Walmart CEO Notes Company’s ‘Substantial Progress’

In his opening remarks at Wal-Mart Stores Inc.’s 20th Annual Meeting for the Investment Community in Rogers, Ark., Mike Duke, the company’s president and CEO, said the company is focused on near-term execution to grow comparable sales in Walmart U.S., improve returns in Walmart International and leverage expenses for the full year. At the same time, Duke noted, the mega-retailer is making considerable or, in some cases, even what he termed “step-change” progress in such crucial areas as 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,” he observed. “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.”

Duke stressed the importance of increasing Walmart U.S.’ comps. “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,” he said. “We’re focusing on execution to deliver results.”

In regard to Walmart International, Duke acknowledged that the company could improve “even in places where we’re already doing well.” Noting that the division recently assessed its portfolio and made important strategic decisions on current operations, he said, “These actions, combined with capital discipline and e-commerce investments, will deliver a solid framework for future growth and improved returns.”

Turning to a company-wide goal set two years ago to reduce operating expenses as a percentage of sales by at least 100 basis points over five years, Duke noted, “We made progress on that goal last year, and our goal is to deliver leverage again for this fiscal year.”

Other long-term areas where the company has made progress, according to Duke, include investments in leverage initiatives that now are paying off around the world, including China and Latin America. “We're driving costs out of our system so we can invest those savings into lower prices for Walmart customers,” explained Duke.

He added that the company is “much more streamlined in how we make real estate decisions and invest capital,” highlighting the stronger performance of new stores and progress in lowering the cost to build, expand and remodel stores.

Further, Duke noted, “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 rose 30 percent globally.

Duke also spoke about Walmart’s major investments in compliance over the past year, with a focus on better processes and procedures, increased training for associates and strengthening organizational leadership. “This is the right thing to do,” he said. “[O]ur progress with compliance makes us a stronger business for the long-term. Compliance is an essential part of our growth strategy.”

In reference to Walmart’s 2.2 million associates around the word, Duke noted that global associate engagement scores are now at their highest mark ever and the company has hired more than 16,000 veterans in less than six months. “The quality of the leaders we're recruiting is just incredible,” he added.

As to the company’s various corporate responsibility efforts, Duke said, “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. 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.”

“We're making substantial progress in areas that are the foundation for long-term growth and shareholder returns,” Duke concluded in his opening remarks. “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.”

Bentonville, Ark.-based Walmart operates more than 11,000 stores under 69 banners in 27 countries, as well as e-commerce websites in 10 countries.

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