Saving customers Money So They Can Live Better

Growth opportunities continue. We are more committed than ever to helping customers save money so they can live better in every category throughout the store. Price leadership continues to be the cornerstone of how we go to market. The remodeling program, a key component of the Project Impact strategic framework, is now in its third year and continues to improve the customer shopping experience. Growth in the United States will come from additional penetration into more metropolitan markets, as well as from new formats and stronger integration with the online business. Walmart.com traffic exceeded one billion visits this past year, growing more than 15 percent over the previous year through Site-to-Store™ and home delivery.

Leverage scale and reduce costs. Innovation, process improvements and strong management teams drove significant improvements in our business. Walmart U.S. repositioned the business to leverage operating expenses on a slower rate of sales growth this past year. Improved productivity through enhanced scheduling systems better matched associate staffing levels in our stores to customer traffic. Stronger supply chain processes also improved inventory flow. Merchandising and planning systems contributed to lower inventory levels, which were also benefited by increased sell-through. Global sourcing initiatives now under way will strengthen efforts to drive down the cost of goods and pass those savings on to our customers. The restructuring of the Walmart U.S. operations organization, announced early this year, provides a much more integrated approach to running the business and creates opportunities for career development and growth for our talented associates.

Improved returns. Walmart U.S. significantly increased its cash flow and return on invested capital in fiscal 2010. Gross margin improvements, tight expense control, strong inventory management and efficient capital allocation contributed to this improved performance. We reduced year-end inventory by $1.8 billion, or 7.6 percent, and increased inventory turns as well.