Walmart 2016 Annual Report Download

Download and view the complete annual report

Please find the complete 2016 Walmart annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 68

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68

2016
ANNUAL
REPORT
Only Walmart

Table of contents

  • Page 1
    t r a m l a W Only 16 20 NUAL AN R EP O R T

  • Page 2
    ... is Walmart. Customers want to save money and time while shopping. Our mobile apps and innovative services like Online Grocery and Walmart Pay deliver the convenience customers seek today. With our global footprint, only Walmart can deliver a seamless shopping experience at scale. We're investing in...

  • Page 3
    Adding Online Grocery to more markets

  • Page 4
    .... Globally, we are doing more to invest in our associates' futures - through increased training and development, higher pay and better opportunities to build rewarding careers. Walmart is positioned to win the future of retail by providing a ladder of opportunity for every member of our team.

  • Page 5
    approximate 2-year investment in higher U.S. hourly wages, education and training 2.7 billion $ Training and "Pathways" program support career growth

  • Page 6
    Expanding options for faster checkout Improved in-stock through processes and technology

  • Page 7
    Winning with our stores Operating great stores that have friendly associates, well-stocked shelves and fast checkouts is central to our growth agenda. We're infusing our stores with efficient processes and new technology to help associates serve customers better. Our merchandise offering in key ...

  • Page 8
    .... Technology has changed customer expectations. Customers used to compare us with the store down the street; now they compare us with "We have the resources to chart our own destiny, we know where we are going, and we will win with a strategy that only Walmart can execute." 6 2016 Annual Report

  • Page 9
    ... reimagine Walmart by being the first and only to deliver a truly seamless shopping experience at scale, with great savings and massive selection. DOUG MCMILLON President and Chief Executive Officer, Wal-Mart Stores, Inc. the best online shopping experience. And beyond just retail, they compare us...

  • Page 10
    ... and technology advances globally. We expanded Online Grocery shopping to new markets, ramped up in-store and in-club pickup, fully acquired the Chinese online retailer Yihaodian, and began to add new mobile services such as Walmart Pay. We developed a technology platform that we can scale across...

  • Page 11
    ... repurchases. This year, we announced a dividend increase to $2.00 per share, marking the 43rd consecutive year of dividend increases for Walmart. Although this will be another year of foundational investments, we believe we will soon be growing faster than the retail market. We are a growth company...

  • Page 12
    ... expansion of Store Pickup and Online Grocery. Customers appreciate Neighborhood Markets for their convenience and access to fresh food, fuel, pharmacy and e-commerce order pickup. We're focused on refining processes and selecting quality locations to improve their profitability. 2016 Annual Report

  • Page 13
    ... driving store traffic. As we work to improve store operations, enhancing the quality of our fresh offering is a key focus. We're emphasizing the basics - with better processes at every step of the supply chain - from farm to fork. We're also expanding our assortment of organic foods, healthy snacks...

  • Page 14
    ... markets had solid performance. with a focused portfolio Actively managing the portfolio We continue to review our portfolio, a key strategic priority aimed at sharpening our focus on our core food retail business, in both stores and online, and driving increased profitability. As a result, we sold...

  • Page 15
    ... winning moments with our members and exceeding their expectations through personal engagement and a value proposition designed to save them time and money. We know our members, and we are building a shopping experience for them that is seamless no matter how they choose to shop. Only Walmart 13

  • Page 16
    ... the company's competitive position both now and in the future. We've challenged management to increase the pace of change even further, and we're tracking comp sales, customer satisfaction scores and growth in gross merchandise value to monitor progress on delivering this strategy. Walmart's Board...

  • Page 17
    ... Duke Mr. Duke is the former Chairman of the Executive Committee of the Board of Directors of Wal-Mart Stores, Inc., where he served in that capacity until January 31, 2015. He previously served as the President and Chief Executive Officer of Wal-Mart Stores, Inc. from February 2009 to January 2014...

  • Page 18
    ...BRETT BIGGS Executive Vice President and Chief Financial Officer Wal-Mart Stores, Inc. During this past year, Walmart's financial strength allowed for shareholder returns in excess of $10 billion through dividends and share repurchases. Also, in February 2016, we raised our annual dividend for the...

  • Page 19
    ... Accounting Firm on Internal Control Over Financial Reporting Management's Report to Our Shareholders Unit Counts as of January 31, 2016 Corporate and Stock Information Executive Officers Neil M. Ashe Executive Vice President, President and Chief Executive Officer, Global eCommerce and Technology...

  • Page 20
    ...) 2016 2015 2014 2013 2012 Operating results Total revenues Percentage change in total revenues from previous fiscal year Net sales Percentage change in net sales from previous fiscal year Increase (decrease) in calendar comparable sales(1) in the United States Walmart U.S. Sam's Club Gross profit...

  • Page 21
    ..., drug stores and convenience stores, as well as digital retail. The overall gross profit rate for Walmart International is lower than that of Walmart U.S. because of its merchandise mix. Walmart International is our second largest segment and has grown through acquisitions, as well as by adding...

  • Page 22
    ...the Company. These strategic investments may not benefit net sales and comparable store and club sales in the near term. Net Sales Fiscal Years Ended January 31, (Amounts in millions) Net Sales 2016 Percent of Total Percent Change Net Sales 2015 Percent of Total Percent Change Net Sales 2014 Percent...

  • Page 23
    ... in the form of share repurchases and dividends, which are discussed in the Liquidity and Capital Resources section. Return on Investment Management believes return on investment ("ROI") is a meaningful metric to share with investors because it helps investors assess how effectively Walmart is...

  • Page 24
    ... most comparable GAAP financial measure, is as follows: Fiscal Years Ended January 31, (Amounts in millions) 2016 2015 As of January 31, 2016 2015 2014 Certain Balance Sheet Data Total assets of continuing operations(2) Accumulated depreciation and amortization Accounts payable Accrued liabilities...

  • Page 25
    ...) Fiscal Years Ended January 31, 2016 2015 2014 Total revenues $482,130 Percentage change from comparable period (0.7)% Net sales $478,614 Percentage change from comparable period (0.7)% Total U.S. calendar comparable store and club sales increase (decrease) 0.3% Gross profit rate 24.6% Operating...

  • Page 26
    ...the segment's strategic focus on price investment, pharmacy cost inflation, reductions in third-party reimbursement rates and changes in merchandise mix. Operating expenses as a percentage of segment net sales increased 113 and 24 basis points for fiscal 2016 and 2015, respectively, when compared to...

  • Page 27
    ... the segment's investment in the Cash Rewards program, changes in merchandise mix, and commodity cost inflation, partially offset by an increased gross profit rate on fuel sales. Membership and other income increased 5.3% and 7.7% for fiscal 2016 and 2015, respectively, when compared to the previous...

  • Page 28
    ... to the timing of payments. We generally operate with a working capital deficit due to our efficient use of cash in funding operations, consistent access to the capital markets and in providing returns to our shareholders in the form of payments of cash dividends and share repurchases. We use...

  • Page 29
    ...2015, when compared to the balance at the end of the previous fiscal year. We generally utilize the liquidity provided by short-term borrowings to provide funding for our operations, dividend payments, share repurchases, capital expenditures and other cash requirements. For fiscal 2016, the increase...

  • Page 30
    ... the Company's free cash flows. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total amount paid for share repurchases for fiscal 2016, 2015 and 2014: (Amounts in millions, except per share data) Fiscal Years Ended January...

  • Page 31
    ... uncertain tax positions and have been recorded as liabilities. The timing of the payment, if any, associated with these liabilities is uncertain. Refer to Note 9 in the "Notes to Consolidated Financial Statements" for additional discussion of unrecognized tax benefits. Off Balance Sheet...

  • Page 32
    ... of our commercial paper and interest rate swaps, represented 19% of our total short-term and long-term debt. Based on January 31, 2016 debt levels, a 100 basis point change in prevailing market rates would cause our annual interest costs to change by approximately $79 million. Foreign Currency Risk...

  • Page 33
    ... the estimated annual effect of inflation, 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, 2016 and 2015, our inventories valued at LIFO...

  • Page 34
    ... account for uncertain tax positions by determining the minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. This determination requires the use of significant judgment in evaluating our tax positions and assessing the timing and...

  • Page 35
    ...financial condition of the Company's adoption of certain new, or amendments to existing, accounting standards. Statement of our plans, objectives and goals in this Annual Report to Shareholders, including our priority of the growth of the Company being balanced by the long-term health of the Company...

  • Page 36
    ...our FCPA-related matters, and associated costs and expenses; • changes in the rating of any of our indebtedness and our access to the capital markets; and • unanticipated changes in generally accepted accounting principles or their interpretations or applicability and in accounting estimates and...

  • Page 37
    Consolidated Statements of Income Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2016 2015 2014 Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income ...

  • Page 38
    ... Years Ended January 31, (Amounts in millions) 2016 2015 2014 Consolidated net income Less consolidated net income attributable to nonredeemable noncontrolling interest Less consolidated net income attributable to redeemable noncontrolling interest Consolidated net income attributable to Walmart...

  • Page 39
    ...year Total current liabilities Long-term debt Long-term capital lease and financing obligations Deferred income taxes and other Commitments and contingencies Equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive income (loss) Total Walmart shareholders...

  • Page 40
    ... February 1, 2013 3,314 Consolidated net income - Other comprehensive income, net of income taxes - Cash dividends declared ($1.88 per share) - Purchase of Company stock (87) Redemption value adjustment of redeemable noncontrolling interest - Other 6 Balances as of January 31, 2014 Consolidated net...

  • Page 41
    ...-term debt Payments of long-term debt Dividends paid Purchase of Company stock Dividends paid to noncontrolling interest Purchase of noncontrolling interest Other financing activities Net cash used in financing activities Effect of exchange rates on cash and cash equivalents Net increase (decrease...

  • Page 42
    Notes 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 ...

  • Page 43
    ... on a straight-line basis: Fiscal Years Ended January 31, 2016 2015 Accounting Standards Codification 840, Leases, ("ASC 840") defines those payments as automatic indicators of ownership and requires the Company to capitalize the lessor's total project cost with a corresponding financing obligation...

  • Page 44
    ... Consolidated Financial Statements The following table reflects goodwill activity, by reportable segment, for fiscal 2016 and 2015: (Amounts in millions) Walmart Walmart U.S. International Sam's Club Total Balances as of February 1, 2014 $451 Changes in currency translation and other - Acquisitions...

  • Page 45
    ...of fiscal year 2016, and has applied the changes retrospectively to all periods presented. Adoption of this ASU did not materially impact the Company's consolidated net income, financial position or cash flows. In November 2015, FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classi...

  • Page 46
    ... Company's share-based compensation expense by award type: Fiscal Years Ended January 31, (Amounts in millions) 2016 2015 2014 2. Net Income Per Common Share Basic income per common share from continuing operations attributable to Walmart is based on the weighted-average common shares outstanding...

  • Page 47
    ..., cost of borrowings, its results of operations and the market price of its common stock. The following table provides, on a settlement date basis, the number of shares repurchased, average price paid per share and total cash paid for share repurchases for fiscal 2016, 2015 and 2014: Fiscal Years...

  • Page 48
    ... and certain employee-related healthcare benefits. (3) Accrued non-income taxes include accrued payroll, value added, sales and miscellaneous other taxes. (4) Other accrued liabilities consist of various items such as maintenance, utilities, advertising and interest. 46 2016 Annual Report

  • Page 49
    ... millions) 2016 2015 2014 Maximum amount outstanding at any month-end Average daily short-term borrowings Weighted-average interest rate $10,551 4,536 1.5% $11,581 7,009 0.5% $13,318 8,971 0.1% The Company has various committed lines of credit, committed with 23 financial institutions, totaling...

  • Page 50
    Notes to Consolidated Financial Statements The Company's long-term debt, which includes the fair value instruments further discussed in Note 8, consists of the following: January 31, 2016 (Amounts in millions) Maturity Dates By Fiscal Year Amount Average Rate (1) January 31, 2015 Amount Average Rate...

  • Page 51
    ... 2016 and 2015, the Company also repaid other, smaller long-term debt as it matured in several of its non-U.S. operations. 7. Fair Value Measurements The Company records and discloses certain financial and non-financial assets and liabilities at fair value. The fair value of an asset is the price...

  • Page 52
    ...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, 2016 and 2015, the notional...

  • Page 53
    ... to cross-currency interest rate swaps that the Company uses to hedge its net investments. The agreements are contracts to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. All changes in the fair value of these instruments are recorded in accumulated other...

  • Page 54
    ... Consolidated Financial Statements Financial Statement Presentation Although subject to master netting arrangements, the Company does not offset derivative assets and derivative liabilities in its Consolidated Balance Sheets. Derivative instruments with an unrealized gain are recorded in the Company...

  • Page 55
    ... tax rate and the effective income tax rate on pretax income from continuing operations is as follows: Fiscal Years Ended January 31, 2016 2015 2014 The deferred taxes are classified as follows in the Company's Consolidated Balance Sheets: January 31, (Amounts in millions) 2016 2015 Balance Sheet...

  • Page 56
    ...2016 and 2015, accrued interest related to uncertain tax positions of $60 million and $57 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, 2016 or 2015. 54 2016 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, 2016, 2015 and 2014, the Company incurred the following...

  • Page 58
    ... related to the Company's retirement-related benefits for fiscal 2016, 2015 and 2014: Fiscal Years Ended January 31, (Amounts in millions) 2016 2015 2014 11. Commitments The Company has long-term leases for stores and equipment. Rentals (including amounts applicable to taxes, insurance, maintenance...

  • Page 59
    Notes to Consolidated Financial Statements 13. Acquisitions, Disposals and Related Items In fiscal 2016, the Company completed the following transaction that impacts the operations of Walmart International: Yihaodian In July 2015, the Company completed the purchase of all of the remaining ...

  • Page 60
    ... Corporate and support Consolidated Fiscal Year Ended January 31, 2016 Net sales Operating income (loss) Interest expense, net Income from continuing operations before income taxes Total assets Depreciation and amortization Capital expenditures Fiscal Year Ended January 31, 2015 Net sales Operating...

  • Page 61
    ... Statements 16. Quarterly Financial Data (Unaudited) Fiscal Year Ended January 31, 2016 (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
    Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Wal-Mart Stores, Inc. We have audited the accompanying consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2016 and 2015, and the related consolidated statements of income, ...

  • Page 63
    ... Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Wal-Mart Stores, Inc. as of January 31, 2016 and 2015, and related consolidated statements of income, comprehensive income, shareholders' equity and redeemable noncontrolling interest, and cash flows for...

  • 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
    ...(1) Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2015, to correspond with the balance sheet date of the related geographic market. Canada unit counts are stated as of January 31, 2016. (2) "Other" includes drug stores and convenience stores operating...

  • Page 66
    ... 2011 Assumes Dividends Reinvested Fiscal Year Ending January 31, 2016 Fiscal Years Ended January 31, 2011 2012 2013 2014 2015 2016 The high and low market price per share for the Company's common stock for the first quarter of fiscal 2017, were as follows: 2017 High Low Wal-Mart Stores Inc. $100...

  • Page 67
    ... to receive future materials digitally for our Annual Shareholders' Meetings. BY THE NUMBERS MEDIA CENTER ENHANCED CONTENT Walmart's investor relations app: anytime, anywhere access to financial and company news Our IR app offers shareholders an array of investor resources in a user-friendly...

  • Page 68
    Wal-Mart Stores, Inc. (NYSE: WMT) 702 S.W. 8th Street Bentonville, Arkansas 72716 USA 479-273-4000 walmart.com