In opening remarks at the
company's 20^th Annual Meeting for the Investment Community, Wal-Mart Stores,
Inc., WMT President and CEO Mike Duke today said that the company is focused on
near-term execution to grow comp sales in Walmart U.S., improve returns in
Walmart International and leverage expenses for the full year. At the same
time, he said the company is making substantial or, in some cases, even
"step-change" progress in key areas, including leverage initiatives, capital
discipline, e-commerce, compliance, talent recruitment and corporate
responsibility.
"We have delivered consistent growth and returns to shareholders for many
years, and we will continue to do so," said Duke. "No matter what environment
we're in -- today, a year from now, or five years from now -- we are driven to
win. And we're never satisfied at Walmart until we do."
Focus on Near-Term Execution
Acknowledging the challenging retail environment, Duke said: "We're in a tough
and unpredictable global economy. The competition is also tough. And the
holidays are right around the corner -- raising the stakes even further on
serving customers and delivering on performance. All of this is to say that
near-term execution is critical for us."
Duke started with the priority of growing comp sales at Walmart U.S. He said,
"When you go to our stores, you're going to see fantastic new merchandise,
aggressive investments in price through lots of rollbacks and better in-stock
levels. We're focusing on execution to deliver results."
Duke also discussed returns in Walmart International, saying the company could
improve "even in places where we're already doing well." Duke said that the
division recently assessed its portfolio and made important strategic
decisions on current operations. "These actions, combined with capital
discipline and e-commerce investments, will deliver a solid framework for
future growth and improved returns," added Duke. "Walmart International is a
great business that we are only making stronger."
Duke then turned to a company-wide goal he set at the annual investors'
meeting two years ago: reducing operating expenses as a percentage of sales by
at least 100 basis points over five years. "We made progress on that goal last
year, and our goal is to deliver leverage again for this fiscal year," said
Duke.
Substantial Progress in Key Long-Term Areas
Highlighting the long-term areas where the company is making progress, Duke
started by saying that investments in leverage initiatives are paying off
around the world. For example, the U.S. logistics team is reducing shipping
costs and increasing transportation efficiency, a single process initiative is
generating significant savings in labor productivity in China, and the company
has migrated all but one market in Latin America to its Costa Rican Shared
Services Center. Duke added, "We're driving costs out of our system so we can
invest those savings into lower prices for Walmart customers."
Duke said the company is "much more streamlined in how we make real estate
decisions and invest capital." He highlighted the stronger performance of new
stores and progress in bringing down the cost to build, expand and remodel
stores.
Duke said he "loved the progress that the company has made in e-commerce over
the past year. The biggest opportunity we have is winning the intersection
between physical and digital retail around the world. We've never been more
connected across the company on e-commerce, and our results demonstrate this."
In the first half of the year, Walmart's e-commerce sales grew 30 percent
globally, including a strong performance at Yihaodian in China.
As the company has discussed previously, Walmart has made major investments in
compliance over the past year. Its focus has been on better processes and
procedures, increased training for associates and strengthening organizational
leadership. "This is the right thing to do," Duke said. "And let me be clear
that our progress with compliance makes us a stronger business for the
long-term. Compliance is an essential part of our growth strategy."
Turning to Walmart's 2.2 million associates worldwide, Duke highlighted that
global associate engagement scores are currently at their highest mark ever,
the company has hired more than 16,000 veterans in the U.S. in less than six
months, and some of the best talent anywhere is excited about joining
Walmart. "I feel better than ever about our talented associates and the
career opportunities we provide at Walmart," said Duke. "The quality of the
leaders we're recruiting is just incredible."
Duke also said that he was very pleased with the work the company has done to
make a difference on big issues around the world. "We've only accelerated in
the past year -- with our commitments on renewable energy, to reduce certain
chemicals in products and to help revitalize manufacturing in the U.S," said
Duke. "We set the pace for how companies take on big issues facing society,
and we'll keep leading because it's good for our business."
Winning in Any Retail Environment
Duke closed his opening remarks by sharing his overall view on Walmart's
global business and where it's headed: "Even in a tough and unpredictable
economy, there is strength in our businesses around the world. We're making
substantial progress in areas that are the foundation for long-term growth and
shareholder returns. And whether I'm meeting with the leadership team in the
Home Office, or walking stores and clubs in any market, I see a team that's
disciplined, focused and executing on the fundamentals. Walmart will win."
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