1 A Service Strategic Preview: Q4 November January February 2013 STEPHEN SPRINGHAM Senior Retail Analyst

2 Analyst Comment: Strategic Preview: Walmart Q4 “We’re anticipating a relatively robust Q4 performance domestically, against a mixed picture internationally. Walmart’s proactive stance in the US (bringing forward Layaway by a month, an aggressive Black Friday, focus on price leadership, expanded assortment, strong holiday marketing campaign) resonated with customers and saw it establish early momentum. The company was able to sustain this momentum over the festive period and emerge as one of the retail sector’s relative winners. However, it cannot afford to rest upon its laurels domestically as the changes in the competitive landscape are manifold – there is even a hint that rival Kroger could be poised to invest heavily on price. Internationally, we anticipate slower growth in Latin America but a steady performance at Asda in the UK. There may be a return to comp growth in China, as the business rebuilds and repairs self-inflicted wounds, rather than embarking on further widespread expansion. We believe Walmart remains committed to India although the recent reforms to FDI are still not sufficiently conducive for a major expansion push. India remains firmly on the radar screen, but the process will be a slow one.” “We’re anticipating a relatively robust Q4 performance domestically, against a mixed picture internationally. Walmart’s proactive stance in the US (bringing forward Layaway by a month, an aggressive Black Friday, focus on price leadership, expanded assortment, strong holiday marketing campaign) resonated with customers and saw it establish early momentum. The company was able to sustain this momentum over the festive period and emerge as one of the retail sector’s relative winners. However, it cannot afford to rest upon its laurels domestically as the changes in the competitive landscape are manifold – there is even a hint that rival Kroger could be poised to invest heavily on price. Internationally, we anticipate slower growth in Latin America but a steady performance at Asda in the UK. There may be a return to comp growth in China, as the business rebuilds and repairs self-inflicted wounds, rather than embarking on further widespread expansion. We believe Walmart remains committed to India although the recent reforms to FDI are still not sufficiently conducive for a major expansion push. India remains firmly on the radar screen, but the process will be a slow one.” STEPHEN SPRINGHAM Senior Retail Analyst

1.Expectations for the Quarter 2.US: Q4 Strategic Changes 3.Global: Q4 Strategic Changes 4.Outlook 5.What’s new at Planet Retail Strategic Preview: Walmart Q4

4 Walmart US is increasingly trading-up against a more challenging year-on- year comp base. Nevertheless, we are anticipating positive comp growth of between 1-2% in Q4.

5  Walmart US geared up for Q4 strategically and aggressively around its core pillar of value. This focus (and manner of execution) is likely to have been rewarded by a positive performance in comp sales.  But there is on-going polarity in the group’s US multi-format strategy – aggressive roll-out of Neighborhood Stores vs. extremely piecemeal expansion of Express Stores. The latter issue remains a concern especially as the dollar stores continue to steal a march in this space.  The relative performances, strategic directions and outlooks at the International businesses are likely to be very mixed.  Under new leadership, the Latin America division will be looking to consolidate its position and sales growth is likely to have slowed accordingly. China too is looking to re-group and despite challenging market conditions could see an encouraging increase in comparable store sales.  On a positive note, the UK is expected to have performed solidly in a more competitive environment. Performance has undoubtedly been boosted by a more diversified e-commerce offering, particularly around click & collect and m-commerce.  Progress in India will be slow – FDI reforms are not necessarily the catalyst they promise to be. Positive result domestically in Q4, a number of challenges internationally.