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Neil Ashe has some explaining to do

BY CSA STAFF

President and CEO of Walmart Global eCommerce, Neil Ashe, made a cameo appearance during Walmart’s fourth quarter earnings presentation to shed light on omnichannel investments that caused the company to forecast 2013 profits below analysts’ estimates.

Walmart’s forecast first quarter earnings in the range of $1.11 to $1.16 and full year earnings in the range of $5.20 to $5.40. Embedded in those numbers are huge investments in ecommerce that will cost the company about nine cents a share.

"We are excited about the opportunities these investments will provide," said Walmart CFO Charles Holley.

An expense impact of nine cents a share at a company the size of Walmart is more than material, so Ashe was included in the roster of speakers commenting on results. He provided details on Walmart’s fundamental ecommerce strategy which entails four strategic priorities: to excel in the fundamentals of e-commerce, innovate in new areas like big data, social and mobile, win key markets such as the U.S., the U.K., Brazil, uniting and expanding the Walmart platform to do what no one else can do, and build a best-in-class e-commerce that can be combined with the retail footprint to deliver to customers what no one else can deliver.

"To realize these strategies, we’re developing a global technology platform, and we are investing in local assortment and fulfillment capabilities in each of our markets. We are becoming known for our ability to build and deploy technology for the benefit of our customers," Ashe said.

He noted that in the past year the company developed and launched a product search engine that is regarded as best-in-class and developed pricing optimization tools which allow for the deliver of reliably low prices to customers in the dynamic e-commerce pricing environment. He also said Walmart has made major advancements in mobile commerce and is operating one of the largest and most effective big data initiatives in e-commerce.

"The investments we’ve made so far in our e-commerce business are delivering. Revenue growth is accelerating and ahead of our plans," Ashe said. "During the fourth quarter, we took share in all of our key markets. In the United States, we led on key days and had our largest sales day on Cyber Monday. We served more customers more effectively than we ever have before."

In 2013, Ashe said Walmart will continue to penetrate key markets and drive the development of its global technology platform. The company will also invest in the development of what Ashe called, "the next generation fulfillment network that incorporates stores, distribution centers and online dedicated fulfillment centers," with the goal of being the fastest and most efficient at getting customers the products they want when and where they want them.

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Cost of compliance continutes to mount

BY CSA STAFF

Expenses related to Walmart’s ongoing Foreign Corrupt Practices Act and related compliance matters will reach $200 million by the end of the first quarter, according to disclosures made Thursday in conjunction with the release of fourth quarter financial results.

In addition to the $99 million Walmart had spent on FCPA and compliance matters at the end of the third quarter, it spent another $58 million during the fourth quarter and said the first quarter could see expenses ranging from $40 million to $45 million.

Despite providing details on expense relating to FCPA and compliance issues that initially stemmed from bribery charges in Mexico, Walmart provided no insight as to when the matter would be resolved and offered few details on specific actions taken. However, executives did reaffirm their commitment to doing the right thing.

"My requirement is full compliance with all laws and regulations in the markets where we operate," said Wal-Mart Stores Inc., president and CEO Mike Duke. "’Doing the right thing,’" has been a fundamental principle since Sam Walton started our company, and it will continue to guide us for generations to come."

Duke said Walmart had made significant improvements to its compliance programs around the world in fiscal 2013 and took a number of specific actions with respect to the processes, procedures and people.

"We’ve spent thousands of hours and millions of dollars with compliance experts on anti-corruption support and training. We will have a world-class compliance organization."

Walmart International president and CEO Doug McMillon listed "world-wide compliance remediation," as one of his top priorities for the coming year.

"As Mike said, we’ve strengthened our compliance organization and programs around the world through processes, procedures and people that put us on track for a world class

compliance program," McMillon said. "On FCPA, we continue to work closely with anticorruption compliance experts to review and to assess our programs and help us implement concrete steps for each particular market. In the various markets, these experts have spent tens of thousands of hours on anti-corruption support and training. We remain committed to follow all laws and regulations in the markets where we operate."

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Nordstrom Q4 profit up 20%; upbeat for 2013

BY Marianne Wilson

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Seattle — Nordstrom Inc. on Thursday reported that its fourth-quarter profit rose 20% to $284 million, compared to $236 million a year earlier. The company also forecast further increases in same-store sales for its new fiscal year.

Revenue for the three months ended Feb. 2 rose 13.5% to $3.6 billion, from $3.17 billion. Same-store sales, which consist of the full-line and direct businesses, rose 6.3%.

Direct sales surpassed $1 billion dollars this year for the first time in Nordstrom’s history, driven by a same-store sales increase of 31% in the fourth quarter on top of last year’s increase of 35% for the same period. Direct sales growth continues to outpace the overall company, reflecting ongoing initiatives to improve the customer experience online, Nordstrom said.

The company said Nordstrom Rack, which opened 15 stores in fiscal 2012, continued to demonstrate strong sales growth in the fourth quarter with a 23% increase in net sales. Same-store sales increased 7.1% for the Rack, its largest fourth quarter increase in the last six years.

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