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Wal-Mart Stores, Inc.

Company Profile

Publication Date: 5 Aug 2011

www.datamonitor.com

Asia PacificAmericasEurope, Middle East & Africa Level 46245 5th Avenue119 Farringdon Road 2 Park Street4th FloorLondon Sydney, NSW 2000New York, NY 10016EC1R 3DA AustraliaUSAUnited Kingdom

t: +61 2 8705 6900t: +1 212 686 7400t: +44 20 7551 9000 f: +61 2 8088 7405f: +1 212 686 2626f: +44 20 7551 9090 e: [email protected]: [email protected]: [email protected]

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Wal-Mart Stores, Inc.

TABLE OF CONTENTS

Company Overview..............................................................................................4

Key Facts...............................................................................................................4

Business Description...........................................................................................5

History...................................................................................................................7

Key Employees...................................................................................................12

Key Employee Biographies................................................................................14

Major Products and Services............................................................................22

Revenue Analysis...............................................................................................25

SWOT Analysis...................................................................................................26

Top Competitors.................................................................................................35

Company View.....................................................................................................36

Locations and Subsidiaries...............................................................................39

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Wal-Mart Stores, Inc. TABLE OF CONTENTS

COMPANY OVERVIEW

Wal-Mart Stores (Wal-Mart or ‘the company’) operates retail stores in various formats across the world. In the US, the retail formats operated by Wal-Mart include discount stores, supercenters, neighborhood markets, marketside, and Sam's Clubs. Internationally, the company operates in Argentina, Brazil, Canada, Chile, China, Costa Rica, El Salvador, Guatemala, Honduras, India, Japan, Mexico, Nicaragua, Puerto Rico and the UK. Wal-Mart is headquartered in Bentonville, Arkansas, and employs 2.1 million people.

The company recorded revenues of $421,849 million during the financial year ended January 2011 (FY2011), an increase of 3.4% over FY2010. The operating profit of the company was $25,542 million in FY2011, an increase of 6.4% over FY2010. The net profit was $16,389 million in FY2011, an increase of 14.1% over FY2010.

KEY FACTS

Wal-Mart Stores, Inc.Head Office 702 Southwest 8th Street Bentonville Arkansas 72716 8611 USA

1 479 273 4000Phone

Fax

http://www.walmartstores.comWeb Address

421,849.0Revenue / turnover (USD Mn)

JanuaryFinancial Year End

2,100,000Employees

WMTNew York Stock Exchange Ticker

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Wal-Mart Stores, Inc. Company Overview

BUSINESS DESCRIPTION

Wal-Mart Stores (Wal-Mart or ‘the company’) is the largest retail company in the world. The company operates retail stores in various formats worldwide. Wal-Mart also offers its products through various e-commerce websites, including walmart.com and samsclub.com. Wal-Mart offers a wide assortment of merchandise at everyday low prices (EDLP).

Wal-Mart operates through three business segments: Walmart US, Walmart international, and Sam's Club*.

Walmart US operates four different retail formats in the US: supercenters, discount stores, neighborhood markets, and other small formats. The segment has retail operations in all the 50 states in the US. At the end of FY2011, the company operated 2,907 supercenters (average store size of 184,000 square feet) in 48 US states and Puerto Rico, 708 discount stores (average store size of 106,000 square feet) in 45 US states and Puerto Rico, and 189 neighborhood markets and other small format stores (average store size of 39,000 square feet) in 16 US states and Puerto Rico. The segment also markets its products through its e-commerce website www.walmart.com. The stores operated by Walmart US offer branded as well as private label merchandise in various product categories, including grocery, entertainment, electronics, apparel, health and wellness, and home furnishing and housewear. These stores also offer financial services such as money order sales, wire transfers, check cashing and bill payment.

The retail operations of Walmart US are supported by 123 distribution facilities spread across the US and Puerto Rico, of which the company owns 105; the remaining are owned and operated by third parties. A few of these distribution centers also service Wal-Mart's Sam's Club for certain items. During FY2011, these distribution centers shipped approximately 78% of the merchandise purchased by Walmart US. The remaining merchandise was shipped directly by the suppliers to the company's stores.

Walmart international segment comprises wholly owned subsidiaries operating in Argentina, Brazil, Canada, Japan, and the UK. Wal-Mart's majority-owned subsidiaries operate in Chile, Mexico, and five countries in Central America. In India and China, the company operates through joint ventures. Walmart international also operates through some controlled subsidiaries in China. The operating formats vary from country to country, and include discount stores, supermarkets, supercenters, hypermarkets and other formats which comprise restaurants and apparel stores. The retail centers operated by the segment range in size of 2,000–250,000 square feet and the wholesale stores range in size of 40,000–150,000 square feet. The restaurants in Chile, Japan and Mexico, range in size of 1,000–10,000 square feet.

Walmart international’s retail operations are supported by 134 distribution facilities located in Argentina, Brazil, Canada, Chile, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, and the UK, including two export consolidation facilities in the US. Of these 134 distribution facilities, 34 are owned and operated by the company, 38 are leased and operated, while

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Wal-Mart Stores, Inc. Business Description

the remaining facilities are operated by third parties. Wal-Mart distributes both import and domestic products to the international retail stores through these distribution facilities. During FY2011, approximately 77% of the international segment's purchases were shipped from these distribution facilities.

Sam's Club operates Wal-Mart's warehouse membership clubs in the US. The segment also sells its merchandise through the website, www.samsclub.com. At the end of FY2011, Wal-Mart operated 609 Sam's Club (average store size of 133,000 square feet) in 48 US states and Puerto Rico. Sam's Club serves both individuals and businesses. The segment offers brand name merchandise including hard goods, some soft goods, and selected private-label items under the Member's Mark, Bakers & Chefs and Sam's Club brands. A significant number of Sam's Club warehouses offer photo processing and pharmacy services. Some of these warehouses also include optical departments and gasoline stations.

The company operates 25 distribution facilities across the US to support Sam's Club retail operations. Of these, the company owns eight distribution facilities and the remaining are third party owned facilities. During FY2011, approximately 63% of the segment’s non-fuel purchases were shipped from these distribution centers; the balance merchandise was shipped directly by the suppliers to the warehouses. Sam's Club uses a combination of private fleet and common carriers to transport non-perishable merchandise from distribution centers to Sam's Club.

*As part of an operational realignment in February 2010, Wal-Mart shifted its Puerto Rico operations from the Walmart international segment to the respective Walmart US and Sam's Club segments.

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Wal-Mart Stores, Inc. Business Description

HISTORY

Wal-Mart Stores (Wal-Mart or ‘the company’) was established in 1969. In the following year, the company became a publicly-held company and started selling shares over the counter. In 1972, Wal-Mart got listed on the New York Stock Exchange.

The company diversified into grocery (Wal-Mart Supercenters), international operations, and membership warehouse clubs (Sam's Clubs) during the 1980s. In 1983, Wal-Mart opened Sam's Wholesale Club, a concept based on the cash-and-carry, membership-only warehouse format pioneered by the Price Company of California (now Costco Wholesale Corporation). The company started Hypermart*USA in 1987 as a joint venture with the Dallas-based supermarket chain Cullum Companies (now Randall's Food Markets). Hypermart*USA outlets later became the company's Wal-Mart Supercenters. In 1989, Wal-Mart acquired Cullum Companies.

The company acquired a wholesale distributor, McLane Company, in 1990. Wal-Mart entered Mexico in 1992 through a joint venture with Mexico's largest retailer, Cifra, to open Sam's Clubs. Furthermore, it acquired 122 former Woolco stores in Canada in 1994. Wal-Mart continued to expand internationally, and established Chinese operations in 1996. The company also acquired the German hypermarket chain, Wertkauf, in 1997. In Brazil, Wal-Mart acquired a stake in the retailer Lojas Americanas in 1998. During the same year, the company began testing the neighborhood market format, a 40,000 square feet grocery and drug combination store. In 1999, Wal-Mart purchased 74 German-based Interspar hypermarkets and acquired ASDA Group, the UK's third-largest supermarket chain.

In 2000, the company began selling household appliances in selected stores. Wal-Mart launched its "No Boundaries" private label cosmetics brand in 2001. The company started operating in Japan by acquiring a 6% stake in Seiyu, one of Japan's top retailers, in 2002. Later that year, Wal-Mart increased its stake in Seiyu to 36%. The company also acquired Supermercados Amigo in Puerto Rico in the same year. In 2002, Wal-Mart started 107 international units, with two in Brazil, 22 in Canada, eight in China, two in Germany, three in South Korea, 59 in Mexico, two in Puerto Rico, and nine in the UK. The company's attempt to open a state industrial bank in California in 2002 failed owing to legal problems.

Wal-Mart sold its McLane subsidiary, a US grocery distributor, in 2003. The company sold the subsidiary to Berkshire Hathaway to concentrate on its core retail activities. In 2004, Wal-Mart Brazil acquired Bompreco, a retail chain in northeastern Brazil with 118 units (hypermarkets, supermarkets and mini markets), from a Dutch retailer, Royal Ahold. During the same year, Wal-Mart launched its online music store.

In early 2005, the company entered into a joint venture with CITIC Pacific to open hundreds of stores in China over the following five years. Wal-Mart held a 65% share of the venture. During the same period, Wal-Mart Canada closed one of its two Quebec stores in Jonquiere because of the weak financial performance. The company increased its stake in Seiyu (Japan) to 42% in mid 2005. In the same year, Wal-Mart purchased a one-third interest in Central American Retail Holding

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Wal-Mart Stores, Inc. History

(CARHCO), an operator of supermarkets in Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. In late 2005, Wal-Mart acquired about 140 stores in Brazil from Sonae, a Portuguese retailer, for about $757 million, increasing the number of outlets it operates in Brazil to nearly 300.

The company acquired an additional 17.7% interest in CARHCO from Royal Ahold in 2006 increasing its stake in the Central America supermarket operator to 51%. Shinsegae Company, South Korea's leading retailer, agreed to purchase Wal-Mart's South Korean retail business in the same year. The company sold its German retail business to Metro in 2006. Later in 2006, Eagles and Wal-Mart entered into a long-term strategic marketing agreement, including sponsorship, exclusive audio and video releases, and product visibility.

Wal-Mart purchased a 35% interest in Bounteous Company, which operated hypermarkets in China under the Trust-Mart banner, in 2007. The company introduced the neighborhood market concept to Naples with a new company design in 2007. Further in the year, Wal-Mart partnered with Skype to bring Internet communications to the masses. As part of a pilot project to determine solar power viability, the company purchased solar power from three providers, BP Solar, SunEdison, and SunPower's subsidiary PowerLight, in 2007.

Fendi and Sam's Club resolved the dispute regarding sale of counterfeit bags and other products under the Fendi label in 2007. Under the agreement, Sam's Club had to pay a confidential amount for settlement to Fendi. In tandem with the intended roll-out of a financial center, Wal-Mart announced the introduction of pre-paid debit card catering to low-income US customers in 2007.

The company completed the final phase of its Site to Store national rollout to more than 3,300 stores across the country in 2007. This service allowed customers to order products online at www.walmart.com, most of which were also available in its stores. Wal-Mart entered into a 50:50 joint venture agreement with Bharti Enterprises to establish Bharti Wal-Mart (Private Limited) in 2007. The joint venture was meant for establishing wholesale cash-and-carry and back-end supply chain management operations in India. In the same year, Wal-Mart announced the addition of two new Home brands.

In 2008, the company reopened its store at Oakland Park Boulevard and University Drive which were damaged by Hurricane Wilma two years ago. In the same year, Wal-Mart entered into a long-term agreement with 1-800 CONTACTS to provide contact lenses at lower prices in its stores. The company became the first nationwide US grocery chain to adopt Global Food Safety Initiative (GFSI) standards in 2008. As per the standards, Wal-Mart's suppliers of private label and other food products such as meat, fish, poultry and ready-to-eat foods would have their factories certified against GFSI standards.

The company introduced "Canopy" private label brand in home furnishings category in 2008. Also, Wal-Mart opened 81 new stores and clubs across the country. The company launched six coffee products under its Sam's Choice brand in the same year. Wal-Mart partnered with the South Carolina Department of Agriculture to promote locally grown produce at Wal-Mart stores across South Carolina in 2008.

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Wal-Mart Stores, Inc. History

Further in 2008, Wal-Mart unveiled the new Walmart Smart Network to provide shoppers with relevant and useful information via in-store TV. The company became the first retailer in the US to rollout this retail media network powered by Internet Protocol Television. The technology allowed the company to monitor and control more than 27,000 screens in over 2,700 stores across the country. Wal-Mart also established a new Asia regional headquarters in Hong Kong. The regional headquarters had the strategic responsibilities for managing the company's current operations and business development in Asia.

Wal-Mart opened its first four marketside stores at Chandler, Gilbert, Mesa and Tempe in Phoenix, Arizona in 2008. The company describes these stores as "community grocery" stores which are designed to offer restaurant-quality food at everyday low prices.

Bharti Wal-Mart, in a memorandum of understanding with the State Government of Punjab (Punjab is a state in India), established a special skills training centre in Amritsar, Punjab in 2008 to bridge the shortage of skilled workers for cash-and-carry and organized retail formats in India.

In 2009, Wal-Mart sold Gazeley Limited, an ASDA commercial property development subsidiary in the UK, to Economic Zones World, a Dubai World company, to further focus on the company's retail operations. In the same year, the company opened its first neighborhood market (45,000 square feet) in Virginia. The company acquired 58.2% of the outstanding shares of Distribucion y Servicio D&S (D&S) in 2009. D&S operates 197 stores, 10 shopping centers and 85 PRESTO financial services branches throughout Chile. Further in the year, Wal-Mart acquired additional 16.4% of the outstanding shares of D&S for approximately $430 million.

Bharti Wal-Mart Private Limited named its self-service wholesale stores in India as "BestPrice Modern Wholesale" in 2009. During the same year, Wal-Mart announced agreements with CoxHealth and Northwest Health System to open clinics in its stores.

Expanding its home portfolio, the company launched Your Zone, a new home furnishings collection for teens, in stores nationwide and on Walmart.com in 2009. In a test aimed at expanding pharmacy sales, Wal-Mart started free mail-order delivery of generic prescription drugs in Michigan in the same year. Wal-Mart also announced plans to revamp the electronics departments in its US stores, in 2009, in a battle with Best Buy and Amazon.com for customers of the closed Circuit City Stores.

Later in 2009, www.walmart.com further expanded the products available online and also launched a wide assortment of personal care products, including health and beauty items, diapers and over-the-counter medication, which are available for home delivery.

The company collaborated with Federation International de Football Association’s (FIFA) exclusive worldwide master licensee, Global Brands Group (GBG), in 2009 to operate 2010 FIFA World Cup Official Event Stores in nearly all of its retail markets around the world. This allowed Wal-Mart to feature FIFA branded shops inside select stores that offered exclusive FIFA World Cup official licensed products and host special events leading up to the games.

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Wal-Mart Stores, Inc. History

In February 2010, Walmart Canada announced plans to open 35–40 supercentres in 2010. The projects included new stores, relocation of existing stores, store expansions and store remodels, representing a combined investment of almost half a billion dollars in Canadian communities.

The company announced the opening of its 1,000th Walmart MoneyCenter in March 2010 at Chalmette. Walmart MoneyCenters provide customers affordable solutions on basic money services, including the Walmart MoneyCard. Wal-Mart also announced plans to add Wal-Mart MoneyCenters in 500 additional stores during the year.

In May 2010, Asda, Wal-Mart's UK subsidiary, announced an agreement with Dansk Supermarked to purchase its fully owned subsidiary, Netto Foodstores. The transaction would enable Asda to convert Netto's UK locations into Asda stores and integrate them into its new supermarkets division for units smaller than 25,000 square feet. This acquisition is aimed at increasing Wal-Mart's presence in Europe. Netto was established in the UK in 1990 and operates 193 stores with an average size of 8,000 square feet. Netto is the market leader in Denmark and among the fastest growing discounters in Germany, Poland and Sweden. In October 2010, Humana, a health and supplemental benefits company, and Wal-Mart launched Medicare Part D prescription drug plan to provide savings on monthly plan premiums and prescription medicines co-payments and cost-shares for Medicare beneficiaries.

Wal-Mart closed its Moscow office in December 2010.

In January 2011, Seiyu announced plans to expand its online supermarket service to 125 stores by the end of 2011, and to 350 stores by the end of 2013. Seiyu aims to increase the number of online supermarket members by 10-fold and their sales by 20-fold during 2011–15. In the same month, Walmart Canada announced plans to open 40 supercentres in FY2012. The project includes construction of new stores, and expanding, remodeling or relocating existing stores.

In the following month, Walmart de Mexico y Centroamerica announced plans to invest MXP18.97 billion (approximately $1.5 billion), towards expansion of its sales floor by 12.2% in Mexico, and 8.8% throughout the five countries (Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica) where it operates in Central America.

In March 2011, Walmart Canada announced plans to implement price rollbacks in 2011 to better serve value oriented customers in the country.

In April 2011, the company acquired Kosmix in order to strengthen its presence in social and mobile commerce. Kosmix, based in Mountain View, California, has developed a social media technology platform that filters and organizes content in social networks to connect people with real-time information.

Wal-Mart announced plans to invest BRL1.2 billion (approximately $0.68 billion) during FY2012 towards opening 80 new stores in Brazil in May 2011. In the same month, Bharti Walmart opened its fourth wholesale cash and-carry store in Ludhiana, Punjab.

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Wal-Mart Stores, Inc. History

The company acquired 51% stake in Massmart Holdings, a South Africa based company, in June 2011. Massmart Holdings operates nine wholesale and retail chains, and one buying group, each focused on high-volume, low-margin, low-cost distribution of primarily branded consumer goods. Further in the month, Walmart Canada entered into an agreement with Target Canada to assume the leasehold interests in up to 39 sites operated by Zellers.

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Wal-Mart Stores, Inc. History

KEY EMPLOYEES

CompensationBoardJob TitleName

18712721 USDExecutive BoardPresident and Chief Executive Officer

Michael T. Duke

Non Executive BoardChairman of the Board of DirectorsS. Robson Walton

271050 USDNon Executive BoardDirectorAida M. Alvarez

240179 USDNon Executive BoardDirectorJames W. Breyer

228483 USDNon Executive BoardDirectorM. Michele Burns

262647 USDNon Executive BoardDirectorJames I. Cash, Jr.

297972 USDNon Executive BoardDirectorRoger C. Corbett

254498 USDNon Executive BoardDirectorDouglas N. Daft

224000 USDNon Executive BoardDirectorGregory B. Penner

194451 USDNon Executive BoardDirectorSteven S Reinemund

Non Executive BoardDirectorH. Lee Scott, Jr.

224000 USDNon Executive BoardDirectorArne M. Sorenson

226037 USDNon Executive BoardDirectorJim C. Walton

318864 USDNon Executive BoardDirectorChristopher J. Williams

274127 USDNon Executive BoardDirectorLinda S. Wolf

9168188 USDSenior ManagementVice ChairmanEduardo Castro- Wright

Senior ManagementExecutive Vice President, People Division

M. Susan Chambers

Senior ManagementExecutive Vice President, Corporate Affairs and Government Relations

Leslie A. Dach

Senior ManagementExecutive Vice President, Global Customer Insights

Cindy Davis

Senior ManagementExecutive Vice President and Chief Information Officer

Rollin L. Ford

Senior ManagementExecutive Vice President, General Counsel and Corporate Secretary

Jeffrey J. Gearhart

8186163 USDSenior ManagementExecutive Vice President and Chief Financial Officer

Charles M. Holley, Jr.

Senior ManagementExecutive Vice President, Global Sourcing

Ed Kolodzieski

Senior ManagementSenior Vice President and ControllerSteven P. Whaley

Senior ManagementPresident and Chief Executive Officer, Sam’s Club

Brian C. Cornell

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Wal-Mart Stores, Inc. Key Employees

CompensationBoardJob TitleName

8806408 USDSenior ManagementPresident and Chief Executive Officer, Walmart International

C. Douglas McMillon

14054824 USDSenior ManagementPresident and Chief Executive Officer, Walmart US

William S. Simon

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Wal-Mart Stores, Inc. Key Employees

KEY EMPLOYEE BIOGRAPHIES

Michael T. Duke

Board: Executive Board Job Title: President and Chief Executive Officer Since: 2009 Age: 61

Mr. Duke has been the President and Chief Executive Officer at Wal-Mart Stores since 2009. He previously served as Wal-Mart's Vice Chairman and was responsible for the international division during 2005–09. Mr. Duke was an Executive Vice President at the company and the President and Chief Executive Officer of Walmart US from 2003 to 2005. Currently, he serves on the Board of Directors of The Consumer Goods Forum, the executive committee of the Business Roundtable, and the executive board of Conservation International's Center for Environmental Leadership in Business.

S. Robson Walton

Board: Non Executive Board Job Title: Chairman of the Board of Directors Since: 1992 Age: 66

Mr. Walton has been the Chairman of the Board of Directors at Wal-Mart Stores since 1992. He has been a Director at the company since 1978. Previously, he served as Senior Vice President, Corporate Secretary, General Counsel and Vice Chairman at the company. Before joining Wal-Mart, he was in private law practice as a partner with the law firm of Conner & Winters in Tulsa, Oklahoma.

Aida M. Alvarez

Board: Non Executive Board Job Title: Director Since: 2006 Age: 61

Ms. Alvarez has been a Director at Wal-Mart Stores since 2006. She is the former Administrator of the US Small Business Administration and was a member of President Clinton's Cabinet during 1997–2001. Ms. Alvarez was the founding Director of the Office of Federal Housing Enterprise Oversight from 1993 to 1997. She was the Vice President in Public Finance at First Boston Corporation and Bear Stearns & Co. prior to 1993. Currently, Ms. Alvarez is the Chair of the Latino Community Foundation of San Francisco, and a Director at UnionBanCal Corporation, and Union Bank.

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Wal-Mart Stores, Inc. Key Employee Biographies

James W. Breyer

Board: Non Executive Board Job Title: Director Since: 2001 Age: 49

Mr. Breyer has been a Director at Wal-Mart Stores since 2001. He is a Partner at Accel Partners, a venture capital firm. Currently, Mr. Breyer also serves as a Director at Dell, and several private companies, and non-profit organizations.

M. Michele Burns

Board: Non Executive Board Job Title: Director Since: 2003 Age: 53

Ms. Burns has been a Director at Wal-Mart Stores since 2003. She is the Chairman and Chief Executive Officer at Mercer, a subsidiary of Marsh & McLennan Companies. Ms. Burns also served as an Executive Vice President and the Chief Financial Officer at Marsh & McLennan Companies in 2006. Previously, she has served as an Executive Vice President, the Chief Financial Officer and Chief Restructuring Officer at Mirant Corporation, a company where Ms. Burns served from 2004 to 2006. Ms. Burns served as an Executive Vice President and the Chief Financial Officer at Delta Air Lines from 2000 to 2004. Currently, she is a Director at Cisco Systems.

James I. Cash, Jr.

Board: Non Executive Board Job Title: Director Since: 2006 Age: 63

Mr. Cash has been a Director at Wal-Mart Stores since 2006. He is the James E. Robison Emeritus Professor of Business Administration at Harvard Business School and former Senior Associate Dean and Chairman of HBS Publishing. Currently, Mr. Cash also serves as a Director at The Chubb Corporation, and General Electric.

Roger C. Corbett

Board: Non Executive Board Job Title: Director Since: 2006 Age: 68

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Wal-Mart Stores, Inc. Key Employee Biographies

Mr. Corbett has been a Director at Wal-Mart Stores since 2006. He is a retired Chief Executive Officer and Group Managing Director of Woolworths, an Australian retailer. Mr. Corbett currently serves as a Director at The Reserve Bank of Australia, the Deputy Chairman at PrimeAg Australia, an Australian farming enterprise. He is also the Chairman at Fairfax Media, a Director and the Non Executive Chairman at Mayne Pharma Group.

Douglas N. Daft

Board: Non Executive Board Job Title: Director Since: 2005 Age: 68

Mr. Daft has been a Director at Wal-Mart Stores since 2005. He was the Chairman and Chief Executive Officer at The Coca-Cola Company from 2000 to 2004. Mr. Daft served in various capacities at The Coca-Cola Company since 1969. He currently serves as a Director at The McGraw-Hill Companies, and Green Mountain Coffee Roasters.

Gregory B. Penner

Board: Non Executive Board Job Title: Director Since: 2008 Age: 41

Mr. Penner has been a Director at Wal-Mart Stores since 2008. He has been a General Partner at Madrone Capital Partners since 2005. Earlier, Mr. Penner served as Wal-Mart's Senior Vice President and Chief Financial Officer at Japan from 2002 to 2005. Prior to that, he was the Senior Vice President of Finance and Strategy for Walmart.com. Before joining the company, he was a General Partner at Peninsula Capital and a Financial Analyst at Goldman, Sachs & Co. Mr. Penner currently serves as a Director of Baidu, Hyatt Hotels Corporation, 99Bill Corporation, and eHarmony.

Steven S Reinemund

Board: Non Executive Board Job Title: Director Since: 2010 Age: 63

Mr. Reinemund has been a Director at Wal-Mart Stores since 2010. He has also been the Dean of Business and Professor of Leadership and Strategy at Wake Forest University since 2008. Prior to joining the faculty of Wake Forest University, Mr. Reinemund served at PepsiCo for 23 years. At PepsiCo, he served as the Chairman of the Board from 2006 to 2007 and as the Chairman and Chief Executive Officer from 2001 to 2006. Prior to that, Mr. Reinemund was PepsiCo's President and

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Wal-Mart Stores, Inc. Key Employee Biographies

Chief Operating Officer from 1999 to 2001, and Chairman and Chief Executive Officer of Frito-Lay's worldwide operations from 1996 to 1999. Currently, Mr. Reinemund is also a Director at Exxon Mobil Corporation, American Express Company, and Marriott International.

H. Lee Scott, Jr.

Board: Non Executive Board Job Title: Director Since: 1999 Age: 62

Mr. Scott has been a Director at Wal-Mart Stores since 1999. He was the company’s President and Chief Executive Officer from 2000 to 2009. Mr. Scott served as an Executive Officer at Wal-Mart and as the Chairman of the Executive Committee until January 2011. From 1999 to 2000, he was the Vice Chairman and Chief Operating Officer at Wal-Mart. Prior to that, from 1998 to 1999, Mr. Scott was an Executive Vice President at the company and the President and Chief Executive Officer of Walmart US. He joined Wal-Mart in 1979. Currently, Mr. Scott also serves as a member of the Board of Directors at The Goldman Sachs Group.

Arne M. Sorenson

Board: Non Executive Board Job Title: Director Since: 2008 Age: 52

Mr. Sorenson has been a Director at Wal-Mart Stores since 2008. He has also been the President and Chief Financial Officer at Marriott International since 2009. Mr. Sorenson has served as a member of the Marriott Board of Directors since 2011. From 1998 to 2009, he was an Executive Vice President and the Chief Financial Officer at Marriott International. Mr. Sorenson joined Marriott International in 1996 as the Senior Vice President of Business Development. Prior to joining Marriott International, he was a partner in the law firm of Latham & Watkins in Washington, D.C. Currently, Mr. Sorenson also serves as a Director of Regents of Luther College.

Jim C. Walton

Board: Non Executive Board Job Title: Director Since: 2005 Age: 62

Mr. Walton has been a Director at Wal-Mart Stores since 2005. He is the Chairman and Chief Executive Officer at Arvest Bank Group, a group of banks operating in the states of Arkansas, Kansas, Missouri, and Oklahoma. Mr. Walton also serves as the Chairman at Community Publishers.

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Wal-Mart Stores, Inc. Key Employee Biographies

Christopher J. Williams

Board: Non Executive Board Job Title: Director Since: 2004 Age: 53

Mr. Williams has been a Director at Wal-Mart Stores since 2004. He is the Chairman and Chief Executive Officer at The Williams Capital Group, an investment bank. Mr. Williams has also been the Chairman and Chief Executive Officer at Williams Capital Management since 2003. He also serves as a Director at Caesars Entertainment (formerly Harrah's Entertainment).

Linda S. Wolf

Board: Non Executive Board Job Title: Director Since: 2005 Age: 63

Ms. Wolf has been a Director at Wal-Mart Stores since 2005. She is the former Chairman and Chief Executive Officer at Leo Burnett Worldwide, an advertising agency and division of Publicis Groupe. Ms. Wolf served in various positions at Leo Burnett Worldwide and its predecessors from 1978 to 2005, including as the Chairman and Chief Executive Officer from 2001 to 2005. She currently serves as a Trustee for investment funds advised by the Janus Capital Group.

Eduardo Castro- Wright

Board: Senior Management Job Title: Vice Chairman Since: 2010 Age: 56

Mr. Castro-Wright has been the Vice Chairman at Wal-Mart Stores since 2010. From 2008 to 2010, he served as the Vice Chairman for the Walmart US segment. During 2005-08, Mr. Castro-Wright served as an Executive Vice President, the President, and Chief Executive Officer of Walmart US division.

M. Susan Chambers

Board: Senior Management Job Title: Executive Vice President, People Division Since: 2006 Age: 53

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Wal-Mart Stores, Inc. Key Employee Biographies

Ms. Chambers has been the Executive Vice President, People Division at Wal-Mart Stores since 2006. She previously served as the Executive Vice President of Risk Management, Insurance and Benefits Administration at the company during 2003–06.

Leslie A. Dach

Board: Senior Management Job Title: Executive Vice President, Corporate Affairs and Government Relations Since: 2006 Age: 56

Mr. Dach has been the Executive Vice President, Corporate Affairs and Government Relations at Wal-Mart Stores since 2006. From 1997 to 2006, he served as the Vice Chairman at Daniel J. Edelman.

Cindy Davis

Board: Senior Management Job Title: Executive Vice President, Global Customer Insights

Ms. Davis currently serves as the Executive Vice President, Global Customer Insights at Wal-Mart Stores. In 2008, she was appointed the Executive Vice President of Membership, Marketing and eCommerce at the company. Ms. Davis joined the company in 2007 as Senior Vice President of Sam’s Club Membership and Marketing. Before joining the company, she served as the President, Global Development and Communications at Rapp Collins Worldwide. Previously, she was the Vice President, Brand Marketing at the Pizza Hut division of YUM! Brands.

Rollin L. Ford

Board: Senior Management Job Title: Executive Vice President and Chief Information Officer Since: 2006 Age: 48

Mr. Ford has been an Executive Vice President and the Chief Information Officer at Wal-Mart Stores since 2006. From 2003 to 2006, he was the Executive Vice President, Logistics and Supply Chain at the company. Mr. Ford joined the company in 1983. He currently is also a member of the Board of Directors of Thurgood Marshall College Fund, John Brown University, and Mercy Health System of Northwest Arkansas. He is also a Board member at GS1.

Jeffrey J. Gearhart

Board: Senior Management

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Job Title: Executive Vice President, General Counsel and Corporate Secretary Since: 2010 Age: 46

Mr. Gearhart has been Executive Vice President, General Counsel and Corporate Secretary at Wal-Mart Stores since 2010. From 2009 to 2010, he served as Executive Vice President, General Counsel at the company. Prior to that, from 2007 to 2009, Mr. Gearhart was Senior Vice President, Deputy General Counsel at Wal-Mart. From 2003 to 2007, he served as Vice President, General Counsel, Corporate division at Wal-Mart.

Charles M. Holley, Jr.

Board: Senior Management Job Title: Executive Vice President and Chief Financial Officer Since: 2010 Age: 54

Mr. Holley has been an Executive Vice President and the Chief Financial Officer at Wal-Mart Stores since 2010. From 2007 to 2010, he served as the Executive Vice President, Finance and Treasurer at the company. Before that, from 2005 to 2007, Mr. Holley was the Senior Vice President, Finance at Wal-Mart.

Ed Kolodzieski

Board: Senior Management Job Title: Executive Vice President, Global Sourcing

Mr. Kolodzieski currently serves as the Executive Vice President, Global Sourcing at Wal-Mart Stores. Prior to this, he held several positions in Japan including Chief Executive Officer at Walmart Japan; Chairman of the Board, Representative Executive Officer and Chief Executive Officer of Seiyu, a subsidiary of Wal-Mart . Previously, Mr. Kolodzieski served as the Chief Operating Officer of Walmart International. He joined Wal-Mart in 2000 as the Senior Vice President, Neighborhood Market division.

Steven P. Whaley

Board: Senior Management Job Title: Senior Vice President and Controller Since: 2007 Age: 51

Mr. Whaley has been Senior Vice President and Controller at Wal-Mart Stores since 2007. He held the position of Vice President and Controller at the company during 2005–07. Mr. Whaley served as Vice President and Assistant Controller at Wal-Mart in 2005.

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Wal-Mart Stores, Inc. Key Employee Biographies

Brian C. Cornell

Board: Senior Management Job Title: President and Chief Executive Officer, Sam’s Club Since: 2009 Age: 52

Mr. Cornell has been the President and Chief Executive Officer of Sam's Club, a division at Wal-Mart Stores, since 2009. Prior to joining the company, he was the Chief Executive Officer at Michaels Stores from 2007 to 2009. From 2004 to 2007, Mr. Cornell served as an Executive Vice President and the Chief Marketing Officer at Safeway.

C. Douglas McMillon

Board: Senior Management Job Title: President and Chief Executive Officer, Walmart International Since: 2009 Age: 44

Mr. McMillon has been the President and Chief Executive Officer of Walmart International, a division of Wal-Mart Stores, since 2009. He served as an Executive Vice President at the company, and as the President and Chief Executive Officer of Sam's Club during 2005–09.

William S. Simon

Board: Senior Management Job Title: President and Chief Executive Officer, Walmart US Since: 2010 Age: 51

Mr. Simon has been the President and Chief Executive Officer of Walmart US, a division of Wal-Mart, since 2010. From 2007 to 2010, he was an Executive Vice President and Chief Operating Officer, Walmart US. Prior to that, from 2006 to 2007, Mr. Simon was the Executive Vice President, Professional Services, Walmart US.

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MAJOR PRODUCTS AND SERVICES

Wal-Mart Stores operates retail stores in various formats across the world. The company's key products, services, and brands include the following:

Products:

Grocery:

Meat Produce Deli Bakery Dairy Frozen foods Alcoholic and nonalcoholic beverages Flowers Dry grocery

Consumables:

Health and beauty aids Baby products Household chemicals Paper goods Pet supplies

Entertainment:

Electronics Toys Cameras and supplies Cellular phones

Hardlines:

Stationery and books Automotive accessories Hardware and paint Sporting goods Fabrics and crafts

Apparel:

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Wal-Mart Stores, Inc. Major Products and Services

Clothing Shoes Jewelry Accessories

Home:

Home furnishings Housewares and small appliances Bedding Home decor

Others:

Gasoline Tools and power equipment

Services:

Pharmacy and optical services Photo processing services Cellular service plan Money order services Wire transfers

Brands:

Great Value Equate Ol' Roy Spring Valley Parent's Choice Marketside Oak Leaf Prima Della Everstart Faded Glory No Boundaries George Athletic Works Secret Treasures Puritan Hometrends Mainstays Ozark Trail

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Wal-Mart Stores, Inc. Major Products and Services

White Stag Canopy

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Wal-Mart Stores, Inc. Major Products and Services

REVENUE ANALYSIS

Wal-Mart Stores, Inc.

The company recorded revenues of $421,849 million during the financial year ended January 2011 (FY2011), an increase of 3.4% over FY2010. For FY2011, the US and Puerto Rico, the company's largest geographic market, accounted for 73.9% of the total revenues.

Wal-Mart generates revenues through three business segments: Walmart US (62.1% of the total revenues during FY2011), Walmart international (26.1%), and Sam’s Club (11.8%).

Revenues by segment*

In FY2011, the Walmart US segment recorded revenues of $260,261 million, an increase of 0.1% over FY2010.

The Walmart international segment recorded revenues of $109,232 million in FY2011, an increase of 12.1% over FY2010.

The Sam's Club segment recorded revenues of $49,459 million in FY2011, an increase of 3.5% over FY2010.

Revenues by geography*

The US and Puerto Rico, Wal-Mart's largest geographical market, accounted for 73.9% of the total revenues in FY2011. Revenues from the US and Puerto Rico reached $309,720 million in FY2011, an increase of 0.6% over FY2010.

International operations accounted for 26.1% of the total revenues in FY2011. Revenues from international operations reached $109,232 million in FY2011, an increase of 12.1% over FY2010.

*The difference in total revenues is because of membership fees which is not included in the revenue breakdown by segments or geographies.

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Wal-Mart Stores, Inc. Revenue Analysis

SWOT ANALYSIS

Wal-Mart Stores (Wal-Mart or "the company") operates retail stores in various formats across the world. The company was ranked first by Fortune 500 on the list of America’s largest corporations, as well as on the list of world’s largest corporations in 2011. Wal-Mart stores offer a large variety of nationally recognized as well as private label merchandise in the categories of grocery, entertainment, hardlines, health and wellness, apparel, and homewares, among others. The company’s dominant position and wide range of products offered allow it to quickly shift the product mix to adapt to changes in demand. However, with over two million employees, rising labor and healthcare costs will significantly affect Wal-Mart's profitability.

WeaknessesStrengths

Big box retailing format led to low penetration in the urban areas

Market leader with unprecedented scale and wide product assortment

Litigations affect labor relations adverselyLow cost leadership enables Wal-Mart to offer products at low price points Internationalization strategy a strong foundation for growth as the US market matures

ThreatsOpportunities

More than two million employees increase exposure to rising wages and high healthcare costs

Outperformance of the retail sectors in emerging markets Concentration on grocery and food will benefit as eating at home, health and wellness trends continue to emerge

Volatility in commodity prices and cost inflation may pressurize margins

Growth in internet retailing to serve larger market

Blurring difference between Wal-Mart and its competitors Increasing resistance to expansion from local organizations and authorities

Strengths

Market leader with unprecedented scale and wide product assortment

Wal-Mart is the largest retailer in the world. The company was ranked first by Fortune 500 on the list of America’s largest corporations, as well as on the list of world’s largest corporations in 2011. By the end of FY2011, the company had more than $400 billion in revenue, over $25 billion in operating income, 8,970 stores, and over 984,949 square feet of space. The scale of its operations

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is unprecedented and there is no competitor of comparable size. The company has been expanding its clout; international operations. In FY2011, Wal-Mart’s international operations account for nearly one fourth of the company’s total revenue, half of its store count, and nearly 30% of its retail space. Wal-Mart US is an integral part of consumers' budgets as it accounts for a substantial portion of the country’s total retail and grocery sales. The company dominates the US retail landscape and is growing internationally at a fast pace. Wal-Mart, being a market leader, is able to replicate its best practices constantly on an unmatched scale both in the US and across the world. Wal-Mart's large scale relative to most vendors leads to favorable terms on everything from the products on its shelves to store leases and distribution agreements. These competitive advantages generate positive economic returns and market share gains.

Also, Wal-Mart stores offer a large variety of nationally recognized as well as private label merchandise across several categories, including grocery, entertainment, hardlines, health and wellness, apparel, and homewares. Wal-Mart’s dominant position and range of products allow the company to quickly shift the product mix to meet demand and benefit from increased sales. For example, by changing floor space allocation, Wal-Mart can benefit from low-income consumers' growing preference for consumable staples instead of discretionary items. Such flexibility and clout enables the company to maintain its market position and continue to gain market share from competitors.

Low cost leadership enables Wal-Mart to offer products at low price points

Wal-Mart is a price leader and its low cost operations enabled the company to maintain this position over the years. The company offers its grocery products at much lower prices compared with other players in the industry. Wal-Mart constantly flexes its bargaining muscle to lower prices. This strategy ensures a steady, recurring stream of customers for its goods, making Wal-Mart synonymous with inexpensive. This strategy also keeps constant pressure on competitors. Sam's Club also enjoys a similar reputation but on a per-unit basis, as most of its goods are sold in bulk. The company receives favorable pricing from and systematic integration with most of its suppliers, which is a large part of Wal-Mart's crucial low-cost advantage. The company generally requires suppliers to tie into its own inventory management system and to deliver goods in the manner and timing suitable to Wal-Mart, leading to impressive inventory turns (especially considering that nearly half of revenue is from non-grocery categories). Furthermore, a no-frills store environment also improves total asset turns and limits maintenance capital investment. In addition, as a low-cost general retailer, Wal-Mart has built a reputation with consumers as a one-stop shop for good deals on a huge spectrum of merchandise. The company has been aggressively trying to further lower prices. Asda, Wal-Mart’s subsidiary, offers Asda Price Guarantee program to customers at its stores. Under this program, if a basket of comparable grocery products offered at Asda’s stores is not at least priced 10% lower than Tesco, Morrison’s, Sainsbury’s and Waitrose, then Asda would refund the difference amount. Additionally, Walmart Canada, in March 2011, announced to implement price rollback on most of the merchandise across all major categories offered at its stores. These rollbacks are expected to save customers more than $55 million in 2011. Most cost savings are likely to be passed to consumers, making Wal-Mart's low-price leadership even more difficult to surpass.

Macro economic conditions have pressurized customer's spending in the US. Amid such a situation, customers are more attracted to low price value retailers. The prominence of warehouse clubs has

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been increasing as more number of customers opt to shop in warehouses. Despite indications of some trading up, economic recovery is estimated to be relatively mild, suggesting that Wal-Mart's low-price strategy will continue to resonate with lower-income consumers. Due to its positioning, the company has benefited more than most peers from consumers trading down. Wal-Mart primarily serves less-affluent consumers, but the economic slowdown has put more people in that group, and many are drawn to Wal-Mart's low-cost leadership. The company's price leadership ensures a large addressable market, which will drive top-line growth.

Internationalization strategy a strong foundation for growth as the US market matures

Wal-Mart has been increasingly focusing on establishing its presence strongly in the international arena. At the end of FY2011, the company’s international segment operated 3,949 retail stores in 14 countries. Wal-Mart opened its first international store in Mexico in 1991 and since then has grown both through acquisitions and its own innovation. Though it is synonymous with the big-box stores in the US, the company operates through several store formats ranging from relatively tiny Bodega Aurrera Express stores in Mexico to a cash-and-carry warehouse in India and to the traditional box in Canada. Walmart International operates under 60 different banners, which include Acuenta in Chile, Asda in the UK and Seiyu in Japan. Wal-Mart's international segment is its fastest growing segment and is expected to grow at an aggressive pace through strong organic growth and acquisitions. Wal-Mart's focus on international growth has enabled it to achieve a milestone by surpassing the $100 billion net sales mark in FY2011. The international segment’s revenue (26.1% of total revenue) grew by 12.19% in FY2011. Similar growth rates are expected in the medium term as Wal-Mart increases capital spending in fast-growing markets such as Latin America and South Africa.

As the markets in the US saturates for Wal-Mart, the international strategy will help the company to improve returns from emerging markets. Additionally, international revenue growth more than offset a modest decrease in the US comparable-store sales at Wal-Mart. As it expands at the international level, not only will the company be able to replicate the business model and leverage on the expertise, but also will leverage on the global scale through global brand and supplier relationships and merchandising efficiencies.

Weaknesses

Big box retailing format led to low penetration in the urban areas

Wal-Mart is a big box retailer and operates supercenters which require large space for every new store. This is limiting expansion of Wal-Mart stores in urban areas where there is limited space available and limited commercial spaces which can provide such large spaces. Wal-Mart's massive stores can combine a grocery store and a discount store under one roof. Building huge stores made sense when suburban landscapes were wide open and baby boomers were moving away from cities. However, the recent trends show that the baby boomers are scaling back, moving into smaller homes closer to urban areas. The housing market crash in the US also means new neighborhoods are not

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springing up to support retail centers. The latest urban focus suggests that big stores are less attractive. Retailers are expected to invent formats that differ dramatically from current ones.

Previously, Wal-Mart has experimented with new formats and opened convenience-sized grocery stores called Marketside in 2008. However, not much was done to expand the Marketside stores. Walmart US also operates small stores under the Neighborhood Market banner in the US market. These stores range in the size of 40,000 square feet. In the first quarter of FY2012, sales and the traffic at these stores increased by 4% and 2%, respectively. Furthermore, in 2011, the company launched a new store formant under the Walmart Express banner. These stores are less than 10% of the size of Wal-Mart’s regular stores and carry nearly 11,000–13,000 stock-keeping units, compared with 100,000 items at the company’s supercenters. The success of these stores is yet to be proved.

Besides the expansion of these small stores, the company has also been expanding its large format stores, leading to cannibalization of existing stores. The total number of Wal-Mart supercenters increased from 2,620 in FY2009 to 2,907 in FY2011, representing an increase of 10.9%. In comparison, the number of Neighborhood Markets and other small formats grew by merely 2.2% during FY2009–11. The comparable store sales at Walmart US declined for eight consecutive quarters, the first quarter of FY2012 being the latest. The traffic at its stores has also witnessed a decrease in the first half of FY2011. Therefore, it has become increasingly important for Wal-Mart to innovate a format that can use its current strengths and is more suitable to the urban locations. Its competitors such as Tesco, Target and Costco are also focusing on inventing new sustainable smaller formats, and success with the new formats will be a competitive disadvantage for Wal-Mart.

Litigations affect labor relations adversely

Wal-Mart has been facing several charges and lawsuits with respect to labor relations. In FY2009, the company settled 63 wage-and-hour class action lawsuits. As a result of the settlement, Wal-Mart recorded a pre-tax charge of approximately $382 million during the fourth quarter of FY2009. Further in May 2010, the company settled two wage-and-hour class action lawsuits under which Wal-Mart may be required to pay $2 million to $4.45 million. Also in May 2010, Wal-Mart settled a wage-and-hour class action lawsuit which can result in penalty of $43 million to $86 million. Wal-Mart has been suffering the ill-effects of such lawsuits which divert large amounts of money towards counterproductive activities. Additionally, the company's reputation is tarnished and may find itself short of skilled and qualified employees. The employees might demand higher compensation and this could also lead to skilled employees choosing to work with competitors, which will be a key competitive disadvantage.

Opportunities

Outperformance of the retail sectors in emerging markets

Wal-Mart has been expanding its presence in several emerging economies such as Brazil, Mexico, and South Africa. Economists have long predicted that consumers in emerging economies would

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not only manufacture most of the world's goods but also buy them. The growing retail trends in these economies will positively impact Wal-Mart’s revenue growth. According to Brazilian Institute of Geography and Statistics, the retail sales in Brazil grew by 6.2% in May 2011 compared with the same month in the previous year. The retail sales in Mexico have also been growing. According to the Statistical Office of INEGI, the retail sales in Mexico increased by 4.9% on an year-on-year basis in April 2011. Furthermore, according to Statistics South Africa, the retail sales in South Africa increased by 5.1% on an year-on-year basis in March 2011. Strong underlying economic growth, population expansion, increasing wealth of individuals and the rapid construction of organized retail infrastructure are key factors behind the growth in retail markets of these emerging economies.

In order to leverage on this trend, Wal-Mart's has harped on various expansion plans in the emerging nations. In February 2011, Walmart de Mexico y Centroamerica announced plans to invest MXP18.97 billion (approximately $1.5 billion), towards expansion of its sales floor by 12.2% in Mexico, and 8.8% throughout the five countries (Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica) where it operates in Central America. Moreover, in May 2011, Wal-Mart announced plans to invest BRL1.2 billion (approximately $0.68 billion) during FY2012 towards opening 80 new stores in Brazil. Also, in June 2011, the company acquired 51% stake in Massmart Holdings, a South Africa based company. Massmart Holdings operates nine wholesale and retail chains, and one buying group, each focused on high-volume, low-margin, low-cost distribution of primarily branded consumer goods in Brazil. For developing countries accustomed to informal markets, such as mom-and-pop shops and street vendors where prices can change daily, Wal-Mart is expected to meet a resistance among the customers. However, the company is accustomed to such environments as Wal-Mart's early strategy of building stores in a rural America neglected by other retailers is in similar lines and its experience will provide the company with necessary expertise to penetrate in these emerging markets. The growing retail sector in the emerging markets will drive the growth for Wal-Mart.

Concentration on grocery and food will benefit as eating at home, health and wellness trends continue to emerge

Eating at home and eating healthy are important trends that are likely to increase the demand for grocery. According to a recent survey, it was found that 86% of the budget-conscious women in the US prepared their meals at home in 2010. Approximately 71% purchased convenience produce (prepared salads, chopped fruits and vegetables, etc.) and approximately 81% purchased convenient forms of fresh poultry and meats regularly. The economic downturn, the perception that home-prepared foods are much healthier a view held by a major proportion of grocery shoppers, and an unmet desire to enjoy affordable, restaurant-style foods at home have given food marketers the opportunity to recapture mealtime. With more food shoppers cooking at home, basic ingredients such as rice, breakfast meats, frozen poultry, oils, and frozen vegetables are expected to enjoy brisk sales. Additionally, self-care has emerged as a key money-saving strategy, which is driving the health and wellness trend in the US. Another industry report suggests that consumers have been rating nutritious/wholesome meals as a major consideration when planning food and beverage shopping trips. Customers in the US are more health conscious now than before and the trend has impacted the preference of food products. It has been observed that more than half of the consumers read ingredient statements on packaging and are using nutritional information to make their purchasing decisions.

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These trends strongly reflect that the food and grocery segment will increase the guest traffic into the stores converting into higher sales. Although Wal-Mart has been a multi-line retailer, it has pro-actively increased the share of groceries and food products in the total sales. In FY2011, groceries accounted for 54% of the sales generated by Walmart US, as compared with 47% in FY2008. At Sam’s Club stores too, the share of grocery sale has risen in the past few years. The positive trends in the market will lead to increased sales in the segment which have higher margins driving the profitability as well.

Growth in internet retailing to serve larger market

Online retailing has been increasing at a fast pace in the US. According to the US Department of Commerce, the e-commerce sales in the US totaled $166.5 billion in 2010 compared with $45 billion in 2002, representing a compound annual growth rate (CAGR) of 18% for the period FY2002–10. e-commerce sales accounted for 4.3% of the total retail sales in 2010. In comparison, in 2002, e-commerce sales accounted for only 1.4% of the total retail sales. The high growth market gives Wal-Mart an opportunity to reach out to wider audience and increase customer base. In addition, the online channel has several counter recessionary characteristics such as low infrastructure costs and convenience which can be passed on to the consumers.

The company offers its merchandise online at www.walmart.com and www.samsclub.com. Wal-Mart operates e-commerce business in nine countries. The company has also been testing an online grocery delivery service ‘Walmart to Go’. In order to strengthen its foothold in the online retail channel, Wal-Mart acquired Kosmix, a California based company, in April 2011. Kosmix will help Wal-Mart to create technologies and businesses around social and mobile commerce and integrate its brick and mortar stores with the e-commerce platform. In the international market too, Wal-Mart has been expanding its online retail presence.

The company has also been pursuing opportunities to expand its online presence internationally. In May 2011, the company reached an agreement to acquire a minority stake in the holding company of Yihaodian, an ecommerce company based in China. Yihaodian was launched in 2008, and since then has grown to hold a significant position in the growing Chinese online market, with over 75,000 SKU’s in offerings in various categories. Strengthening presence in Chinese online retail channel will facilitate revenue growth for Wal-Mart, as the country’s online channel is set to grow. According to industry estimates, the online retail sales in China increased 22% in 2010 with the consumers increasingly turning to low cost products and convenience shopping. Internet sales in the country touched CNY4.5 trillion (approximately $684 billion) in 2010. With the consumer online spending accounting for about 3% of total retail sales in the country, there is a huge room for growth in online retailing in China.

In saturated markets where Wal-Mart’s format has limited expansion models, online channel will be a crucial channel for expansion. It will also help the company penetrate into the newer markets faster than through the establishment of retail stores. The company has been focusing on establishing a strong presence in the online segment and the growing popularity of the channel will help the company to expand its customer base.

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Threats

More than two million employees increase exposure to rising wages and high healthcare costs

The labor costs for companies in the US have been rising as the healthcare costs and wages increased in the recent times. Tight labor markets, increased overtime, government mandated increases in minimum wages and a higher proportion of full-time employees are resulting in an increase in labor costs. In the US, the government increased the minimum wage rate from $6.55 per hour in 2008 to $7.25 an hour in July 2009. Furthermore, many states and municipalities in the country have minimum wage rate even higher than $7.25 per hour due to higher cost of living. In addition to this, the health care costs for employers in the US are increasing. According to industry estimates, health-care costs for the US employers are estimated to increase by 8% in 2011 and 8.5% in 2012. The increase in medical cost continues to outpace inflation and wage increases. One of the key drivers expected to increase medical costs in 2011 is that the workers are concerned about losing their jobs and potentially their health insurance and therefore are using their health care more while they still have it. The new healthcare reforms are bringing more people under the gamut of insurance further increasing the costs for employers. These trends have several negative implications for the company. Foremost is Wal-Mart's huge employee base of just over 2 million, which leaves the firm susceptible to wage and health-care cost trends, discrimination lawsuits. With 2.1 million people on the payroll, overall wage and benefit cost trends are large drivers of the company's profitability. Over the past 10 years, the company’s selling, general, and administrative costs have outpaced its revenue growth, offset by other efficiencies, leading to roughly stable operating margins. If Wal-Mart’s revenue growth falls below total labor cost inflation, or the company is no longer able to squeeze savings out of its supply chain, the rising costs will materially impact its profitability. In the coming years, Wal-Mart plans to aggressively increase its footprint in the US and internationally which means addition of more employees to its already huge work force. Thus, rising labor cost can weigh down on Wal-Mart’s profitability.

Volatility in commodity prices and cost inflation may pressurize margins

The inflation for producers in the US market has been increasing at a faster pace than consumer's inflation leading to higher costs for the producers. The cost inflation returned and the food and grocery industry has little pricing power, the factors which have been pressurizing margins. Although the retailers have been witnessing rising cost, they have not been able to fully pass through the price increases. The spread between Consumer Price Index (CPI) and Producer Price Index (PPI) was at the largest negative spread in over twenty years, indicating high PPI compared to CPI, underscoring the margin pressure in the grocery industry in 2010. For the month of March 2010, PPI was up 6.8% while CPI was down -0.7% creating a spread of -7.5%. In the following months, PPI continued to grow at a higher rate compared with the CPI, further increasing the pressure on retailers' margins. For the period of 12 months ending June 2011, the PPI increased by 7%, while the CPI for All Urban Consumers (CPI-U) increased by only 3.6% for all items index and by 3.7% rise in food. Growing inflation can cause gross margin shortfalls as grocers have difficulty passing through cost increases to the final consumers. Furthermore, price wars between competitors will ensure that customers are offered products at the lowest price possible. As inflation and the shelf prices increase, customers

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tend to reduce demand. These factors will affect Wal-Mart’s margins adversely, especially because the company’s ‘every day low prices’ strategy is the key driving force among customers. Deflation in grocery would also pressurize Wal-Mart to continually wring efficiency out of operations and forces lower selling prices from suppliers. This may further increase an already existing quiet battle between grocery retailers and consumer packaged goods manufacturers over retail shelf prices. The weak pricing environment for Wal-Mart, increasing PPI and deflation at the consumer's end will severely affect margins for the company.

Blurring difference between Wal-Mart and its competitors

The retail industry is the US is characterized by intense competition. Wal-Mart competes with the likes of Target, Tesco, Safeway, and other large retailers in the country. Over the past few years, the thin line of differentiation between Wal-Mart and these players has been disappearing. According to industry reports, the percentage of similar general merchandise items offered at Target and Wal-Mart stores has been increasing. This is expected to increase further in the coming years. Target has also been catching up with Wal-Mart on the price front. Target has made conscious effort to strengthen its supply chain and leverage on the cost savings resulting from efficient functioning. These cost savings are being passed onto customers in the way of low prices. Another non-traditional competitor, Amazon.com has also been closing on the difference between Wal-Mart and itself. Like Wal-Mart, Amazon.com also offers a wide assortment of merchandise through its web portal. Amazon.com has a strong logistics, supply chain network, and presence only on the online channel. Amazon.com has also been expanding its household goods and groceries category, and is testing a grocery delivery service called "Amazon Fresh" in Seattle, a service similar to Wal-Mart’s ‘Walmart to Go’ concept. These factors help it to derive cost savings which is ultimately passed on to customers in the form of low merchandise prices. Additionally, with growing number of people shopping online for all their needs, Amazon.com is set to gain significant market share in future. Wal-Mart’s low cost positioning seems to be diluting, which is reflected in low traffic at its stores. Other competitors such as the Kroger, Dollar General, and Target have been registering a robust growth in traffic at their respective stores in recent times. The blurring difference between Wal-Mart and its competitors can render its competitiveness weak and lead to market share loss.

Increasing resistance to expansion from local organizations and authorities

For several years now, Wal-Mart has been facing severe resistance from several groups when it planned to open new stores. A review by an industry related report suggested that a Wal-Mart store gets more than two third of its business from existing stores. Another report documented that Wal-Mart has received more than $1 billion in subsidies from state and local governments through tax breaks and paying for roads and utility connections at many of its new stores. A market analysis report estimated that for every new Wal-Mart super center that opens, two local supermarkets will close. Furthermore, since the prices offered at Wal-Mart superstores are much lower than at local competitors, the sales tax revenues also decrease. Several of these reports have been affecting the decisions made by local authorities, which is deterring the expansion plans of Wal-Mart. Additionally, several labor issues that Wal-Mart is involved in also leads to severe opposition from the unions. In many cases, the pitched battles with the local organizations and authorities have more than doubled the amount of time it takes Wal-Mart to open a store. Local authorities have been forced to consider

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giving permits on several occasions delaying the projects. It is becoming increasingly difficult for Wal-Mart to open new stores as the resistance increases. This is affecting the new investments and the time to open new stores for the company.

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TOP COMPETITORS

The following companies are the major competitors of Wal-Mart Stores, Inc.

Target Corporation Safeway Inc. Sears Holdings Corporation J. C. Penney Corporation, Inc. Kroger Co., The Tesco PLC Carrefour S.A. Metro AG Costco Wholesale Corporation Amazon.com, Inc. CVS Caremark Corporation Kohl's Corporation Lowe's Companies Inc Office Depot, Inc. Staples, Inc. SUPERVALU INC. Walgreen Co. Dollar General Corporation

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Wal-Mart Stores, Inc. Top Competitors

COMPANY VIEW

A statement by Michael T. Duke, the President and Chief Executive Officer at Wal-Mart Stores is given below. The statement has been taken from the company’s Annual Report for FY2011.

To our shareholders, associates and customers

Building the Next Generation Walmart

At Walmart, we are proud that we work for a very special company that’s based on Sam Walton’s vision of saving people money so they can live better. Every time a Walmart associate walks the sales floor, enters our offices, or gets behind the wheel of a truck, he or she has the opportunity to improve the lives of millions of people around the world. What we do and how we perform is watched closely not only by our customers and shareholders, but also by the whole world.

Financial results. Walmart delivered solid financial performance for fiscal year 2011. We increased net sales by 3.4 percent to $419 billion and operating income by 6.4 percent to more than $25 billion. Our diluted earnings per share from continuing operations rose 12 percent to $4.18 per share. We continued to deliver a stable return on investment of over 19 percent. We closed out the year with almost $11 billion in free cash flow. And I’m proud that we returned a record $19.2 billion to shareholders through dividends and share repurchases.

These results demonstrate the strength of our underlying business and our dedication to delivering shareholder value. In the coming year, I’m optimistic that Walmart will improve where we need to and continue to build momentum where we’re already succeeding. Our talented leadership team is fully aligned on executing plans to support our financial priorities of growth, leverage and returns.

Business segments. We were simply not satisfied with the net sales results in Walmart U.S. last year. The team is implementing an aggressive plan to reinforce our commitment to EDLP and to offer a broad merchandise assortment and presentation that’s even more relevant to customers. My top priority this year is to work with Bill Simon, CEO of Walmart U.S., and his team to achieve positive comparable store sales. At the same time, there’s a tremendous opportunity to grow in the United States through supercenters and new formats, such as Walmart Express, in urban and rural markets.

Under Doug McMillon, CEO of Walmart International, our international segment continued to be a growth engine last year – generating a 12 percent net sales increase and adding approximately 8 percent more selling space through 458 net new units. Walmart International leveraged expenses on a constant currency basis this past year, and we expect improving returns in the years ahead. We are pleased with the progress of the Massmart transaction in South Africa and continue to work on finalizing our acquisition of the Netto stores in the U.K. Our international leadership teams are accelerating organic growth in emerging markets, including Brazil, China, India and Mexico.

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I am very pleased with Sam’s Club’s performance and the contributions they’re making to shareholder value. Brian Cornell, CEO of Sam’s Club, and his team grew sales 3.5 percent, and we expect continued sales momentum this year. Sam’s top priority for this year is attracting new members through improved member experiences.

Best-positioned retailer. There is no doubt that Walmart is the best-positioned global retailer to address the needs of customers around the world. Our customers remain pressured, particularly in mature markets, about job security and personal finances. In emerging markets, the economic recovery is stronger and fueling a growing middle class. All of this points to the incredible opportunity we have with the Next Generation Walmart and our mission of saving people money so they can live better.

At Walmart, we have so many great strengths to leverage throughout our company. Our new Global Business Processes team is developing and sharing improved processes, such as workforce productivity, across our business segments. Our Global Customer Insight Group will help drive growth by deepening our understanding of consumer trends and creating new analytical tools. I’m also pleased with the progress we’re making in developing the best talent in each market. Recruiting, developing and retaining future leaders is vital to Walmart’s success, and we have a special emphasis on women leaders. This is important because, globally, women represent 50 percent of the available talent and, according to an external study, directly influence over $20 trillion in annual consumer spending.

With customers adopting technology faster than ever, we’re entering an era of even greater price transparency. Our ASDA price guarantee program is a great example of that transparency. Our focus on the productivity loop helps ensure we drive every day low cost, so we can deliver every day low prices across our business. Walmart U.S. is also leveraging multi-channel innovations like Site-to-Store, Pick Up TodaySM and Fed-Ex Site to Store to allow our customers to shop when and how they want. We have a web presence in many of our 15 countries and are working to coordinate those efforts and expand to new markets where we may not even have a physical presence. Through these and other initiatives, we will continue to leverage our resources, lower costs and increase our speed to market.

Leading on social issues. We continue to play an even bigger leadership role on the social issues that matter to our customers. I am especially proud of how sustainability is integrated throughout our business, and how associates all over the world are involved in this initiative. This year, we’ve published a Global Responsibility Report, expanding the dialogue to a broader range of major issues beyond our environmental sustainability efforts. This is a natural evolution for the company as we work toward a globally responsible view of our impact on the world community.

Our culture is what makes us special at Walmart. The retailer that respects individuals, puts customers first, strives for excellence, and is trusted, will win the future. In particular, it is important that Walmart associates obsess about serving customers every day – listening to them and giving them what they want. Everywhere I travel, customers tell me that they care about quality products at an affordable price, and that’s what we need to deliver to them.

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We can and do make a profound difference in people’s lives. At Walmart, we understand this opportunity and the responsibility that comes with it. And not a day goes by when I don’t think about how much our Board of Directors and the management team appreciate the hard work of our 2.1 million associates. Working together, we are building the Next Generation Walmart and making Sam Walton’s vision a reality around the world.

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LOCATIONS AND SUBSIDIARIES Head Office

Wal-Mart Stores, Inc. 702 Southwest 8th Street Bentonville Arkansas 72716 8611 USA P:1 479 273 4000 http://www.walmartstores.com

Other Locations and Subsidiaries

Walmart de Mexico y CentroamericaWal-Mart Canada Corp. Blvd. M. Avila Camacho 6471940 Argentia Road Colonia PeriodistasMississauga Delegacion Miguel HidalgoOntario L5N 1P9 11220 MexicoCAN MEX

Distribucion y Servicio S.A. de C.V.ASDA Group Limited CHLAsda House

Southbank Great Wilson Street Leeds LS11 5AD GBR

Gazely LimitedWal-Mart Stores East, LP GBRDelaware

USA

Wal-Mart Property CompanyWal-Mart Real Estate Business Trust DelawareDelaware USAUSA

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Wal-Mart Stores, Inc. Locations and Subsidiaries