International Meeting for the Investment Community Japan...

Wal-Mart Stores, Inc. (NYSE:WMT) 2013 International Meeting for the Investment Community

June 25, 2013 Tokyo, Japan

2 2013 International Meeting for the Investment Community

•Walmart Japan overview

•Japan retail overview

•Business objectives

Customer

Associate

Community

Shareholder

Contents


Walmart Japan overview


Walmart acquired a majority stake (53%) in Seiyu’s

outstanding shares

In June 2008, Seiyu became a wholly-owned subsidiary

of Walmart

Walmart Japan Holdings was established

2002 2005 2008 2009 2012

Seiyu.com opening

Walmart made an initial investment in Seiyu

2013

Walmart and Seiyu for the last 10 Years

10th anniversary of Walmart’s entry

into Japan


As of June 4, 2013;. Numbers do not include Wakana roadside deli stores.

Seiyu today


Format Store banner No. of stores

Super- markets

257

Hyper- markets

115

Overviews

• Full assortment of foods and consumables with some general merchandise.

• Average store 25,000 sq ft

• Full range of products: food, consumables, general merchandise, apparel

• One-stop shopping experience

• Average store size 155,000 sq ft

Wakana 65

• Roadside deli with take away meal solutions

• Wakana products also offered in most supermarkets and hypermarkets

• Average store 740 sq ft

Photo

Photo

Photo

As of June 4, 2013

Store formats


New store openings

In 2013, the opening of 5 new supermarkets (including 2 relocation/reopening) has already been scheduled

Tsukuba Takezono (Tsukuba City, Ibaraki)

Shin-Yuri Green Town (Kawasaki City, Kanagawa)

Gyoda Sama (Gyoda City, Saitama)

Fuchu Yotsuya (Fuchu City, Tokyo)

Kagohara (Kumagaya City, Saitama)

Nozomino (Izumi City, Osaka)

Toride Ekimae (Toride City, Ibaraki)

Seiyu opened 7 new supermarkets in 2012


A three-part business

Food General merchandise* Apparel

79% 14% 7%

* Includes consumables (e.g. paper, pet foods, household chemicals, HBA , pharmacy and drug)


Limited financials

2012 Summary

Net sales growth +0.7%

Comp sales growth +0.5%

Expense leverage

Operating income

growing faster than sales

Note: Growth rates are on a constant currency basis


Japan retail overview


What is on the horizon?

Bright spots

• “Abenomics” driving macro forecasts higher

• Trans Pacific Partnership

• 5.0% eCommerce growth (4 year CAGR)

Headwinds

•Consumption tax doubles over next 2 years:

Apr. 2014: 5% → 8%

Oct. 2015: 8% → 10%

•Consumer spending not increasing despite

gains in stock market / other indicators

•Growing 65+ age group; workforce

decreasing

•Real disposable income is not projected to

accelerate

•Rising debt as % of GDP

Economic forecasts: 2012 → 2016 (4-year CAGR)

Real GDP growth

0.1% → 1.6%

Inflation

-0.6% → 1.2%

Real disposable income

1.3% → 1.2%

% Age >65

24% → 28%

Source: Economist Intelligence Unit; June 2013

Japanese economic challenges continue…

Source: McKinsey


Population growth by region

Population will be concentrated around big cities and rural areas will suffer from population decrease by more than 10% by 2030

Source: National Institute of Populations and Social Security Research

Population growth by prefecture (2010-2030)

Total growth: -8.7%

> 0%

> -5%

> -10%

> -15%

< -15%

Tokyo

Osaka Nagoya


14%

6%

7%

5%

5%

4%3%

56%

…the retail market is extremely fragmented…

Retail sales by country USD billion (2012)

Sources: Based on various sales announcements (for settlement of accounts) (JPY:96.470) Retail sales by country – Planet Retail, June 2013

Japan retail market share by channel

Japan SM & GMS market share

2012 WMJ mkt share: 2.7% 2012 SM and GMS sales

in retail mkt : 20%

3,468

2,299

1,714

860

761

US

China

Japan

India

Brazil

Super

Market

GMS

DIY

CVS

Others

Dep.

Store Drug

Store

Others 62%

Cons Ele

Others 62%

http://www.unyhk.com/

http://www.lifecorp.jp/

http://www.izumiya.co.jp/


Changes in total sales and no. of stores

...and retailers are rapidly expanding their footprint

despite little overall sales growth

100 100 99 100 103

100

111

118

130

144

2000 2003 2006 2009 2012

Total sales (rebased 2000=100)

No. of stores (rebased 2000=100)

Source: METI surveys ("Supermarkets" only - stores > 1500sqm, excludes department stores)


Business objectives


Our beliefs and purpose

By listening to our customers and achieving a price, assortment and

shopping experience that exceeds their expectations,

we will become a necessity for society and our customers in their daily lives and

thereby help people to

Save Money so they can Live Better.


Shareholder Growth, Leverage, Returns

Associate No.1 place to work and grow for

our associates

Community No.1 business that contributes to

the local communities

Customer No.1 “store in my neighborhood”

EDLP promise Value for money

Business objectives






EDLP promise Value for money

Business objectives


our Associates


Source: Japan Economy Midterm Outlook by MUFJ Research & Consulting (Jan. 2013)

Index: year 2010 = 100

100

105

106

100 Disposable income

CPI

CPI (excl. perishables)

Consumption tax increases and rising utilities are weighing on the household Among consumer spending, the share of “consumer goods” decreased

Growing need and opportunity to save customers money

Japanese households are under pressure…


0%

20%

40%

60%

80%

100%

Shar

e o

f to

tal b

ee

r m

arke

t “True” beer ¥178

Happoshu ¥121

“Third beer” ¥101

… and the need for quality products is growing

The beer market is a good example where consumers are trading down quality for price New beer and Happoshu are lower quality products, and 43% less expensive Today they have taken over 50% of the beer market

Sources: Kirin Brewery Company; Prices are at Seiyu retail


They shop at Seiyu

because... Have low prices always

Offer the lowest prices on the products I usually buy

Have long store hours

Provide a wide selection of products

I can get what I need at this store alone

Our customers are… About half are “2 persons or less” households

About 30% are households with annual income of “less than 3 million yen”

About 30% “visit our store 2-3 times/week or more”

About half come to our store “on foot/by bicycle”

Walmart satisfies our customers’ needs…


Introduced EDLP to baby category

Transitioned food/apparel/GM to EDLP

Cut prices of major 1,300 items (Average 9% price reduction)

Cut prices on 2,300 items

… by building Every Day Low Price strategy


And communicated with innovative marketing

KY

2012 2008 2011 2013

Focus on categories

Baspura SAGERIKU Nesage

Communicate EDLP (Company oriented)

Communicate customer’s benefit (Customer oriented)

Increase price perception

Accumulate facts

Basket price at SEIYU is low

Request in tweet, discount in store.

Cut prices of 2300 items a year

Price-cut on signature categories.


Marketing example: beef campaign

Meat department in the store Store front KY Times(flyer) TV commercial WEB

Low prices on beef and other

food products, too. So low prices on a basket full of

products, too

Japanese Black: \297

Low prices on Japanese Black

Low prices on all beef items Baspra Low prices on all beef items

Japanese Black \297 US beef steak \197

US short rib \97 Enhance price

What！Japanese Black at such a low price?

Such a low price on Japanese Black! Other beef items are cheap, too. I’ve got to go to SEIYU!

We’ll have Sukiyaki tonight as the beef is so cheap! I think I’ll buy other ingredients for the dish like vegetables.

Japanese Black is cheap and other beef, too. (Wonder if other meats are low prices, too. Let’s check it out!)

● ● ● ● ●


Oct 2008 Oct 2012

52%

86%

Growing % of our customers appreciate “value for money” we offer

EDLP is resounding with our customers…

Source: Monthly “Store Trak” Surveys by Seiyu


2009 2010 2011 2012

METI

Average comp

spread of +330 bps

4th year in a row of positive comps sales Growing operating margin

…and Seiyu stores have outperformed the market

Source: Japan Ministry of Economy, Trade, and Industry; Seiyu financials


Enhance private brand and direct import offerings

Continue to build on EDLC/EDLP

Excitement

Convenience

Differentiation

Accelerate eCommerce

Differentiate with Wakana

Unique Seiyu offerings drive excitement and value


¥298 ¥69

¥ 49

Wakana provides high quality, low cost meal solutions


Wakana has fully integrated capabilities of developing,

manufacturing and selling deli products

Production

Development Sales

Production • 9 central kitchens • In-store kitchens • Collaboration with direct import team • By managing from product

development to sales vertically, Wakana can provide a high benefit, contributing to WMJ profitability

Sales • Wakana contributes to Seiyu business

as an important traffic driver • Wakana deli products are 4th most

important traffic driver after vegetables, meat and milk

Development • Own development capabilities • Assign central and area buyers to

meet the local need and preference • New items are released on a

4-week cycle


2006 2007 2008 2009 2010 2011

More women pursuing careers

Increasing number of single households

Aging population & declining birth rate

*Total sales of prepared meals in Japan

Source: Japan Souzai Association

consistently driving and outperforming the growth of Seiyu

Growing demand for quality & value in prepared meals


Seiyu launched Net Super (home grocery delivery) in 2000, ahead of other retailers

Net Super currently operates at 109 stores

Existing Net Super business is a store-pick model

Net Super (meal prep)

Store-pick & delivery

Back-end Front-end

Customer ordering

Customer receiving

Same day to 1 day


Seamless and user friendly front-end Unique two-way delivery scheme Adding fulfillment centers allows country-wide delivery

Seiyu.com site expands offering and delivery coverage

Net Super (meal prep)

eCommerce (replenishment) + fun family shopping

Store-pick & delivery

Back-end Seamless front-end

Fulfillment Center pick & delivery

Customer ordering

1-3 days

Customer receiving

Same day to 1 day


Chosen by you (Minasama-no Osumitsuki)

Basic of Basic (Kihon-no Ki)

Concept: Simple & Basic, so low price.

New PB ① Same quality as national brands with lower price

New PB ② Opening price point

Concept: All the items are tested and approved by consumer

Re-launched private brands


Extensive consumer testing before launches

Fail

Product development

More than 70% of

the panel satisfied in the sampling

Products to be sample-tested every 1.5-2 year for update

Commercialization Pass


Leveraging ASDA’s wholly owned procurement

company

Sourcing of products from Asia for direct

import to Japan

Walmart

Global

Sourcing

Direct import of products through tag on of

purchases or DC pull from US and Canada

Leveraging Walmart network for direct imports


Japan direct imports: “Leverage” opportunities

Price advantage • GV potato chips: 178 yen • GV pure olive oil: 298 yen • Fleece jackets: 990 yen

Key supplier leverage

Eliminating the middleman

• US beef • Wakana potatoes

Unique assortment

Treasure hunt / excitement

• European beers • Pouch wine

http://www.tysonfoods.com/


2012

5 Years

Perishables

Groceries

Apparel / General merchandise

Online 3x

Direct import goal of TRIPLING volume in 5 years






EDLP Promise Value for money

Business objectives


our associates


2012 external field benchmark Avg.=30

Walmart Japan Associate Engagement Score

Associates are more engaged in our business

Source: Annual Grassroots Surveys by Walmart Japan


2008 2015 % of female store managers

1%

6%

10%

2013

Careers for women: Approximately 70 percent of Walmart Japan associates are female, which is in line with our female customer base. With that in mind, we launched our Female Leadership Program to encourage our female associates to pursue career development opportunities in the company. Since 2010, 242 associates have participated in the Female Leadership Program, and a number of participants have gone on to take leadership roles.

“Top 100 Companies for Women to Work” Ranking

25th Overall:

"Female Appointment for Managerial Positions“ score: 9th

We will create a culture of diversity…

Source: Nikkei Women magazine (May 2013)


Part-time to management

Source: Walmart Japan Associate Newsletter (Dec 2012)

Across Japan, it’s generally difficult for part-time workers to grow their professional careers. Walmart Japan, however, offers unique opportunities of career development for all associates who are innovative, enthusiastic and committed to better serving our customers. In fact, since 2006, 249 male and female associates who began part-time have been promoted into management positions. In 2012, 66 associates, 38 of them women, were promoted to assistant manager.

…and help our associates reach their potential







Business objectives


our Associates


Sustainability objectives align with global goals

• Reduced GHG emissions of our stores and DCs that existed in 2005 by more than 20% as of 2012 by increasing energy efficiency across the business.

• Reduced the amount of fuel required to carry one ton of goods one kilometer by 34% from 2006 baseline by 2011.

Be supplied 100% by

renewable energy

• Our direct-sourced produce accounts for about 35% of total produce sales at Seiyu with 13,690 local farmers participating in our direct farm program.

• By expanding “non-tray” products in meat, etc, we have reduced total food tray usage weight by more than 26% from 2007.

Sell products that sustain

people and the environment

• Recycled more than 91% of wastes from our stores with more than 100 stores achieving “zero wastes” (100% waste recycling) in 2012

• Turned more than 70% of our customers to “my bag users” and reduced plastic bag usage weight by 40% from 2007 baseline in 2012.

Create zero waste


Strengthening communities across Japan Partner

organizations

Hunger relief

We have worked with Second Harvest Japan to donate food from our stores to welfare facilities. In 2012, by utilizing backhaul, we expanded the activities to 38 of our stores in Kanto region, with a plan to expand participation to 150 stores across the region by 2016.

Second Harvest Japan

Women’s empower-

ment

Our grant to Florence, an NGO that supports parents who pursue career while raising children, has contributed to a program to provide low-income single parent households with childcare services when their children become ill.

Florence

“Tohoku Kosodate Project” – Our grants are used to support postpartum mothers and babies in the coastal areas of Tohoku, the disaster-stricken region. Nearly 5,000 mothers have participated in free consultative sessions by professional midwives.

J’espère

Recon- struction

Seiyu has helped OISCA through a grant to launch a project to restore seashore forest completely damaged by the 3.11 disaster. As a first-phase of the project, virus-resistant black pines have been seeded and grown in a seedling field in Miyagi prefecture.

OISCA


Associates contribute to communities

• 4,456 associates raised a total of about US$24,700 during ‘Charity Bazaar Together’ campaign to support associates affected by the earthquake

• In Japan 11,000 associates joined MSP ‘s “Walking Together” campaign, logging 637 million steps, an amount equivalent to circling the earth 10 times

My Sustainability Plan

Associates participated in a soup kitchen event in Tokyo (Nov 2012) Associates cleaned up Arakawa River banks (May 2013)

Associates in Sendai took part in a seeding event organized by OISCA in its seedling field in a suburb of Sendai (April 2013)


We offer our customers opportunities to donate to the organizations we work with when they check out, through a bar code-based store fundraising (“Bokin”) program at our checkout counters.

Encouraging customers to help with

community efforts

Seashore Forest Restoration Bokin

(for OISCA)

Tohoku “Kosodate” Bokin

(for J’espèr )

Sick Child Care Bokin

(for Florence)

Food Bank Bokin

(for Second Harvest )







Business objectives


our Associates


Our productivity loop

Saving people money so they can live better

Grow sales

Sell for less

Buy for less

Operate for less

Continuous improvement core of business model


Store labor cost

Logistics expense

HO expense SG&A

5-year productivity gains (2007-2012) (bps of SG&A % of sales)

-51 -67

-218

-619

Productivity loop fuels productivity gains…


WJ reduced the energy consumption by 28%, compared to 2008 At the same time, the unit cost of electricity increased 14% From 2008 to 2012, WJ saved around $52.7 mln on electricity

72

100

114

2008 2009 2010 2011 2012

Total Electricity Usage Unit Cost of Electricity

… and utility cost reductions help to achieve EDLC


Replicates successful program in UK and also being launched in Japan, Canada and China Involves global leverage resources and incorporates global best practice sharing Program objectives:

Clear accountability for results

Continuous pipeline of initiatives

Clear and consistent measurement of results

“Seisansei Kojo” – WO4L in Japanese


Saving people money

so they can live better.TM


Resources

• http://www.seiyu.co.jp

• http://www.walmart.com/

• http://stock.walmart.com/

You can download the Walmart Investor Relations App at

the following link or by scanning the QR Code.

http://stock.walmart.com/stock-information/walmart-

investor-relations-app

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