Welcome to the Walmart Earnings Call for the Fourth Quarter of Fiscal Year 2013. The date of this call is February 21, 2013. This call is the property of Wal-Mart Stores, Inc. and is intended for the use of Walmart shareholders and the investment community. It should not be reproduced in any way. [Operator Instructions] This call will contain statements that Walmart 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, are committed, assumes, assuming, continuing, expect, expects, focus, forecast, forecasting, goal, goals, growth, guidance, have plans, may be impacted, may continue to fluctuate, may fluctuate, plan, plans, to open, will be, will begin, will benefit, will continue, will do, will excel, will expand, will evaluate, will have, will help, will impact, will improve, will innovate, will keep, will release, will take, will unite and expand, will win and/or a 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 Walmart's objectives, plans, goals, targets or expectations are forward-looking statements. The forward-looking statements in this call include statements relating to management's forecasts and expectations: for Walmart's diluted earnings per share from continuing operations attributable to Walmart for the quarter ending April 30, 2013, and the year ending January 31, 2014, and statements of certain assumptions underlying such forecasts; for increased costs for Walmart's eCommerce operations in fiscal 2014; for the comparable store sales of the Walmart U.S. operating segment and the comparable club sales, excluding fuel, of the Sam's Club operating segment…

Hi. 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 fourth quarter and full year of fiscal 2013. Our press release is available on the website. That's stock.walmart.com, and a full transcript of this call has already been posted there. Please also note that we have a second press release out this morning announcing our annual dividend for fiscal 2014, and the dividend news is referred to during today's call. Here is today's agenda. Mike Duke, President and CEO of Wal-Mart Stores, Inc., will open the call with his thoughts about the year and our priorities for FY '14. Jeff Davis, EVP of Finance and Treasurer, will cover the consolidated financial details. Then we'll cover the operating segments. Bill Simon, President and CEO of Walmart U.S.; followed by Doug McMillon, President and CEO of Walmart International; and then Rosalind Brewer, President and CEO of Sam's Club. Charles Holley, Walmart's CFO, will provide our outlook for fiscal 2014 and discuss our financial priorities of growth, leverage and returns. He'll also be joined in the booth by Neil Ashe, our President and CEO of Global eCommerce. A number of you have asked about the potential impact of a 53-week year on our business. Let me remind you that, unlike some other retailers, whose fiscal year end is tied to the retail calendar, Walmart's fiscal year always ends on January 31. All financial information for Walmart U.S. and Sam's Club, except comp sales, are on the fiscal calendar. To align with the company's internal operating systems, today's discussion on U.S. comps will be on a 4-5-4 basis, so we did not recognize a 53-week retail calendar during fiscal 2013. Our U.S. comp period ended on Friday, January…

Thanks, Carol, and greetings to everyone in this new fiscal year for our company. Walmart topped off a really good year with a solid fourth quarter, and I'm proud of what we accomplished as a team. Every day, our associates around the world deliver on our mission to help customers save money so that they can live better. Walmart shareholders were rewarded with the best overall return in stock performance and dividends that they have received in our last 10 fiscal years. Now let me share with you some of the most important financial highlights for fiscal 2013. We delivered a 10.6% increase in earnings per share to $5.02 for the full year, including $1.67 for the fourth quarter. Jeff will cover the details behind our EPS shortly. I'm pleased with today's announcement that Walmart increased its annual dividend by $0.29 to $1.88 per share for fiscal 2014, an 18% increase over last year. Our company added $22 billion in net sales this year to reach more than $466 billion, an increase of 5% over last year. Walmart U.S. had a strong year, adding $4.7 billion in comp store sales and growing market share. Sam's Club continued to drive member value with price investment as comp sales, without fuel, increased 3.6% for the full year. International continues to be a growth engine for our company, delivering more than $135 billion in net sales for the year, including nearly $38 billion in the fourth quarter. Walmart leveraged operating expenses again this year. That's 3 consecutive years now that we reduced operating expenses as a percentage of sales. Walmart grew free cash flow by 18.1% to $12.7 billion. This enabled us to return $13 billion to shareholders through dividends and share repurchases this year. We also generated a return on investment of…

Thank you, Mike. I'll begin by going through our fourth quarter P&L results and wrap up with a summary of our full year. For the fourth quarter of fiscal 2013, Walmart reported diluted earnings per share from continuing operations of $1.67 versus $1.51 for the fourth quarter of last year. Our fiscal 2013 fourth quarter effective tax rate was 27.7%, which was lower than our expectations and compares to 30.9% last year. Our fourth quarter effective tax rate benefited from a number of discrete tax items, including the positive impact from fiscal 2013 legislative changes, most notably the American Taxpayer Relief Act of 2012. It is important to note that our tax rate may fluctuate from quarter-to-quarter and may be impacted by a number of factors. Consolidated net sales increased 3.9%, or $4.8 billion, to $127.1 billion. The increase included $200 million in net sales from our 51% stake in Yihaodian and $147 million from currency exchange rate fluctuations. Therefore, on a constant currency basis, consolidated net sales would have increased 3.7% over last year's fourth quarter to $126.8 billion. With respect to comp sales, total U.S. comp sales, without fuel, increased 1.2% for the 13-week period ended January 25. Bill and Roz will provide more details for Walmart U.S. and Sam's Club. Consolidated membership and other income declined 7.8%. Though membership income increased approximately 3.6%, it was primarily offset by other income from our International segment, and you will hear more from Doug on the details. Our gross profit rate for the fourth quarter was 24.4%, an increase of 9 basis points compared to last year. This increase was primarily driven by our International segment, where we experienced stronger margin performance in several of our major markets. For the quarter, operating expenses as a percentage of sales were 18.3%,…

Thank you, Jeff. I want to start by appreciating the dedicated work of all of our associates throughout the year. The team excelled at executing our core strategy, allowing us to invest in price and fulfill our mission of helping customers save money and live better. I'll speak more about our performance for the full year, but first, let's take a closer look at our quarterly results. Our customers continue to rely on us to deliver Every Day Low Prices. This is evident by our consistent gains in market share across the majority of the businesses. According to the Nielsen Company, we gained 40 basis points of market share in the measured category of food consumables health & wellness, OTC during the 13 weeks ended January 26, 2013. And according to the NPD Group, for the 3-month period ending December 31, 2012, we also improved market share in toys and the Walmart entertainment categories. In the fourth quarter, net sales were $74.7 billion, up $1.9 billion or 2.6% versus last year, with consistent sales growth across all geographies. Comp sales grew 1%, lapping a solid 1.5% comp last year. This represented $743 million in comp growth for the quarter. Our comp was driven by a 1.1% increase in ticket. We retained most of the 70-basis-point traffic gains that we had in the fourth quarter last year, with traffic down 10 basis points this year in the fourth quarter. Despite comps at the low end of the guidance, our market share gains, as noted by Nielsen and NPD, along with our 2-year positive comp trend, indicate the underlying strength of Walmart's business. This is especially important considering customers have ongoing challenges of higher fuel prices, increased payroll taxes and delayed income tax refunds. Let me give you some highlights of the…

Thank you, Bill. I'll cover our results for Walmart International for the fourth quarter and for the year and then get to our key individual markets. On a reported basis, International segment net sales were $37.9 billion, up 6.9% over last year's fourth quarter. We were disappointed in our sales performance in the quarter. As we discussed previously, we opened fewer new stores in Mexico, China and Brazil than we had originally planned during the course of the year, and the cumulative impact of that was felt more in the fourth quarter. In addition, our comparable store sales in our developed markets of the U.K., Canada and Japan were pressured and below our expectations. The holiday season was not as strong as we'd planned in several of our markets. Operating expenses were up 7.7%, and we did not leverage operating expenses, due to the softness in comp sales. Operating income was $2.4 billion, up 6.1% but growing slower than sales. Currency exchange rate fluctuations increased operating income by $78 million. There are 2 items affecting comparability of our fourth quarter operating income. First, this year, operating income benefited by a $37 million gain related to the step-up of our initial investment in Yihaodian to a 51% majority stake. And second, recall last year, operating income benefited by a net gain of $68.2 million from a sale of real estate in Brazil, partially offset by a charge for store closures. With the Yihaodian transaction at the beginning of our fourth quarter, we expanded our global eCommerce presence by adding China to our portfolio along with the U.K., Canada and Brazil. Our continued investment in eCommerce demonstrates we are committed to developing and to bringing the best possible shopping experience to Chinese consumers. Now let me go through the numbers on a…

Thanks, Doug. At Sam's Club, I am pleased with both our full year sales and operating income results. I credit our success to our club associates. Their alignment to our strategy, their ability to create lasting value to our members through superb execution of price leadership, their eye for exciting merchandise and their best-in-class member service all led to our success. Together, we achieved full year performance above our expectations. We were pleased with our holiday performance, which was driven by November events and the week of Christmas. Our optimism, however, is tempered as sales growth slowed later during the fourth quarter, most notably during mid-December and late January, and was more pronounced from our business members. Important indicators of the health of our business are traffic and add-ons from small business members. Both of these areas were soft in the fourth quarter, and we are closely monitoring them. Additionally, as we indicated last quarter, operating income growth was challenged in the fourth quarter by a price investment initiative that will benefit Sam's Club long term but negatively impact the short-term results. First, I'll review our Q4 results and then provide a recap of the full year. Comp sales, without fuel, were within our guidance, up 2.3% for the 13-week period. We achieved this on top of a 5.4% comp sales increase for fiscal year 2012. Comp traffic was up 1.6%, and ticket was up 0.7%. Our members had a stream of exciting shopping experiences throughout the season. This thread of events allowed us to maintain the member in the club consistently throughout the season, leading to exceptional sell-through that minimized our markdown position at the end of the season. We jump-started the holiday season with the mid-November Holiday Taste of Sam's event, the VIP event for Plus and Business…

Thanks, Roz. As Mike mentioned earlier, Walmart had a really good year. And given some of the headwinds we saw this year, I'm particularly pleased with our full year results versus the guidance we provided at this time last year. We continue to deliver value for our shareholders through strong free cash flow, solid return on investment and continued share repurchase activity. We added over $22 billion in net sales during fiscal 2013. No other retailer in the world can deliver that kind of growth, especially in a soft economy. Earlier in the year, I outlined the 4 key areas of focus to have a successful year. Let's take a minute to review these in more detail. First, I said Walmart U.S. would have to continue its momentum we saw at the beginning of the year, and it did. During fiscal 2013, the Walmart U.S. team delivered over $10 billion in net sales growth, which included $4.7 billion in comp growth. Our customers understand our price leadership position, and as you heard Bill say earlier, we had a number of areas where our market share improved during the year. Next, Sam's Club needed to continue the success it had experienced over the last several quarters of fiscal 2012. Sam's focused on driving value to our members during the year, and membership engagement scores are an all-time high right now. Despite investments in price and technology, Sam's delivered solid operating income growth for the year. Third, I told you we needed to improve profits and returns in Walmart International, especially for Brazil and China. We still aren't gaining the traction we would like to see, but we believe we're on the right path. In both Brazil and China, we have to continue to lower cost and improve operating income while driving our Every Day Low Price programs. We remain excited about the potential of these important markets. Finally, I said we would need to continue to invest in capabilities and increase sales in our eCommerce businesses. We are excited about the opportunities in this space and pleased with the successes we delivered during the year. To help provide more insight into our eCommerce businesses, I've asked Neil Ashe, President and CEO of Global eCommerce, to discuss a few specifics. Neil?

Thanks, Charles. In October, I laid out 4 key strategic points: we will excel in the fundamentals of eCommerce; we will innovate in new areas like big data, social and mobile; we will win in key markets, especially the U.S., the U.K., Brazil and China; and we will unite and expand the Walmart platform to do what no one else can do. We are building best-in-class eCommerce that, when we combine it with our unparalleled retail footprint, will deliver to customers what no One else can deliver. To realize these strategies, we're developing a global technology platform, and we are investing in local assortment and fulfillment capabilities in each of our markets. We are becoming known for our ability to build and deploy technology for the benefit of our customers. Just in the last year, we have developed and launched a product search engine that is regarded as best in class. We have developed pricing optimization tools, which allow us to reliably deliver low prices to customers in the dynamic pricing environment that's eCommerce. We made major advancements in mobile commerce. In fact, Mobile Commerce Daily recognized us as Mobile Retailer of the Year. And we are operating one of the largest and most effective big data initiatives in eCommerce. The investments we've made so far in our eCommerce business are delivering. Revenue growth is accelerating and ahead of our plans. During the fourth quarter, we took share in all of our key markets. In the United States, we led on key days and had our largest sales day on Cyber Monday. We served more customers more effectively than we ever have before. We also had record performance in China, Brazil, and Doug has already spoken about ASDA. We are encouraged by our successes, and our company will continue to invest in this growth. In fiscal year 2014, our investments will continue to penetrate our key markets, will continue to drive the development of our global technology platform and will continue the development of our next-generation fulfillment network that incorporates stores, distribution centers and online dedicated fulfillment centers to be the fastest and most efficient at getting customers the products that they want, when and where they want them. Thanks, Charles, for inviting me to share where we're going with eCommerce.

Thanks, Neil. As you heard, not only are we making investments for today, but also for our future. Our recent investment in Yihaodian is a great example of the thoughtful and long-term approach to capital allocation that will help position us with our customer for the future. Our disciplined approach to capital spending is critical to Walmart's business model. In Walmart U.S., we've lowered the average cost of a remodel by 50% over the last 2 years and shifted more capital to new stores while decreasing the amount of overall capital spend. We will continue to find more efficiencies and productivity on our asset base. Now our financial priorities remain growth, leverage and returns. And in this context, let me update our fiscal 2014 goals. In October, I told you that our net sales, excluding acquisitions and currency exchange rate fluctuations, would increase 5% to 7%. Given the continued soft global economic environment, we believe our sales growth will be similar to what we experienced in fiscal 2013, somewhere between 5% and 6%. This represents an additional $23 billion to $28 billion in sales. We expect to grow square footage 3% to 4%, or 36 million to 40 million additional square feet. As a reminder, we kicked off fiscal 2013 with a goal to reduce operating expenses as a percentage of sales by at least 100 basis points over the next 5 years. That's a reduction of over $6 billion. In our first year, we delivered 14 basis points of leverage. Please remember that our leverage progress may be uneven on a year-to-year basis. We still have a lot of work to do, but the entire company has rallied around this leverage challenge, and we expect we will continue to see progress toward this goal. Now on to returns. The…