1 planetretail.net Strategic Preview: Q4 November January February 2014 STEPHEN SPRINGHAM Senior Retail Analyst

2 The unscheduled trading update in at the end of January confirmed that comp growth was negative in Q4 at both Walmart US and Sam’s Club. Actual Like-for-Like Sales Projected Like-for-Like Sales

3 All change at the top…  Doug McMillon has stepped up to replace Mike Duke as Group President & CEO from 1 February  This is a natural succession, as opposed to a forced change. Duke’s departure was widely anticipated for some time and, at the age of 63 and having been in the role since 2009, his retirement had to come sooner rather than later.  A ‘Walmart lifer’, McMillon steps up from being CEO of Walmart International – possible recognition the business has been too US-centric in its outlook in the past. More significant is the fact he has senior management experience across all three of Walmart’s key operating units (he was previously CEO of Sam’s Club, before assuming the same role at International).  David Cheesewright has been promoted from President & CEO of EMEA to head up International.  A UK national, Cheesewright started his career with Asda. where he held leadership positions in operations, merchandising, logistics, strategy and format development.  He has previously also headed the Canadian business and oversaw the integration of the Massmart acquisition in sub- Saharan Africa and the acquisition of the UK Netto stores. © Walmart

4 Africa: Muted performance at Massmart.  Acquired with a fanfare back in 2011, trading at Massmart continues to be subdued – and there is limited evidence to date of Walmart exercising its muscle in Africa.  Massmart announced preliminary group turnover growth of 7.5% for the year to 29 December Like-for-like sales increased 3.8%, but taking into account internal inflation of 2.7%, volume growth was just above 1%.  Massdiscounters, the general merchandise and food retail division, proved the group’s weakest performer - sales grew 1% on a like-for-like basis, with internal inflation of 0.5%. Masswarehouse, the group’s warehouse clubs division, increased sales 4% with inflation running at 2.1%.  Walmart’s position in Africa is difficult to gauge. Massmart’s reported like-for-like figures seem weak against initial expectations of an emerging market like South Africa, but they are reflective of continued high unemployment and the low consumer confidence levels currently rife in wider the market.  Expectations that Walmart would quickly impose its established business model in Africa and revolutionize the market look increasingly misguided.

5 Costco has outperformed Sam’s Club since Q But the divergence has widened in the intervening period and has been massive over the last quarter.