Steve Schmitt - VP, Investor Relations Douglas McMillon - President and Chief Executive Officer Brett Biggs - Executive Vice President and Chief Financial Officer

Q -

Good morning and thank you for joining us to review Walmart’s Second Quarter Fiscal 2018 Results. This is Steve Schmitt, Vice President of Investor Relations at Wal-Mart Stores, Inc. The date of this call is August 17, 2017. On today's call you will hear from Doug McMillon, President and CEO as well as Brett Biggs, CFO. This call contains 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 information provided by that Act. A cautionary statement regarding forward looking statements is at the end of this call. As a reminder, our earnings materials include the press release, transcript and accompanying slide presentation which are intended to be used together. All of this information, along with our fiscal 2018 earnings release dates, store counts, square footage, earnings infographic and other materials are available on the investors’ portion of our corporate website stock.walmart.com. For our U.S. comp sales reporting in fiscal 2018, we utilize a 52-week calendar. Our Q2 reporting period ran from Saturday, April 29, 2017 through Friday, July 28, 2017. Before we get started, I’d like to remind you of a few upcoming dates. Our annual Investment Community Meeting will be held in Northwest Arkansas on October 9 and 10. Registration will begin next week. Also, we will release [second] quarter earnings on Thursday, November 16. And now, I'd like to turn it over to Walmart’s CEO, Doug McMillon.

Good morning, everyone and thanks for joining us today. Our second quarter results were solid with continued topline momentum in the business. Walmart U.S. grew comp sales 1.8% and comp traffic 1.3%. We continue to gain traction in e-commerce with Walmart U.S. GMV up 67%. The U.S. store team has done a great job staying focused on providing a fast and easy customer experience while managing expenses and inventory. Customers are responding to the improvements we’re making to deliver a seamless shopping experience that saves them time and money and that’s exciting to see. In addition, Sam’s Club delivered comp traffic growth of more than 2%. In International, nine of 11 markets posted positive comp sales and five of these markets grew comps by more than 5%. So overall, we’re making progress across the business and feel good about where we are midway through the year. Our strategy is to make every day easier for busy families. To accomplish this, we continue our transformation to become more of a digital enterprise that moves with speed and agility. I’m encouraged by innovation in the business. We’re testing associate delivery of walmart.com orders in a few stores and by the end of the year, we’ll have approximately 100 automated pickup towers in stores across the U.S., where customers can pick up their orders within a matter of minutes. With Easy Reorder on walmart.com, a customer has visibility to their past in-store and online purchases. In a matter of seconds, they can easily repurchase the items they’ve bought most frequently before and save the time it may have taken to make a weekly shopping list. Another example is our integrated back-to-school offering. Our dedicated back-to-school destination on walmart.com enables customers to shop school supply lists for more than a million classrooms across the United States. They can find their own list by simply entering their zip code and quickly adding all the items from the school list to their basket. Then, they can choose whether to pick up the items at their local store or ship them to their home. It’s a huge time-saver for busy families. If you haven’t done your back-to-school shopping, you should definitely check this out. We have tests going on with digital endless aisle shopping, robotics and image analytics to scan aisles for outs and we’re using machine learning to assist our merchants with pricing. Sam’s Club members continue to provide great feedback on the convenience of Scan & Go and we’ll be further expanding Scan & Go within Walmart U.S. this year. This quarter, we also enjoyed welcoming entrepreneurs from more than 500 small businesses to Bentonville to pitch their Made in the USA products to sell in our stores and online as part of our Investing in American Jobs Open Call in June. And last month, we released proposals for policy actions to address barriers to manufacturing growth here in the U.S. We’re pleased to be making progress towards our goal of purchasing an additional $250 billion in products made, sourced or grown in the U.S. Customers want to buy products that are not only good for their families, but also for the people that made them. In e-commerce, customers are responding favorably to our expanded assortment, which surpassed 67 million SKUs on walmart.com. Our recent acquisitions, such as Moosejaw, Shoebuy and Bonobos, further improved our assortment, and have provided critical category expertise in higher margin categories like shoes and apparel. A couple of weeks ago, I was in Boston to meet with the Shoebuy team, which is now known as shoes.com. They were very engaged and really impressive. In addition, I was excited to visit with the Moosejaw team in Detroit in July. This talented group is thriving in their creative culture and it was great to hear what they’re working on. We believe that we’re uniquely positioned to grow and delight customers by providing the seamless shopping experience they desire. Having stores within 10 miles of approximately 90% of the U.S. population allows us to serve customers in ways that are most convenient for them. We’ve seen strong results from the rollout of online grocery, which is now in more than 900 U.S. locations, and we’re expanding this service in many of our markets around the world. Retail is constantly evolving and it’s critical that we move even faster as the customer and competitive landscape continue to change. Brett will provide more details on the financials shortly, but before he does, I’ll talk briefly about each area of the business. Let me start with Walmart U.S. We had a strong quarter with comp sales growth of 1.8% and comp traffic growth of 1.3%. It’s exciting that sales growth is coming from across the business including stores, e-commerce and a combination of both. Under Greg Foran’s leadership, the stores continue to perform well. The grocery business has really strengthened as food categories delivered the strongest quarterly comp sales performance in five years. We’re also pleased with the expense discipline as physical stores leveraged expenses for the second consecutive quarter. We’ve done this while maintaining high in-stock and service levels. Store associates are using better technology and processes to perform their tasks and we’re becoming more efficient. Our training programs are fueling this progress as well. This training is not only equipping associates for their current roles, but preparing them for promotion into roles with greater responsibility and pay. We’ve now opened 175 training academies and expect to have 200 operating by the end of the year. In Walmart U.S. e-commerce, Marc Lore and the team delivered another quarter of robust topline growth with GMV up 67%, including acquisitions. The majority of this growth was organic through walmart.com as customers are finding a broader assortment and more options to receive what they want at their convenience. They love not having to pay a membership fee to get Walmart’s free two-day shipping on millions of items. And we’re seeing a nice increase in customers receiving discounts for picking up non-store items at their local stores. Marc, Greg and their teams continue to make good progress in driving innovative solutions across the business and providing the seamless shopping experience customers’ desire. Staying in the U.S., let’s talk about Sam’s Club. John Furner and team have improved execution, resulting in stronger comp traffic. Sam’s Club had comp sales growth without fuel of 1.2% in the quarter led by 2.1% comp traffic growth and e-commerce GMV increased 23%. Overall, we’re starting to see good traction in categories where we want to win. Club Pickup continues to grow and I’m excited about how we’re leveraging clubs to serve members across multiple channels. We’re also strengthening the assortment with exciting merchandise, including progress in fresh and with our private brand, Member’s Mark, which is more than a $10 billion brand and growing. Outside the U.S., the Walmart International team, led by Dave Cheesewright, continued to deliver strong underlying results with nine of 11 markets posting positive comp sales and the segment leveraging expenses overall. Walmex continues to be the strongest International market with comp sales growth of more than 7% in the quarter. What’s even more impressive is that this sales momentum is broad-based across all countries and regions. In China, our stores are improving and we launched Walmart and Sam’s Club global flagship stores through our alliance with JD.com this quarter. In addition, more than 25% of Walmart stores in China now offer delivery of orders in less than one hour through the JD Daojia delivery platform. Moving to Canada, the business continues to perform well. The investments that we’ve made in price are resonating with customers and contributing to market share gains in key traffic driving categories. We’re also encouraged that the UK delivered positive comp sales. In June, I visited Asda to see the progress being made. Customers are responding to investments in price and store experience by visiting the stores more often and increasing their basket sizes. There’s still much more to be done, but we’re clearly headed in the right direction. While there, I visited stores as well as our Heston grocery-delivery fulfillment center. I was impressed by how the team is focused on not only improving grocery pick-up and delivery from stores, but also from fulfillment centers in higher-volume environments. So overall, the International segment has made steady progress as we find new ways to serve customers more effectively through stores and e-commerce. In conclusion, we’re encouraged with the solid first half results. We are uniquely positioned to deliver the seamless, fast, innovative and exciting shopping experience our customers desire. I’m pleased with how we’re equipping our associates to deliver it. I’d like to thank our associates for their focus on serving customers in all the ways they choose to shop. It’s making a difference. We have a clear strategy that we’re executing against and good momentum across the business. Thanks for your continued interest in Walmart. Now, I’ll hand it over to Brett.

Good morning, and thanks for joining us today. We had a solid first half of the year. We are improving our competitive position with a differentiated offering by giving customers a better experience in our stores and more of what they want online. We are guided by our financial framework to deliver strong, efficient growth, operate with discipline and allocate capital strategically. We are making progress on each element, and it’s through this lens that I’ll discuss our results. Second quarter adjusted EPS of $1.08 was at the top end of our guidance. Walmart U.S. comp sales increased 1.8%, led by traffic growth of 1.3%. U.S. e-commerce GMV grew 67% and International delivered strong results. Two items significantly impacted EPS for the quarter. There was a $0.17 negative impact related to the premiums paid for bond tenders, which allowed us to retire higher rate debt to reduce interest expense in future periods. We also recorded a gain from the sale of our Suburbia business in Mexico, which benefited EPS by $0.05. It’s also important to remember that during the second quarter of last year, the Company’s EPS was positively impacted by $0.14 related to the gain from the sale of our Yihaodian business in China. Adjusted for these items, EPS increased approximately 1% year-over-year. Gross profit margin decreased 11 basis points during the quarter. Strategic price investments in key markets and the growing mix of our e-commerce business reduced the gross margin rate. The presentation accompanying this transcript includes more details on gross margins for each segment. We continue to make some progress with expenses as we leveraged expenses in our U.S. stores, as well as in the International segment. As a Company, SG&A delevered by 10 basis points in the period, primarily due to increased technology spending and some impairment charges related to Sam’s Club. We expect to slightly leverage expenses on a consolidated basis for the year. Operating with discipline is important to where we are going in the future. We have a lot of work to do, but I’m encouraged by the focus I’m seeing. Cash flow from operations and free cash flow for the first six months were solid at $11.4 billion and $6.9 billion, respectively. Compared with last year, the decreases in operating cash flow and free cash flow were due to an increase in incentive payments and the timing of other payments. We are still seeing improvement in working capital, but not as strong as the tremendous improvement last year, which also impacts the year-on-year comparability. In terms of capital allocation, we completed remodels of 283 stores globally, and in the U.S. we further expanded our online grocery service to include more than 900 locations. In addition to investing in the business, we returned $3.8 billion to shareholders through dividends and share repurchases. For the trailing 12 months ended July 31, 2017, consolidated return on investment decreased 50 basis points due primarily to reduced operating income. Let’s now move on to e-commerce. As a reminder, e-commerce results include all web-initiated transactions including those through walmart.com such as ship-to-home, ship-to-store, pick up today and online grocery, as well as transactions through jet.com and the other sites in our family of brands. Walmart U.S. e-commerce again performed very well on the topline as GMV grew 67% and sales increased 60%, including acquisitions. The majority of this growth was organic through walmart.com, including Online Grocery, which is growing quickly. We are delivering growth through an improved customer value proposition that includes free two-day shipping on millions of items and Easy Reorder, as well as an expanded assortment, now with more than 67 million SKUs, an increase of more than 30% from the first quarter. With Easy Reorder, we’re integrating both in-store and online purchases to provide customers with a single spot to view and repurchase the items they buy most frequently. Initiatives like these, along with everyday low prices, are the reasons why customers are choosing Walmart in greater numbers. As a reminder, we’ll begin to lap the jet.com acquisition in the third quarter. Now, let’s move on to operating segment details. Walmart U.S. delivered another quarter of solid comp sales, increasing 1.8%, led by growth in customer traffic of 1.3%. On a two-year stacked basis, comp sales were up 3.4% and comp traffic increased 2.5%. This marks the 12th consecutive quarter of positive comp sales and the 11th consecutive quarter of positive comp traffic. The grocery business continued to improve as food categories delivered the strongest quarterly comp sales performance in five years, led by strong customer traffic and a return of slight market inflation in food, excluding our own price investments. All formats had positive comp sales and e-commerce contributed approximately 70 basis points to the segment. Keep in mind the e-commerce sales contribution includes not only purchases that are shipped to a customer’s home, but also omni-channel transactions fulfilled in stores, such as Online Grocery and Pickup Today. Gross margin rate declined five basis points in the quarter. Savings from procuring merchandise benefited the margin rate but was more than offset by the mix effects from our growing e-commerce business, as well as continued investments in price. Operating expenses as a percentage of net sales increased 13 basis points primarily due to investments in e-commerce and technology. While we didn’t leverage expenses for the overall segment, we did leverage in the stores for the second straight quarter. Service levels remained high and our associates are doing a great job of being more efficient through improved training and by utilizing upgraded technology. Operating income increased 2.2% in the quarter, which is the second straight quarterly increase. Managing inventory has been a key focus for the U.S. business, and the team continues to do a fantastic job in this area. During the quarter, inventory at comp stores fell 3.8%, while in-stock levels remained high. We’re pleased with the continued momentum at Walmart U.S. in both the digital and physical space. With the third quarter underway, the back-to-school season is in full swing, and we’re providing more options for customers to save time and money in our stores and online. For the 13-week period ending October 27, 2017, we expect comp sales to increase between 1.5% and 2%. Now, let’s move on to Walmart International. Walmart International continued to execute against its strategic priorities and delivered strong underlying results. On a constant currency basis, net sales increased 2.5% and decreased 1% on a reported basis. Keep in mind, the divestitures of Yihaodian and Suburbia created a headwind to sales of nearly $520 million in the period when compared to last year. The good performance in the quarter was fairly broad-based, and results at Walmex were particularly strong with comp sales growing more than 7%. Nine of 11 markets posted positive comp sales, including in the U.K., and five of these markets grew comps by more than 5%. As a reminder, the timing of Easter benefited our results for the second quarter. Operating income declined by 2% on a constant currency basis and 7.8% on a reported basis. As I mentioned earlier, there were a few items from international affecting year-over-year performance related to divestitures. The net impact from these divestitures benefited operating income by $415 million this year and $513 million last year in constant currency. Excluding these items, operating income grew 5.2% on a constant currency basis. We delivered these results even as we continued to make strategic investments to enhance the shopping experience both in-store and online in several of our major markets. The attention to operating discipline allowed us to leverage expenses in the period, even as we made important investments. Let’s now turn to some highlights from key markets. The presentation accompanying this transcript includes detailed information on our four major markets. The results discussed below are on a constant currency basis. Let’s begin with Walmex, where momentum in sales continued across all countries and regions. Total sales increased 9.2%, excluding Suburbia, and comp sales grew 7.2%. In Mexico, comp sales increased more than 15% on a two-year stacked basis, and each of our merchandise divisions outpaced ANTAD self-service. In Canada, net sales increased 3.4%, and comp sales increased 2.5%. We further improved our price position against competitors, which contributed to market share gains in key traffic driving categories such as food and consumables. Inventory was also a focus, as the team reduced overall levels even as sales increased. Turning to the UK, net sales increased 3.9%, and comp sales increased 1.8%. Customers responded to investments in the value proposition, and we continued to see sequential improvement in the business, including customer traffic and ticket. In China, net sales increased 2.5%, and comp sales increased 0.6%. Previously, we highlighted our decision to reduce the mix of bulk sales of certain items in our stores, and while we saw a negative impact to topline results, we believe it was the right decision. Results for the quarter were primarily driven by momentum in the fresh and consumables categories. Additionally, we had good performances with local festivals and holidays. From an e-commerce perspective, we continued to expand our offering through the alliance with JD.com. We now have 134 Walmart stores across 18 cities that have joined the JD Daojia platform, which offers delivery of orders in less than one hour. Moving on to Sam’s Club, comp sales without fuel increased 1.2% in the period, led by traffic growth of 2.1%. We’re serving members across multiple channels, and our e-commerce initiatives produced strong results with 80 basis points of contribution to comp sales and year-over-year growth of 29% or Club Pickup. Operating income decreased in the period primarily due to a charge of about $50 million as a result of impairments of certain assets and the decision to close four underperforming clubs. The team is moving quickly to execute on their priorities of people, products and digital, and we’re starting to see good traction in categories where we want to win. We believe good growth opportunities exist in the club channel, and we know we have to do more to capture greater share in this space. We’re laser focused on our members and how we can serve them in new and exciting ways. For the 13-week period ending October 27, 2017, we expect comp sales without fuel to increase between 1% and 1.5%. With that, let’s talk about guidance. We’re pleased with our first half performance. Given our results to-date, combined with our expectations for the balance of the year, we now expect full-year adjusted EPS to be $4.30 to $4.40, which includes a range of $0.90 to $0.98 for the third quarter. This compares to previous EPS guidance of $4.20 to $4.40 for the full-year. The initial guidance for full-year EPS assumed a negative currency impact of about $0.05 per share, but we now expect the EPS impact from currency will be less given current exchange rates. We continue to assume a full-year effective tax rate around 32%. As with all guidance, this assumes the economic conditions in key markets remains relatively consistent. Overall, we’re doing what we said we would do, executing our plan and delivering good results. I continue to be excited about where we’re heading as a Company and how we’re improving our customer’s lives. As I close today, let me say thank you to all of our associates around the world for the work you do every day. You serve an incredible number of customers each day, and you do it well.

Q -: :

This call includes certain forward-looking statements intended to enjoy the safe harbor protections of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements relate to management’s guidance and forecasts as to, and expectations for Walmart’s earnings per share for the three months ending October 31, 2017. Adjusted earnings per share for the fiscal year ending January 31, 2018, comparable store and club sales for the Walmart U.S. and Sam’s Club segments, excluding fuel for the 13-week period ending October 27, 2017, levering expenses for the year ending January 31, 2018, the impact of currency exchange rates on our earnings per share, and the number of training academies we expect to have open by year-end. Assumptions on which any guidance or forecasts are based are considered forward-looking statements. Walmart’s actual results may differ materially from the guidance provided, or the goals, expectations or forecasts discussed, in such forward-looking statements as a result of changes in facts, assumptions not being realized or other risks, uncertainties and factors, including: economic, geo-political, capital markets and business conditions, trends and events around the world and in the markets in which Walmart operates; currency exchange rate fluctuations, changes in market interest rates and commodity prices; unemployment levels; competitive pressures; inflation or deflation, generally and in particular product categories; consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels and demand for certain merchandise; consumer enrollment in health and drug insurance programs and such programs' reimbursement rates; the amount of Walmart's net sales denominated in the U.S. dollar and various foreign currencies; the financial performance of Walmart and each of its segments; the impact of acquisitions, divestitures and store and club closures; Walmart's ability to successfully integrate acquired businesses, including in the e-commerce space; Walmart's effective tax rate and the factors affecting Walmart's effective tax rate, including assessments of certain tax contingencies, valuation allowances, changes in law, administrative audit outcomes, impact of discrete items and the mix of earnings between the U.S. and Walmart's international operations; customer traffic and average ticket in Walmart's stores and clubs and on its e-commerce websites; the mix of merchandise Walmart sells, the cost of goods it sells and the shrinkage it experiences; the amount of Walmart's total sales and operating expenses in the various markets in which it operates; transportation, energy and utility costs and the selling prices of gasoline and diesel fuel; supply chain disruptions and disruptions in seasonal buying patterns; consumer acceptance of and response to Walmart's stores, clubs, e-commerce websites, mobile apps, initiatives, programs and merchandise offerings; cyber security events affecting Walmart and related costs; developments in, outcomes of, and costs incurred in legal or regulatory proceedings to which Walmart is a party; casualty and accident-related costs and insurance costs; the turnover in Walmart's workforce and labor costs, including healthcare and other benefit costs; changes in accounting estimates or judgments; changes in existing tax, labor and other laws and regulations and changes in tax rates, trade agreements, trade restrictions and tariff rates; the level of public assistance payments; natural disasters, public health emergencies, civil disturbances, and terrorist attacks; and Walmart's expenditures for FCPA and other compliance related costs. Such risks, uncertainties and factors also include the risks relating to Walmart’s strategy, operations and performance and the financial, legal, tax, regulatory, compliance, reputational and other risks discussed in Walmart’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the SEC. You should consider the forward-looking statements in this call in conjunction with that annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Walmart urges you to consider all of the risks, uncertainties and factors identified above or discussed in such reports carefully in evaluating the forward-looking statements in this call. Walmart cannot assure you that the results reflected or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects for or on Walmart’s operations or financial performance. The forward-looking statements made in this call are as of the date of this call. Walmart undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.