Walmart 2015 Annual Report Download

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Winning the future of retail
One customer at a time
2015 Annual Report
10:00 a.m.
Brazil
Walmartbrasil.com’s
expanded assortment
puts a million items
within reach.
8:00 a.m. CT
United States
Supercenter customers
enjoy low prices and
fast, friendly checkout.
2:00 p.m.
United Kingdom
Click & Collect lets Asda
shoppers order online and
collect their groceries at
various pickup points.
2015 Annual Report

Table of contents

  • Page 1
    2015 Annual Report 8:00 a.m. CT United States Supercenter customers enjoy low prices and fast, friendly checkout. 2:00 p.m. United Kingdom Click & Collect lets Asda shoppers order online and collect their groceries at various pickup points. 10:00 a.m. Brazil Walmartbrasil.com's expanded ...

  • Page 2
    ... to save time and money, and have an enjoyable shopping experience. We're investing to increase associate wages and training to improve the service in our stores and clubs. Customers want more choice, more items than they ever did before. Walmart.com increased assortment by 60% in fiscal 2015, and...

  • Page 3
    ... customers' time. What are your most important objectives to improve customer experience, both in stores and online? Retail has always been a people business, and we win when associates exceed customer expectations. That's why we're investing in higher wages and increased training and development...

  • Page 4
    ...each consecutive quarter during the year. I'm pleased by the positive comp sales growth, especially the strong performance from Neighborhood Markets, but we're not satisfied. The Almost 260M Customers served weekly in our stores in 27 countries and through websites globally 2 2015 Annual Report

  • Page 5
    ... Consolidated fiscal 2015 revenue 16% Fiscal 2015 total shareholder return technology, assortment and supply chain. The investments in our global technology platform provide a foundation that strengthens usability and conversion across our e-commerce websites and mobile apps. We're also investing...

  • Page 6
    ...available during peak hours and weekends. In February, we announced an array of changes for associates and a bold new approach to our jobs. These changes to training, scheduling and pay will lead to expanded career opportunities and increased wages for hundreds of thousands of 4 2015 Annual Report

  • Page 7
    ... and our supply chain, including our more than 4,500 stores. These investments will give our customers better access to merchandise and make the shopping experience more rewarding. full-time and part-time hourly store associates. Across the country, all entry-level associates now earn a minimum of...

  • Page 8
    ...fiscal 2015, Walmart International's net sales increased 3.6 percent on a constant currency basis, to $141.4 billion. We grew operating income faster than sales, demonstrating balanced growth and improved profitability. We also added 9.4 million square feet of retail space and 183 stores, bringing...

  • Page 9
    ... quality fresh food and excellent customer service. For example, in China, we've invested to improve our distribution network for fresh products and also utilized Walmart's "Worry Free Fresh" program to provide a money-back guarantee if our produce and meats don't meet customer expectations. Our...

  • Page 10
    ...increased hourly wages and additional investments in training, announced in February, will provide greater career opportunities for our club associates and allow us to continue delivering award-winning service to members. In addition, Plus members appreciate the benefits of our Cash Rewards program...

  • Page 11
    ... of our members are enthusiastic about our cash back credit card. This secure, chip-enabled 5-3-1 MasterCard® offers the best cash-back program in the market. We've also expanded our portfolio of services to provide more convenience and value. We're helping small business members take care of back...

  • Page 12
    Integrating digital and physical retail for Walmart customers 11 Countries with dedicated Walmart e-commerce websites blueChip_12 1.2M sq. ft. Average size of our 4 new U.S. e-commerce fulfillment centers opening in FY 16 $12.2B Global e-commerce sales in FY 15 (22% growth) 10 2015 Annual Report

  • Page 13
    ... and scientists as we build a technology company inside the world's largest retailer. And, we continue to use our stores to test innovations like order pickup and grocery home shopping to position Walmart as the global leader in integrating digital and physical retailing. 2015 Annual Report 11

  • Page 14
    ... If you work hard, develop new skills and care for our customers, there should be no limit to what you can do here." Doug McMillon President and Chief Executive Officer Wal-Mart Stores, Inc. Of our associates are women 2.2M Dedicated associates globally 12 12 2015 2015 Annual Annual Report Report

  • Page 15
    ...Bonuses earned by hourly associates in fiscal 2015 4 of 5 75% Of store operations management joined Walmart as hourly associates Are proud to work at Walmart Based on survey results from more than 2 million associates worldwide 3,600 Global eCommerce associates around the world 2015 Annual Report...

  • Page 16
    ... of Directors Wal-Mart Stores, Inc. Across our markets, Walmart is in a period of rapid change, and our Board of Directors is highly engaged in overseeing the development and execution of Walmart's enterprise strategy. Under Doug's leadership, management is focused on driving long-term growth and...

  • Page 17
    ... (C) Executive Global Comp. Strategic Planning Tech & & Finance e-commerce (C) (C) Thomas W. Horton Michael T. Duke (FE) Marissa A. Mayer Kevin Y. Systrom Aida M. Alvarez Gregory B. Penner (C) Steven S Reinemund (C) (C) Committee Chair (FE) Financial Expert 2015 Annual Report 15

  • Page 18
    ...expanded training opportunities will help hourly associates earn higher pay and advance their careers. This investment will benefit our customers through a better store and club experience, leading to higher sales and returns. I'm proud of Walmart's long record of consistent returns to shareholders...

  • Page 19
    ... of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interest Consolidated Statements of Cash Flows 40 60 61 Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Report of...

  • Page 20
    Five-Year Financial Summary As of and for the Fiscal Years Ended January 31, (Amounts in millions, except per share and unit count data) 2015 2014 2013 2012 2011 Operating results Total revenues Percentage change in total revenues from previous fiscal year Net sales Percentage change in net sales...

  • Page 21
    ...we operate. Digital retail is comprised of our e-commerce websites and mobile commerce applications. Each week, we serve nearly 260 million customers who visit our over 11,000 stores under 72 banners in 27 countries and e-commerce websites in 11 countries. Our strategy is to lead on price, invest to...

  • Page 22
    ... we manage working capital through free cash ï¬,ow. While all three priorities are important, our top priority is growth, with increased investment in digital retail and our associates. Sales growth will contribute to improving leverage and returns over time. Growth Net Sales Fiscal Years Ended...

  • Page 23
    ...from the retail calendar comparable store and club sales provided in our quarterly earnings releases. Calendar comparable store and club sales, as well as the impact of fuel, for fiscal 2015 and 2014, were as follows: Fiscal Years Ended January 31, 2015 With Fuel 2014 2015 Fuel Impact 2014 Walmart...

  • Page 24
    ... strategic initiatives with possible short-term impacts. ROI was 16.9% and 17.0% for the fiscal years ended January 31, 2015 and 2014, respectively. The slight change in ROI was primarily due to continued investments in store growth and digital retail initiatives, offset by currency exchange rate...

  • Page 25
    ...Average invested capital Return on investment (ROI) CALCULATION OF RETURN ON ASSETS Numerator Income from continuing operations Denominator Average total assets of continuing operations (1) Return on assets (ROA) Free Cash Flow Free cash ï¬,ow is considered a non-GAAP financial measure. Management...

  • Page 26
    ...-year growth in retail square feet, positive comparable sales in the U.S. and higher e-commerce sales across the Company. The increase was partially offset by $5.3 billion of negative impact from ï¬,uctuations in currency exchange rates for fiscal 2015. The increase in net sales for fiscal 2014...

  • Page 27
    ...in China and Mexico to correct a historical accounting practice that did not conform to our global accounting policies; and • Expenses for the termination of the joint venture, franchise and supply agreements related to our former partner's retail store operations in India. 2015 Annual Report 25

  • Page 28
    ... the addition of 15 new clubs, partially offset by a decrease in fuel sales due to the lower average selling price. Comparable club sales were ï¬,at for fiscal 2015. The fiscal 2014 increase in net sales was due to year-over-year growth in retail square feet of 2.1%, driven by the addition of 12...

  • Page 29
    ... for fiscal 2015, 2014 and 2013, respectively, and generally consisted of payments to add stores, remodel numerous existing stores, expand our digital retail capabilities and invest in other technologies. Net cash used in investing activities decreased $1.4 billion for fiscal 2015, when compared...

  • Page 30
    ...11.6 to $12.9 Net Cash Used in Financing Activities Fiscal Years Ended January 31, (Amounts in millions) 2015 2014 2013 Our total outstanding long-term debt balance was relatively ï¬,at as of January 31, 2015 compared to the balance as of January 31, 2014. During fiscal 2015, we used the proceeds...

  • Page 31
    ... date basis, the number of shares repurchased, average price paid per share and total cash paid for share repurchases for fiscal 2015, 2014 and 2013: (Amounts in millions, except per share data) Fiscal Years Ended January 31, 2015 2014 2013 Capital Resources We believe cash ï¬,ows from continuing...

  • Page 32
    ... the current liabilities section of the Company's Consolidated Balance Sheets. Estimated interest payments are based on our principal amounts and expected maturities of all debt outstanding at January 31, 2015, and management's forecasted market rates for our variable rate debt. Purchase obligations...

  • Page 33
    ... to ï¬,uctuations in foreign currency exchange rates as a result of our net investments and operations in countries other than the U.S. For fiscal 2015, movements in currency exchange rates and the related impact on the translation of the balance sheets of the Company's subsidiaries in Canada, the...

  • Page 34
    ... for the estimated annual effect of inï¬,ation, and these estimates are adjusted to actual results determined at year-end. Our LIFO provision is calculated based on inventory levels, markup rates and internally generated retail price indices. At January 31, 2015 and 2014, our inventories valued...

  • Page 35
    ... Statements); • the recently announced new associate wage structure and comprehensive associate training and educational programs adversely affecting Walmart's ability to leverage in the future and cash provided by operating activities being sufficient to fund those programs; 2015 Annual Report...

  • Page 36
    ... low cost allowing investment in and strengthening of the segment's everyday low cost pricing strategy and offering value to customers, the ranges of the number of units and amount of retail square feet to be added by Walmart U.S. in fiscal 2016, and transparent pricing for customers occurring...

  • Page 37
    ... websites and mobile commerce applications; • the availability of attractive opportunities for investment in retail operations in the markets in which we currently operate and in new markets and for investment in digital retail acquisitions and initiatives; • disruption in our supply chain...

  • Page 38
    Consolidated Statements of Income Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2015 2014 2013 Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income ...

  • Page 39
    Consolidated Balance Sheets As of January 31, (Amounts in millions) 2015 2014 ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Current assets of discontinued operations Total current assets Property and equipment: Property and equipment Less ...

  • Page 40
    ... interest Other Balances as of January 31, 2014 Consolidated net income Other comprehensive income, net of income taxes Cash dividends declared ($1.92 per share) Purchase of Company stock Purchase of redeemable noncontrolling interest Other Balances as of January 31, 2015 See accompanying...

  • Page 41
    Consolidated Statements of Cash Flows Fiscal Years Ended January 31, (Amounts in millions) 2015 2014 2013 Cash flows from operating activities: Consolidated net income Income from discontinued operations, net of income taxes Income from continuing operations Adjustments to reconcile income from ...

  • Page 42
    ...to Consolidated Financial Statements 1 Summary of Significant Accounting Policies General Wal-Mart Stores, Inc. ("Walmart" or the "Company") helps people around the world save money and live better - anytime and anywhere - in retail stores or through the Company's e-commerce and mobile capabilities...

  • Page 43
    ... cost. Management reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is performed at the lowest level of identifiable cash ï¬,ows, which is at the individual store or club level...

  • Page 44
    ...revenue, end of year $ 759 $ 641 $ 575 Membership fee revenue is included in membership and other income in the Company's Consolidated Statements of Income. The deferred membership fee is included in accrued liabilities in the Company's Consolidated Balance Sheets. Shopping Cards Customer purchases...

  • Page 45
    ... and included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. Pre-opening costs totaled $317 million, $338 million and $316 million for fiscal 2015, 2014 and 2013, respectively. Currency Translation The assets and liabilities of all...

  • Page 46
    ... for all plans was $462 million, $388 million and $378 million for fiscal 2015, 2014 and 2013, respectively. Share-based compensation expense is included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The 44 2015 Annual Report

  • Page 47
    ... Years Ended January 31, (Amounts in millions, except per share data) 2015 2014 2013 1.3 2.0 2.0 1.7 2.1 1.7 Total number of shares repurchased Average price paid per share Total cash paid for share repurchases 13.4 $75.82 $1,015 89.1 $74.99 $6,683 113.2 $67.15 $7,600 2015 Annual Report...

  • Page 48
    Notes to Consolidated Financial Statements 4 Accumulated Other Comprehensive Income (Loss) The following table provides the fiscal 2015, 2014 and 2013 changes in the composition of total accumulated other comprehensive income (loss), including the amounts reclassified out of accumulated other ...

  • Page 49
    ... table includes additional information related to the Company's short-term borrowings for fiscal 2015, 2014 and 2013: Fiscal Years Ended January 31, (Amounts in millions) 2015 2014 2013 Maximum amount outstanding at any month-end Average daily short-term borrowings Weighted-average interest rate...

  • Page 50
    ... Company's Consolidated Balance Sheets. Annual maturities of long-term debt during the next five years and thereafter are as follows: (Amounts in millions) Fiscal Year Annual Maturities 2016 2017 2018 2019 2020 Thereafter Total $ 4,810 2,312 1,523 3,518 514 33,219 $45,896 48 2015 Annual Report

  • Page 51
    ...in active markets; • Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and • Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions. 2015 Annual Report 49

  • Page 52
    ...Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2015 and 2014...

  • Page 53
    ...setting the foreign currency translation adjustment of the related net investments that is also recorded in accumulated other comprehensive income (loss). At January 31, 2015 and January 31, 2014, the Company had ¥100 billion and ¥200 billion, respectively, of outstanding long-term debt designated...

  • Page 54
    ... designated and qualifying as net investment hedges, were classified as follows in the Company's Consolidated Balance Sheets: January 31, 2015 (Amounts in millions) Fair Value Instruments Net Investment Instruments Cash Flow Instruments Fair Value Instruments January 31, 2014 Net Investment...

  • Page 55
    ... income tax rate on pretax income from continuing operations is as follows: Fiscal Years Ended January 31, 2015 2014 2013 The deferred taxes are classified as follows in the Company's Consolidated Balance Sheets: January 31, (Amounts in millions) 2015 2014 Balance Sheet classification: Assets...

  • Page 56
    ...2015 and 2014, accrued interest related to uncertain tax positions of $57 million and $40 million, respectively, was recorded in the Company's Consolidated Balance Sheets. The Company did not have any accrued penalties recorded for income taxes as of January 31, 2015 or 2014. 54 2015 Annual Report

  • Page 57
    ... and other information in connection with the government investigations, in defending the shareholder lawsuits, and in conducting the review and investigations. These costs will be expensed as incurred. For the fiscal years ended January 31, 2015, 2014 and 2013, the Company incurred the following...

  • Page 58
    ... Balance Sheets in deferred income taxes and other. Certain other international operations also have defined benefit arrangements that are not significant. The following table summarizes the contribution expense related to the Company's retirement-related benefits for fiscal 2015, 2014 and 2013...

  • Page 59
    ... operations in the Company's Consolidated Statements of Income for the fiscal year ended January 31, 2015. 14 Segments The Company is engaged in the operation of retail, wholesale and other units located in the U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan...

  • Page 60
    ... 8,478 12,898 Total revenues, consisting of net sales and membership and other income, and long-lived assets, consisting primarily of property and equipment, net, aggregated by the Company's U.S. and non-U.S. operations for fiscal 2015, 2014 and 2013, are as follows: Fiscal Years Ended January 31...

  • Page 61
    ... Statements 16 Quarterly Financial Data (Unaudited) Fiscal Year Ended January 31, 2015 (Amounts in millions, except per share data) Q1 Q2 Q3 Q4 Total Total revenues Net sales Cost of sales Income from continuing operations Consolidated net income Consolidated net income attributable to Walmart...

  • Page 62
    ...consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, shareholders' equity and redeemable noncontrolling interest, and cash ï¬,ows for each of the three years in the period ended January 31, 2015...

  • Page 63
    ... balance sheets of Wal-Mart Stores, Inc. as of January 31, 2015 and 2014, and related consolidated statements of income, comprehensive income, shareholders' equity and redeemable noncontrolling interest and cash ï¬,ows for each of the three years in the period ended January 31, 2015 and our report...

  • Page 64
    Management's Report to Our Shareholders Wal-Mart Stores, Inc. Management of Wal-Mart Stores, Inc. ("Walmart," the "company" or "we") is responsible for the preparation, integrity and objectivity of Walmart's Consolidated Financial Statements and other financial information contained in this Annual ...

  • Page 65
    ... 31, 2014, to correspond with the balance sheet date of the related geographic market. Canada unit counts are stated as of January 31, 2015. (2) "Other" includes restaurants, drug stores, convenience stores and banks operating under varying banners. (3) Africa unit counts by country are Botswana...

  • Page 66
    ... Wal-Mart Stores, Inc. periodically communicates with its shareholders and other members of the investment community about our operations. For further information regarding our policy on shareholder and investor communications refer to our website, www.stock.walmart.com. The following reports...

  • Page 67
    ... our Annual Shareholders' Meetings. Walmart's IR app gives shareholders anytime and anywhere access to financial and company news from their mobile devices. Find presentations, quarterly results, global footprint map and the stock price on your iPad, iPhone or Android device. Download the free app...

  • Page 68
    ... By using Easy Reorder on SamsClub.com, business members conveniently order online and use Club Pickup to access merchandise. 8:00 a.m. Mexico Bodega Aurerra Express shoppers find low prices on favorite brands close to where they live and work. Wal-Mart Stores, Inc. (NYSE: WMT) 702 S.W. 8th Street...