Recruitment Strategies in Japan Strayer University Sherri Coleman Professor Margaret Taylor BUS 325: Global Human Resource Management November 03, 2017 Japan recruitment Most organizations use a recruitment style that dates back from the 1970s which is very unique as compared to one in the west. Most companies focus on identifying potential employees. They mainly focus on students who are about to graduate. The students stay under recruitment process for about one year. The students selected have potential and have passion working with the company. In Japan, most organizations use a recruitment style that dates back from the 1970s which is very unique as compared to one in the west. Most companies focus on identifying potential employees as students when they are about to graduate from universities and high school and put them under recruitment process that lasts for about one year. Findings about Japan recruitment Potential candidates are chosen on the bases of their personalities, communication skills and sources of motivation. The subject of study in university and high school is not considered a lot. Shave adopted institutions that allow for companies to identify students before graduating. There is a lot of jobs hopping, most Japanese work within the organization they were employed after graduation until retirement. They consider young graduates from universities and high schools. Potential candidates are chosen on the bases of their personalities, communication skills and sources of motivation rather than what they have studied (Horta, Sato & Yonezawa, 2011). Consequently, schools have adopted institutions that allow for companies to identify students before graduating. Therefore, unlike the US where there is a lot of jobs hopping, most Japanese work within the organization they were employed after graduation until retirement. Those who are available for recruitment are consequently the young graduates from universities and high schools. Considering these facts, a Human Resource Manger should be extremely vigilant in recruitment of new employees. Factor to consider while recruiting in Japan Starting the recruitment process early to equip the potential employees. Ensure the potential employee have adequate knowledge before hiring. Writing a Compelling Job description. In advertising for a recruitment opportunity, the recruiter should focus less on the qualifications and skills. One strategy for recruitment in Japan is to start the recruitment process early. As indicated, the recruitment process in Japan will take about one year. This measure is taken to ensure that one has adequate knowledge of the candidate before they are hired. Further, the largest recruitment pool in the country is made up of the young, inexperienced persons who need to be taught skills to carry out their specific jobs. There are only a few experienced individuals who are available for recruitment in the country. The second strategy for recruiti ...

1. Recruitment Strategies in Japan
Strayer University
Sherri Coleman
Professor Margaret Taylor
BUS 325: Global Human Resource Management
November 03, 2017
Japan recruitment
Most organizations use a recruitment style that dates back from
the 1970s which is very unique as compared to one in the west.
Most companies focus on identifying potential employees.
They mainly focus on students who are about to graduate.
The students stay under recruitment process for about one year.
The students selected have potential and have passion working
with the company.
In Japan, most organizations use a recruitment style that dates
back from the 1970s which is very unique as compared to one in
the west. Most companies focus on identifying potential
employees as students when they are about to graduate from
universities and high school and put them under recruitment
process that lasts for about one year.
Findings about Japan recruitment
Potential candidates are chosen on the bases of their
personalities, communication skills and sources of motivation.
The subject of study in university and high school is not
considered a lot.
Shave adopted institutions that allow for companies to identify

2. students before graduating.
There is a lot of jobs hopping, most Japanese work within the
organization they were employed after graduation until
retirement.
They consider young graduates from universities and high
schools.
Potential candidates are chosen on the bases of their
personalities, communication skills and sources of motivation
rather than what they have studied (Horta, Sato & Yonezawa,
2011). Consequently, schools have adopted institutions that
allow for companies to identify students before graduating.
Therefore, unlike the US where there is a lot of jobs hopping,
most Japanese work within the organization they were employed
after graduation until retirement. Those who are available for
recruitment are consequently the young graduates from
universities and high schools. Considering these facts, a Human
Resource Manger should be extremely vigilant in recruitment of
new employees.
Factor to consider while recruiting in Japan
Starting the recruitment process early to equip the potential
employees.
Ensure the potential employee have adequate knowledge before
hiring.
Writing a Compelling Job description.
In advertising for a recruitment opportunity, the recruiter should
focus less on the qualifications and skills.
One strategy for recruitment in Japan is to start the recruitment

3. process early. As indicated, the recruitment process in Japan
will take about one year. This measure is taken to ensure that
one has adequate knowledge of the candidate before they are
hired. Further, the largest recruitment pool in the country is
made up of the young, inexperienced persons who need to be
taught skills to carry out their specific jobs. There are only a
few experienced individuals who are available for recruitment
in the country. The second strategy for recruiting in Japan is
writing a Compelling Job description. In advertising for a
recruitment opportunity, the recruiter should focus less on the
qualifications and skills required for the job and more on the
opportunities and challenges (Stahl et al., 2012).
Japan recruitment vs US recruitment.
Japan offers employment to their people unlike US where
people have to look for employment.
Japan employees young energetic youth when are fresh
graduates unlike US where the largest population of
unemployed are the young.
Japanese look for jobs for security purposes ensuring they have
a source of livelihood for their families while US people look
for employment as a method of improving their life.
This is because unlike in the US where people look for
employment as a method of improving their life and Japanese
look for jobs for security purposes ensuring they have a source
of livelihood for their families. They will, therefore, be less
interested in skills required than the remuneration. Further, with
the target being the young who have minimum skills, it is not
fair to include experience. Thirdly, it is necessary to get
connected and seek partners in recruitment. To get a sufficient
pool of candidates, one need to partner with universities and

4. schools where most candidates are located. The Japanese
External Trade Organization (JETRO) helps foreign companies
identify recruitment pools which match the company’s values
and culture (Stahl et al., 2012). Taking a partner ensures there
is sharing of accountability and responsibility hence increase
chances of getting the best recruits.
Importance of considering the recruitment factors.
Ensuring that the companies employ qualified employees.
The firm will be able to identify the right skills for the firm.
The proposed considerations take into account the traditional
recruitment process in the country.
Helps to employee people with good morale.
They ensure the human resource manager does not get entangled
in cultural challenges while recruiting.
With recruiting in Japan not being as straightforward as in the
US, it is necessary to consider strategies that will help an
organization identify potential workers therein. The proposed
considerations take into account the traditional recruitment
process in the country. These strategies ensure that a human
resource manager does not get entangled in cultural challenges
while recruiting.
References
Horta, H., Sato, M., & Yonezawa, A. (2011). Academic
inbreeding: Exploring its characteristics and rationale in
Japanese universities using a qualitative perspective. Asia
Pacific Education Review, 12(1), 35-44.
Stahl, G., Björkman, I., Farndale, E., Morris, S. S., Paauwe, J.,

5. Stiles, P., & Wright, P. (2012). Six principles of effective
global talent management. Sloan Management Review, 53(2),
25-42.
Equity Research United States
Wal-Mart
Stores, Inc.
WMT
International: The World's
6th Largest Retailer
• Wal-Mart International could be one of the largest yet most
overlooked
$78 billion global businesses. While value creation is largely
driven by
Wal-Mart’s domestic business, international’s importance is
growing as
market penetration begins to peak in the U.S.
• Providing context to Wal-Mart’s international business. As
International
becomes more important we believe it will garner increased
investor attention
and results will have a more meaningful impact on WMT’s
stock price. We
believe the two key questions facing Wal-Mart are how to
define and achieve
“success” internationally and can Wal-Mart consistently manage

6. its business
outside the U.S.?
• ROI improvement is needed. Wal-Mart International has some
great
success stories (Canada, Brazil, Mexico) but also failure
(Germany). While
international will need to shoulder more of Wal-Mart’s growth,
it will also need
to significantly improve its ROI. U.S. supercenters and Canada
have the
highest ROI’s followed by U.S. discount stores, Mexico, SAM’s
and then the
various international country operations. Thus, in order for the
market to
reward Wal-Mart for its international growth, the company will
need to show it
is capable of generating higher and more consistent returns.
• A closer look at ASDA. ASDA remains the most important
piece to the Wal-
Mart International puzzle, accounting for ~40% of total
international sales. To
a certain extent, so goes ASDA, so-goes Wal-Mart
International. Results at
ASDA remain under significant pressure given an exodus of
senior
management, recent poor execution, lack of diversified formats,
and the
competitive positioning of Tesco. We believe investors and
Wal-Mart itself
will need to remain patient with ASDA.
• Investment Thesis. We view WMT as a long-term value
investment given
its opportunities for growth and improving ROI in the U.S. and

7. longer-term
opportunities abroad. Our Outperform rating and $55 target
price assumes
WMT can achieve incremental improvement in its U.S.
merchandising
strategy and further position the organization for growth and
margin
expansion abroad.
• Within this report we analyze each of Wal-Mart’s key
international
markets, leveraging Credit Suisse’s global equity research
franchise.
25 March 2006
IMPORTANT DISCLOSURES AND ANALYST
CERTIFICATIONS ARE IN THE DISCLOSURE APPENDIX.
U.S. Disclosure: Credit Suisse does
and seeks to do business with companies covered in its research
reports. As a result, investors should be aware that the Firm
may have a conflict of
interest that could affect the objectivity of this report. Investors
should consider this report as only a single factor in making
their investment decision.
Customers of Credit Suisse in the United States can receive
independent, third party research on the company or companies
covered in this report, at
no cost to them, where such research is available. Customers
can access this independent research at www.credit-
suisse.com/ir or call 1 877 291 2683
or email [email protected] to request a copy of this research.
research team

8. Michael Exstein
Research Analyst
212 325 4147
[email protected]
suisse.com
Marisa Ho
Research Analyst
852 2101 7466
[email protected]
Andrew Kasoulis
Research Analyst
44 20 7888 0324
[email protected]
suisse.com
Yasuyuki Sasaki
Research Analyst
81 3 4550 9912
[email protected]
suisse.com
Rating OUTPERFORM*
Price (23 Mar 06) 48.54 (US$)
Target price (12 months) 55.00 (US$)
52 week high - low 50.99 - 42.49
Market cap. (US$m) 200,528.90
Enterprise value (US$m) 240,814.90
Region / Country Americas / United States
Sector General Merchandise Stores
Analyst's Coverage Universe Mass Merchants
Weighting (vs. broad market) MARKET WEIGHT

9. Date 25 March 2006
* Stock ratings are relative to the coverage universe in
each analyst's or each team's respective sector.
Price / Indexed S&P 500
42
47
52
57
Mar-05 Jun-05 Sep-05 Dec-05
Daily Mar 24, 2005 - Mar 22, 2006, 3/24/05 = US$50.66
Price Indexed S&P 500
On 03/22/06 the S&P 500 index closed at 1,301.67
Year 1/06A 1/07E 1/08E
EPS (CS adj., US$) 2.65 2.91
Prev. EPS (US$)
P/E (x) 18.2 16.6
P/E rel. (%) 110.1 100.2 —
Q1 EPS 0.55 0.59
Q2 0.67 0.74
Q3 0.57 0.62
Q4 0.86 0.96

10. Number of shares (m) IC (Current, US$m)
4,169.00 —
BV/Share (Current, US$m) EV/IC (x)
22.41
Net Debt (Current, US$m) Dividend (Current, US$m)
29,319.0 0.15
Net debt/Total cap. (Current) Dividend yield
29.2% 0.3%
Year 1/06A 1/07E 1/08E
Revenues (US$m) 315,580.0 353,600.0 —
EBITDA (US$m) 23,142.0 25,638.8 —
OCFPS (US$) 4.07 4.08 —
P/OCF (x) 11.3 11.8 —
EV/EBITDA (x) 10.4 9.4 —
Net debt (1/06A, US$m) 40286.0 40286.0 40286.0
ROIC — — —
Source: Company data, Credit Suisse estimates
Wal-Mart Stores, Inc. 25 March 2006
2

11. Key Issues
Wal-Mart’s international strategy is a work in progress as the
company attempts to
leverage its U.S. domestic success and powerful brand to
establish a large market
share position overseas. Since Wal-Mart’s initial international
investment fourteen years
ago we have seen several phases of expansion take form. Wal-
Mart International
began with investments in North America (Canada and Mexico)
in the early 1990’s
followed by a period of “flag planting” whereby the company
established a presence in
multiple areas throughout the world without making a
significant commitment to any one
country. Flag planting abruptly ended with the $10.8 billion
acquisition of U.K. retailer
ASDA in 1999, Wal-Mart’s largest acquisition ever. The ASDA
acquisition signaled that
Wal-Mart intended to take more meaningful stakes in the
countries it operated in. Wal-
Mart complemented its entry into the U.K. with an initial
minority investment in Seiyu, a
Japanese retailer, in 2002. With these moves into the U.K. and
Japan, Wal-Mart now
had an established presence in two of the largest consumer
economies outside the U.S.
Wal-Mart’s current strategy appears to be an amalgamation of
prior phases with Wal-
Mart entering a new market and expanding its physical and
financial presence in
existing markets. In September 2005, Wal-Mart made its first
investment in Central
America, acquiring a 1/3rd stake in the Central American Retail
Holding Company

12. (CARCHO) which it subsequently took majority control of in
March 2006. Wal-Mart also
added to its presence in Brazil through the acquisition of 140
Sonae stores and
increased its ownership in Seiyu to over 50%.
Exhibit 1: Wal-Mart International Timeline
Dominate North America Flag Planting Big Markets/Big Share
Hybrid
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
2002 2003 2004 2005 2006
Mexico Puerto Canada Brazil China Germany U.K. Japan
Central
Rico Argentina South Korea America
Source: Company data, Credit Suisse estimates
In the most recent phase of Wal-Mart’s expansion the company
adopted a regional
management structure allowing for more local decision-making
power. While core
strategy is still driven by Bentonville, local management now
has more autonomy to run
the business allowing for a more tailored offering to local needs
and providing flexibility
around the peculiarities of individual markets. This is an
important development for
Wal-Mart but one that was needed as evidenced by weak initial
operating performance
in several new markets.
While it is difficult to tag the current phase of Wal-Mart’s
international development, it is

13. clear that investment in the business is increasing. International
investment spending
has ramped up significantly in the past three years as Wal-Mart
has begun to recommit
to several key international markets. Wal-Mart’s decision to
accelerate international
coincides with a rationalization in the global retailing arena,
proving an advantage to
financially and operationally strong competitors. However, this
phenomenon has also
put pressure on Wal-Mart in countries where its market share is
modest and competitive
positioning poses challenges, including South Korea, Argentina
and Germany.
Wal-Mart Stores, Inc. 25 March 2006
3
Exhibit 2: Wal-Mart’s Investment in International ($’s in
millions)
-$250
$250
$750
$1,250
$1,750
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

14. 2002 2003 2004 2005
(not to scale)
ASDA acquisition
$10.4 billion
Investment in international
ramping up again
Investments in Mexico,
Germany and Brazil
Source: Company data, Credit Suisse estimates
While the expansion of the world’s largest retailer into Latin
America and Asia is
important, investors need to keep in mind that ASDA (~45% of
2005 International
sales), Mexico (~25% of sales), and Canada (~15% of sales)
still make up a large
majority of the division’s overall sales and profits. We expect
this to remain the case for
at least the next 5-10 years excluding any potential large-scale
acquisitions.
Still Learning
Wal-Mart’s international track record is checkered with some
success stories but plenty
of disappointments as well. Profit margins have been stagnant
in recent years due in
large part to ASDA’s weak performance while market share
trends have varied
depending on the country. Having said that, Wal-Mart
International is still in its very
early stages of development as the company only moved outside

15. North America eleven
years ago. While this may seem like quite a long time from an
investor’s perspective, it
is important to note that Wal-Mart opened its first store in the
U.S. back in 1962. As a
result, Wal-Mart remains in the learning process.
Management’s ability to learn from its
mistakes and create a flexible organization that can cater to
local tastes and practices
will ultimately determine the success of the business.
Investment in International
is increasing again
The U.K., Mexico, and
Canada are the “big 3” of
Wal-Mart International
International expansion
isn’t easy and Wal-Mart
has a checkered history
thus far
Wal-Mart Stores, Inc. 25 March 2006
4
Exhibit 3: Wal-Mart International Sales and Margins Exhibit 4:
Wal-Mart International Unit and Profit Growth
$0

16. $10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
2005 2006E
(2.0%)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Sales EBIT Margin

17. 0%
10%
20%
30%
40%
50%
60%
70%
80%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
2005 2006E
E
B
IT
G
ro
w
th
0

18. 500
1000
1500
2000
2500
U
n
it
G
ro
w
th
Units EBIT Growth
Source: Company data, Credit Suisse estimates Source:
Company data, Credit Suisse estimates
The one common theme across Wal-Mart’s different countries
of operation is that profits
and returns need to improve significantly if the market is to
ever begin to reward the
company for global expansion. Canada and Mexico are the only
division that come
close to the return on capital of the core U.S. business. And the
ROI of the non-North
American businesses significantly lag the U.S. In Exhibit 5, we
have reproduced a chart

19. provided by Wal-Mart at its 2005 Shareholder/Analyst meeting.
While we do not know
the actual numerical values, the chart provides context to the
challenges the
international business is faced with. While there are new pieces
to be added to the
matrix below (Japan and Central America), the theme remains
the same. There is
opportunity for results to improve but it may take longer for an
adequate return to be
achieved in smaller markets where consolidation is still under
way.
Exhibit 5: Sales Growth and ROI of Wal-Mart Divisions (2005)
Sales Growth
R
O
I
Supercenters
USA
Discount Stores
USA
Canada
SAM's
Mexico
ASDAPuerto Rico

20. Brazil
Argentina
China
Germany
Korea
Source: Company data- Wal-Mart 2005 Shareholder Meeting
presentation, Credit Suisse estimates
ROI in international markets
much lower than core U.S.
business for WMT.
Wal-Mart Stores, Inc. 25 March 2006
5
Global Retail More Competitive Than Ever
We believe one of the major reasons behind the step-up in Wal-
Mart’s international
investment is the increasingly competitive environment for
foreign retail acquisitions
throughout the world and particularly in Latin America, Asia
and Eastern Europe. While
global competition both for sales and acquisition candidates has
been an issue for
several years, we believe the dynamics are growing more
challenging as the global

21. retail landscape becomes more heavily consolidated. In this
new competitive dynamic,
global retailers such as Wal-Mart, Tesco, and Carrefour now
compete against one
another for international market share, having already won
market share from smaller
and weaker local players (i.e. the “low-hanging fruit”). Despite
significant investments
and acquisitions in foreign markets by the large global players,
an indigenous retailer
holds the #1 market share position in every global market other
than Eastern Europe
and Argentina.
Global retailers are also finding some middle ground and are
now negotiating with one
another as each fine-tunes their presence in certain markets.
South Korea is a good
example, as Carrefour is likely to sell some or all of its stores in
the market with Wal-
Mart, Tesco, and Lotte Mart (a local retailer) all likely bidding
for the stores. This follows
Carrefour’s decision to exit the Japanese market in 2005. Some
of the major global
retailers are entering into store swap agreements with each
other. In 2005, Tesco sold
six of its stores in Taiwan to Carrefour in exchange for eleven
of Carrefour’s Czech
Republic stores and four of its Slovakia stores.
These examples of “cooperation” amongst global retailers
highlight the fact that
company’s are keenly focused on positioning themselves in
markets where they believe
they have a comparative advantage. This dynamic will force
Wal-Mart to be more

22. “locally” focused than in the past in order to ensure proper
execution within the market.
Defining and Achieving International Success
One of the key issues concerning Wal-Mart’s international
strategy is how the company
defines success. From an investor standpoint, we don’t believe
there is a hard target
that needs to be hit in order for the market to deem the business
a success. However,
we believe the market is more likely to focus on the company’s
failures in the near-term.
To that extent, Wal-Mart’s stock price is likely more sensitive
to disappointment abroad,
such as the recent troubles at ASDA, relative to potential
successes.
As for how Wal-Mart management defines success, we have
heard very little. In some
markets, the goal appears to be market share while in others
“taking it slow” is the
mantra. As international becomes more important, management
will need to better
focus investors on its long-term strategy and how it intends to
position the business (i.e.
the stores) in its key markets. For example, will ASDA adopt
different store formats in
order to increase its flexibility given more challenging real
estate zoning requirements?
And will the company continue to push the Wal-Mart
supercenter concept in foreign
markets or move to locally branded nameplates?
Can Bentonville Consistently Manage Overseas?
The relative success or failure of Wal-Mart’s international
business will largely be driven

23. by central management’s ability to manage a large diversified
business outside of its
core domestic market. While decision-making continues to shift
out of Bentonville and
Large, global retailers are
the competition in
emerging markets, not just
local players
Delicate balance between
market share and ROI
Wal-Mart Stores, Inc. 25 March 2006
6
to the individual regions, strategic direction and the
organization’s overall mantra still
come from the home office. This is one of the reasons why
experience will be critical as
Wal-Mart learns from its miscues. History has shown that a
delicate balance needs to
be established in managing the need for local management to
tailor to the target
audience while at the same time putting in place systems and an
organizational
structure that leverages the broader global enterprise.
Brazil is a good example where the company had a very
challenging market entry in
1995 because it forced U.S. practices on the business rather

24. than “localizing” the
operations. The limited resources and deteriorating financial
position of its JV partner
also played a role. However, as we discuss later, Wal-Mart has
successfully turned
around its Brazil operation after ceding more control of the
business to the country-level
management. And as a result of recent successes in Brazil,
Wal-Mart expanded its
position in the market through its 2005 acquisition of 144 stores
from Sonae.
Wal-Mart is already showing signs of management flexibility as
Brazil and the rest of the
Americas report to Craig Herkert, CEO of The Americas
division of Wal-Mart
International, who is based out of Miami, FL. Likewise Wal-
Mart’s efforts in China have
been locally directed from early on, allowing it to achieve
competitive status against
larger in-country rivals.
Wal-Mart’s key advantages are its sourcing, procurement
infrastructure, and substantial
cash flow, which provide the company with perspective that few
others have. But the
key to success has to be a locally facing retailer that leverages
these advantages rather
than an American retail company trying to do things “its own
way”. Wal-Mart has
attempted to do business “its own way” in international markets
before with little
success.
Where Next?
Speculation on where Wal-Mart will appear next in the global

25. marketplace seems to be
a sport for some observers. We believe that the prospects for
additional expansion will
largely be driven by the degree of success the company has with
what its current
portfolio. The “big three” markets of the UK, Mexico and
Canada, which account for
over 70% of international sales and close to 80% of the profit,
will continue to shape the
international division’s immediate prospects. Over the
intermediate-term, there is need
for a significant improvement in the prospects at Seiyu and
execution of the turnaround
plan at ASDA. We also expect Wal-Mart to solidify its market
share in Japan through
acquisitions in order to position itself in this key consumer
market.
Wal-Mart has invested heavily the last three years in its global
sourcing and
procurement infrastructure. The company’s IT platform remains
the envy of the industry
due in large part to the company’s ability to leverage its
platform throughout the
organization, doing away with the need for duplicate systems.
The combination of these
elements needs to be the core of Wal-Mart’s competitive
advantage. While Wal-Mart
usually sets high standards and is used to beating the
competition handily in the U.S.,
the reality of the international business is that the challenges
are more dynamic and
unfamiliar. As a case in point, recall Wal-Mart’s promise to
open forty new locations in
Germany within two years of entering that market. Since then it
has been forced to

26. retrench.
WMT needs to leverage its
global strengths but
manage locally
Emerging markets are
important but contribution
not enough to move the
needle for several years
Wal-Mart Stores, Inc. 25 March 2006
7
With a formidable investment already in place around the globe,
Wal-Mart needs to
show signs of greater productivity, which need to translate into
higher returns on capital.
There will always be opportunities for entry into new countries
but the days of simply
being first into a market as a precursor of success appears over.
The “first mover”
advantage may not be as advantageous as it once was. It may
now make more sense
to let other retailers do the heavy political and social lifting in
new markets, allowing
Wal-Mart to move in after lessons have been learned.

27. Wal-Mart Stores, Inc. 25 March 2006
8
ASDA
There is perhaps no better example of the dichotomy in Wal-
Mart’s international efforts
than the UK. It was the acquisition of ASDA that broke the
company’s previous mold of
limited initial investments in new international territories. In
1999, Wal-Mart purchased
ASDA for $10.8 billion, a 25% premium to the market value of
the company before it
entered into discussions with U.K. retailer Kingfisher regarding
a potential merger.
While ASDA performed well after being acquired by Wal-Mart,
challenges began to
arise in 2002 as company-specific issues and a more challenging
macro and industry
environment began to emerge. Profit trends for ASDA
deteriorated in 2004 and 2005,
highlighting Wal-Mart’s continued challenges in expanding
outside the U.S. and
generating consistent execution within the business.
Exhibit 6: Sales and Profit Growth Prior to Wal-Mart’s
Acquisition
Exhibit 7: Sales and Profit Growth Following Wal-Mart’s

28. Acquisition
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1992 1993 1994 1995 1996 1997 1998 1999
Sales Growth Operating Profit Growth
-15.0%
-10.0%
-5.0%
0.0%
5.0%

29. 10.0%
15.0%
20.0%
25.0%
30.0%
2001 2002 2003 2004
Sales Growth Operating Profit Growth
Source: Company data Source: Company data
We expect the performance of Wal-Mart International will be
largely driven in the near-
term by results at ASDA given its large sales and profit
contribution. In 2004, the most
recent year that we have public data for, ASDA operating
income declined 6.8% as
margins declined 30bp to 2.3% despite a 6.7% increase in sales.
In 2005, profits
deteriorated again as same store sales declined and the overall
profit for the business
did not meet management’s original plan. (ASDA traditionally
files its financial
statement to U.K. regulators in October)
ASDA is representative of
Wal-Mart’s international
challenges

30. Wal-Mart Stores, Inc. 25 March 2006
9
Exhibit 8: ASDA Operating Margin Trends
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
2004
Wal-Mart acquires ASDA and begins
implementing new systems and
operations which depressed the margins
NOTE: Prior to 2000, ASDA margin is calculated for 52 week
period ending April 30th. For 2000,
margin is for 52 weeks ended January 6, 2001. 2001-2004 data
is for 52 weeks ended December 31.

31. Source: Company data, Credit Suisse estimates
Given the consistent erosion in profitability, considerable
management attention has
been placed on ASDA. In 2005, the company reduced
headcount by approximately
1,000 employees, including 200 in-store management positions
in order to streamline
the organization and reduce the cost structure. Another 400
employees were
redeployed into different positions at the company including
back onto the store floor to
help improve the customer shopping experience.
In addition, ASDA experienced a change in leadership in 2005
when CEO Tony
Denunzio left to join a private equity group, which came as a
surprise to many. Andy
Bond, ASDA’s COO at the time was promoted to replace Mr.
Denunzio. David
Cheesewright returned to ASDA as COO to replace Mr. Bond
after serving in a similar
role for Wal-Mart’s Canadian business. Andy Clarke also
returned to the company to
serve as Retail Director. Mr. Clarke has been with a competitor
for the prior 3 years.
The Issues
We have incorporated comments from our Credit Suisse
European Food Retail team led
by Andrew Kasoulis.
“Brain Drain”
Although current management plays down its significance,
ASDA has seen a significant
exodus of senior management since it was acquired by Wal-

32. Mart. Alan Leighton and
Archie Norman, who are attributed with ASDA's recovery in the
1990's, departed soon
after Wal-Mart’s takeover, as did CFO Phil Cox.
Maybe more important than these departures was the loss of
some of the next
generation of management talent including Justin King (went to
Sainsbury), Andy
ASDA margins have
declined since Wal-Mart
took over
Management attrition has
been a major issue
Wal-Mart Stores, Inc. 25 March 2006
10
Hornby (went to HBOS) and Richard Baker (went to Boots).
And more recently, Paul
Mason was appointed CEO of Somerfield (the 5th largest food
retailer in the UK).
Interestingly, all of these executives, excluding Paul Mason,
have become CEO’s at
FTSE 100 companies. Other notable departures include Mike
Coupe and Gwyn Burr
(both now on the Sainsbury Operations Board) and Phil Dutton,
who went to Matalan.
These departures were significant in that they represented the

33. departure of the next
generation of management and a flow of talent to the
competition.
Execution Drift
Lack of execution is clearly one of the drivers behind the
deterioration in fundamentals.
Among these issues is ASDA’s greater focus on general
merchandise versus food.
While it hasn’t necessarily replaced food floor space with
general merchandise, it was
evident that the company’s marketing and in-store presentations
were focused on the
general merchandise assortment. ASDA also failed to innovate
and differentiate its food
offering. ASDA lost its edge in price, service, and assortment,
which it had spent several
years developing. In Exhibit 9, we show ASDA’s floor space
allocation relative to the
competition, which shows the company’s larger penetration in
the non-food category
and clothing and footwear in particular.
Exhibit 9: Floor Space Allocation for U.K. Grocery Retailers
Tesco Sainsbury Morrison ASDA
Food 23.9% 31.2% 30.3% 19.6%
Fresh Food 30.8% 33.3% 34.9% 27.2%
Alcohol 5.3% 6.6% 7.0% 4.5%
Non-Food 40.0% 28.9% 27.8% 48.7%
Clothing/Footwear* 10.6% 4.5% 1.9% 18.6%
* Clothing/Footwear included in Non-Food category
Source: Company data, Verdict

34. We also believe that ASDA may have suffered from
“complacency creep” as Wal-Mart
senior management became more focused on the negative
publicity and slowing results
relative to Target in its U.S. business. In addition, Wal-Mart
continued to expand into
new international markets, possibly diverting management
attention away from its core
U.K. international business.
Tesco
Its hard to argue that ASDA’s problems have been solely
internally generated as the
decline in ASDA profits coincided with a period of
unprecedented growth for Tesco, the
#1 market share player in U.K. food retail. Much of Tesco’s
new store growth has
directly over-lapped with ASDA's traditional big-box footprint.
Since the late 1990’s,
Tesco has opened or expanded approximately 120 “Extra”
branded hypermarkets in the
U.K. while ASDA added very few new stores. Extra is a
destination hypermarket format
and competes directly with the ASDA supercenter. Given the
divergence in profit trends
at ASDA and Tesco, it appears that Tesco has the upper hand.
Given Wal-Mart’s
intense focus on success, the question becomes what will Wal-
Mart do in order to
become more competitive in this market.
Increased emphasis on
general merchandise
relative to food

35. Tesco expansion and
strong performance remain
an issue for ASDA
Wal-Mart Stores, Inc. 25 March 2006
11
Exhibit 10: UK Food Retail Market Share
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2000 2001 2002 2003 2004 2005E
Tesco Sainsbury ASDA Morrison Group Safeway
Source: Verdict
One of the major problems ASDA faces is that Tesco's growth
looks unrelenting, just as
Wal-Mart’s growth looks unrelenting in the U.S. Our UK retail

36. team expects at least 20
new or remodeled Extra stores to open per year over the next
five years. As Tesco's
non-food sourcing and ranging capability improves, we expect
those new Extra's to get
bigger - Tesco's newest UK Extra's are 100-120,000 sq ft,
compared to a current
average size of less than 70,000 sq ft.
Exhibit 11: Tesco Extras vs ASDA Supercenters
2000 2001 2002 2003 2004 2005
Tesco Extras - Number of stores 23 41 62 83 100 119e
Tesco Extras - Selling area '000 sq ft 1,600 2,700 4,000 5,500
6,584 8166e
Tesco Extras - Average Sq Ft per Store 70 66 65 66
66 69
Asda Supercenters - number of stores 0 3 6 10 12 21
Asda Supercenters - Selling area '000sqf 0 271e 543e 905e
1086e 1,900
Asda Extras - Average Sq Ft per Store 90 90 90 90
90
Source: Tesco, Wal-Mart annual reports, Verdict, Credit-Suisse
estimates
Source: Company data, Verdict, Credit Suisse estimates
Thus, Tesco will likely continue to remodel and enlarge
approximately 20 Extra’s per
year, in addition to its aggressive new store-opening plan. In
the face of a difficult real
estate regulatory environment, Tesco has been flexible by
adopting a multiple format
approach to growth using both smaller convenience formats and
the larger hypermarket

37. format.
Tesco rapidly gaining
market share
Wal-Mart Stores, Inc. 25 March 2006
12
Exhibit 12: Tesco Extra Number of Stores Exhibit 13: Extras
Are Getting Bigger (Avg store size, 1,000
sq ft)
0
20
40
60
80
100
120
140
160
180

38. 200
1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04
2004/05 2005/06E 2006/07E 2007/08E 2008/09E 2009/10E
65.9
64.5
66.3
65.8
68.6
62
63
64
65
66
67
68
69
2001/02 2002/03 2003/04 2004/05 2005/06E
Source: Company data, Credit Suisse estimates Source:

39. Company data, Credit Suisse estimates
Extra has been an effective way of building scale in many of
ASDA's traditional non-
food markets such as home entertainment, consumer electronics,
clothing, footwear,
toys, books/news/magazines, and housewares. We expect more
of the same as the
Extra rollout continues, with Tesco gaining ever-greater market
shares.
Tesco also plans to aggressively pursue other channels of non-
food distribution
including the trial/roll-out of stand-alone non-food format(s)
such as its Homeplus
concept and greater use of home delivery. This could result in
increased competition for
ASDA and is likely to enable Tesco to enter categories in which
it has previously been
under-penetrated in, such as jewelry, furniture, and gardening.
Management is Forthright
The ASDA division has been extremely candid in discussing its
miscues in the U.K. and
what needs to be done to improve results. In December 2005,
ASDA hosted a meeting
for U.K. retail analysts to make clear its intention over the next
few years and provide
insight into what has happened in recent years. It was also an
opportunity for new CEO
Andy Bond to provide his evaluation of the business and his
plans for a turnaround.
ASDA admitted that it is “operationally failing”. Customers
have changed in recent
years, becoming less loyal and wanting “more for less”. This

40. means that ASDA’s legacy
price-driven approach is now too one-dimensional. There has
also been a convergence
in the market, with all food retailers now looking very similar
and ASDA not doing
enough to be differentiate its offering. Management indicated
that ASDA has become
process-driven rather than customer-driven and has lost some of
its old passion for
selling and its pace, flair, innovation and desire to be different
(the previous mantras of
the business).
Although the language was perhaps stark, it was refreshingly
honest and should not
come as much of a surprise to many ASDA-watchers. CEO
Andy Bond provided some
of his thoughts on what needs to be done to fix the business.
First, the basics need to
be fixed as in-stocks, service levels, “shopability” (convenience
levels) and the size of
the price gap are still not acceptable.
“Operationally failing”
Wal-Mart Stores, Inc. 25 March 2006
13
Management’s plan included five key initiatives: 1) lowering
prices more aggressively; 2)
re-establishing its fresh food offering; 3) establishing and
emphasizing points-of-

41. differentiation; 4) Re-invigorating George; 5) Delivering a
hassle-free shopping
experience with personality.
Best Value
The recent step-down in Sainsbury’s pricing and the one-off
pricing initiatives resulting
from the Safeway-Morrison combination resulted in a reduction
in the price gap between
ASDA and the competition. This is clearly a major issue given
that providing the lowest
price is the lifeblood of the Wal-Mart organization.
Management has made clear its
intention to re-establish the gap, although it hasn’t disclosed by
how much it would cut
prices other than to confirm it would be investing a higher
percentage of sales than
during 2005.
While a return to price leadership is needed, this obviously
creates concern about the
margins. However, we believe there are several ways of
lowering prices without
actually impacting the operating margin. First, ASDA’s buying
power is approximately
3% weaker than Tesco, which we believe suggests there is
significant opportunity for
improvement. Second, in-store productivity can improve.
Third, a mix shift toward more
non-food/fresh food can help improve margins. ASDA has
acknowledged that it needs
to improve product quality especially in fresh food if it is to
improve customer perception
of overall value. Innovation has been lacking until recently, but
is now improving in
areas such as premium chilled ready-to-eat meals. However,

42. fresh fruits, vegetables
and to a lesser extent meat, are still problem areas. Fourth,
global sourcing using the
Wal-Mart organization is still in its early stages creating gross
margin opportunity.
Recent sourcing and distribution problems are being resolved
due to network changes
in 2005. Fourth, we believe SG&A should come under more
control given recent
initiatives.
Points of Differentiation
ASDA considers its private label general merchandise and
George line of apparel as
key points-of-differentiation. One of the company’s largest
initiatives is to re-emphasize
these lines in order to win back customer loyalty. It also wants
to re-claim the reputation
for warm, open, friendly customer service that it used to be well
know for. These are all
encouraging initiatives but it remains to be seen how effectively
and how quickly
management can drive this process.
New store formats
ASDA is now adopting a more flexible approach toward multi-
formats and regeneration
schemes and is showing a much greater determination to roll-
out new space, especially
since less than 50% of the UK population live within a 10
minute drive time of one of its
stores.
Multi-formats are an area where ASDA has been a long way
behind its competitors. It is
establishing a new-store pipeline across several different

43. formats, although planning
constraints are restricting the numbers of new
hypermarkets/superstores. Also, the level
of existing-store-expansion remains inexplicably low to us.
There will be further trials of
ASDA Living and stand-alone George in 2006, plus the first
ASDA brand store (~8,000
The pricing gap between
ASDA and the competition
has narrowed
Re-emphasizing private
label and George
Wal-Mart Stores, Inc. 25 March 2006
14
square feet, neighborhood discount store, stocking 2,500 SKU’s,
95% of which will be
private label).
Acquisitions?
While there are other priorities in fixing the business, Wal-Mart
has a significant amount
of excess capital that it could deploy to increase its position in
the market. While
management has not given its preference, we believe the
company is likely to focus on
increasing its market share and improving the profitability of
the business (note these

44. can be divergent goals) before making large-scale acquisitions.
However, just as we
have seen in Brazil, we would expect ASDA to continue to use
selective acquisitions as
the operating environment improves or as opportunities may
present themselves such
as the 2005 entry into Northern Ireland.
Wal-Mart Stores, Inc. 25 March 2006
15
Brazil as a Case Study in Success
Brazil is a good example of the new Wal-Mart strategy as the
company’s first step into
the country through a 60% joint-venture agreement with
Brazilian discount/variety
department store retailer, Lojas Americanas, which took several
years to make
successful.
In 1995, the partnership opened its first stores and ended the
year with five total units-
two SAM’s Clubs and three supercenters. In 1995, Lojas was
positioned as the
country’s fourth-largest retailer. Wal-Mart’s partnership with
Lojas Americanas initially
appeared logical, with the Brazilian retailer’s extensive
experience in real estate, its own
brand of “everyday low prices,” and its position as one of
Brazil’s largest retailers.
However, with Wal-Mart’s quick start in Brazil (entering the
market with five new units

45. and three more in 1997) coinciding with Lojas’ own
restructuring and significant losses
in its credit operations, the retailer did not have the capital to
grow at Wal-Mart’s pace.
In December 1997, Wal-Mart purchased Lojas’ stake for $110
million. Wal-Mart then
embarked on a multi-year effort to turn around its business in
Brazil following a
disappointing market entry. The company purchased Bompreco,
a Brazilian
supermarket chain, from Ahold in 2004 and the turnaround
culminated this year when
Wal-Mart reached an agreement to acquire Sonae, a Brazil retail
chain operating 140
hypermarkets, supermarkets, and wholesale units throughout the
state of Sao Paulo
and the southern states of Rio Grande do Sul, Santa Catarina,
and Parana.
While Wal-Mart’s Sonae acquisition significantly improves its
position in the market,
Carrefour and CBD still maintain much larger market shares-
9.9% for Casino and 7.6%
for Carrefour versus 3% for Wal-Mart. Thus, Wal-Mart still has
a ways to go before
becoming a more meaningful player market share player.
However, this also suggests
that Wal-Mart has significant opportunities to grow in Brazil.
Today, Wal-Mart occupies the third largest market share
position in Brazil but accounts
for only 3% of the overall market due to the high proportion of
sales concentrated in the
informal marketplace. The bar for Brazil’s retail sector has
risen significantly. Almost all
major retailers have invested substantially in infrastructure,

46. particularly technology. As
an example, handheld scanners are used in almost all of major
retailer’s stores. Store
standards for selection and presentation have also improved
markedly and in many
cases could be stacked up against most world-class competitors.
In prior visits, this
was certainly not the case as standards were sub-par versus
operations in other parts of
the world. The quality and variety of fresh produce are world
class, with more and more
retailers staking out positions in organic and imported produce.
The quality and selection of general merchandise have also
improved. Examples
include the introduction of flat screen televisions (despite the
fact that they are subject to
a substantial luxury duty) and positioning toward current trends
such as surfing.
Furthermore, as is the case at Wal-Mart U.S., retailers are
introducing general
merchandise that has not been previously been available
including food service, metal
shelving, dog-houses, and U.S. based home and beauty aides
such as Crest whitening
toothpaste. Despite a change in the competitive landscape, the
Brazilian consumer
enjoys a better range of products and higher retail standards
than at anytime in recent
memory.
Weak results in Brazil after
initial investment
Turnaround driven by
focus on running the

47. business locally
Wal-Mart Stores, Inc. 25 March 2006
16
At Wal-Mart, changes in the operating model since its original
entry through a joint
venture with Lojas Americanas are remarkable. The strategy has
shifted from a one size
fits all model, based on the rollout of U.S. supercenters and
SAM’s Club formats, to the
development of market-specific formats such as Todo Dia or
Bompreço’s primary food
format. At the same time, stores appear to have some operating
flexibility and the
company does not apply a doctrinaire approach to promotion,
store format or logistics
functions.
While the recent focus of Wal-Mart’s international efforts have
been on its activities in
China and slowing results at ASDA, the company’s efforts in
South America hardly get a
mention in the investment community. However, Wal-Mart
Brazil is almost double the
size of Wal-Mart’s operations in China and is likely to grow
new organic units over the
next five years at rates at least comparable to China’s unit
growth rate. While the
Brazilian retail market lacks the long-term size potential of
China, real private

48. consumption ranks just below China and Brazil exceeds China
by 30% in terms of GDP
per capita.
Why is Brazil important in the context of Wal-Mart’s large
size? It shows that Wal-Mart
can adjust all facets of its operation to compensate for past
missteps and position itself
for future market potential. The company appears to have a
longer time horizon than
most investors or competitors realize. After all, Wal-Mart was
willing to invest in a 5-year
rebuilding effort in Brazil before undertaking a major expansion
effort. While the Street
remains focused on issues in the core U.S. operations and even
the slowdown in the
U.K., we think that Brazil holds valuable lessons for retail
observers as Wal-Mart
continues to balance potential future growth both domestically
and internationally.
Wal-Mart’s Entry into Brazil
Wal-Mart’s initial entry into Brazil utilized both the supercenter
and SAM’s Club format,
modeled very closely to their U.S. counterparts. This strategy
turned out to be less than
optimal for the more intense competitive environment of Brazil
and a marketplace
characterized by a very bifurcated consumer population.
Wal-Mart’s operation in place today has morphed to take into
account what the Brazilian
consumer demands and what Wal-Mart can deliver as a
competitive advantage. From a
customer facing perspective, the company has adopted
essentially four formats to better

49. fit its customer and real estate needs/availability- supercenters
(some that are multiple
levels), SAM’s, Todo Dia (a smaller sized primarily food store
aimed at lower income
urban consumers), and supermarkets acquired via the Bompreço
acquisition.
Supporting the retail stores are five distribution centers, of
which one was built by Wal-
Mart (the balance were acquired with Bompreço) and specified
to the company’s
engineering standards. Today, 60-70% of general merchandise
is shipped through this
faculty. In time the company is likely to build a facility that can
distribute perishables and
significantly increase self-distribution. In the meantime,
distribution practices have been
modified. Trucks do not have any Wal-Mart identification on
them, value per load is
limited, and much of the sortation processes are performed
manually, as human capital
is less expensive than economic capital. We note that Brazil
has the distinction of
having some of the highest real interest rates in the world at
approximately 15%.
Use of local formats
among the reasons for
success
Wal-Mart Stores, Inc. 25 March 2006

50. 17
Food remains the cornerstone of Wal-Mart’s efforts in Brazil, as
it is in most developing
markets. Wal-Mart prefers the defensive nature of the food
business in cyclical markets
like Brazil. The food business also serves as a driver of foot
traffic and provides an
opportunity to drive cross-divisional sales of general
merchandise. Keep in mind that
Wal-Mart will showcase general merchandise during both good
and bad economic
times, but it is when disposable income is increasing and more
discretionary spending
takes place at general merchandise does disproportionately well.
We believe that the
current split between food and general merchandise is
approximately 50/50.
Supporting Wal-Mart’s efforts in Brazil is a higher degree of
promotion than in the U.S.
While the “every day low price” (EDLP) strategy has always
been the backbone of the
company’s marketing message and is hammered home in print,
television and in-store
promotions, the strategy is an even bigger part of the story in
Brazil. We estimate that
almost 30% of sale items are offered either on price rollbacks or
special buys. The
inflationary history of the country and the large degree of
market share held by the
informal sector are the main reasons for the high degree of
promotional activity.
As part of its standard promotional posture, Wal-Mart
distributes a food flyer every week

51. and periodically distributes a separate flyer for general
merchandise. While other
retailers traditionally adhere to a high/low weekly promotional
structure, Wal-Mart simply
posts these ads at the front of each store and at registers and
matches any of the
weekly price reductions of its competitors, no questions asked.
While these practices have all helped Wal-Mart turnaround its
business in Brazil, it is the
merchandising effort that has advanced and been refined the
most. Any westerner that
sees a Brazilian store needs to remember first and foremost that
labor is inexpensive
and as such, many services and merchandising techniques that
would be too costly in a
developed market are not in a developing market. For example,
multiple service areas
in fish, meat and deli are in all Wal-Mart formats in Brazil and
standards for
presentation, including labels facing out on shelves, are the
norm.
Furthermore, the range of merchandise offered is impressive.
For example, in a large
supercenter serving a more affluent customer we saw over 50
varieties of fresh fish,
which is well communicated through signage. This is in contrast
to the smaller sized
Todo Dia, geared to the lower income consumer, which has only
20 fresh varieties of
fish.
Merchandising efforts are also far more tailored to the
environment than simply depth
and breadth of assortment. Whereas a price message is

52. important in the Todo Dia
format, a special of 3 real or less has been established in the
front of the store to both
reinforce the overall price message and spur incremental sales
through a treasure hunt
approach. In more upscale locations cyber cafes have been
added to encourage
consumers to spend more time shopping. Wal-Mart also offers
“how to” classrooms, in-
store babysitting, and baby changing rooms in almost all of its
general merchandise
stores.
We believe Wal-Mart could easily take some of the
improvements in merchandising in
Brazil and apply the lessons to the U.S. particularly with regard
to the presentation and
assortment practices. Clear progressions and assortment were
evident in the
marketplace and the actual display of the merchandise was far
more user friendly than
in the U.S. For example, all of the plates in the housewares
section were displayed
Merchandise, advertising
and marketing all tailored
to local tastes
Wal-Mart Stores, Inc. 25 March 2006
18

53. face-out to the customer versus in the U.S. where display and
presentation tends to
differ and is often times disorganized. Even the pet area has
display and graphics that
clearly communicate both the depth and breadth of assortment,
as a specialist would. In
the fall Brazil will begin to rollout the George line of apparel
and while exact plans were
not revealed it is clear that fixturing, placement, and promotion
will be coordinated for
maximum impact. If this effort proves successful, there could be
some significant
lessons learned for Wal-Mart Stores in the U.S. We believe the
company could take the
example in Brazil and the successful launch that occurred in
Canada and relaunch the
George effort in the U.S.
Brazil provides some significant lessons as to how Wal-Mart
responds to its miscues. In
Brazil, it has adopted a hybrid approach by leveraging the
infrastructure capability of the
organization as a whole (IT, logistics, common purchasing,
direct imports) but also
applying these with a local face. There is little doubt that one of
the advantages that
Wal-Mart has is its ability to invest to correct problems. The
nearly five-year period
between the change in management in Brazil and the decision to
invest in Bompreço is
a clear example of this.
Germany as a Case Study in International Challenges
Wal-Mart’s entry into the German marketplace, and its
subsequent, well documented,
execution issues have served as a lightning rod for investor

54. concern about the
soundness of the company’s overall international strategy. The
German retail
marketplace is one of the most difficult in the developed world.
A combination of
government regulation, cultural inertia, restrictive labor
practices and unusual
competitive dynamics all contribute in making it challenging for
new markets entrants.
Wal-Mart clearly underestimated these challenges when it
entered the market, which
resulted in consistently weak results and an eventual
retrenchment from the market.
Over time, Wal-Mart has put in place structural reforms to
improve the profitability of the
business. Administrative functions were moved under one roof
and logistics were
centralized with “work arounds” established for some of the
most troublesome aspects
of the business. Even with these significant improvements in
both subjective and
objective measures, Wal-Mart will need to gain both further
size and acceptance in the
marketplace before its German operations can reach acceptable
returns on investment.
Wal-Mart’s initial entry into Germany through the acquisition
of the 21-store Wertkauf
chain and the subsequent acquisition of 74 locations from Spar
were Wal-Mart’s vehicle
for entering the large German market. These moves are a
“Poster Child” of what can
happen when a company, even with the resources of Wal-Mart,
does not fully
understand what it is buying and where it will be operating.

55. Germany has been a
challenge for any number of western retailers and Wal-Mart has
been no exception.
One of the most
challenging areas for Wal-
Mart International
Wal-Mart Stores, Inc. 25 March 2006
19
International Overview
Wal-Mart’s International segment is comprised of operations
through wholly owned
subsidiaries in Argentina, Canada, Germany, Puerto Rico, South
Korea, and the United
Kingdom, operations through majority-owned subsidiaries in
Brazil, Costa Rica, El
Salvador, Guatemala, Honduras, Nicaragua, Mexico, Japan, and
operations through
joint ventures in China. International generated 20% of total
company sales in 2005 and
between 17% of total company operating income (on an
unallocated basis).
Exhibit 14: Overview of Wal-Mart International Countries (data
as of March 2006)
Country Format
Number

56. of Stores
Number of
Employees Country Format
Number
of Stores
Number of
Employees
Argentina Wal-Mart Supercenters 11 4,573 Honduras Dispensa
Familiar 25 1,460
Supertiendas Paiz 5
Brazil Wal-Mart Supercenters 23 50,000 Maxi Bodegas 2
SAM's Club 15
Todo Dia 2 Japan Seiyu Supermarkets 301 35,426
Bompreco Hypermart 28 Seiyu GMS 82
Bompreco Supermarket 70 LIVIN Department Stores 12
Bompreco Mini-Market 8 Seiyu Supercenters 2
Balaio (Bompreco) 7 Seiyu GMS (food & apparel) 82
Magazine (Bompreco) 3 Seiyu GM 2
BIG Hypermarkets 37
Nacional Supermarkets 67 Korea Wal-Mart Supercenters 16
3,600
Mercadorama Supermarkets 24
Maxxi Atacado Wholesale Clubs 11 Mexico Wal-Mart
Supercenters 105 112,000
Maxxi Distribuicao 1 SAM's Club 70
Bodega 189
Canada Wal-Mart Discount Store 256 70,000 Mi Bodega 18
SAM's Club 6 Superama 55
Suburbia 54

57. China Wal-Mart Supercenters 51 27,000 VIPS Restaurants 287
SAM's Club 3 Mercamas 1
Neighborhood Markets 2 Mi Bodega Express 1
Costa Rica Pali 93 6,990 Nicaragua Pali 27 1,050
Max X Menos 23 La Union 5
Maxi Bodegas 5
Hiper Mas 4 Puerto Rico Wal-Mart Stores 9 14,000
Wal-Mart Supercenters 4
El Salvador Dispensa Familiar 25 3,150 SAM's Club 9
Despensa de Don Juan 31 Supermercados/Amigo 32
Hiper Paiz 2
United Kingdom ASDA/Wal-Mart Supercenters 21 140,000
Germany Wal-Mart Supercenters 88 12,000 ASDA Supercenters
237
George 10
Guatemala Dispensa Familiar 77 7,390 ASDA Living 5
Supertiendas Paiz 29 ASDA Small Town 43
Hiper Paiz 6
Maxi Bodegas 6
Club Co. 1
Super Gas 2
Other 7
Source: Company data, Credit Suisse estimates

58. Wal-Mart Stores, Inc. 25 March 2006
20
Exhibit 15: Wal-Mart Segment Sales Contribution (2000)
Exhibit 16: Wal-Mart Segment Sales Contribution (2005)
Wal-Mart U.S.
67%
SAM's
15%
International
18%
Wal-Mart U.S.
67%
SAM's
13%
International
20%
Exhibit 17: % of Wal-Mart International Sales (2000) Exhibit
18: % of Wal-Mart International Sales (2006E)
Brazil
2%
Canada

59. 19%
China
1%
Germany
7%
Korea
1%
Mexico
24%Puerto Rico
2%
U.K.
43%
Argentina
1%
Brazil
4%
Canada
14%
China
3%
Costa Rica
1%
El Salvador

60. 1%
Germany
2%
Guatemala
1%
Honduras
1%
Japan
10%
Mexico
20%
Nicaragua
1%
Puerto Rico
2%
South Korea
1%
United Kingdom
38%
Argentina
1%
Exhibit 19: Wal-Mart Segment EBIT Contribution (2000)
Exhibit 20: Wal-Mart Segment EBIT Contribution (2005)
Wal-Mart U.S.

61. 83%
Sam's
8%
Intl
9%
Wal-Mart U.S.
76%
Sam's
7%
Intl
17%
Source: Company data, Planet Retail, Credit Suisse estimates
Source: Company data, Planet Retail, Credit Suisse estimates
Wal-Mart Stores, Inc. 25 March 2006
21
What Markets Matter (U.K., Canada, Mexico and Japan)
A Look at Mexico
Tufic Salem has coverage responsibilities for Walmex.
We believe that the virtuous cycle of same store sales growth +

62. margin expansion +
reinvestment = shareholder value creation is far from over at
Walmex. Therefore,
Walmex should enjoy sustainable operating profit growth in
excess of 16% in dollar
terms.
Walmex is reinvesting in a very profitable operation as
evidenced by: (1) an acceleration
in square footage growth, (2) share repurchase, and (3) ROIC
which reached ~20% in
2005.
2006 Expansion: Walmex intends to open 120 new units in
2006, which would represent
14% growth in selling square footage. The 120 new units
include 55 Bodegas, 13
supercenters, 5 Superamas, 8 SAM’s Club, 9 Suburbia, and 30
Restaurants. The new
store-opening plan for 2006 is similar to 2005 and reflects an
increase in the growth rate
after 10% average annual square footage growth over the past
five years.
The opening plan was higher than the market’s expectation,
which we believe were in
the 10-12% range (we also had estimates in that range).
Expansion CAPEX for 2006 is
set at $850 million. Expansion should be underpinned by a
strategy involving: (1) Multi-
format growth. Walmex is again focusing expansion on its
higher margin Superama and
Suburbia formats. (2) Expansion into new cities. The Company
will search to grow into
~37 new cities (to reach a presence of 140 stores by year-end
2006 up from 36 cities in

63. 1997); and (3) with flexible formats. The company has
developed up to three different
prototypes (Large, Medium and Small) in its Supercenter,
SAM’s, and Bodega formats.
Furthermore, starting this year the company will also launch
smaller versions of
Suburbia and Vip’s.
Furthermore, Walmex announced a remodeling program for a
“new and improved”
layout as well as store conversions (7-10 Bodegas could be
converted into SAM’s
Clubs). Additional remodeling CAPEX for 2006 is $270 million
for 150 stores, which is
approximately 50% higher than in 2005.
We have a positive outlook on the consumption environment
from a macro standpoint.
Furthermore, we believe Walmex is the retailer best suited to
benefit from: (1)
expanding consumer credit – recall that Walmex has higher
exposure to non-food
products (~50%, versus 20-30% in the industry); (2) very strong
momentum in its
Suburbia stores, which are growing same store sales above the
group’s average; (3) a
rapidly expanding Bodega format, which is taking up market
share from the informal
market and has experienced improved customer perception for
higher-ticket items such
as white goods and electronics.
Profitability improvement: Walmex has been able to post a
winning combination of gross
margin expansion and operating leverage despite ongoing price
reductions. We believe

64. Walmex’s portfolio of formats allows it to segment
appropriately. Bodega and SAM’s
(despite having lower gross margins) brings the market share
gains and scale
necessary for operational leverage, while Vip’s, Suburbia, and
Superama bring the
gross margin points. It is clear to us that there is still plenty of
space for Walmex to grow
its stellar Bodega format at an increasing ROIC.
Mexico is Wal-Mart
International’s 2nd largest
market
Wal-Mart Stores, Inc. 25 March 2006
22
Furthermore, it should not go unnoticed that Walmex has
retaken expansion in these
higher margin formats. Superama broke out of the Mexico City
region, expecting to
expand nationwide. Suburbia has opened and closed stores
without a clear path for
store base growth reaching a high of 53 stores in 2000.
Furthermore, over the past
several years Suburbia went from a High/Low pricing strategy
to EDLP, adjusted its
assortment, changed its private label provider from Banamex to
the more aggressive
Bancomer and moved to a more dynamic advertising campaign.
We now see Suburbia,

65. which is generating same store sales growth above the company
average, returning to
its expansion program. Thus, we believe that this should help
keep gross margins from
falling more rapidly over the next 3-5 years.
Finally, we believe that we have only seen the first phase of
results for the cold-channel
distribution center, which is the high quality provider of
produce. Nonetheless, we
expect a second phase that has yet to be exploited, which
implies skipping the
middleman, and retaining that margin to offer more
competitively priced produce to its
customers. Investors should remember that the company is
looking to source produce
directly, which would change the way business is done for
perishables in Mexico.
A Look at Canada
Canada is one of the bright spots for Wal-Mart International as
the ROI matches that of
U.S. supercenters, a significant achievement in its own right.
While we do not have
public filings to rely on, we estimate that Canada generates
approximately 14% of Wal-
Mart International sales and probably close to 20% of the profit.
Wal-Mart’s entry in
Canada was through its acquisition of the country’s number six
retailer, Woolco—a
lagging Woolworth Canada division. Wal-Mart paid $352
million for 123 Woolco stores.
The Canadian retail market is not without its challenges—Home
Depot as well as other
home improvement chains are major factors. Category killers

66. Linen’s N’ Things and
Best Buy are also major participants. Thus, Wal-Mart Canada
has had to both defend
and capture market share. It has also had to deal in a very
public way with an attempt to
unionize at least one discount store location. In the end, Wal-
Mart chose to close the
location due to “profitability issues”.
Wal-Mart Canada began to modify its strategy in 2004 opening
its first SAM’s location
and now intends to begin opening supercenters after relying on
expanded food
assortments in its existing discount stores over the past five
years.
A Look at Japan
Seiyu is Japan’s fourth largest supermarket chain operator and
was established on April
19, 1963. In May 2002, Wal-Mart acquired a 6.1 % stake in
Seiyu. In December 2005,
Wal-Mart acquired a majority interest in Seiyu (53.34%),
making Seiyu a Wal-Mart
subsidiary. Wal-Mart is working closely with Seiyu to renew its
focus on the customer
and its core retail operations, as well as facilitate the gradual
transition to a low-cost,
low-price retail structure.
Japan Important Due to Size of Consumer/Retail Market
Wal-Mart has signaled the importance of Japan with consistent
increases in its
ownership stake in Seiyu, culminating in its majority 50%+
ownership stake. While
Japan will likely represent only 10% of 2006 Wal-Mart
International sales, we see

67. Canada ROI in-line with
U.S. supercenters
Japan will be an
increasingly important
market due to size of
consumer economy
Wal-Mart Stores, Inc. 25 March 2006
23
tremendous long-term opportunity given the size of the Japanese
consumer economy.
In addition, the Japanese retail sector continues to consolidate,
creating opportunity for
strong, financially sound companies.
Operating results at Seiyu are showing some signs of life after
several consecutive
quarters of downward revisions to earnings guidance and
disappointing results. Same
store sales trends improved throughout 2005 from –7.1% in 1Q,
to –2.0% in 2Q, to –
1.4% in 3Q to +1.8% in 4Q. However, operating income
declined 87.1% in 2005 and
management is guiding to breakeven results in 2006.
Exhibit 21: Seiyu Same Store Sales History Exhibit 22: Seiyu
EBIT Margin

68. -12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05
Same Store Sales
0.0%
0.2%
0.4%
0.6%
0.8%

69. 1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
2006E
EBIT Margin
Source: Company data, Credit Suisse estimates Source:
Company data, Credit Suisse estimates
For 2006, management assumes 1.0% same-store sales growth
including a positive
impact from the remodeling of 65 stores. However, the prospect
of only breakeven
recurring income despite an overall improvement in the macro
environment indicates
delays in implementing structural reforms. The plan also
includes $380 million (¥45
billion) in asset impairment costs, resulting in a substantial net
loss.
Given the increasing importance of Seiyu and Japan to Wal-
Mart’s overall business, we
thought it useful to review some comments on the outlook for
retail in Japan from our

70. Japan Broadline Retail analyst Yasuyuki Sasaki. We provide
his comments below.
Yasuyuki Sasaki has primary coverage responsibility for Seiyu.
Four Themes for Retail in Japan
We believe there are four overall themes for Japanese retail in
2006- 1) increasing tax
burden, 2) regulation of store openings, 3) income disparity and
4) M&A.
The environment for the Broadline retail industry in 2005 was
significantly different than
in 2004. The sales growth rate at department stores turned
positive and strong sales of
seasonal fall and winter merchandise in 2H led to sharp growth
in earnings. General
merchandise and convenience stores also saw increases in
earnings, albeit at a lower
rate than the department stores, as a result of a slower pace of
sales declines, an
improvement in gross margins and a reduction in expenses.
Given the improvement in
fundamentals and the general bullishness in the equity market,
retail stocks (particularly
in the department store sub-sector) outperformed strongly and
valuations rose across
the board.
Wal-Mart Stores, Inc. 25 March 2006
24
For 2006 there are several complicated factors at work and we

71. believe the scenario
where a recovery in the economy leads to a recovery in
consumption and translates
directly to improvement in retailer earnings is too simplistic.
The four main themes on which we are concentrating are as
follows:
(1) Increased burden on taxpayers leads to slower growth in
consumption: Against
the background of a continuing need for fiscal reform and the
overwhelming
victory of the incumbent LDP administration in the Lower
House election in
summer 2005, we believe an increase in the tax burden on
individuals now
looks inevitable. For example, it is already a given that the two-
stage reduction
in personal income tax planned over FY3/06-07 will be
scrapped, pension
contributions will continue to rise steadily, and there will be a
reduction in the
percentage of health-care costs for the elderly reimbursed under
the nursing
care insurance scheme. Salaries and bonuses and other
compensation are
growing, leading to an increase in cash remuneration for
employees, but for the
reasons cited above, disposable incomes are not necessarily
growing so
rapidly. In addition, there are also some potential problems
connected with the
rise in the consumption tax. Our chief Japan strategist, Shinichi
Ichikawa,
expects the consumption tax to be raised between April 2008
and April 2009,

72. but to effect a change as early as April 2008 would require a
bill to be presented
to the normal session of the Diet in 2007, meaning that debate
about the
necessity of raising the tax would be carried out in 2006-07.
Also, we believe if
there is a rise in the consumption tax, it is likely to come as a
sudden jump from
the current 5% to 10-15%. If this occurs, we expect the tax rate
on everyday
items and food to be left relatively low at around 5-7%, while a
differential,
higher tax rate is levied on luxury goods. If so, then this could
put a damper on
the equity market, which currently expects a strong rise in sales
of high priced
goods (i.e. department store sales) in 2007. As a result of this,
we believe there
is a strong possibility that consumer-spending intentions will
not necessarily rise
consistently through 2006.
(2) Revision to urban planning law will restrict suburban large-
store openings. We
now believe it highly likely that a bill to revise the basic body
of urban planning
law will be presented to the ordinary session of the Diet in
summer 2006. The
three major urban planning laws are the City Planning Law, the
City
Revitalization Law and the Large-Scale Retail Stores Location
Law. The aim of
the reforms currently being proposed is the promotion of the
creation of
“compact cities” in response to Japan’s reduced birthrate and
aging population,

73. along with the cessation of the current indiscriminate expansion
of urban areas
and stronger urban planning. To promote these aims, the new
laws are
expected to call for a much stricter adherence to zoning
regulations. Recently
there have been a number of cases where large suburban
shopping centers or
large-scale retail stores have been built on ex-factory sites sited
in semi-
industrial areas, on ex-farmland or on land within urbanization
coordination
areas. Strictly speaking, construction of retail developments
should not be
permitted on these types of sites, but local governments have
frequently
rezoned the sites as commercial sites in order to allow
development. However,
to prevent damage to commerce in neighboring communities
when local
Wal-Mart Stores, Inc. 25 March 2006
25
government chiefs re-zone land for commercial use, it is now
proposed that
zoning decisions should be taken at the prefectural government
level. In real
terms, we expect this to have the impact of limiting new store
openings. To put
it in plain terms, this could represent a return to the situation
before the passage

74. of the Large-Scale Retail Store Law in 2000.
(3) Difference in incomes is leading to the emergence of
discounters. The equity
market is currently focusing on consumption of high-priced
items as a result of
the sharp increase in sales at the department stores, but the
biggest growth is
in low priced stores, otherwise known as “discounters”. The
Gini coefficient,
which measures income inequality, was 0.35 before
redistribution of income in
1971 but had risen to 0.50 in 2002. In qualitative terms, putting
aside urban
areas, the rate of unemployment is particularly high in regional
areas, which
tend to be dependent on public investment, and in these area
economic
recovery has been delayed. Levels of cash income and
expenditure are also
low. In this environment, there has been a notable surge in
sales at stores with
low wage levels that have opened on sites where outlets of large
chains have
closed down, creating a category of low-priced discounters,
which buy their
stocks from cash wholesalers and sell at a discount.
(4) Progress in corporate restructuring through M&A activity.
In 2005, Livedoor
acquired Cecile. However, this was a friendly, rather than a
hostile takeover,
and in real terms, it represented a business disposal on Cecile’s
part, as
management determined that this was the best way to enhance
enterprise

75. value. We believe this kind of friendly takeover will occur more
frequently. We
expect an increased demand for corporate restructuring through
takeover at
companies which have seen a downturn in profitability through
obsolescent
business models or which are suffering from succession
problems as their
founders approach retirement.
What Markets Don’t Matter As Much….Yet
Argentina
Wal-Mart entered the Argentina market in August 1995 with a
SAM's Club in Avellaneda
in the greater Buenos Aires area. The first supercenter opened
later in 1995. In 2000,
Wal-Mart Argentina sold all three of its SAM’s Club locations
to Home Depot due to
consumer’s preference for the supercenter format over
warehouse clubs. In 2002, with
the economy strengthening, Wal-Mart Argentina remodeled 10
of its 11 current stores
and expanded its distribution center in Buenos Aires Province to
include fresh food in
addition to general merchandise.
China
Wal-Mart entered China through two joint ventures in 1996
when it opened its first
supercenter and SAM’s Clubs. Wal-Mart’s supercenter
partnership was with Shenzhen
International Trust and its SAM’s club was opened through a
joint venture with The
Shenzhen Economic Zone Development Company. The

76. company’s entry to China
marked Wal-Mart’s first steps into the Asian markets.
Recognizing the obvious
Wal-Mart Stores, Inc. 25 March 2006
26
differences not only in the market, but the culture and
government as well, Wal-Mart’s
Asian operations tiptoed through expansion in its early years.
The company opened
only one supercenter in 1997, two in 1998 and decided against
expanding its SAM’s
club format. It was not until 2000, when Wal-Mart opened five
supercenters that the
company began to better establish its market presence. Today,
Wal-Mart has 51
supercenters in China along with 3 SAM’s Clubs and 2
Neighborhood Markets. We
estimate that Wal-Mart generates approximately $2 billion in
sales in China.
China is an important market for Wal-Mart both in terms of
long-term sales potential but
also as a source of product for sale in its stores worldwide. In
fact, the sourcing side of
Wal-Mart operations in China are likely to remain a much more
important piece to the
overall organization relative to the near-term sales opportunity.
Over the last decade the company has had to modify its
traditional distribution practices

77. and educate many vendors to its more highly efficient practices.
The company has also
had to create a retail format that reflects the needs of the
customer ranging from selling
fresh fish and market-specific items (e.g. live snake!) to being
the avenue of distribution
for Avon cosmetics.
The retail landscape for foreign entities in China changed
dramatically in 2004 when the
country began to allow foreign companies to wholly own their
operations in-country (part
of China’s entrance into the WTO) versus restrictions that
allowed only minority stakes
in JV’s in the past. Since that time, global retailers including
Wal-Mart have further
positioned their business to take advantage of a developing and
more structured retail
industry. For example, large retailers are beginning to act as
“anchors” to large retail
developments. Interestingly, this trend has pushed up the cost
of locations and
occupancy. However this is a small price to pay relative to the
size of the opportunity
that the overall market provides.
Most established foreign retailers in China appear to be
accelerating their investment
through a ramp-up in new store openings. Wal-Mart is planning
to open at least 20
supercenters in 2006 from its current base of 51. There are also
signs that local
competitors are looking to take advantage of the renewed
interest in China as an
opportunity to sell out to larger players. For example, Wal-
Mart’s name has been

78. attached to any number of potential acquisitions.
We admire what Wal-Matt has been able to do in China, as it
has built the business
from the ground up in a very short period of time. While the
long-term opportunities in
China are significant for Wal-Mart, it will likely take much
more than ten years for the
business to have a more meaningful impact on the company’s
bottom line. We note
that even if Wal-Mart grew its current $2 billion business in
China, it would take almost
twelve years to become the size that ASDA is today. While a
25% growth rate may
seem conservative for the near-term, it will obviously become
much more difficult to
maintain that level of growth as the business grows.
CARHCO
CARHCO is Central America's largest retailer, with 363
supermarkets in Guatemala, El
Salvador, Honduras, Nicaragua and Costa Rica and was formed
as a joint venture in
2001 with three equal partners- Royal Ahold NV and two
Central American groups: the
Paiz family, the major shareholders of La Fragua , with
headquarters in Guatemala, and
Wal-Mart Stores, Inc. 25 March 2006
27
Corporación de Supermercados Unidos (CSU), with

79. headquarters in Costa Rica.
CARCHO generated 2004 sales of approximately $2.0 billion.
In September 2005, Wal-Mart acquired a 33 1/3 percent interest
in CARHCO from the
Dutch retailer Royal Ahold NV and in March 2006 it announced
that it increased its
ownership stake to 51%.
CARHCO has three operative companies: La Fragua, founded in
Guatemala in 1928 by
Carlos Paiz Ayala; CSU, founded in Costa Rica in 1960 by
Enrique Uribe Pages; and
Corporación de Compañías Agroindustriales (CCA), a supplier
to CARHCO of meat and
seafood, fruit, grain, vegetables and bakery products.
Costa Rica
Corporación de Supermercados Unidos (CSU) was founded in
Costa Rica in 1960 by
Enrique Uribe Pages. CSU operates 124 stores Costa Rica and
30 in Nicaragua. CSU
operates several retail formats including Mas X Menos and Pali
discount stores, La
Unión supermarkets, Hiper Más hypermarkets and warehouse
stores Maxi Bodega
warehouse stores.
Guatemala
La Fragua was founded in Guatemala in 1928 by Carlos Paiz
Ayala. La Fragua
operates 120 stores in Guatemala, 32 in Honduras and 57 in El
Salvador. Its formats
include Dispensa Familiar and La Despensa de Don Juan
discount stores, Supertienda
Paiz supermarkets, Hiper Paiz hypermarkets, Maxi Bodega

80. warehouse stores and Club
Co., a membership wholesale club.
Nicaragua
Corporación de Supermercados Unidos (CSU) was founded in
Costa Rica in 1960 by
Enrique Uribe Pages. CSU operates 124 stores Costa Rica and
30 in Nicaragua. CSU
operates several retail formats including Mas X Menos and Pali
discount stores, La
Unión supermarkets, Hiper Más hypermarkets and warehouse
stores Maxi Bodega
warehouse stores.
Korea
Wal-Mart entered Korea in 1998, by acquiring equity shares and
associates of 4 Makro
stores in Inchon, Daejeon, Ilsan and Gusung.
In July 1998, Wal-Mart expanded its Asian presence with the
acquisition of a majority
investment in four existing stores and six undeveloped sites in
Korea. Korea Makro
previously operated the stores. In 1999, the first supercenter
opened in Gangnam,
Seoul's most affluent area. Wal-Mart has slowly grown its
Korean operations and now
has a total of 16 stores, all supercenters, in operation. Wal-
Mart’s modest investment in
Korea is a contrast to other global retailers who have
aggressively invested in the
market.

81. Wal-Mart Stores, Inc. 25 March 2006
28
Companies Mentioned (Price as of 23 Mar 06)
Ahold (AHLN.AS, Eu 7.23, OUTPERFORM, TP Eu 8.00,
MARKET WEIGHT)
Avon Products, Inc. (AVP, $30.97)
BJ's Wholesale Club Inc. (BJ, $31.12, UNDERPERFORM, TP
$26.00, MARKET WEIGHT)
Carrefour (CARR.PA, Eu 43.03, UNDERPERFORM, TP Eu
38.00, MARKET WEIGHT)
Casino Guichard (CASP.PA, Eu 58.05, UNDERPERFORM, TP
Eu 46.00, MARKET WEIGHT)
Costco Wholesale Corporation (COST, $55.16, NEUTRAL, TP
$55.00, MARKET WEIGHT)
Home Depot (HD, $43.37, OUTPERFORM, TP $50.00,
MARKET WEIGHT)
Kingfisher (KGF.L, 244.75p, NEUTRAL, TP 210.00p,
MARKET WEIGHT)
Matalan plc (MTN.L, 196.00p, UNDERPERFORM, TP 140.00p,
MARKET WEIGHT)
Metro (MEOG.F, Eu 43.60, NEUTRAL, TP Eu 38.00, MARKET
WEIGHT)
Morrison (William) (MRW.L, 197.50p, OUTPERFORM, TP
220.00p, MARKET WEIGHT)
Safeway Inc. (SWY, $25.33, UNDERPERFORM, TP $19.00,
MARKET WEIGHT)

82. Sainsbury (J) (SBRY.L, 329.25p, UNDERPERFORM, TP
280.00p, MARKET WEIGHT)
Sears Holding Corp. (SHLD, $132.27, OUTPERFORM [V], TP
$180.00, MARKET WEIGHT)
Seiyu (8268, ¥286, UNDERPERFORM, TP ¥150, MARKET
WEIGHT)
Target Corporation (TGT, $53.56, OUTPERFORM, TP $62.00,
MARKET WEIGHT)
Tesco (TSCO.L, 334.75p, OUTPERFORM, TP 380.00p,
MARKET WEIGHT)
Wal-Mart Stores, Inc. (WMT, $48.10, OUTPERFORM, TP
$55.00, MARKET WEIGHT)
Walmex (WALMEXV, $2.80, OUTPERFORM, TP $3.50,
OVERWEIGHT)
Woolworths (WLW.L, 36.75p, NEUTRAL, TP 35.00p,
MARKET WEIGHT)
Disclosure Appendix
Important Global Disclosures
I, Michael Exstein, certify that (1) the views expressed in this
report accurately reflect my personal views
about all of the subject companies and securities and (2) no part

83. of my compensation was, is or will be
directly or indirectly related to the specific recommendations or
views expressed in this report.
See the Companies Mentioned section for full company names.
Wal-Mart Stores, Inc. 25 March 2006
29
3-Year Price, Target Price and Rating Change History Chart for
BJ
13
22
26
10
15
20
25
30
3/2
5/0
3

84. 5/2
5/0
3
7/2
5/0
3
9/2
5/0
3
11
/25
/03
1/2
5/0
4
3/2
5/0
4
5/2
5/0
4

85. 7/2
5/0
4
9/2
5/0
4
11
/25
/04
1/2
5/0
5
3/2
5/0
5
5/2
5/0
5
7/2
5/0
5
9/2

86. 5/0
5
11
/25
/05
1/2
5/0
6
Closing Price Target Price Initiation/Assumption Rating
USD
O=Outperform; N=Neutral; U=Underperform; R=Restricted;
NR=Not Rated; NC=Not Covered
BJ Closing Price Target Price Initiation/
Date Price (US$) Price (US$) Rating Assumption
5/20/03 14.68 13
8/19/03 21.26 22
2/28/06 31.66 26
3-Year Price, Target Price and Rating Change History Chart for
COST
41
37

87. 40
46
55
N
28
33
38
43
48
53
3/2
5/0
3
5/2
5/0
3
7/2
5/0
3

88. 9/2
5/0
3
11
/25
/03
1/2
5/0
4
3/2
5/0
4
5/2
5/0
4
7/2
5/0
4
9/2
5/0
4
11

89. /25
/04
1/2
5/0
5
3/2
5/0
5
5/2
5/0
5
7/2
5/0
5
9/2
5/0
5
11
/25
/05
1/2
5/0

90. 6
Closing Price Target Price Initiation/Assumption Rating
USD
O=Outperform; N=Neutral; U=Underperform; R=Restricted;
NR=Not Rated; NC=Not Covered
COST Closing Price Target Price Initiation/
Date Price (US$) Price (US$) Rating Assumption
5/13/03 36.2 41
8/6/03 28.89 37
2/2/04 37.22 40
2/12/04 37.75 NEUTRAL
12/9/05 48.55 46
3/2/06 52.8 55
Wal-Mart Stores, Inc. 25 March 2006
30
3-Year Price, Target Price and Rating Change History Chart for
TGT
40
53

91. 66
62
49
O
29
34
39
44
49
54
59
64
3/2
5/0
3
5/2
5/0
3
7/2
5/0

92. 3
9/2
5/0
3
11
/25
/03
1/2
5/0
4
3/2
5/0
4
5/2
5/0
4
7/2
5/0
4
9/2
5/0

93. 4
11
/25
/04
1/2
5/0
5
3/2
5/0
5
5/2
5/0
5
7/2
5/0
5
9/2
5/0
5
11
/25
/05

94. 1/2
5/0
6
Closing Price Target Price Initiation/Assumption Rating
USD
O=Outperform; N=Neutral; U=Underperform; R=Restricted;
NR=Not Rated; NC=Not Covered
TGT Closing Price Target Price Initiation/
Date Price (US$) Price (US$) Rating Assumption
2/19/04 41.71 40
3/11/04 44.7 49 OUTPERFORM
11/11/04 50.77 53
7/15/05 58.7 66
2/17/06 54.31 62
3-Year Price, Target Price and Rating Change History Chart for
WMT
55
O
O
R
R

95. 42
44
46
48
50
52
54
56
58
60
62
3/2
5/0
3
5/2
5/0
3
7/2
5/0
3

96. 9/2
5/0
3
11
/25
/03
1/2
5/0
4
3/2
5/0
4
5/2
5/0
4
7/2
5/0
4
9/2
5/0
4

97. 11
/25
/04
1/2
5/0
5
3/2
5/0
5
5/2
5/0
5
7/2
5/0
5
9/2
5/0
5
11
/25
/05
1/2

98. 5/0
6
Closing Price Target Price Initiation/Assumption Rating
USD
O=Outperform; N=Neutral; U=Underperform; R=Restricted;
NR=Not Rated; NC=Not Covered
WMT Closing Price Target Price Initiation/
Date Price (US$) Price (US$) Rating Assumption
8/1/03 55.27 RESTRICTED
9/29/03 57.23 OUTPERFORM
5/24/05 47.65 55
9/20/05 43.21 RESTRICTED
9/21/05 42.49 OUTPERFORM
The analyst(s) responsible for preparing this research report
received compensation that is based upon
various factors including Credit Suisse's total revenues, a
portion of which are generated by Credit Suisse's
investment banking activities.
Wal-Mart Stores, Inc. 25 March 2006
31
Analysts’ stock ratings are defined as follows***:

99. Outperform: The stock’s total return is expected to exceed the
industry average* by at least 10-15% (or
more, depending on perceived risk) over the next 12 months.
Neutral: The stock’s total return is expected to be in line with
the industry average* (range of ±10%) over
the next 12 months.
Underperform**: The stock’s total return is expected to
underperform the industry average* by 10-15% or
more over the next 12 months.
*The industry average refers to the average total return of the
analyst's industry coverage universe
(except with respect to Asia/Pacific, Latin America and
Emerging Markets, where stock ratings are
relative to the relevant country index, and Credit Suisse Small
and Mid-Cap Advisor stocks, where stock
ratings are relative to the regional Credit Suisse Small and Mid-
Cap Advisor investment universe.
**In an effort to achieve a more balanced distribution of stock
ratings, the Firm has requested that
analysts maintain at least 15% of their rated coverage universe
as Underperform. This guideline is
subject to change depending on several factors, including
general market conditions.
***For Australian and New Zealand stocks a 7.5% threshold
replaces the 10% level in all three rating
definitions.
Restricted: In certain circumstances, Credit Suisse policy and/or
applicable law and regulations preclude
certain types of communications, including an investment
recommendation, during the course of Credit
Suisse's engagement in an investment banking transaction and
in certain other circumstances.
Volatility Indicator [V]: A stock is defined as volatile if the
stock price has moved up or down by 20% or

100. more in a month in at least 8 of the past 24 months or the
analyst expects significant volatility going
forward. All Credit Suisse Small and Mid-Cap Advisor stocks
are automatically rated volatile. All IPO stocks
are automatically rated volatile within the first 12 months of
trading.
Analysts’ coverage universe weightings* are distinct from
analysts’ stock ratings
and are based on the expected performance of an analyst’s
coverage universe**
versus the relevant broad market benchmark***:
Overweight: Industry expected to outperform the relevant broad
market benchmark over the next 12
months.
Market Weight: Industry expected to perform in-line with the
relevant broad market benchmark over the
next 12 months.
Underweight: Industry expected to underperform the relevant
broad market benchmark over the next 12
months.
*Credit Suisse Small and Mid-Cap Advisor stocks do not have
coverage universe weightings.
**An analyst’s coverage universe consists of all companies
covered by the analyst within the relevant
sector.
***The broad market benchmark is based on the expected return
of the local market index (e.g., the S&P
500 in the U.S.) over the next 12 months.
Credit Suisse’s distribution of stock ratings (and banking
clients) is:
Global Ratings Distribution
Outperform/Buy* 38% (65% banking clients)
Neutral/Hold* 45% (60% banking clients)

101. Underperform/Sell* 15% (50% banking clients)
Restricted 3%
*For purposes of the NYSE and NASD ratings distribution
disclosure requirements, our stock ratings of Outperform,
Neutral, and
Underperform most closely correspond to Buy, Hold, and Sell,
respectively; however, the meanings are not the same, as our
stock
ratings are determined on a relative basis. (Please refer to
definitions above.) An investor's decision to buy or sell a
security should be
based on investment objectives, current holdings, and other
individual factors.
Credit Suisse’s policy is to update research reports as it deems
appropriate, based on developments with
the subject company, the sector or the market that may have a
material impact on the research views or
opinions stated herein.
Credit Suisse's policy is only to publish investment research
that is impartial, independent, clear, fair and not
misleading. For more detail please refer to Credit Suisse's
Policies for Managing Conflicts of Interest in connection with
Investment Research: http://www.csfb.com/research-and-
analytics/disclaimer/managing_conflicts_disclaimer.html
Credit Suisse does not provide any tax advice. Any statement
herein regarding any US federal tax is not
intended or written to be used, and cannot be used, by any
taxpayer for the purposes of avoiding any
penalties.
See the Companies Mentioned section for full company names.

102. Wal-Mart Stores, Inc. 25 March 2006
32
Price Target: (12 months) for (BJ)
Method: BJ's Wholesale target price of $26 is calculated by
applying a 5.0x Entrerpise Value-to-EBITDA
(Earnings Before Interest, Tax, Depreciation, and Amortization)
multiple on our 2006 EBITDA estimate of
$316 million and 14x Price-to-Earnings multiple on our 2006
earnings per share estimate of $1.85.
Risks: Risks for BJ's include the longer-term outlook for this
model given the highly competitive nature of
the food market, a high density of locations, investor
expectations for a leveraged buyout, and an
increasingly competitive environment in the warehouse club
industry, and risks associated with accelerating
square footage growth.
Price Target: (12 months) for (COST)
Method: Our Costco target price of $55 is based on 20x Price-
to-Earnings (P/E) multiple on our Fiscal
2007 earnings per share estimate of $2.73. We apply a 25%
premium to the broader market P/E multiple
of two-year forward earnings estimates.
Risks: Competition from WMT's Sam's Club, need to control
SG&A, more difficult environment to increase
margins, increased need for promotion to drive sales, potential
for a more challenging economic
environment for the consumer
Price Target: (12 months) for (TGT)
Method: Our $62 target price for TGT is based on 20x Price-to-
Earnings multiple on our 2006 earnings per
share estimate of $3.07 and a 20% premium to our mass

103. merchant index average earnings multiple of
16.7x.
Risks: Risks for TGT include WMT, a company about 6x its
size, balancing its fashion message with its
price message, management, a food business that is not yet fully
proven.
Price Target: (12 months) for (WMT)
Method: Our Wal-Mart target price of $55 is based on 19x
price-to-earnings ratio on our fiscal 2006
estimate of $2.91 and 10.2x our enterprise value-to-earnings
before interest, tax, and depreciation and
amortization ratio on our $26.0 billion fiscal 2006 estimate
Risks: Risks for WMT include potential diseconomies of scale
from the company's size, negative public
and press sentiment, potential weakness of the consumer,
government and regulatory issues and higher
energy costs
See the Companies Mentioned section for full company names.
The subject company (WMT) currently is, or was during the 12-
month period preceding the date of
distribution of this report, a client of Credit Suisse.
Credit Suisse provided investment banking services to the
subject company (WMT) within the past 12
months.
Credit Suisse provided non-investment banking services, which
may include Sales and Trading services, to
the subject company (WMT) within the past 12 months.
Credit Suisse has managed or co-managed a public offering of
securities for the subject company (WMT)
within the past 12 months.
Credit Suisse has received investment banking related
compensation from the subject company (WMT)
within the past 12 months.
Credit Suisse expects to receive or intends to seek investment
banking related compensation from the

104. subject company (BJ, COST, TGT, WMT) within the next 3
months.
Credit Suisse has received compensation for products and
services other than investment banking services
from the subject company (WMT) within the past 12 months.
As of the date of this report, Credit Suisse Securities (USA)
LLC makes a market in the securities of the
subject company (COST, TGT, WMT).
Important Regional Disclosures
An analyst involved in the preparation of this report has visited
certain material operations of the subject
company (BJ, TGT, WMT) within the past 12 months. The
analyst may not have visited all material
operations of the subject company. The travel expenses of the
analyst in connection with such visits were
not paid or reimbursed by the subject company, other than de
minimus local travel expenses.
The analyst(s) involved in the preparation of this report have
not visited the material operations of the
subject company (COST) within the past 12 months.
Restrictions on certain Canadian securities are indicated by the
following abbreviations: NVS--Non-Voting
shares; RVS--Restricted Voting Shares; SVS--Subordinate
Voting Shares.
Individuals receiving this report from a Canadian investment
dealer that is not affiliated with Credit Suisse
should be advised that this report may not contain regulatory
disclosures the non-affiliated Canadian
investment dealer would be required to make if this were its
own report.
Wal-Mart Stores, Inc. 25 March 2006

105. 33
For Credit Suisse Securities (Canada), Inc.'s policies and
procedures regarding the dissemination of equity
research, please visit
http://www.csfb.com/legal_terms/canada_research_policy.shtml.
Credit Suisse Securities (Europe) Limited acts as broker to
KGF.L.
The following disclosed European company/ies have estimates
that comply with IFRS: AHLN.AS,
CARR.PA, CASP.PA, KGF.L, MTN.L, MEOG.F, MRW.L,
SBRY.L, TSCO.L, WLW.L.
As of the date of this report, Credit Suisse acts as a market
maker or liquidity provider in the equities
securities that are the subject of this report.
For disclosure information on other companies mentioned in
this report, please visit the website at
www.credit-suisse.com/researchdisclosures or call +1 (877)
291-2683.
Disclaimers continue on next page.
WMT International Report_Final.doc
Disclaimers
References in this report to Credit Suisse or CS include all of
the subsidiaries and affiliates of Credit Suisse, a Swiss bank,
operating under its investment banking division.

106. For more information on our structure, please follow the below
link: http://www.credit-
suisse.com/who_we_are/en/structure.html.
This report is not directed to, or intended for distribution to or
use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction
where such distribution, publication, availability or use would
be contrary to law or regulation or which would subject Credit
Suisse, the Swiss bank, or its subsidiaries or its affiliates
(“CS”) to any registration or licensing requirement within such
jurisdiction. All material presented in this report, unless
specifically indicated otherwise, is under copyright to CS. None
of the material, nor its content, nor any copy of it, may be
altered in any way, transmitted to, copied or distributed to any
other party, without the prior express written permission of
CS. All trademarks, service marks and logos used in this report
are trademarks or service marks or registered trademarks or
service marks of CS or its affiliates.
The information, tools and material presented in this report are
provided to you for information purposes only and are not to be
used or considered as an offer or the solicitation of an
offer to sell or to buy or subscribe for securities or other
financial instruments. CS may not have taken any steps to
ensure that the securities referred to in this report are suitable
for
any particular investor. CS will not treat recipients as its
customers by virtue of their receiving the report. The
investments or services contained or referred to in this report
may not
be suitable for you and it is recommended that you consult an
independent investment advisor if you are in doubt about such
investments or investment services. Nothing in this
report constitutes investment, legal, accounting or tax advice or
a representation that any investment or strategy is suitable or
appropriate to your individual circumstances or
otherwise constitutes a personal recommendation to you. CS