Welcome to the Walmart Earnings Call for the Third Quarter of Fiscal Year 2014. The date of this call is November 14, 2013. This call is the property of Walmart Stores Incorporated and its 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. Please note that a cautionary statement regarding the forward-looking statements will be made following Charles Holley’s remarks in this call.

Hi, this is Carol Schumacher, Vice President of Investor Relations for Walmart Stores, Inc. Thanks for joining us today for our third quarter earnings call of fiscal year 2014. Our press release and transcript of this call are available on our website and again that’s www.stock.walmart.com. Here is today’s agenda. Mike Duke, President and CEO of Walmart Stores, Inc., will kick us off with an overview on the quarter’s results and our company’s strategies for this important fourth quarter. Jeff Davis, EVP and Treasurer, will cover the consolidated financial results. Then we’ll move to the operating segments. Bill Simon, President and CEO of Walmart U.S. will start followed by Doug McMillon, President and CEO of Walmart International and then Rosalind Brewer, President and CEO of Sam’s Club. Charles Holley, our CFO, will wrap up the call with comments on our financial priorities, as well as detailed analysis on guidance for the fourth quarter and the full year. Discussions about e-commerce are included throughout the operating segments. We recognize that our retail comp reporting calendar for Walmart U.S. and Sam’s Club is different than some of our competitors. Our comp sales week begin on Saturday and runs on Friday. As a reminder, this fiscal year we utilized the 53-week reporting calendar with 4-5-5 reporting for Q4. Therefore, week 53 of this fiscal year will be compared to week 1 of the same current fiscal year 2014. Our fiscal 2014 Q4 reporting period began on October 26 and runs through January 31, 2014. This compares to the 14-week period last year from October 27, 2013 through February 1, 2013. We have posted a fiscal 2014 and fiscal 2015 week-by-week comp reporting calendar under the comp sales link on the Investors portion of our website. Additional information regarding some of the terms we use at Walmart, including constant currency, gross profit and gross profit rate are also available on our sites. We have a lot to cover today. Mike will start us off. Mike?

Thanks, Carol and good morning everyone. Today, I am pleased to report a 6.5% increase in diluted earnings per share from continuing operations of $1.14 for the third quarter. Walmart delivered solid earnings growth that was also within our guidance range. Our most important priority is growing top line sales, including comps by providing quality merchandise at great prices to customers around the world. The retail environment, both in stores and online, remains competitive. At the same time, some customers feel uncertainty about the economy, government, job stability and their need to take care of their families through the holidays. Walmart has aggressive plans to help our customers enjoy the holiday season and find fantastic gifts for the loved ones while maximizing their budgets at the same time. There is no doubt that we plan to win for our customers and shareholders throughout the holidays. Now let’s take a closer look at how our business performed in the third quarter. Consolidated net sales impacted significantly by currency were below expectations. However we had strong operating income across our segments, Walmart U.S. grew operating income almost 6%, Sam’s Club was up more than 9% and International delivered an increase of 8% on a constant currency basis. Consolidated operating income was $6.3 billion, an increase of 3.6%. Walmart U.S. grew net sales 2.4% to nearly $68 billion in the third quarter. Comp sales declined 0.3% in the 13 week period ended October 25. Traffic continued to improve from the first half of the year and we gained market share again in some of our most important categories. Our neighborhood markets produced comp sales in-line with best in-class competitors. We’re on pace to increase this small format fleet by almost 50% this year. And as you heard in our October Analyst Meeting we’re…

Thank you, Mike. In the third quarter of fiscal 2014, Walmart reported diluted earnings per share from continuing operations attributable to Walmart $1.14. This was within our guidance of $1.11 to $1.16. This compares $1.07 last year and reflects a $0.01 per share from the VIPS restaurant business in Mexico. You should note that we reflected the operating results of VIPS as discontinued operations in our financial statements for the current and prior periods. The VIPS sale is subject to regulatory approval, but we expect it to be completed by year end. As you recall, our plan was to invest an incremental $0.09 per share in e-commerce for fiscal 2014. In Q3, we invested $0.03 per share bringing the year-to-date total to approximately $0.08 per share. However, we now expect the fiscal 2014 incremental impact to be approximately $0.10 per share. Now, let’s turn our attention to the detailed financial results for the quarter. Consolidated net sales increased 1.6% or $1.8 billion to $114.9 billion. Net sales were impacted by approximately $1.6 billion from currency exchange rate fluctuations and we benefited $314 million from acquisitions. Therefore, on a constant currency basis, net sales would have increased 2.7% to $116.2 billion. The membership and other income increased 12.3% to $800 million primarily driven by a solid 8.1% increase in membership income at Sam’s Club. Therefore coupled with net sales total revenue was $115.7 billion a 1.7% increase over last year. Our growth profit rates for Q3 was 24.5% an increase of 13 basis points compared to last year. The increase was primarily driven by Sam’s Club and Walmart U.S. Operating expenses as a percentage of sales was 19.8% an increase of eight basis points compared to last year. However this represents a 22 basis point improvement from last quarter, we appreciate…

Thank you, Jeff. In the third quarter, we delivered strong profit results in a challenging sales environment. I continue to be impressed by the resilience of our customers and the pace of economic headwinds and fiscal uncertainty and I am proud of our associates for their commitment to managing the business and serving our customers. Net sales grew to $67.7 billion, up approximately $1.6 billion or 2.4%, while comp sales declined 0.3% driven by a 0.4% decline in traffic. Comp traffic was up slightly from second quarter. Operating income increased 5.8% to over $5.1 billion. Walmart U.S. delivered another quarter of market share gains with an increase of 18 basis points in the measured category of food, consumables and health and wellness OTC during the 13 weeks ending October 26 according to the Nielsen Company. Throughout the quarter, we continued to see strength in produce, home, apparel and wireless. Our focus on improved quality, pricing and brand innovation produced strong sales in these areas. Overall, the quarter started slower than we would have liked. The comp sales picked up in September and October and team aggressively drove value through two mass merchandising events Stock Up and Save and October savings events. These events featured core multi-pack consumables at a great value and helped offset additional consumer noise in the third quarter related to the government shutdown and debt ceiling discussions. As the quarter progressed, we also saw improvement in the more challenging categories of TVs and snacks and beverages. We will continue to drive excitement in value across the store through these kinds of events focusing on key areas and delivering a strong holiday season for our customers. Let me share more details about our financial results for the third quarter. Our gross profit rate was up slightly at 9…

Thanks Bill. Let’s talk about international’s overall results and then I will move on to a discussion of our 6th largest market. As Jeff covered we had significant impact from currency exchange rate fluctuations on net sales. We had 0.2% increase in net sales achieving $33.1 billion, on a constant currency basis net sales were $34.4 billion up 4.1%. Currency negatively impacted sales by approximately $1.6 billion and our Yihaodian acquisition in China added $314 million in sales. Our gross profit rate, on a reported basis was relatively flat to last year. On a constant currency basis, it increased 28 basis points driven by rate improvements primarily in the UK and Mexico. We’re committed to leveraging expenses and continue to work on our goal of reducing spending to a rate that is in-line with slower sales. As we covered in our recent investor conference we also continue to deal with the headwinds of wage inflation, and higher indirect taxes. We also continue to make investments in e-commerce. Operating expenses increased 0.5% and 5% on a constant currency basis. So you can see we made progress on the absolute expense dollar growth but the softness in sales hurt our ability to leverage. Operating income increased 1.7% to $1.5 billion and improved 8% on a constant currency basis to $1.5 billion also. I’m proud of our team for delivering that 8% increase in the slow growth sales environment. Inventory was up 2.6% compared to sales growth of 0.2%, on a constant currency basis inventory grew 7.6% on sales growth of 4.1%. Inventory days on hand were well managed in Canada, Brazil and Japan. You will recall that on October 15th, we covered several actions to improve our operational effectiveness. We had announced in September the pending sale of our VIPS Restaurants in…

Thanks Doug. At Sam’s Club, we continued to deliver superior member value driving strong membership income and profit growth. Overall, we are pleased with our third quarter results especially our positive comp sales and steady increase in traffic. I would like to take a moment to cover the highlights of the quarter before discussing our financial results. During the third quarter members notice our merchandise transformation. There was a great deal of excitement and itself that translated into traffic and sales. Our merchants are bringing in great new items at exceptional values and our operators are making the merchandise come to life with inviting displays. I'm pleased with this merchandising evolution which will continue both in club and online. We remain satisfied with the investments we’ve made in price leadership as well as our strategy to provide differentiated merchandise and to accelerate our club opening. These investments will continue to strengthen our topline results going forward. We have ramped up our new club opening sharpening our focus on new member acquisition. In Q3 we opened 13 new and relocated clubs the greatest number of clubs opened during one quarter within the past few years. I attended several grand openings, and it's clear that both member and associate excitement levels are high. Many of our new clubs are exceeding sales expectations based on the strength of the new club member acquisitions such as helping generate early momentum and driving traffic. We strive to be the overall price leader in the club channel for consistently low prices and strategic price investment. Our instant savings program is one form of price investment allowing us to provide additional value with special offers that are above and beyond our normal members only prices. In Q3 members received one instant savings book valid from August 28th…

Thanks Ross. Last quarter I told you that our expectations for the back half of the year would be through a lens of cautious consumer spending and I believe that we’re seeing that play out. In the third quarter we invested strategically in price across all of our segments and we made progress on expense leverage. Although it was a challenging quarter from a self-standpoint, we’re encouraged that we continue to manage our business well and deliver consistent, solid returns for our shareholders. On the quarter, we added approximately $1.8 billion of consolidated net sales. On a constant currency basis we would have increased net sales by more than $3 billion, currency exchange rate fluctuations against the U.S. dollar have clearly been a headwind for us this year and if foreign currency rates remain where they are today I expect a similar impact for the fourth quarter. Around the world the company added approximately 11.7 million net new square feet of retail space during the quarter, bringing our net year-to-date additional square footage to 22.7 million. We’re also pleased with the growth of our smaller formats in Walmart U.S. In fact we have close to 400 neighborhood markets by year-end. Our e-commerce growth was extremely strong, during the quarter we increased sales by almost 40% due in part to last year's acquisition of Yihaodian in China. Without Yihaodian we still grew global e-commerce sales by over 20%. The investments we’re making or generating additional site traffic and sales particularly in our key e-commerce market of U.S., UK, Brazil and China. We expanded our fulfillment network around the world, including new facilities in Texas, Brazil and China across our four websites @WalmartLabs team made significant advances in personalization by building a new sophisticated recommendation engine that is a big leap forward…