Welcome to the Wal-Mart Earnings Call for the First Quarter of Fiscal Year 2013. The date of this call is May 17, 2012. This call is the property of Wal-Mart Stores, Incorporated and is intended for the use of Wal-Mart shareholders and the investment community. It should not be reproduced in any way. [Operator Instructions] This call will contain statements that Wal-Mart believes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and that are intended to enjoy the protection of the Safe Harbor for forward-looking statements provided by that act. These forward-looking statements generally are identified by the use of the words or phrases anticipate or expected or forecasting, expect, focused on, improving, forecast, goal, guidance, may be impacted, may fluctuate, plan, projected, scheduled, target, will be, will still open, will also manage, will continue, will create, will drive, will enhance, will focus, will gradually reduce, will mark, will pressure, will review, will see and will take or variation of one of those words or phrases in those statements or by the use of words and phrases of similar import. Similarly, descriptions of Wal-Mart's objectives, plans, goals, targets or expectations are forward-looking statements. The forward-looking statements made in this call discuss, among other matters, management's forecasts of Wal-Mart's diluted earnings per share from continuing operations attributable to Wal-Mart for the 3 months ending July 31, 2012, and assumptions underlying such forecasts regarding Wal-Mart's current trend and performance, seasonal impacts in the current economic and sales environment and the comparable store sales of Wal-Mart's Walmart U.S. operating segment and the comparable club sales, without fuel, of Wal-Mart's Sam's Club operating segment for the 13-week period from April 28, 2012, through July 27, 2012. The forward-looking statements include statements discussing management's expectations regarding…

Hello, this is Carol Schumacher, Vice President of Investor Relations for Wal-Mart Stores Inc. Thanks for joining us today for our earnings call to review the first quarter of fiscal year 2013. All information for this quarter, including our unit counts, square footage and financial metrics is available on our website. That's www.walmartstores.com/investors. Please note that while we update unit counts on a monthly basis on the website, in the earnings discussion, units and square footage are referred to as of the quarter end. Our press release is available on the website as well, and a full transcript of this call has already been posted. Here's the agenda for today's call. Mike Duke, President and CEO of Wal-Mart Stores, Inc., will open the call with his thoughts about the quarter. Jeff Davis, SVP of Finance and Treasurer, will cover the consolidated financial details, followed by a review of our operating segment results. We'll kick off with Bill Simon, President and CEO of Walmart U.S. Next up, Doug McMillon, President and CEO of Walmart International. And then Rosalind Brewer, President and CEO of Sam's Club, will round out that section. Charles Holley, our CFO, will wrap up the call with a review of our priorities as well as EPS guidance for the second quarter of fiscal 2013. A few reminders before we get into the details. Wal-Mart's consolidated financial statements are based on a fiscal year ending January 31 for both our U.S. and Canadian operations and December 31 for all other operations. Massmart, our acquisition in South Africa, currently reports on a June 30 fiscal year end but is consolidated into our results on a calendar year basis with a one-month lag. There's also a one-month lag for all non-Canadian International operations. This year, as you know, is a leap…

Thanks, Carol, and good morning, everyone. I'm excited and really proud to speak to you today about Wal-Mart's excellent first quarter. We delivered great sales and profitability. We appreciate the hard work of our 2.2 million associates around the world who contributed to this strong performance. Wal-Mart reported first quarter diluted earnings per share of $1.09, well above the top of our guidance range of $1.01 to $1.06. This compares to last year's first quarter EPS from continuing operations of $0.98. Let's take a closer look at some of the key performance metrics for the quarter. I'm pleased that Walmart U.S. grew comp sales 2.6%. It was our best quarterly comp performance in 3 years and was well above the top end of our guidance range. Walmart U.S. not only delivered top line, they also delivered impressive profitability with operating income growing faster than sales. Walmart International is off to a great start. International grew net sales 15%, and operating income was up 21.2% despite a negative impact from currency. Sam's Club continued its momentum as comp sales without fuel increased 5.3% for the quarter, above the top end of our guidance range. Sam's operating income without fuel was up 7.7%. Net sales for the company were $112.3 billion, an increase of 8.6% from last year. Currency exchange had a negative impact on sales of approximately $800 million this quarter. It should be no surprise to hear me say that our company leveraged operating expenses again this quarter. We continue to build on our 2-year trend of leveraging, and we are very focused on delivering productivity initiatives and reducing cost so we can invest in lower prices for our customers. Consolidated operating income was $6.4 billion this quarter, up 8.3% from last year. Free cash flow was more than $3…

Thank you, Mike. For the first quarter of fiscal 2013, Wal-Mart reported diluted earnings per share from continuing operations of $1.09, which compares to $0.98 last year. Recall last year that we had several pretax items that provided a net $0.01 per share benefit to earnings per share. Let me review those details from last year's first quarter for comparability. We realized approximately $117 million from mark-to-market gains on foreign currency derivative positions. As it recorded an approximate $67 million charge related to changes in its defined benefit plan, Wal-Mart Japan incurred an approximate $51 million casualty loss related to the March earthquake and tsunami. And Walmart Chile realized a gain from the sale on an investment of approximately $51 million. All of these items were included in operating expense with the exception of the gain from the sale in Chile, which was recorded in membership and other income. Now let's get back to our first quarter results. Net sales increased 8.6%, or $8.9 billion, to $112.3 billion for the quarter. The increase included $1.9 billion in net sales from acquisitions, which was partially offset by approximately $800 million of negative impact from currency exchange rate fluctuations. On a constant currency basis, net sales increased 7.5% to $111.2 billion. As Carol mentioned earlier, the extra day this year added approximately 100 basis points to net sales. Total U.S. comp sales without fuel increased 3% for the 13-week period ended April 27. Bill and Roz will provide more details on the strength of our comp sales for Walmart U.S. and Sam's Club. Membership and other income was down 3.6% compared to the first quarter of last year. As I noted previously, last year's gain from Chile was recorded in other income. Without this gain, membership and other income was up 3.2%.…

Thank you, Jeff. We're proud of the first quarter performance and are particularly excited to highlight a 2.6% comp sales increase, which is well above guidance and the highest quarterly comp in 3 years. Comp traffic was up 1.1%, and ticket grew 1.5%. All 3 geographic business units performed well with strength across all store formats. During the first quarter, we executed our core strategy, delivering the right assortment at the right time and for the lowest price. Our core strategy has been focused on reenergizing the productivity loop. We lower our costs in order to lower our prices so we can give customers a great assortment at the lowest prices. It's a fairly simple concept, but one that's critically important to our customers, particularly in challenging economic times. We delivered strong performance around all the major holidays and events, including Super Bowl, Valentine's Day and Easter. We also benefited from the early warm weather as customers transitioned to outdoor activities earlier this year versus last year. Our sales performance was supported by price investment, primarily in food and consumables. As we had planned, we reduced our gross profit rate and drove traffic with a broad assortment and a favorable mix. In addition, we significantly leveraged expenses for the quarter. Our 1.4 million associates did an outstanding job this quarter, and I really appreciate their commitment. It requires incredible speed and flexibility to keep up with our dynamic business, especially during periods of strong growth and leverage. Price was the focus of our first quarter marketing, and this will continue to be a key message this year. The introduction of our new low price guarantee commercials assured shoppers that they'd save money at Wal-Mart with Every Day Low Prices delivering savings for real family baskets. Additionally, we focused attention on…

Thank you, Bill. Walmart International delivered exceptional results in the first quarter. Net sales grew 15%, and our operating income grew faster at 21.2%. Most of our markets had strong comp sales. We outperformed the market in every country with the exception of China. Customers around the world are similar. They want great items at great prices. We're serving our customers with a broad assortment, locally relevant items and lower prices as we continue to progress through our EDLP journey. In addition, being Powered by Walmart brings unique items and lower cost to our customers. EDLP is our business model, and when we execute it well, it serves both customers and shareholders well. We've been transitioning to EDLP in more of our markets. Pay close attention to the results in Japan, Brazil and Central America since they're the most recent transitions. Our more established markets in the U.K., Canada and Mexico also strengthened their EDLP positioning. We can't have an EDLP philosophy without EDLC, Every Day Low Costs. We're constantly implementing best practices across markets. This process mindset is improving productivity and lowering costs. A best practice example is our recent focus on optimizing inventory flow. Without effective inventory management, we miss sales or add costs. The added costs show up in markdowns or in lost associate productivity. So we're working to improve our on-shelf availability and increase inventory turnover. EDLP and item merchandising drive comp sales growth, which is the most important pillar of our growth. Another growth pillar is new stores, and we remain committed to both comp sales and new store growth in International. We increased square footage by 14.4% or 1,122 more retail units in the past 12 months. Earlier, Carol reminded you about the alignment of the calendar and the impact of calendar changes, including…

Thanks, Doug. I am very pleased with the quality of the results we achieved this quarter at Sam's Club. It represents a strong discipline to our strategic objectives to provide quality merchandise at the best price in a clean and efficient shopping environment. We have sales growth in key categories that are both high velocity and high volume. We're investing in price in those categories that are most important to our members. And we've had strong membership renewal rates. Members are truly responding to Sam's as we grow share of wallet. Comp sales without fuel exceeded guidance and were up 5.3% for the 13-week period. This is our best first quarter 13-week comp performance in 8 years. Comp traffic and ticket, excluding fuel, increased for both Business and Advantage members in the period. Exceptional values in categories such as fresh and consumables are driving traffic across the club, helping deliver strong sales performance. Gross profit rate improved during the quarter even with investments in pricing for key items. Our operators are performing well, and we increased productivity, reinvesting those productivity gains back into member service and member experience. Our membership engagement surveys tell us that Sam's members are very happy with the way associates are delivering in the clubs. But we got even more validation of this recently when Sam's received the #1 ranking in the 2012 Temkin experience ratings on customer experience. Temkin surveys 10,000 U.S. consumers about their recent interactions with 206 companies over 18 industries. We were both the top company and the top retailer. Now let's get into the financial details for the quarter. Including fuel, first quarter net sales were $13.9 billion, a 7.9% increase over last year. Gross profit rate was up 8 basis points. SG&A expense as a percentage of net sales increased…

Thanks, Roz. I hope you got the sense that we are excited about the start to this fiscal year. We recognize there are always some unknowns with economy ahead, but we feel confident about our business strategies and our ability to execute them across all segments. Our revenue growth of 8.6% is the largest first quarter sales increase since the first quarter ended in April 2009. Our annual net sales target remains the same. We plan to grow sales between 5% and 7%, which should add between $22 billion and $31 billion in revenue for fiscal 2013. This quarter, we also added 4 million square feet of retail space. As we outlined in October, we have in place initiatives to reduce construction costs and to deliver more productive stores, and these efforts continue. Moving on to expenses. We leveraged expenses for the quarter, and we're confident that the progress we've already made will push us toward the goal we shared in October, that is reducing operating expenses as a percent of sales by more than 100 basis points over the next 5 years. The contributions from Walmart U.S. and Walmart International put us on a great path to deliver on these expense leverage goals. Now price investment. We're investing expense savings in the U.S. back into prices for our customers. In our International business, depending on the market, we are reinvesting in price and/or driving higher profitability and returns. Our earnings performance continues to translate into strong free cash flow. Our priorities for cash remain growth, strategic acquisitions and returns to shareholders through dividends and share repurchases. During the quarter, Wal-Mart returned $1.3 billion to shareholders through dividends. In March, we were pleased to report that our Board of Directors declared an annual dividend of $1.59 per share for the…