Consider and discuss the specific risks and nature of the company you will be auditing.

Create comprehensive audit programs for the cash, financial instruments, sale, and receivables accounts and cycles.

Submit a 1,400- to 1,750-word document that includes:

Audit steps for tests of controls, balances, transactions, analytical procedures, etc. as well as other considerations such as sample size and sample methodology.

A brief summary page should be included in this document, 350 to 700 words for each of the audit programs. Include in this summary specific financial information gleaned from the current Form 10-K used to perform an analysis of work program steps. For example, if the team noted significant swings in the Receivables balance year-over-year, identify these swings and how you address them in your work program (this is in essence an audit procedure - analytical review).

I am doing sales part of this assignment and my group is doing it with Walmart. I am a little unclear as to how I am to find this information or at least group it together. Can you help?

I have attached the 10k for Walmart.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________ FORM 10-K ___________________________________________ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended January 31, 2016 , or Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 001-6991. ___________________________________________ WAL-MART STORES, INC. (Exact name of registrant as specified in its charter) ___________________________________________ Delaware 71-0415188 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 702 S.W. 8th Street Bentonville, Arkansas 72716 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (479) 273-4000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $0.10 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None ___________________________________________ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No As o f July 31, 2015, th e aggregate market value of the voting common stock of the registrant held by non-affiliates of the registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2015, was $112,949,080,512. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common stock are the affiliates of the registrant. The registrant had 3,144,335,104 shares of common stock outstanding as of March 28, 2016 . DOCUMENTS INCORPORATED BY REFERENCE Document Parts Into Which Incorporated Portions of the registrant's Annual Report to Shareholders for the Fiscal Year Ended January 31, 2016 (the "Annual Report to Shareholders") included as Exhibit 13 to this Form 10-K Parts I and II Portions of the registrant's Proxy Statement for the Annual Meeting of Shareholders to be held June 3, 2016 (the "Proxy Statement") Part III 2 Cautionary Statement Regarding Forward-Looking Statements This Annual Report on Form 10-K and other reports, statements, and information that Wal-Mart Stores, Inc. (which individually or together with its subsidiaries, as the context otherwise requires, is referred to as "we," "Walmart" or the "Company") has filed with or furnished to the Securities and Exchange Commission ("SEC") or may file with or furnish to the SEC in the future, and prior or future public announcements and presentations that we or our management have made or may make, include or may include, or incorporate or may incorporate by reference, statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the "Act"), that are intended to enjoy the protection of the safe harbor for forwardlooking statements provided by the Act. Nature of Forward-Looking Statements Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our economic performance or results for future periods or as of future dates or events or developments that may occur in the future, including, without limitation, our earnings per share, the comparable store and clubs sales for one or more of our reportable segments, our effective tax rate, the dividends we will pay, our capital structure, the outcome of tax matters, the outcome of, the costs we may incur, and the liability we may have or not have in, legal or regulatory proceedings to which we are subject, and, on a consolidated basis or for one or more of our reportable segments, the amount of or period-over-period change in total revenue, net sales, membership income, other income, gross merchandise value, inventory levels, performance of certain categories of merchandise, capital expenditures, expense items, store and club openings, the amount and nature of capital and operating expenditures and investments, increases in retail square footage, the consummation of acquisitions or dispositions of assets, and other financial measures or metrics. Our forward-looking statements also include statements of our strategies, plans and objectives for our operations, including areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we make. The forward-looking statements we make can typically be identified by the use therein of words and phrases such as "aim," "anticipate," "believe," "could occur," "could result," "continue," "estimate," "expect," "expectation," "focus," "forecast," "goal," "guidance," "intend," "plan," "priority," "project," "to be," "will be," "will benefit," "will change," "will come in at," "will continue," "will decrease," "will grow," "will have," "will increase," "will remain," "will strengthen" and "will stay," variations of such words or phrases, other phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results. The forward-looking statements include statements made in Part I, Item 3. "Legal Proceedings" in this Annual Report on Form 10-K as to our belief that the possible loss or range of any possible loss that may be incurred in connection with certain legal proceedings will not be material to our financial condition, results of operations, or liquidity. Risks Factors and Uncertainties Affecting Our Business Our business operations are subject to numerous risks, factors and uncertainties, domestically and internationally, outside of our control. One, or a combination, of these risks, factors and uncertainties could materially affect any of those matters as to which we have made forward-looking statements and cause our actual results or an actual event or occurrence to differ materially from those results or an event or occurrence described in a forward-looking statement we have made. These factors, which may be global in their effect or affect only some of the markets in which we operate and which may affect us on a consolidated basis or affect only some of our reportable segments, include, but are not limited to: economic, geo-political, financial markets and business conditions, trends, changes, and events, economic crises, including sovereign debt crises, and disruptions in the financial markets; monetary policies of the various governments, governmental entities, and central banks; currency exchange rate fluctuations and volatility and changes in market rates of interest; inflation and deflation, generally and in certain product categories, including gasoline and diesel fuel; consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels, demand for certain merchandise and receipt of income tax refunds and public assistance payments; consumer acceptance of our stores and clubs, e-commerce websites, mobile commerce applications, initiatives, programs and merchandise offerings and customer traffic and average ticket in our stores and clubs and on our retail websites and mobile commerce applications; the availability of attractive opportunities for investment in retail operations and e-commerce operations; commodity and energy prices and selling prices of commodity items, such as gasoline and diesel fuel; our historical results of operations, cash flows, financial condition and liquidity; the amounts of sales and earnings from our United States and foreign operations and our cost of goods sold; competitive initiatives, and changes in the operations, of other retailers, including e-commerce retailers, and warehouse club operators, arrival of new competitors and other competitive pressures; the seasonality of our business, seasonal buying patterns and the disruption of such patterns; unanticipated store or club closures and unanticipated restructurings and the related expenses; 3 the size of and turnover in our hourly workforce, and our labor costs, including health-care and other benefit costs; costs of transportation and other essential services, such as medical care; casualty- and accident-related costs and our casualty and other insurance costs; cyberattacks on and incidents relating to our information systems, related costs and liabilities and information security costs; availability and cost of acceptable building sites and necessary utilities for new and relocated units; availability and cost of skilled construction labor, materials and other construction costs; availability of qualified labor pools for existing, new or expanded units and to meet seasonal hiring needs; real estate, zoning, land use and other laws, ordinances, legal restrictions and initiatives affecting our ability to build new units in certain locations or relocate or expand existing units; weather conditions, patterns and events, climate change, catastrophic events and disasters, public health emergencies, civil disturbances and terrorist attacks, resulting damage to our units and store and club closings and limitations on our customers' access to our stores and clubs resulting from such events; disruptions in the availability of our e-commerce websites and mobile commerce applications; trade restrictions, changes in tariff and freight rates and disruptions in our supply chain; costs of compliance with laws and regulations and effects of new or changed tax, labor and other laws and regulations, including those changing tax rates and imposing new taxes and surcharges; changes in our assessment of certain tax contingencies, changes in valuation allowances, outcome of administrative audits, impact of discrete items on our effective tax rate and resolution of tax matters; developments in and the outcome of our legal and regulatory proceedings and our FCPA-related matters, and associated costs and expenses; changes in the rating of any of our indebtedness and our access to the capital markets; and unanticipated changes in generally accepted accounting principles or their interpretations or applicability and in accounting estimates and judgments. We typically earn a disproportionate part of our annual operating income in the fourth quarter as a result of seasonal buying patterns, which patterns are difficult to forecast with certainty and can be affected by many factors. Other Risk Factors; No Duty to Update The above list of factors that may affect the estimates and expectations discussed in or implied or contemplated by forward-looking statements we make or made on our behalf is not exclusive. We are subject to other risks and uncertainties discussed below under the caption "Item 1A. Risk Factors," and that we may discuss in Management's Discussion and Analysis of Financial Condition and Results of Operations incorporated by reference in our Annual Reports on Form 10-K and appearing in our Quarterly Reports on Form 10-Q or otherwise disclose in our Quarterly Reports on Form 10-Q and other reports filed with the SEC. Investors and other readers are urged to consider all of these risks, uncertainties and other factors carefully in evaluating our forward-looking statements. The forward-looking statements that we make or made by others on our behalf are based on our knowledge of our business and our operating environment and assumptions that we believe to be reasonable when such forward-looking statements are made. As a consequence of the factors described above, the other risks, uncertainties and factors we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in facts, assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein. We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business, our operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on such forward-looking statements, which speak only as of their dates. We undertake no obligation to update any of the forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law. 4 WAL-MART STORES, INC. ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2016 PART I ITEM 1. BUSINESS General Wal-Mart Stores, Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better - anytime and anywhere - in retail stores or through our e-commerce and mobile capabilities. Through innovation, we are striving to create a customer-centric experience that seamlessly integrates digital and physical shopping. Physical retail encompasses our brick and mortar presence in each market where we operate. Digital retail is comprised of our e-commerce websites and mobile commerce applications. Each week, we serve nearly 260 million customers who visit our over 11,500 stores under 63 banners in 28 countries and e-commerce websites in 11 countries. Our strategy is to lead on price, differentiate on access, be competitive on assortment and deliver a great experience. Leading on price is designed to earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity. Price leadership is core to who we are. Everyday low cost ("EDLC") is our commitment to control expenses so those cost savings can be passed along to our customers. Our digital and physical presence provides customers access to our broad assortment anytime and anywhere. We strive to give our customers and members a great digital and physical shopping experience. Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a one-month lag and on a calendar basis. Our discussion is as of and for the fiscal years ended January 31, 2016 ("fiscal 2016 "), January 31, 2015 ("fiscal 2015 ") and January 31, 2014 ("fiscal 2014 "). During fiscal 2016 , we generated total revenues of $482.1 billion , which was primarily comprised of net sales of $478.6 billion . We maintain our principal offices at 702 S.W. 8th Street, Bentonville, Arkansas 72716, USA. Our common stock trades on the New York Stock Exchange under the symbol "WMT." The Development of Our Company Although Walmart was incorporated in Delaware in October 1969, the businesses conducted by our founders began in 1945 when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L. Walton, opened a similar store in Versailles, Missouri. Until 1962, our founders' business was devoted entirely to the operation of variety stores. In that year, the first Wal-Mart Discount City, which was a discount store, opened in Rogers, Arkansas. In 1983, we opened our first Sam's Club, and in 1988, we opened our first supercenter. In 1998, we opened our first Neighborhood Market. In 1991, we began our first international initiative when we entered into a joint venture in Mexico. Since then, our international presence has continued to expand and, as of January 31, 2016 , our Walmart International segment conducted business in 27 countries. In 2000, we began our first digital initiative by creating the walmart.com retail website. Since then, our digital presence has continued to grow. As of January 31, 2016 , we operated e-commerce websites in 11 countries, providing access to Walmart and our various brands around the world. 5 Information About Our Segments The Company is engaged in the operation of retail, wholesale and other units located throughout the U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products and services. Walmart U.S. is our largest segment and operates retail stores in all 50 states in the U.S., Washington D.C. and Puerto Rico, with three primary store formats, as well as digital retail. Walmart U.S. generated approximately 62% of our net sales in fiscal 2016 , and of our three segments, Walmart U.S. is the largest and has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income. Walmart International consists of operations in 27 countries outside of the U.S. and includes numerous formats divided into three major categories: retail, wholesale and other. These categories consist of numerous formats, including supercenters, supermarkets, hypermarkets, warehouse clubs, including Sam's Clubs, cash & carry, home improvement, specialty electronics, apparel stores, drug stores and convenience stores, as well as digital retail. Walmart International generated approximately 26% of our fiscal 2016 net sales. The overall gross profit rate for Walmart International is lower than that of Walmart U.S. primarily because of its merchandise mix. Walmart International is our second largest segment and has grown through acquisitions, as well as by adding retail, wholesale and other units. Sam's Club consists of membership-only warehouse clubs and operates in 48 states in the U.S. and in Puerto Rico, as well as digital retail. Sam's Club accounted for approximately 12% of our fiscal 2016 net sales. As a membership-only warehouse club, membership income is a significant component of the segment's operating income. As a result, Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments. The Company measures the results of its segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, we revise the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by our CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified to be comparable to the current period's presentation. Walmart U.S. Segment The Walmart U.S. segment is a mass merchandiser of consumer products, operating under the "Walmart" or "Wal-Mart" brands, as well as walmart.com. The Walmart U.S. segment had net sales of $298.4 billion , $288.0 billion and $279.4 billion for fiscal 2016 , 2015 and 2014 , respectively. During the most recent fiscal year, no single unit accounted for as much as 1% of total Company consolidated net sales. Physical. The Walmart U.S. segment operates retail stores in the U.S., including in all 50 states, Washington D.C. and Puerto Rico, with supercenters in 49 states, Washington D.C. and Puerto Rico, discount stores in 41 states and Puerto Rico and Neighborhood Markets and other small store formats in 31 states and Puerto Rico. The following table provides square footage details on each of our formats as of January 31, 2016 : Minimum Square Feet Maximum Square Feet Supercenters (general merchandise and grocery) 69,000 260,000 178,000 Discount stores (general merchandise and limited grocery) 30,000 206,000 104,000 Neighborhood Markets (1) (grocery) 28,000 66,000 42,000 (1) Excludes other small formats which include various test formats used to understand market demands and needs. 6 Average Square Feet WALMART U.S. SEGMENT RETAIL UNIT COUNT AND RETAIL SQUARE FEET (1) Supercenters Fiscal Year Opened Closed Conversions (2) Balance forward Discount Stores Total Square Feet 2,907 534,577 Opened Conversions (2) Closed Total Square Feet 708 75,116 2012 43 79 3,029 552,237 (79) 629 66,402 2013 55 74 3,158 570,409 7 (1) (74) 561 59,098 2014 72 58 3,288 589,858 4 (57) 508 53,496 2015 79 40 3,407 607,415 2 (40) 470 49,327 2016 55 (16) 19 3,465 616,428 (9) (19) 442 45,991 Neighborhood Markets and Other Small Formats Fiscal Year Opened Closed Conversions (2) Balance forward Total 189 Total Segment Square Feet Opened (3) Closed (4) Total 7,374 Square Feet 3,804 617,067 2012 27 (6) 210 8,047 70 (6) 3,868 626,686 2013 79 (3) 286 11,226 141 (4) 4,005 640,733 2014 122 (1) 407 15,778 198 4,203 659,132 2015 235 (3) 639 23,370 316 (3) 4,516 680,112 2016 161 (133) 667 27,228 216 (158) 4,574 689,647 (1) (2) (3) (4) "Total" and "Square Feet" columns are as of January 31 for the years shown. Retail square feet are reported in thousands. Conversions of discount stores or Neighborhood Markets to supercenters. Total opened, net of conversions of discount stores or Neighborhood Markets to supercenters. Of the 158 stores closed in fiscal 2016, 149 stores were closed following the announcement on January 15, 2016 of the closure of 269 stores globally. The fiscal 2016 store closures included 102 Express format locations of Walmart U.S., which were included in the Neighborhood Markets and Other Small Formats category. 7 Digital. Walmart U.S. provides its customers access to a broad assortment of merchandise, including products not found in our physical stores, and services online through our e-commerce websites and mobile commerce applications. Walmart.com experiences on average 85 million unique visits a month and offers access to approximately 8 million SKUs. In addition, our e-commerce website includes Marketplace, a feature of the website that permits third parties to sell merchandise on walmart.com. Digital retail is integrated with our physical stores through services like "Walmart Pickup," "Pickup Today" and "Online Grocery." The Walmart U.S. segment also offers access to digital content and services including Vudu and InstaWatch. Merchandise. Walmart U.S. does business in six strategic merchandise units, listed below, across several store formats including supercenters, discount stores, Neighborhood Markets and other small store formats, as well as walmart.com. Grocery consists of a full line of grocery items, including meat, produce, natural & organics, deli & bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables such as health and beauty aids, baby products, household chemicals, paper goods and pet supplies; Health and wellness includes pharmacy, optical services, clinical services, over-the-counter drugs and other medical products; Entertainment contains electronics, toys, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid service, movies, music, video games and books; Hardlines consist of stationery, automotive, hardware and paint, sporting goods, fabrics and crafts and seasonal merchandise; Apparel includes apparel for women, girls, men, boys and infants, as well as shoes, jewelry and accessories; and Home includes home furnishings, housewares and small appliances, bedding, home decor, outdoor living and horticulture. The Walmart U.S. segment also offers fuel and financial services and related products, including money orders, prepaid cards, wire transfers, money transfers, check cashing and bill payment. These services total less than 1% of annual net sales. National brand merchandise represents a significant portion of the merchandise sold in the Walmart U.S. segment. We also market lines of merchandise under our private-label store brands, including: "Equate," "Everstart," "Faded Glory," "George," "Great Value," "Holiday Time," "Hometrends," "Mainstays," "Marketside," "No Boundaries," "Ol' Roy," "Ozark Trail," "Parent's Choice," "Prima Della," "Pure Balance," "Sam's Choice," "Special Kitty," "Spring Valley" and "White Stag." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes & Gardens," "Danskin Now," "Farberware," "General Electric," "OP," "Rival," "Russell," "Starter," and "Straight Talk." The percentage of net sales for the Walmart U.S. segment, including online sales, represented by each strategic merchandise unit was as follows for fiscal 2016 , 2015 and 2014 : Fiscal Years Ended January 31, STRATEGIC MERCHANDISE UNITS 2016 2015 2014 Grocery 56% 56% 56% Health and wellness 11% 11% 10% Entertainment 9% 10% 11% Hardlines 9% 9% 9% Apparel 8% 7% 7% Home 7% 7% 7% Total 100% 100% 100% Periodically, revisions are made to the categorization of the components comprising our strategic merchandise units. When revisions are made, the previous period's presentation is adjusted to maintain comparability. Operations. Hours of operation for nearly all supercenters, and an increasing number of discount stores and Neighborhood Markets, are 24 hours each day. A variety of payment methods are accepted at our stores and through our e-commerce websites and mobile commerce applications. Seasonal Aspects of Operations. The Walmart U.S. segment's business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating income have occurred in the fiscal quarter ending January 31. 8 Competition. The Walmart U.S. segment competes with a variety of local, national and global chains in the supermarket, discount, grocery, department, dollar, drug, variety and specialty stores, supercenter-type stores, hypermarkets, e-commerce and catalog businesses. We also compete with others for desirable sites for new or relocated retail units. Our ability to develop, open and operate units at the right locations and to deliver a customer-centric experience that seamlessly integrates digital and physical shopping largely determines our competitive position within the retail industry. We employ many programs designed to meet competitive pressures within our industry. These programs include the following: EDLP: our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity; EDLC: everyday low cost is our commitment to control expenses so those cost savings can be passed along to our customers; Rollbacks: our commitment to continually pass cost savings on to the customer by lowering prices on selected goods; Savings Catcher, Save Even More and Ad Match: strategies to meet or be below a competitor's advertised price; Walmart Pickup: customer places order online and picks it up for free from a store. The merchandise is fulfilled through our distribution facilities; Pickup Today: customer places order online and picks it up at a store within four hours for free. The order is fulfilled through existing store inventory; Online Grocery: customer places grocery order online and has it delivered to home or picks it up at one of our participating stores or remote locations; and Money Back Guarantee: our commitment to ensure the quality and freshness of the fruits and vegetables in our stores by offering our customers a 100 percent money-back guarantee if they are not satisfied. We offer a broad assortment of merchandise that provides one-stop shopping, in-stock levels that give our customers confidence that we will have the products they need and operating hours that allow customers to shop at their convenience. In addition, our retail website and mobile commerce applications are important factors in our competition with other retailers, particularly e-commerce retailers. Distribution. For fiscal 2016 , approximately 79% of the Walmart U.S. segment's purchases of merchandise were shipped through our 137 distribution facilities, which are located strategically throughout the U.S. The remaining merchandise we purchased was shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the segment's private truck fleet. However, we contract with common carriers to transport the majority of our perishable grocery merchandise. Walmart U.S. ships merchandise purchased by customers on its retail website and through its mobile commerce applications by a number of methods from multiple locations including from its dedicated e-commerce fulfillment centers. The following table provides further details of our distribution facilities, including return facilities and 13 e-commerce dedicated fulfillment centers, as of January 31, 2016 : Walmart U.S. distribution facilities Owned and Operated Owned and Third Party Operated Leased and Operated Third Party Owned and Operated Total 102 2 10 23 137 Walmart International Segment The Walmart International segment consists of operations in 27 countries outside of the U.S. and includes numerous formats divided into three major categories: retail, wholesale and other. These categories consist of numerous formats, including supercenters, supermarkets, hypermarkets, warehouse clubs, including Sam's Clubs, cash & carry, home improvement, specialty electronics, apparel stores, drug stores and convenience stores, as well as digital retail. The segment's net sales for fiscal 2016 , 2015 and 2014 , were $123.4 billion , $136.2 billion and $136.5 billion , respectively. During the most recent fiscal year, no single unit accounted for as much as 1% of total Company net sales. Physical. Our Walmart International segment is comprised of physical stores operated by: our wholly-owned subsidiaries operating in Argentina, Brazil, Canada, Chile, China, India, Japan and the United Kingdom; our majority-owned subsidiaries operating in Africa (which includes Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Nigeria, South Africa, Swaziland, Tanzania, Uganda and Zambia), Central America (which includes Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua) and Mexico; and our joint ventures and other controlled subsidiaries in China. Generally, retail units range in size from 4,000 square feet to 185,000 square feet. Our wholesale stores generally range in size from 35,000 square feet to 70,000 square feet. Other, which includes drugstores and convenience stores operating under various banners in Brazil, Chile, Japan, Mexico and the United Kingdom, range in size up to 2,400 square feet. Also, on a limited basis, our Walmart International segment operates financial institutions that provide consumer credit. 9 WALMART INTERNATIONAL SEGMENT UNIT COUNT (1) AND RETAIL SQUARE FEET (2) Africa Fiscal Year Balance forward Unit Count Argentina Square Feet Unit Count Brazil Square Feet Unit Count Central America Canada Square Feet Unit Count Square Feet Unit Count Chile Square Feet Unit Count Square Feet 63 6,211 479 30,272 325 42,005 549 8,739 279 11,115 2012 347 18,529 88 7,270 512 31,575 333 43,738 622 9,501 316 11,785 2013 377 19,775 94 7,531 558 32,494 379 48,354 642 9,873 329 12,671 2014 379 20,513 104 8,062 556 32,501 389 49,914 661 10,427 380 13,697 2015 396 21,223 105 8,119 557 33,028 394 50,927 690 11,094 404 14,762 2016 408 21,869 108 8,280 499 30,675 400 51,784 709 11,410 395 15,407 China Fiscal Year Unit Count India Square Feet Unit Count Mexico (3) Japan Square Feet Unit Count Square Feet Unit Count Square Feet United Kingdom Unit Count Square Feet Total Segment (4) Unit Count Square Feet Balance forward 328 56,317 5 270 414 24,513 1,364 73,620 385 31,009 4,191 284,071 2012 370 62,124 15 826 419 24,521 1,724 82,611 541 33,765 5,287 326,245 2013 393 65,801 20 1,083 438 24,448 1,988 88,833 565 34,810 5,783 345,673 2014 405 67,205 20 1,083 438 24,489 2,199 94,900 576 35,416 6,107 358,207 2015 411 68,269 20 1,083 431 24,429 2,290 98,419 592 36,277 6,290 367,630 2016 432 71,724 21 1,146 346 22,551 2,360 100,308 621 37,044 6,299 372,198 (1) (2) (3) (4) "Unit Count" includes retail stores, wholesale clubs and other, which includes drugstores and convenience stores. Walmart International unit counts, with the exception of Canada, are stated as of December 31, to correspond with the balance sheet date of the related geographic market. Canada unit counts are stated as of January 31. For the balance forward, all country balances are stated as of the end of fiscal year 2011. "Square Feet" columns are reported in thousands. All periods presented exclude units and square feet for the Vips restaurant business. The Company completed the sale of the Vips restaurant business in fiscal 2015. There were 189 store closures in fiscal 2016, of which 60 stores were closed in relation to the announcement on January 15, 2016 of the closure of 269 stores globally. 10 Unit counts (1) as of January 31, 2016 for Walmart International are summarized by major category for each geographic market as follows: Geographic Market Africa Retail (3) Other (2) Wholesale Total 318 90 408 Argentina 108 108 Brazil 414 71 14 499 Canada 400 400 Central America (4) 709 709 Chile 392 3 395 China 420 12 432 India 21 21 Japan Mexico United Kingdom Total (1) (2) (3) (4) 346 346 2,189 161 10 2,360 603 18 621 5,899 358 42 6,299 Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2015 , to correspond with the balance sheet date of the related geographic market. Canada unit counts are stated as of January 31, 2016 . Other includes drug stores and convenience stores operating under varying banners. Africa unit counts by country are Botswana ( 11 ), Ghana ( 1 ), Kenya ( 1 ), Lesotho ( 3 ), Malawi ( 2 ), Mozambique ( 6 ), Namibia ( 4 ), Nigeria ( 8 ), South Africa ( 366 ), Swaziland ( 1 ), Tanzania ( 1 ), Uganda ( 1 ) and Zambia ( 3 ). Central America unit counts by country are Costa Rica ( 225 ), El Salvador ( 91 ), Guatemala ( 223 ), Honduras ( 82 ) and Nicaragua ( 88 ). Digital. The Walmart International segment operates e-commerce websites in 10 countries (Argentina, Brazil, Canada, Chile, China, India, Japan, Mexico, South Africa and the United Kingdom). Customers have access through our e-commerce websites and, in countries where available, mobile commerce applications to a broad assortment of merchandise and services, both of which vary by country. Digital retail supports our physical stores with capabilities like "Click & Collect" in the United Kingdom and our grocery home delivery business in Mexico. Merchandise. The merchandising strategy for the Walmart International segment is similar to that of our operations in the U.S. in terms of the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality, lower priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday Time," "Hometrends," "Mainstays," "Ol' Roy" and "Parent's Choice," our international markets have developed market specific brands including "Aurrera," "Cambridge," "Chosen by You," "Extra Special" and "Smart Price." In addition, we have developed relationships with regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to national brands at low prices. Operations. The hours of operation for operating units in the Walmart International segment vary by country and by individual markets within countries, depending upon local and national ordinances governing hours of operation. Each country accepts a variety of payment methods. Seasonal Aspects of Operations. The Walmart International segment's business is seasonal to a certain extent. Historically, the segment's highest sales volume and operating income have occurred in the fourth quarter of our fiscal year. The seasonality of the business varies by country due to different national and religious holidays, festivals and customs, as well as different weather patterns. Competition. The Walmart International segment competes with a variety of local, national and global chains in the supermarket, discount, grocery, department, drug, variety and specialty stores, hypermarkets, wholesale clubs, home improvement, specialty electronic, e-commerce and catalog businesses in each of the markets in which we operate. We also operate, on a limited basis, consumer finance operations. We compete with others for desirable sites. Our ability to develop, open and operate units at the right locations and to deliver a customer-centric experience that seamlessly integrates digital and physical shopping determines, to a large extent, our competitive position in the markets in which Walmart International operates. We believe price leadership is a critical part of our business model and we continue to focus on moving our markets towards an EDLP approach. Additionally, our ability to operate food departments effectively has a significant impact on our competitive position in the markets where we operate. In the markets in which we have retail websites or retail websites and mobile commerce applications, those websites and applications help differentiate us from our competitors and help us compete with other retailers for customers and their purchases, both in the digital and the physical retail operations. 11 Distribution. We utilize a total of 176 distribution facilities located in Argentina, Brazil, Canada, Central America, Chile, China, Japan, Mexico, South Africa and the United Kingdom. Through these facilities, we process and distribute both imported and domestic products to the operating units of the Walmart International segment. During fiscal 2016 , approximately 77% of the Walmart International segment's purchases passed through these distribution facilities. Suppliers ship the balance of the Walmart International segment's purchases directly to our stores in the various markets in which we operate. The following table provides further details of our international distribution facilities, including 19 e-commerce dedicated fulfillment centers, as of December 31, 2015, with the exception of distribution facilities in Canada, which is stated as of January 31, 2016 : Owned and Operated Owned and Third Party Operated Leased and Operated Third Party Owned and Operated Total 45 11 72 48 176 International distribution facilities We ship merchandise purchased by customers on our retail websites and through our mobile commerce applications by a number of methods from multiple locations including from our dedicated e-commerce fulfillment centers. Sam's Club Segment The Sam's Club segment operates membership-only warehouse clubs, as well as samsclub.com, in the U.S. and had net sales of $56.8 billion , $58.0 billion and $57.2 billion for fiscal 2016 , 2015 and 2014 , respectively. During the most recent fiscal year, no single club location accounted for as much as 1% of total Company net sales. Membership. The following membership options are available to business owners and individual consumers: Membership Type Member Type Annual Membership Fee Number of Add-on Memberships ($45 each) Eligible for Cash Rewards Business Plus Savings Plus Business Savings Business Owner Individual Business Owner Individual $45 $100 $100 $45 Up to 16 Up to 8 Yes Yes No No All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is a benefit that provides $10 for every $500 in qualifying Sam's Club purchases up to a $500 cash reward annually. The amount earned can be used for purchases, membership fees or redeemed for cash. Physical. As a membership-only warehouse club, Sam's Club facility sizes generally range between 71,000 and 168,000 square feet, with an average size of approximately 134,000 square feet. SAM'S CLUB SEGMENT CLUB COUNT AND RETAIL SQUARE FEET (1) Fiscal Year Opened Closed Balance forward Total Square Feet 609 81,202 2012 3 (1) 611 81,586 2013 9 620 82,653 2014 12 632 84,382 2015 16 (1) 647 86,510 2016 8 655 87,552 (1) "Total" and "Square Feet" columns are as of January 31 for the years shown. Retail square feet are reported in thousands. Digital. Sam's Club provides its members access to a broad assortment of merchandise, including products not found in our clubs, and services online at samsclub.com and through our mobile commerce application. Samsclub.com experiences on average 16 million unique visits a month and offers access to approximately 51,000 SKUs providing the member the option of delivery direct-to-home or to the club through services such as "Club Pickup." Merchandise. Sam's Club offers brand name merchandise, including hardgoods, some softgoods and selected private-label brands such as "Member's Mark" in five merchandise categories, listed below. 12 Grocery and consumables includes dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic and nonalcoholic beverages, floral, snack foods, candy, other grocery items, health and beauty aids, paper goods, laundry and home care, baby care, pet supplies and other consumable items; Fuel and other categories consists of gasoline stations, tobacco, tools and power equipment, and tire and battery centers; Home and apparel includes home improvement, outdoor living, grills, gardening, furniture, apparel, jewelry, housewares, toys, seasonal items, mattresses and small appliances; Technology, office and entertainment includes electronics, wireless, software, video games, movies, books, music, office supplies, office furniture, photo processing and third-party gift cards; and Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs. The percentage of net sales for the Sam's Club segment, including online sales, by merchandise category, was as follows for fiscal 2016 , 2015 and 2014 : Fiscal Years Ended January 31, MERCHANDISE CATEGORY 2016 2015 2014 Grocery and consumables 59% 57% 56% Fuel and other categories 20% 23% 23% Home and apparel 9% 8% 8% Technology, office and entertainment 7% 7% 8% Health and wellness 5% 5% 5% 100% 100% 100% Total Operations. Operating hours for Sam's Clubs are generally Monday through Friday from 10:00 a.m. to 8:30 p.m., Saturday from 9:00 a.m. to 8:30 p.m. and Sunday from 10:00 a.m. to 6:00 p.m. Additionally, all club locations offer Business Members and Plus Members the ability to shop before the regular operating hours Monday through Saturday, starting at 7:00 a.m. A variety of payment methods are accepted at our clubs and online, including the Sam's Club "Cash Back" MasterCard. Seasonal Aspects of Operations. The Sam's Club segment's business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating income have occurred in the fiscal quarter ending January 31. Competition. Sam's Club competes with other membership-only warehouse clubs, the largest of which are Costco Wholesale and BJ's Wholesale Club, as well as with discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations, e-commerce and catalog businesses. Sam's Club also competes with other retailers and warehouse clubs for desirable new club sites. At Sam's Club, we provide value at members-only prices, a quality merchandise assortment, and bulk sizing to serve both our Savings and Business members. Our strategy allows us to differentiate ourselves within the membershiponly warehouse club industry and the overall retail industry. Our e-commerce website and mobile commerce application have increasingly become important factors in our ability to compete with other membership-only warehouse clubs. Distribution. During fiscal 2016 , approximately 69% of the Sam's Club segment's non-fuel purchases were shipped from the Sam's Club segment's 24 dedicated distribution facilities located strategically throughout the U.S., or from some of the Walmart U.S. segment's distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the balance of the Sam's Club segment's purchases directly to Sam's Club locations. The table below provides further details of our dedicated distribution facilities, including one e-commerce dedicated fulfillment center and two dedicated import facilities, as of January 31, 2016 . Sam's Club distribution facilities Owned and Operated Owned and Third Party Operated Leased and Operated Third Party Owned and Operated Total 3 3 2 16 24 The principal focus of Sam's Club's distribution operations is on cross-docking merchandise, while stored inventory is minimized. Cross-docking is a distribution process under which shipments are directly transferred from inbound to outbound trailers. Shipments typically spend less than 24 hours in a cross-dock facility, and sometimes less than an hour. Sam's Club uses a combination of a private truck fleet, as well as common carriers, to transport non-perishable merchandise from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise from distribution facilities to clubs. Sam's Club ships merchandise purchased by members on its retail website and through its mobile commerce applications by a number of methods from its ecommerce dedicated fulfillment center and other distribution centers. 13 Other Segment Information Certain financial information relating to our segments is included in our Annual Report to Shareholders for the fiscal year ended January 31, 2016 ("Annual Report to Shareholders") under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in Note 14 in the "Notes to Consolidated Financial Statements" included therein, which information is incorporated herein by reference. Note 14 also includes information regarding total revenues and long-lived assets aggregated by our U.S. and non-U.S. operations. Such portions of the Annual Report to Shareholders are included as Exhibit 13 to this Annual Report on Form 10-K and incorporated by reference herein as expressly provided herein. Suppliers and Supply Chain As a retailer and warehouse club operator, we utilize a global supply chain that includes over 100,000 suppliers located around the world, including in the United States, from whom we purchase the merchandise that we sell in our stores and clubs. In many instances, we purchase merchandise from producers located near the stores and clubs in which such merchandise will be sold, particularly products in the "fresh" category. Our purchases may represent a significant percentage of a number of our suppliers' annual sales, and the volume of product we acquire from many suppliers allows us to obtain favorable pricing from such suppliers. Our suppliers are subject to standards of conduct, including requirements that they comply with local labor laws, local worker safety laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume of products we wish to offer to our customer, to receive those products within the required time through our supply chain and to distribute those products to our stores and clubs determines, in part, our in-stock levels in our stores and clubs and the attractiveness of our merchandise assortment we offer to our customers and members. Employees As of the end of fiscal 2016 , the Company and its subsidiaries employed approximately 2.3 million employees ("associates") worldwide, with nearly 1.5 million associates in the U.S. and 0.8 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates and a large number of associates turn over each year. We believe our relationships with our associates are good. On February 19, 2015, the Company announced a significant initiative on pay and training for U.S. associates. Approximately 500,000 full-time and part-time associates at Walmart U.S. stores and Sam's Clubs received pay raises in the first half of fiscal 2016 and in February 2016, approximately 1.2 million full-time and part-time associates at Walmart U.S. stores and Sam's Clubs received pay increases. Also included in the announcement were comprehensive changes to our hiring, training, compensation and scheduling programs, as well as to our store management structure. These changes will give our U.S. associates the opportunity to earn higher pay and advance in their careers. Certain information relating to retirement-related benefits we provide to our associates is included in our Annual Report to Shareholders in Note 12 in the "Notes to Consolidated Financial Statements" included therein, which information is incorporated herein by reference. In addition to retirement-related benefits, in the U.S., the Company offers a broad range of Company-paid benefits to our associates, including store discount cards or Sam's Club memberships, bonuses based on Company performance, matching a portion of purchases of our stock by associates through our Associate Stock Purchase Plan and life insurance. The Company also offers health-care benefits to eligible full-time and part-time associates in the U.S. The Company's medical plan in the U.S. has no lifetime maximum benefit for most expenses. Similarly, in the operations outside the U.S., the Company provides a variety of associate benefits that vary based on customary local practices and statutory requirements. Executive Officers of the Registrant The following chart names the executive officers of the Company, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience shown for each officer has been his or her principal occupation for at least the past five years, unless otherwise noted. 14 Current Position Held Since Age Name Business Experience Neil M. Ashe Executive Vice President, President and Chief Executive Officer, Global eCommerce and Technology, beginning in February 2016, and from January 2012 to January 2016 served as Executive Vice President, President and Chief Executive Officer, Global eCommerce. From April 2011 to July 2011, he served as Special Advisor to the Chief Executive Officer of CBS Corporation, a mass media company. From July 2008 to April 2011, he served as President of CBS Interactive, Inc., an Internet content publisher. 2012 48 Daniel J. Bartlett Executive Vice President, Corporate Affairs, beginning in June 2013. From November 2007 to June 2013, he served as the Chief Executive Officer and President of U.S. Operations at Hill & Knowlton, Inc., a public relations company. 2013 44 M. Brett Biggs Executive Vice President and Chief Financial Officer, effective January 1, 2016. From January 2014 to December 2015, he served as Executive Vice President and Chief Financial Officer of Walmart International. From January 2013 to January 2014, he was Executive Vice President and Chief Financial Officer of Walmart U.S. and from January 2012 to January 2013, he was Senior Vice President and Chief Financial Officer of Walmart U.S. From September 2010 to January 2012, he served as Senior Vice President, Sam's Club Operations. 2016 47 Rosalind G. Brewer Executive Vice President, President and Chief Executive Officer, Sam's Club, effective February 1, 2012. From February 2011 to January 2012, she served as Executive Vice President and President of the East business unit of Walmart U.S. From February 2010 to January 2011, she served as Executive Vice President and President of the South business unit of Walmart U.S. From March 2007 to January 2010, she served as Divisional Senior Vice President of Walmart U.S., responsible for operations in the Southeast. 2012 53 Jacqueline P. Canney Executive Vice President, Global People, effective August 3, 2015. From September 2003 to July 2015, she served as the Managing Director of Global Human Resources at Accenture plc., a global management consulting, technology services, and outsourcing company, and prior to 2003, she served in a variety of human resource roles during her career with Accenture that began in 1989. 2015 48 David Cheesewright Executive Vice President, President and Chief Executive Officer, Walmart International, effective February 1, 2014. From September 2011 to January 2014, he served as President and Chief Executive Officer for Walmart International's Europe, Middle East and Africa (EMEA) and Canada region. From February 2008 to September 2011, he served as President and Chief Executive Officer of Walmart Canada. 2014 53 Gregory Foran Executive Vice President, President and Chief Executive Officer, Walmart U.S. beginning in August 2014. From May 2014 to August 2014, he served as President and Chief Executive Officer for the Walmart Asia region. From March 2012 to May 2014, he served as President and Chief Executive Officer of Walmart China. From October 2011 to March 2012, he served as Senior Vice President responsible for various international projects. From 2009 until July 2011, he served as Director of Supermarkets, Liquor and Petrol at Woolworths Limited, the largest retailer in Australia and New Zealand. 2014 54 Rollin L. Ford Executive Vice President and Chief Administrative Officer, effective February 1, 2012. From May 2006 to January 2012, he served as Executive Vice President, Chief Information Officer. 2012 53 Jeffrey J. Gearhart Executive Vice President, Global Governance and Corporate Secretary, effective February 1, 2013. From July 2010 to January 2013, he served as Executive Vice President, General Counsel and Corporate Secretary. From February 2009 to July 2010, he served as Executive Vice President, General Counsel. 2013 51 C. Douglas McMillon President and Chief Executive Officer, effective February 1, 2014. From February 2009 to January 2014, he served as Executive Vice President, President and Chief Executive Officer, Walmart International. 2014 49 Steven P. Whaley Senior Vice President and Controller. 2007 56 15 Our Website and Availability of SEC Reports and Other Information Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, proxy statements and annual reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we electronically file them with or furnish them to the SEC. In addition, the public may read and copy any of the materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers, such as the Company, that file electronically with the SEC. The address of that website is www.sec.gov. Our SEC filings, our Code of Ethics for our CEO and Senior Financial Officers and our Statement of Ethics can be found on our website at www.stock.walmart.com. These documents are available in print to any shareholder who requests a copy by writing or calling our Investor Relations Department, which is located at our principal offices. A description of any substantive amendment or waiver of Walmart's Code of Ethics for the CEO and Senior Financial Officers or our Statement of Ethics for our chief executive officer, our chief financial officer and our controller, who is our principal accounting officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any such description will be located on our website for a period of 12 months following the amendment or waiver. 16 ITEM 1A. RISK FACTORS The risks described below could materially and adversely affect our business, results of operations, financial condition and liquidity. Our business operations could also be affected by additional factors that apply to all companies operating in the U.S. and globally. Strategic Risks General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial performance. General economic conditions, globally or in one or more of the markets we serve, may adversely affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil, natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation, deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes and surcharges, other changes in tax laws, other regulatory changes, overall economic slowdown and other economic factors could adversely affect consumer demand for the products and services we sell through our business, change the mix of products we sell to one with a lower average gross margin, cause a slowdown in discretionary purchases of goods, otherwise adversely affect our net sales and result in slower inventory turnover and greater markdowns on inventory. Higher levels of unemployment, inflation, deflation, decreases in consumer disposable income, unavailability of consumer credit, changes in consumer spending and shopping patterns, changes in tax and other laws, higher fuel and other energy costs, weakness in the local housing market, fluctuations in currency exchange rates, currency devaluations and other adverse developments in the economies of the other countries in which we operate may adversely affect consumer demand for our merchandise in those countries, especially those countries in which average incomes are significantly lower than average incomes in the U.S. These conditions may adversely affect our net sales, gross margins, cost of sales, inventory turnover and markdowns or otherwise adversely affect our operations and consolidated operating results. Higher interest rates, lower or higher prices of petroleum products, including crude oil, natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, higher transportation costs, inflation, higher commodity prices, higher costs of labor, insurance and healthcare, currency exchange rate fluctuations, higher tax rates and other changes in tax laws, changes in healthcare laws, the imposition of measures that create barriers to or increase the costs associated with international trade, changes in other laws and regulations and other economic factors in the U.S. and other countries in which we have operations can increase our cost of sales and operating, selling, general and administrative expenses, and otherwise adversely affect our domestic and international operations and our operating results. The economic factors that affect our operations also affect the operations and economic viability of our suppliers from whom we purchase goods, a factor that can result in an increase in the cost to us of the goods we sell to our customers or, in more extreme cases, could result in certain suppliers not producing goods in the volume typically available to us for sale. We may not timely identify or effectively respond to consumer trends or preferences, whether involving physical retail, digital retail or the integration of physical and digital retail, which could negatively affect our relationship with our customers, the demand for our products and services, and our market share. It is difficult to predict consistently and successfully the products and services our customers will demand. The success of our business depends in part on how accurately we predict consumer demand, availability of merchandise, the related impact on the demand for existing products and the competitive environment, whether for customers purchasing products at our stores and clubs, through our digital retail businesses or through the combination of both retail offerings. A critical piece of identifying consumer preferences involves price transparency, assortment of products, customer experience, convenience and the speed and cost of shipping. These factors are of primary importance to customers and they continue to increase in importance, particularly as a result of digital tools and social media available to consumers and the choices available to consumers for purchasing products online, at physical locations or through a combination of both retail offerings. Failure to timely identify or effectively respond to changing consumer tastes, preferences (including the key factors described above) and spending patterns, whether for our physical retail offerings, digital retail offerings or the integration of physical retail and di