dotcom and store businesses.

Source: Company reports, Kantar Retail research and analysis 28 Sam’s Club: Sales See Improvement at End of Year Amid CEO Switch

‒ While Sam’s Club’s Q3 results were mixed, Q4 results were up significantly, including better ticket and comps but lower operating income and profit. Without fuel, fourth quarter comps rose 2.4% and sales rose 2.3%. Sam’s Club Financial Q3 Q4 FY ▪ Ticket growth excluding fuel rose 1.2%, down from Q3’s 1.9% growth. Results ▪ Q4 traffic 1.2%, a big increase from Q3’s fall of 0.5%. ▪ Segment operating income declined 5.1% to $376 million excluding fuel. Sales Without Fuel 1.8% 2.3% 1.8% ▪ Gross profit rose 53 basis points excluding fuel. Sales With Fuel 1.1% 3.0% 0.9% ▪ Membership income was flat for the quarter and up 2.3% for the fiscal year. ▪ Business member traffic was not reported. Comps Without Fuel 1.4% 2.4% 1.1% ‒ Comps show ongoing mixed results. Dry grocery and beverage improved to show mid single-digit growth, up Traffic -0.5% 1.2% NP from last quarter. Technology and entertainment was flat. Fresh, freezer, and cooler fell in the low single digits. Ticket Without Fuel 1.9% 1.2% NP Health and wellness continues to grow quickly in the mid single digits. Consumables saw low single-digit growth while home, apparel, and hardlines continued with mid single-digit growth. ‒ Changing of the Guard. President and CEO Rosalind Brewer retired after five years on February 1, 2017, replaced by Chief Merchandising Officer John Furner. Furner guided Sam’s Club’s comprehensive merchandise review, aimed at creating a more compelling shopping experience through faster SKU rotation and better items. Furner is well respected internally and comes with 20 years of combined experience at both Walmart and Sam’s Club. ‒ Top priorities. President and CEO John Furner has laid out three top priorities that include engaging everyone in the company to achieve long term goals (1. people), finding and stocking great items for the members (2. product), and accelerating Sam’s Club’s digital transformation. (3. digital) John Furner wishes to simplify the Sam’s Club business so that buyers and employees will be able to make the right calls and not be hampered by red tape. ‒ Other executive shifts. Ashley Buchanan has become Sam’s Club’s new Chief Merchant while Gisel Ruiz has become the new EVP of Operations. Jamie Iannone, President of Samsclub.com, now oversees all of Sam’s Club technology operations, including those in-club. ‒ Scan & Go app was rolled out to all clubs nationwide. The app offers shoppers the ability to scan their items through their phone’s mobile app as they are placed in the cart, checkout, and receive a virtual receipt. ‒ Piloting Next Day Delivery of Office Products. Sam’s Club has begun offering next-day delivery of office products for its member businesses in the Tulsa, OK; Dallas, TX; and Miami, FL areas. In Miami, Sam’s Club uses startup John Furner as New CEO Deliv to deliver small products and the courier company Need It Now for orders containing larger products such as office furniture. In Dallas, office product orders are delivered by Walmart truck drivers.

NP – Not provided Source: Company reports, Kantar Retail research and analysis 29 Sam’s Club Expectations for 2017

Sam’s Club Faces Competitive Pressures Amidst Push to Innovate

‒ A greater focus on items – As John Furner take the reins as Sam’s Club’s CEO, we expect the club to sharpen its focus on providing exciting, new merchandise. Buyers will be more empowered to create relevant offerings for Sam’s members and to provide exclusives that drive traffic and renewals. Expect Sam’s Club to rely more on rapid item rotation to boost volume instead of relying on higher margins to increase sales.

‒ Conflation with Walmart – We expect ongoing encroachment from Walmart on Sam’s Club’s core value propositions. This includes Walmart offering small business specific solutions, items devoted to organic and more premium Health and Wellness, and more bulk products in general. Walmart continues to look for avenues of boosting its sales regardless of its affect on Sam’s Club.

‒ Rapid private label rise – As Sam’s Club adds SKUs to its Member’s Mark brand, expect tighter and more competitive space for nationally branded SKUs across categories. The increase in Member’s Mark will achieve mixed results, as Sam’s club will enjoy greater margin, but shoppers have not yet built up enough equity with the brand to make the switch.

‒ Store operations and presentation – With Sam’s Club opening only 4 net new clubs for fiscal 2018, same store comps will have a greater role in driving overall sales growth. Sam’s Club will focus on remodeling its existing club portfolio and upgrading the club experience, presentation, and in-club merchandising execution to attract wealthier members capable of boosting ticket and driving growth.

Source: Company reports, Kantar Retail research and analysis 30 Latin America

31 Walmex: Running Strong Across All Segments and Formats

2016 closed with strong growth across the portfolio, with stores and clubs performing better than market

‒ Walmex continued its strong performance in its markets, with operating Q3, Q4, FY WMX Financial Results income outpacing sales growth. eCommerce was only 0.9% of Walmex’s total Q3 Q4 FY sales for the year, but increased 27% from 2015. Sales Mexico 8.3% 8.9% 9.1% ‒ Walmex signs with Western Union to offer international money transfer Sales Central America 9.3% 9.0% 8.2% Sales Consolidated 10.8% 11.8% 11.9% services in every store in Mexico under the Western Union, Vigo, and Orlandi Comps Mexico 7.2% 7.9% 8.0% ValutaSM brands. Comps Central America 5.6% 5.0% 4.9% ‒ To increase its local activities, Walmex trained 1,000+ small producers to improve their offerings, increase productivity, and increase sales. 30 products were chosen to be sold by Walmex. ‒ Store openings ▪ Q3: 27 new stores – 16 in Mexico and 11 in Central America ▪ Q4: 45 new stores – 32 in Mexico and 13 in Central America

Source: Company presentations, media reports, Kantar Retail research and analysis 32 Walmex Expectations for 2017

Focusing on integrating the digital and physical experience across its banners

‒ Expect strong short term retail growth despite the tighter Walmex’s “3.3.1.” Plan to Double Sales in 10 Years government fiscal policies, uncertainty from the U.S., and weak oil revenues lower consumer confidence as increased credit in Mexico combine with higher value remittances from the U.S. ‒ Segmentation strategies become more refined as Walmex considers the appropriate format prototype for stores based on socioeconomic status and weather/regional variances. ‒ Private label will gain in prominence as Walmex solidifies its brand strength for Aurrera and builds equity for Great Value and Extra Special. Expect other private brands from overseas Accelerate Private Brand Growth to also grow in presence. ‒ Fresh produce and groceries will be highlighted in store as a point of differentiation. Anticipate remodels to greatly enhance the display fixtures and lighting for fresh.

Source: Kantar Retail research, analysis, company documents 33 Brazil: Sales Fall 4.1% through January 2017 as Shoppers Shift Trips

Walmart doubles down with plans to renovate and rebrand Highest ‒ Lackluster results in 2016: Walmart Brazil sales fell 4.1% through January 2017 as quality and Brazilian shoppers shift from making large stock up trips on city outskirts to more variety in frequent, smaller trips at small formats in urban centers. ▪ Walmart Brazil sees slight improvement in its Maxxi Wholesale cash & carry Fresh banner as of late. ▪ Walmart Brazil is facing increasing pressure from the Atacadao cash & carry format that has before the preferred format to shop among Brazilian shoppers. Carrefour and Casino are the leaders in this format in Brazil. Live better: ▪ Over the past several years Walmart has seen lackluster results resulting in 60 store closures at the beginning of January 2016. Convenience in Health ‒ Despite the drag, Walmart plans to revamp: ▪ Renovate and rebrand hypermarkets to try and win shoppers away from warehouse stores and local supermarkets. ▪ Spend $320 million over three years on upgrades to U.S. style big box stores. ▪ Rebrand two regional chains, Hiper Bompreço and BIG, with the Walmart name. Enhanced ▪ Renovate existing Walmart hypermarkets with upgraded fresh produce view of all departments, increased assortment, and lower prices. sectors ▪ Open new neighborhood grocer banners, TodoDia and remodel supermarket banners in 2017.

Source: Walmart Brasil, Kantar Retail research and analysis 34 Brazil Expectations for 2017

Holding its own in a tough economy and large competitors

‒ Walmart continues to struggle in Brazil to gain consistency and growth. It is difficult work given an economy that continues to stagnate in all regions. Consumer confidence continues to erode with the major scandals in government and business still emerging after the last 4 years. And the government moves to change social policies such as the unusually early retirement with high monthly payments are needed, but shoppers over 50 are concerned to future revenue. ‒ The atacado is a Brazilian format that continues to perform. It combines very large cash and carry stores with a broad band of consumers. And in difficult financial times it has done quite well for all retailers including Walmart’s Maxxi banner. The challenge for Walmart is they have far less locations (41) than Carrefour or Casino. Other banners for Walmart are not doing nearly as well especially in the economically depressed Northeast. ‒ eCommerce is an area that the company feels will continue to grow. Historically in Brazil the strongest categories for online is HBC products followed by apparel. Chain drug is consolidating but lacks a strong eCommerce presence with the exception of Onofre in the South. Most sales are concentrated in the B2W group. Casino’s Via Vajero group has done poorly as is for sale. ‒ For the remainder of the year Walmart will be in the same position as its competition in gaining sales in a downward consumer market. There may be a faster recovery if the extraction and agricultural sectors improve but will take month to impact the general consumer economy

Source: Kantar Retail research and analysis 35 Argentina: Amid Neutral Sales Growth and Negative Comps, Walmart Appears to be Doing as Well or Better than its Competitors

‒ Walmart reports neutral sales growth and negative comps. However, it appears to be doing as well if not better than competition. Changomas banners continue to be the strongest performers in the portfolio.

‒ Walmart has ramped up its eCommerce and digital investments:

▪ Walmart opened its first click & collect location in Argentina at Buenos Aires hypermarket store in November 2016. Walmart Argentina plans to expand C&C to the rest of its hypermarket stores in Argentina through 2017.

▪ Walmart Argentina invested 8 million pesos to upgrade its local site and create a new software for the C&C option.

▪ This year Walmart Argentina also hopes to launch a mobile app for online ordering, etc.

‒ Sustainability efforts kicked up: Walmart introduces biodegradable plastic bags to Argentine market following a law that outlaws them in Santa Fe, Argentina. They also started charging for using plastic bags in Buenos Aires to help discourage shoppers using them.

‒ Brick & Mortar business is focusing on store renovations across banners. Walmart opened two Changomas banner and renovated others. It celebrated its 10 year banner anniversary with up to 40% savings at Changomas banners nationwide.

Source: Company reports, Kantar Retail research and analysis 36 Argentina Expectations for 2017

Waiting for the new economy to emerge

‒ The Argentine economy continues to stagnate after the change in political leadership. Laws regards exports have been lifted and imports are no longer prohibitively tariffed, but the weakness of the Argentine Peso means that the products are still too expensive. Popular expectation for a rise in the economy have been disappointed and consumer have responded by spending less in all forms of retail for the last year. ‒ Retailers are putting more effort into presentation and signage to spur sales. The use of larger signs, vertical blades and floor graphics has increased across the market particularly in supermarkets. ‒ eCommerce overall was damaged for all retailers with the changes in parcel post rates imposed by the government. Ordering and pick-up appears to be doing in contrast. ‒ The rest of 2017 may improve as exports to Asia and Mexico increase and the services industry continues to expand past out-sourcing.

Source: Kantar Retail research and analysis 37 Chile: Given Economic Stagnation, 2016 was a Better Year Than Expected for Walmart

The expansion of smaller stores has also helped keep sales stable

‒ 2016 was a better year than expected for Walmart given the ‒ Walmart launched its first Click & Collect location: stagnation in the Chilean economy. As the largest grocer in the Walmart Chile launched its first Click & Collect “Click & Retira” market Walmart has done well in establishing and maintaining a price location at Lider supermarket banner in March 2017. Shoppers do position combined with solid fresh and quality portfolio across most not need to get out of their cars. Clients call from drive through via departments. Expansion of smaller stores in new neighbourhoods WhatsApp when they are outside. and suburbs has also kept sales stable. ▪ In H2 2016, Walmart Chile concentrated store expansion in its SuperBodega aCuenta banners opening four total stores and its small format Lider Express banners opening two total stores. Walmart Chile also opened 1 Lider hypermarket. This concluded Walmart Chile’s 2016 expansion plan to open 15 to 20 stores in 2016. ▪ Walmart Chile’s ecommerce banner Lider.cl generated $2.8 million in sales in 2016. ▪ On black Friday (Nov 4th-Nov 8th) in Chile more than 2.5 million people visited the 82 Lider hypermarkets

Source: Walmart Chile, Kantar Retail research and analysis 38 Chile Expectations for 2017

Strong position in a weak market

‒ The Chilean economy may come back next year faster than expected given the recent increases in copper and nickel prices. If so Walmart is well positioned.

‒ Selling off mall holdings and management has provided the company with an investment back for expanding further without impact cash flow. The proceeds from that sale vary by report but are roughly USD 86 million which can rapidly translate into a number of remodels and new stores.

‒ Private label continues to be a larger success than elsewhere in Latin America. Walmart has been able to establish a tiered-program of value that has a high-degree of acceptance from shoppers. This has made competing for price perception a stronger strategy along with expanding the choices for a broad middle class.

‒ Walmart Chile will debut a new ecommerce platform for its Lider.cl banner in 2017. Specifically, it will open 11 click & collect locations and double its online ordering capacity for its website.

Source: Kantar Retail research and analysis 39 Asia

40 Walmart China: Sales Growth while e-Commerce Expanding

Q3 & Q4 China Financial Results Q3 Q4 Sales growth in Q3 & Q4: Sales 4.2% 5.4% ‒ Net sales grew 4.2 percent and comp sales increased 1.6 percent in Q3 (excl. e- Comps 1.6% 2.3% commerce), driven by strong seasonal and festive categories during the Mid-Autumn Festival Traffic -2.7% -2.9% ‒ In Q4, Solid performance in hypermarkets and Sam’s club (especially strong Ticket 4.3% 5.2% performance in fresh and grocery) drove net sales growing 5.4 percent and comp sales increasing 2.3 percent ‒ Operating income on a constant currency basis would have increased in Q3, excluding a benefit to operating expenses from a lease accounting adjustment in Q3 Walmart Global imports FY16. store on JD.com, China Focus on customer growth by expanding the digital channel and upgrading physical stores: ‒ Actively managing the existing portfolio by gaining 5% shares of a Chinese e-Retailer JD.com in Q3 and lifted its holding to 10.8% and 12.1% in October and December respectively in Q4 ‒ Cooperating with new strategic partner JD.com by launching Walmart Global imports store and Sam’s Club flagship store on JD.com Walmart Sam’s Club ‒ New investment in New Dada, China’s largest local on-demand logistics and grocery flagship store on JD.com, O2O (online to offline), which enables 2-hour delivery service from more than 45 China Walmart locations in China ‒ Continuing to increase new physical openings and invest in promoting existing stores

Source: Kantar Company presentations, media reports, Kantar Retail research and analysis 41 Walmart China Expectations for 2017

Seeking more Chinese opportunities and implementing a more customer-oriented approach

‒ Deepen cooperation with JD.com. Walmart China will double down on its strategic partnership with JD.com, a Chinese B2C eCommerce player.

‒ Focus on food safety issue to regain customer trust in China. A new Walmart Food Safety Collaboration Center is expected to launch. Walmart will collaborate with IMB and Tsinghua University in Beijing to use digital block chain technology to create a tamperproof record for tracking pork from farm to store shelf. Walmart Food Safety Collaboration Center Launch ‒ Grow store base and update existing sites. Walmart plans to open 30-40 new stores in 2017, including 3-5 Sam’s Clubs (in Beijing, Shenzhen, Nanchang, Nanjing, and Changsha). About 50 existing stores are expected to be upgraded.

New Sam’s club expecting to open in China

Source: Kantar Retail research and analysis， http://www.guojiguoshu.com, http:// www.ccfa.org.cn, http://business.sohu.com 42 Overall Market Expectations for 2017 Demand for convenience forces retailers to focus on eCommerce

Japan economic indicator 2016 2017 (Percentage changes over the previous year) (Estimate) (Forecast) – Economic activity has performed relatively well in 2016 Q4 given the weakening of the yen following Donald Trump’s victory in the November U.S. GDP (Constant prices) 1.3% 1.5% presidential election. CPI 0.0% 1.1% ▪ On the downside, poor gains in wage growth continue to constrain private consumption. Unemployment rate 3.1% 2.9% ▪ CPI is expected to rise slowly with the weakening yen, which would negatively Source: Economic Outlook by Cabinet Offices, Government of Japan impact the retail market. ‒ The eCommerce companies of Amazon and Rakuten are expanding their share of the retail market by improving convenience for shopping (e.g., delivery service within a one-hour delivery window from orders). ▪ This trend is expected to continue in 2017. ‒ Seiyu has been investing in eCommerce and developing new services such as in-store pick-up lockers and “physical and digital hybrid” store. ▪ Seiyu is expected to continue to reinforce eCommerce related services.

Source: Kantar Retail research and analysis, government and media reports 43 Walmart Global 2H, FY 2016 Results and 2017+ Expectations

Kantar Retail Research Team March 2017