Carol Schumacher – VP, IR Doug McMillon – President and CEO Claire Babineaux-Fontenot – EVP and Treasurer Greg Foran – President and CEO, Wal-Mart U.S. David Cheesewright – President and CEO, Wal-Mart International Rosalind Brewer – President and CEO, Sam’s Club Neil Ashe – President and CEO, Global eCommerce Charles Holley – CFO

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 second quarter of fiscal year 2015. The date of this call is August 14, 2014. This call is the property of Wal-Mart Stores, Inc. and is intended for the use of Wal-Mart shareholders and the investment community. It should not be reproduced in any way. (Playback Navigation Instructions) This call contains 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. Please note that a cautionary statement regarding the forward-looking statements will be made following Charles Holley’s remarks in this call. Our press release and a transcript are available on our corporate website – stock.walmart.com. Additionally, a supplemental slide deck that summarizes our key financial results should be used with this call. That presentation appears at the end of this transcript. We believe that this deck provides a more streamlined approach to reviewing our financial performance and prior year comparisons. Unit count data, which is updated monthly, is posted separately on the investors’ portion of the website, under financial reporting. As a reminder, in Wal-Mart International, we provide results and commentary on primarily our five largest markets, all of which had revenue in excess of $10 billion in fiscal 2014. For fiscal 2015, we utilize a 52-week comp reporting calendar, with our Q2 reporting period from May 3rd, 2014 through August 1st, 2014. A week-by-week comp reporting calendar is available under the comp sales link on the investor portion of our website. For information regarding terms used in today’s release, including EPS, constant currency,…

Thank you, everyone, for joining us today. I’m pleased that Wal-Mart delivered solid earnings per share of $1.21, well within our guidance range, and that our consolidated net sales increased more than $3.2 billion over last year to $119.3 billion. As I look at our second quarter results in the context of our overall strategy, we’re encouraged by the performance of our small format stores and e-commerce, areas where we’re investing significantly this year. But, we wanted to see stronger comps overall in Wal-Mart U.S. and Sam’s Club. Stronger sales in the U.S. businesses would’ve helped our profit performance in the quarter. We can get better operationally and we will. In an environment where customers have so many choices about where to shop and how to buy, and many of them are feeling pressure on their budgets, we have to be at our best. That’s why it’s so important for us to deliver a compelling customer proposition of low prices and quality service for every transaction. For many years, we’ve stressed that we run this business one store at a time, and that’s still true today. So, we’re investing in our stores during the rest of this year to deliver positive comp sales through operational excellence. Now, let me review the second quarter results. Wal-Mart International turned in a very solid performance, with operating income up over 9% on a constant currency basis. I’m pleased with the work that Dave and his team have done to manage expenses, improve profitability and drive sales. On a constant currency basis, net sales rose more than 5%, and comp sales were positive in all but one international market. I’m especially encouraged by the healthy sales improvements in some of our largest markets. Our Wal-Mart U.S. business added approximately $1.9 billion in net sales…

Thank you, Doug. I’ll take a few minutes today to provide commentary on the company’s second quarter consolidated financial results, along with certain other items. Further details are available for your reference in the presentation on slides 2, 3 and 4. First, the dollar growth in consolidated net sales exceeded $3.2 billion during the quarter: that’s over $3.9 billion on a constant currency basis. Next, earnings per share from continuing operations of $1.21 were well within our guidance. Consolidated membership and other income increased 8.2% to $789 million, primarily driven by strong growth in membership income at Sam’s Club. Let’s move on to expenses. Corporate and support expenses, which includes core corporate, global e-commerce support and global leverage services decreased 1.6%. Core corporate expenses decreased 6.9% during the quarter. FCPA and compliance-related costs were approximately $43 million, which represented approximately $31 million for the ongoing inquires and investigations and roughly $12 million related to our global compliance program and organizational enhancements. The growth in e-commerce support expenses was driven by our continued investment in talent, technology and fulfillment. You’ll hear more from Neil about the exciting work under way in the e-commerce space. Our leverage services area includes the investments we are making in technology, such as finance and HR back office capabilities and risk and compliance management, including productivity initiatives. Net interest expense decreased 2.5% over last year. A reduction in interest related to the reversal of certain tax contingencies more than offset an increase to interest expense related to higher debt balances. We continue to anticipate that our net interest expense will be higher for the full year than last fiscal year. Moving on to the balance sheet, consolidated inventory increased 6.2%. You’ll hear more about inventory from each of our operating segments. Payables as a percentage of inventory was 81%, which compares to 85.8% last year, due primarily to higher inventory balances and the timing of payments. Improving inventory leverage is important, and each of our operating segments is focused on this priority. I’ll close today by providing a bit of color around returns. The decrease in ROI was primarily due to a decrease in operating income, as well as our continued capital investment in store growth and e-commerce. Free cash flow increased primarily as a result of the timing of income tax payments and capital expenditures. Although the second quarter presented a few challenges, we had a number of bright spots about which we are encouraged. You heard Doug mention a few of these, and you’ll hear more about them on the remainder of today’s call. I’ll now turn the call over to Greg. Greg?

Thank you, Claire. Let me begin by saying how honored and excited I am to lead the Wal-Mart U.S. business. I’ve learned a great deal in 35 years as a retailer and look forward to learning more about the U.S. market and from our leadership team, our customers, and our 1.2 million U.S. associates. Now, let’s talk results. Q2 comp sales performance came in as expected. However, our operating income results fell short of expectations, due in part to investments in wages, as well as healthcare expenses, which were above last year’s levels and above our initial expectations. Let me provide some additional detail. In Q2, net sales for Wal-Mart U.S. grew $1.9 billion. For the 13-week period ended August 1st, we delivered a flat sales comp; and this was despite a SNAP-related headwind of about 70 basis points. Ticket was up 1.1%, while traffic was down 1.1%, a 30 basis point improvement over Q1. Our e-commerce business, including store-fulfilled sales, delivered double-digit sales growth and contributed approximately 30 basis points to the total Wal-Mart U.S. comp sales growth. Our comp sales results reflect mixed performances across the business. While food was flat, health & wellness delivered positive comps. Overall grocery was aided by price investments and continued inflation. However, deflation in consumables and industry softness in entertainment created an offsetting comp headwind. Overall, I’m encouraged by our solid performance during seasonal events, especially during the Fourth of July holiday. I’m also pleased with the consistent strength in Neighborhood Markets and continued market share gains. In the key category of ‘food, consumables, & OTC,’ we gained 37 basis points of market share for the 13 weeks ended July 19th, according to The Nielsen Company. For gross profit, we continued to invest in price, particularly in the categories of meat and…

Thank you, Greg. We appreciate all of the contributions you have made to our International businesses, and we are confident the Wal-Mart U.S. segment is in great hands. Every day, our associates continue to execute our key strategic initiatives. I’m pleased to say that in the second quarter we delivered solid sales and profit growth, gaining market share in the majority of our markets. As I visit the markets, I see that customers are busier and changing more rapidly than ever before. Busy customers are telling us how they want to shop, and that they want us to do two things: save them time and save them money. They’re looking for faster and, more importantly, convenient ways to shop. I’m encouraged by our progress in driving innovation and accelerating growth in e-commerce to improve our offering and add convenience for our customers. The global economy remains challenged, which means the customer is also stretched. Price remains a critical factor in our customer’s buying decisions. As an example, during a recent visit to Chile, I saw first-hand how important price is to our customers. Just a year ago, Wal-Mart Chile rolled out a mobile app, which allows customers to compare prices between Wal-Mart and competitors. We had almost 200,000 item scans in this quarter alone. We believe innovations like this and price position will continue to set us apart in the market place. We remain focused on price investment across all our markets and expect to continue driving improved comp performance. I’m pleased with the trends in many of our markets, driven by a continued focus on being the lowest cost operator. In all countries except Brazil and China, our discussion of results is inclusive of e-commerce. Slides 7 and 8 of the presentation summarize financial details. For the second quarter,…

Thank you, Dave. Performance at Sam’s Club improved this quarter, with approximately 50 basis points of comp acceleration versus Q1. Our business is foundationally solid and over the past year, we’ve been transforming Sam’s Club, with new membership enhancements, elevated merchandise, increased multichannel access, and a heightened use of data and analytics. There is still work to do, but we remain confident that these efforts will serve as a catalyst for our business, increasing the long-term value of being a member. Our top priority at Sam’s Club remains growth – growing our member base and growing sales. While our top line sales growth of 1.7%, without fuel, was modest, membership income grew 11.9% in the second quarter, with Plus member renewals a primary driver. This growth is more impressive considering we have now lapped the fee increase initiated last year in May. As I mentioned earlier, we’re taking steps to increase the value of membership. This includes our investment in two new membership enhancements, Plus member Cash Rewards and Sam’s Club cash-back MasterCard, both launched a little over a month ago. This new MasterCard comes with chip-enabled technology, making the card more difficult to duplicate and providing additional security from fraudulent activity for our members. It’s still early days, but member response has been positive. But, what I’m most proud of is how the associates have rallied behind these programs by building relationships with members and communicating the combined value of both programs. As Doug indicated, these investments help lay the groundwork for future comp sales growth; however, they also pose an operating profit headwind over the next 12 months. The impact of recent investments, such as Plus member Cash Rewards, can be seen in our financial results, reducing both our gross profit rate and operating income. Further, we expect…

Thanks, Roz. Our e-commerce businesses made significant progress on our strategies and delivered a number of customer-focused enhancements in our core markets. Globally, e-commerce sales grew approximately 24% in the second quarter. I’m excited about the capabilities we’ve delivered and how we are integrating the digital and physical worlds to offer customers easier and more convenient ways to shop. We’re working closely with the operating segments around the world to make all of this happen. Looking at Wal-Mart U.S., we saw double-digit sales growth, and we continued to outpace the e-commerce market overall. The major highlight was that we started to roll out a new Wal-Mart.com site experience. To the consumer, it’s simpler, it’s faster and it’s easier shopping experience. But, it also represents a major technical feat that involves a top-to-bottom rebuild of our entire global technology platform. I’m also really excited about the rollout of Savings Catcher. It’s a perfect demonstration of how we are integrating digital and physical experiences to do the work for our customers, and it reinforces their trust in Wal-Mart’s low prices. The Sam’s team is moving aggressively on enhancing the digital and physical experience for members. The new iPad app is getting rave reviews from the members, going from 3.7 stars to 4.5 stars in the app store. We’re also seeing great momentum in the office category and with the Click ‘n’ Pull program that allows members to order online and pick up in a club. We had double-digit sales growth in Brazil, in Mexico and Chile, and triple-digit growth in Canada and Argentina. Of course, we saw a lot of TV sales leading up to the World Cup, but the pleasant surprise was the sales lift in games as a result of good demand for consoles. In China, Yihaodian delivered high double-digit…

Thanks, Neil. We are now half-way through this fiscal year, and while we have some challenges, we are encouraged by several aspects of our business. Let me cover those examples. During the quarter: Consolidated net sales increased more than $3.2 billion, with Wal-Mart U.S. contributing $1.9 billion of the increase. Wal-Mart International delivered a solid performance, with positive comp sales in all but one market and strong operating income. Earnings per share of $1.21 were well within our guidance. Wal-Mart U.S. comp sales for the quarter and the year were flat, an improvement over the prior year’s string of negative comps. We’re also pleased that traffic improved. And, e-commerce sales grew approximately 24% on a global basis. The challenges that we face are reflected in our revised guidance, and I will go through those now. In addition to continuing global macro-economic challenges, there are several specific items that will continue to be headwinds for us in the back half of this year. First, during the quarter, our U.S. healthcare costs increased $180 million versus last year and were well ahead of our initial estimates. This increase is a result of higher enrollment by our U.S. associates and families, as well as healthcare cost inflation. Enrollment does fluctuate with our hiring. As a result of this increased expense, we now anticipate the impact to be approximately $500 million for the fiscal year, which is approximately $170 million higher than our original estimate of approximately $330 million provided in February. That estimate was included in our full year earnings per share range of $5.10 to $5.45. Second, as you just heard from Neil, e-commerce is particularly important to both our customers and our company’s future, and we will continue to invest in areas such as technology, talent, and fulfillment. As a result,…