Duke Optimistic About Wal-Mart’s Future

ROGERS, Ark. — Wal-Mart Stores still has a lot of upside to its business, Mike Duke, president and chief executive officer, told analysts here Wednesday at the company's 19th annual Meeting for the Investment Community.

"The combination of momentum, investment and discipline will continue to deliver growth, leverage and returns to our shareholders," he said. "We have momentum in our core business and in delivering on the productivity loop. In Walmart U.S. we're executing on the fundamentals of assortments and price, and also driving success in key merchandise categories and investing those savings in price leadership."

In terms of investments, Duke said the company is continuing to strengthen its e-commerce efforts — for example, by developing a new search engine that he said has improved conversion on Walmart.com by 10% to 15%; increasing the assortment of products available on its sites worldwide; and investing in Yihaodian, a Chinese web retailer.

He said the company is committed to imposing more discipline around operating expenses and capital spending. "Three years ago we committed to leveraging expenses, and last year, we raised the bar further by setting a goal to reduce SG&A as a percentage of sales by at least 100 basis points over five years, and Wal-Mart is on track to meet [that] goal.

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"We will generate growth through comp sales from existing business, new stores and e-commerce; Sam's is pushing hard to accelerate growth in membership and top-line sales by testing new ways to engage members and increase renewals and revenue; and our international business will continue to be a growth engine — despite slowing new-store growth in Brazil and China — expanding between 21 million total square feet and 23 million square feet this fiscal year.

"In terms of leverage, we've come a long way, but my commitment is that we have a lot of open road ahead even beyond our current plans.  We will also continue to deliver returns to shareholders through dividends and share repurchases.

"So as far as we have come, I believe we still have a lot of upside," Duke said.

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