Wal-Mart de México, S.A.B. de C.V. (WALMEX) Webcast Results for the First Quarter 2014 Mexico City, April 22, 2014

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1 Wal-Mart de México, S.A.B. de C.V. (WALMEX) Webcast Results for the First Quarter 2014 Mexico City, April 22, 2014

2 RAFAEL MATUTE: Good afternoon everyone and thank you for joining us today for our first quarter of the year 2014 earnings call. Here with me is Scot Rank, our President and CEO for Walmart de México y Centroamérica, and Renzo Casillo, Executive Vice President for Mexico s Selfservice Division. This year started with many challenges for our core customer in a still difficult economic environment, and we had a negative calendar effect, as Easter was in March last year and this time it takes place in April, moving from first quarter to second quarter. We will start by reviewing consolidated results for Walmex, including our thoughts, like we did in our Meeting for the Investment Community last February, on things that went well in the quarter and other things we are concerned about. We called them Hits and Misses. Then we will go into detail in Mexico, including the retail and banking operations, and finally Central America.

Now let s review the consolidated numbers for Walmex. Total revenues for the first quarter were $103 billion pesos, a 2.2 percent increase over last year.

8 percent as a result of an improvement in gross margin in Mexico. We are not satisfied with expenses; consolidated general expenses grew 6.4 percent.

3 Now let s review the consolidated numbers for Walmex. Total revenues for the first quarter were $103 billion pesos, a 2.2 percent increase over last year. Sales were impacted, as I said before, by the Easter calendar effect and by a very soft performance of Sam s Club. Gross margin went from 21.5 percent to 21.8 percent as a result of an improvement in gross margin in Mexico. We are not satisfied with expenses; consolidated general expenses grew 6.4 percent. The most important factor was the level of sales, but we also had some inflationary pressures, some planned investments and some one-offs that I will cover in more detail. The strongest increases were in utilities, as we had double digit growth in electricity tariff, infrastructure investments: mainly rents, depreciation and maintenance; and some pressure in personnel cost, which grew at half the rate of installed capacity, but were challenged given the low sales growth. We will continue investing in productivity initiatives, as our commitment to the productivity loop is a long-term, sustainable strategy. Operating income grew 1 percent and EBITDA grew 3 percent. EBITDA margin improved 10 basis points, from 8.8 percent last year to 8.9 percent this year. Net income declined 4.5 percent. Our tax rate went from 29.1 percent last year to 32.6 percent. Our tax rate was impacted by a change in taxes, as with the fiscal reform in Mexico certain salary related payments are no longer deductible, and also by a one-time adjustment to Banco Walmart deferred income tax. I will now pass the word to Scot. SCOT RANK: Thank you very much, Rafael. Walmex s results for the first quarter were mixed. We had solid results for our self-service division in Mexico; small formats are also doing very well, and we had a good performance in our Central America operation. Our most relevant opportunity today is Sam's Club, which had a disappointing performance in the quarter.

4 percent, and were up 1 percent excluding Sam s. The difference in growth for our self-service formats vs.

4 Let s start by taking a look at Mexico. We started the year outperforming the industry. ANTAD s comp store sales excluding Walmex for the first quarter of the year 2014 declined 3 percent. Our self-service formats including Sam s Club were down 2.4 percent, and were up 1 percent excluding Sam s. The difference in growth for our self-service formats vs. ANTAD self-service formats excluding Walmex was 400 basis points, a significant increase compared to the year 2013, when we outperformed the industry by 70 basis points. I am very encouraged by this level of outperformance that our self-service formats achieved during the quarter. I will now let Renzo Casillo go into more detail. Renzo

relative to the rest of the industry. What is even more encouraging is that we gained market share across all store divisions. Let me comment on some of them.

5 RENZO CASILLO: Thank you Scot and good afternoon. I am pleased with the performance of our Self-service formats during first. We continue to move forward with the strategies for growth that I mentioned in our last meeting with the investment community, and they are starting to pay off, as reflected by the solid performance relative to the rest of the industry. What is even more encouraging is that we gained market share across all store divisions. Let me comment on some of them. Food & consumables, which is the largest part of our business, grew 2 percent on a comparable basis during the quarter. This compares to a negative 2.6 percent for the rest of ANTAD self-service formats, excluding Walmex. This gap vs. the industry increased from 140 basis points in 2013 to 460 basis points during the first quarter of the year. We are also encouraged by the progress in General Merchandise. During first quarter, we outperformed ANTAD by 350 basis points, which is a solid improvement against last year, when we closed in line with the self-service market. This improvement is now narrowing the gap vs. department stores, and we are committed to close this gap. Finally, we also performed well in apparel, relative to the rest of the industry, with a difference of 120 points vs. ANTAD self-service. Our small formats, including Bodega Aurrerá Express and stand-alone pharmacies, also continue to generate very strong results, delivering a quarter of double-digit positive comps, and significantly outperforming other small formats. Comp store sales for food and consumables for ANTAD specialized stores, which includes convenience stores and pharmacies, declined 3 percent during the first quarter, compared to an 11.6 percent growth of our small formats, this is 1,460 basis points better than ANTAD.

We continue to invest in prices and supporting these investments with solid and effective Marketing programs that communicate our price leadership.

Walmart Supercenter s Rebajas en toda la tienda campaign, which translates into Rollbacks throughout the store.

We permanently lowered prices to more than five thousand products, and reinforced our quality guarantee for our customers, as we committed to reimburse them for any product bought at our stores for

6 We continue to invest in prices and supporting these investments with solid and effective Marketing programs that communicate our price leadership. I am particularly encouraged to see customers respond to our Surte tu despensa con Morralla campaign, which roughly translates into Fill your pantry with pocket change at Bodega, as well as to Walmart Supercenter s Rebajas en toda la tienda campaign, which translates into Rollbacks throughout the store. In March we re-launched our Superama stores in Mexico, with a very strong campaign called at Superama we decided to be your store. We permanently lowered prices to more than five thousand products, and reinforced our quality guarantee for our customers, as we committed to reimburse them for any product bought at our stores for which they found better quality in the market. This is really turning into an improved value perception, and Superama is now increasing customer count. Finally, as we mentioned to you during our meeting last February, electronics was one of the main areas of opportunity for self-service. This quarter we worked on increasing the value proposition and innovation of electronics. We are improving the layout of our electronics department, making our products and accessories more relevant to our customers. As I mentioned earlier, we are pleased to see positive progress in this area. I will now pass it back to Scot.

SCOT RANK: Thank you very much, Renzo. Turning now to Sam s Club Our biggest challenge this year is the continued softness in Sam s Club sales, where traffic remains negative.

7 SCOT RANK: Thank you very much, Renzo. Turning now to Sam s Club Our biggest challenge this year is the continued softness in Sam s Club sales, where traffic remains negative. We have been working hard reviewing our business and the club marketplace. We are more focused operationally on improving service to members and working on merchandise differentiation. Sam s is an important part of our business and is sharply impacting overall results. Sam's represents 26% of our sales in Mexico and 22% of our sales for all Walmex. We didn t have the first quarter performance we wanted. In fact, it was significantly below our expectations, but I m confident about our long-term strategy and in the ability of our team to execute. As we stated during our Meeting with the Investment Community, changes will not be immediate and we expect to see improvements in the back half of this year. Let s review the results for the first quarter for Mexico s retail operation, without the bank. Total revenues for the first quarter grew 1.5 percent. Gross margin went from 21.3 percent to 21.7 percent. Our general expenses as a percentage of sales were 14.6 percent, compared to 14.0 percent last year, due to the impact by the previously mentioned inflationary pressures, investments and one-offs. EBITDA grew 2.8 percent and EBITDA margin improved 10 basis points, from 9.4 percent last year to 9.5 percent this year.

In the first quarter we did not leverage expenses due to a low level of sales, but our team did a good job of managing expenses through store labor efficiencies and other key line items.

We will make sure that this trend continues and that we make every effort to drive EDLC (Every Day Low Cost) throughout the organization.

8 In the first quarter we did not leverage expenses due to a low level of sales, but our team did a good job of managing expenses through store labor efficiencies and other key line items. Expenses for our retail business in Mexico excluding depreciation increased 5.7 percent during the quarter, while our average installed capacity increased 6.9 percent. We will make sure that this trend continues and that we make every effort to drive EDLC (Every Day Low Cost) throughout the organization. I would like to give an update on Banco Walmart consumer credit programs. During the first quarter we made a significant investment in driving consumer credit programs through Banco Walmart. The number of Banco Walmart credit cards increase by 34 percent during the quarter, while sales with Banco Wal-Mart s credit card grew a very strong 40 percent. This growth only partially offset the decline in other credit card sales, as our business in the bank is not large enough to impact overall credit sales for the quarter. As a result of this increase in credit activity, there is an impact on results driven by a 114 percent increase in reserves, and a 31 percent increase in expenses. Combining the retail and banking operations, the Mexico results were as follows: Total revenues increased 1.6 percent. Gross profit grew 3.1 percent. General expenses grew 6.7 percent. Operating income declined 0.4 percent and EBITDA grew 1.6 percent.

market. As measured by AC Nielsen, total food and consumable sales for the formal self-service market excluding Walmart grew 1.

5 percent, 340 basis points more than our self-service competitors and 570 basis points more than the traditional market.

9 Now, let s go to Central America. In Central America we significantly outperformed the market during the first quarter, both considering selfservice competitors and the traditional market. As measured by AC Nielsen, total food and consumable sales for the formal self-service market excluding Walmart grew 1.1 percent, and traditional markets decreased 1.2 percent. Walmart total food and consumables sales in Central America grew 4.5 percent, 340 basis points more than our self-service competitors and 570 basis points more than the traditional market. In late January we launched our Mama Lucha campaign and she has been very well received in all of Central America, helping us to increase customer count, as well as to improve price perception and awareness. Three main activities are being done: relevant communications campaigns, strong commercial activities in store and retailtainment.

Central America is on track to deliver good results again this year. During this year s first quarter, on a reported basis in pesos, Walmart Central America grew total revenues 5.8 percent to $14.

3 percent this year. General expenses grew 2.4 percent, below the 3.4 percent growth in sales. Operating income and EBITDA grew 15.7 percent and 13.4 percent respectively. EBITDA margin was 6.

Central America clearly has lots of room for improvement in expenses, and this year we are implementing productivity initiatives in the region that have proven successful in Mexico.

10 Central America is on track to deliver good results again this year. During this year s first quarter, on a reported basis in pesos, Walmart Central America grew total revenues 5.8 percent to $14.5 billion pesos. On a constant currency basis, total revenues were up 3.4 percent. The following discussion is considering constant currency basis: Gross margin grew from 22.1 percent last year to 22.3 percent this year. General expenses grew 2.4 percent, below the 3.4 percent growth in sales. Operating income and EBITDA grew 15.7 percent and 13.4 percent respectively. EBITDA margin was 6.7 percent, 60 basis points better than last year. Central America clearly has lots of room for improvement in expenses, and this year we are implementing productivity initiatives in the region that have proven successful in Mexico. During the first quarter we have established goals and controls to help us control this objective. We have been able to improve performance in 2 key productivity indicators: Reducing store labor hours by 1.4 percent. Energy efficiency, decreasing our kilowatt/hours per store by 2.1 percent. During the first quarter of the year expenses, excluding depreciation grew only 1.3 percent on a constant currency basis, significantly below the 5.3 percent in average installed capacity. I am proud that we are already starting to leverage expenses in Central America. I will now pass the conversation back to Rafael.

RAFAEL MATUTE: Thank you Scot. Now, let s move to our balance sheet. Our cash position at the end of the first quarter of 2014 amounted to $20.8 billion pesos. Inventories were $40.

6 billion pesos and were down 6.5 percent. There was a negative calendar effect, as the month ended on a Monday, the day we pay most of our payments.

2 percent growth program, which we shared during our Meeting for the Investment Community last February. At this point, we are on track to reach this goal.

11 RAFAEL MATUTE: Thank you Scot. Now, let s move to our balance sheet. Our cash position at the end of the first quarter of 2014 amounted to $20.8 billion pesos. Inventories were $40.8 billion pesos, an increase of 12.7 percent, mainly as a result of the Easter calendar effect, and the opening of 217 stores during the last 12 months. Accounts payable to suppliers amounted to 38.6 billion pesos and were down 6.5 percent. There was a negative calendar effect, as the month ended on a Monday, the day we pay most of our payments. Year to date we have opened a total of 19 stores in Mexico and Central America, 11 Bodegas and 8 discount stores. This is part of our 5.2 percent growth program, which we shared during our Meeting for the Investment Community last February. At this point, we are on track to reach this goal. As part of our continuous efforts in developing our ecommerce proposition, we have added six new categories to our walmart.com.mx portal throughout the quarter: Pets, Books, Smart House, Photography, Musical Instruments and Jewelry & Accessories. Thanks to these additions, we now manage a total of 18 categories. On the other hand, Superama s online grocery delivery is still growing, while providing our customer with the opportunity to access it via computers, smartphones and tablets.

We received the Socially Responsible Company award by the Mexican Philanthropy Center (The Cemefi), for our commitment to the highest standards in Corporate Social Responsibility in Mexico.

Additionally, we opened a dining room in the municipality of Villa de Zaachila in Oaxaca, aimed at feeding 200 kids every day, with an investment of $2 million Mexcian pesos provided by Walmart de

12 We received the Socially Responsible Company award by the Mexican Philanthropy Center (The Cemefi), for our commitment to the highest standards in Corporate Social Responsibility in Mexico. It is worth mentioning that we have received this recognition by Cemefi for 14 consecutive years. Additionally, we opened a dining room in the municipality of Villa de Zaachila in Oaxaca, aimed at feeding 200 kids every day, with an investment of $2 million Mexcian pesos provided by Walmart de México Foundation. Finally, The Walmart de México Foundation called our 2014 Projects initiative, in which we support those projects targeting population living in poverty conditions in rural and urban areas. We count with 124 candidates in the Productive Chains, Hunger and Women categories. With this we are ending our conference call, and I remind you that we will be available to receive any calls with questions that you may have. I also want to remind you that next week, on April 29, we are paying our first dividend for the year This is $0.13 Mexican pesos in an ordinary dividend and $0.27 Mexican pesos for the extraordinary dividend, giving a total of $0.40 Mexican pesos. With this now we end our conference call. Thank you.

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