In 250 - 300 word explanation supporting your position

Using the annual report from Walmart, discuss the risks the company faces and the actions they take to mitigate those risks. Refer to the Management Discussion and Analysis section of the annual report for this information. As part of your response consider whether you think the risk mitigation techniques are reasonable. Discuss what others concerns or advice you would offer if you had the opportunity. Include in your post a calculation for the probability of one of the risks identified by your company. This information may not be available in the annual report, therefore you will likely need to conduct research and critical thinking to complete this calculation. Tip: For help with reading an annual report access this handy guide from Moneychimp(http://www.moneychimp.com/articles/financials/fundamentals.htm) .

2016 Annual Report t r a m l a W Only 20N1U6AL Wal-Mart Stores, Inc. (NYSE: WMT) 702 S.W. 8th Street Bentonville, Arkansas 72716 USA 479-273-4000 walmart.com AN R EP O R T Visit our digital annual report for expanded content about our strategy and progress Retail is changing - and so is Walmart. Customers want to save money and time while shopping. Our mobile apps and innovative services like Online Grocery and Walmart Pay deliver the convenience customers seek today. With our global footprint, only Walmart can deliver a seamless shopping experience at scale. We're investing in people and technology to connect customers to convenience more than a quarter billion times a week. Our enhanced digital annual report offers more insight about our performance and strategy. Visit www.stock.walmart.com to access video perspectives from our leaders, and gain additional insight on how we're changing to deliver a seamless shopping experience at scale. On the site, you can also enroll to receive future materials digitally for our Annual Shareholders' Meetings. 260 million times a week % 107 growth in + Walmart's investor relations app: anytime, anywhere access to financial and company news Our IR app offers shareholders an array of investor resources in a user-friendly format. With the app, you can access quarterly results, stock price, financial presentations and company news at any time from your mobile device. It's available for the iPad, iPhone, Android or Microsoft device. Download the free app from iTunes or Google Play. Global Global Responsibility Responsibility The work we do to help people live better extends far beyond the The work westores. do toWe're help people live better extends fardifference beyond the walls of our committed to making a real by walls of our stores.economic We're committed to making a real by working to create opportunity, enhance thedifference sustainability working to create economic opportunity, enhance the sustainability of our operations as well as the systems we operate in, and of our operations as well as the systems we operate in, and strengthen local communities. From supporting the development strengthen local communities. From supporting the development of our associates, suppliers and women entrepreneurs to of our associates, suppliers secure and women entrepreneurs to pursuing a more affordable, food supply chain to building pursuing a more affordable, secure food supply chain to building resiliency in the face of disasters, Walmart is using its strengths to resiliency in the face of disasters, Walmart is using strengths to promote the well-being of people and our planet.itsTo learn more promote the well-being of people Tovisiting learn more about these initiatives and others,and readour ourplanet. GRR by about these initiatives and others, read our GRR by visiting corporate.walmart.com/2016GRR. corporate.walmart.com/2016GRR. NT RI ED TU ED U N SINSIN RI G The minimized environmental footprint of this report is the result of an extensive, collaborative effort of Walmart and our supply chain partners. The environmental and social impact continues to be an important consideration. The environmental of this reportforests is the result of an extensive, collaborative of Walmart and our supply chain The minimized report is printed on paperfootprint from well-managed containing recycled PCW fiber thateffort is Elementally partners.Free The (ECF). environmental and social impact continues to be an power important consideration. The report is printed on paper from Chlorine It is printed using 100 percent renewable wind (RECs), along with environmental well-managed forests containing recycled fiber that isprocess. Elementally Chlorine Freeinclude (ECF). Itenvironmentally is printed using 100 percent renewable manufacturing principles that were utilizedPCW in the printing These practices wind power procurement, (RECs), along with environmental manufacturing utilized in the printing responsible lean manufacturing, green chemistryprinciples principles,that the were recycling of residual materialsprocess. These practices include environmentally responsible procurement, lean manufacturing, green chemistry principles, the recycling of residual materials and reduced volatile organic compound inks and coatings. and reduced volatile organic compound inks and coatings. G global e-commerce net sales over the past 4 years ENHANCED CONTENT P 3rd mostvisited U.S. retail website MEDIA CENTER P Focused on a seamless experience BY THE NUMBERS 10 W IND EN E Supplied by Community Energy W R 0 GY R 0 % % GY 10 (on a constant currency basis) IND EN E TM Rainforest Alliance Certified Supplied by Community Energy SmartWood Program Labeling Guidelines Rainforest Alliance CertifiedTM Adding Online Grocery to more markets 2.3 million associates worldwide Our people make the difference Walmart's success is dependent upon engaged, motivated associates who love serving customers. Globally, we are doing more to invest in our associates' futures - through increased training and development, higher pay and better opportunities to build rewarding careers. Walmart is positioned to win the future of retail by providing a ladder of opportunity for every member of our team. 2.7 billion $ approximate 2-year investment in higher U.S. hourly wages, education and training Training and \"Pathways\" program support career growth Expanding options for faster checkout Improved in-stock through processes and technology Winning with our stores Operating great stores that have friendly associates, well-stocked shelves and fast checkouts is central to our growth agenda. We're infusing our stores with efficient processes and new technology to help associates serve customers better. Our merchandise offering in key categories like fresh food has been strengthened. When customers have an exceptional in-store experience, they shop more, buy more and recommend us to friends and family. Focused on fresh: a key driver of store traffic Doug McMillon President and Chief Executive Officer Wal-Mart Stores, Inc. Winning in a time of change Dear shareholders, T associates and customers: hroughout our history, Walmart has been an innovator in retail. We're now living in a new period of disruption, largely driven by rapid technological advances, and that change is likely to accelerate even further. Our efforts are squarely focused on emerging as the retail leader. Around the world, we face stiff competition, but our future is within our control. We are a strong and profitable business, with unique strengths and assets. Our people, stores and supply chain, combined with our customer relationships and willingness to change, provide the opportunity for us to continue to win with customers. In fiscal 2016, we took several important steps to reimagine Walmart, including initiating an approximately $2.7 billion investment in our people over two years and ramping up Online Grocery. And we will move even faster going forward. The bottom line is this: we have the resources to chart our own destiny, we know where we are going, and we will win with a strategy that only Walmart can execute. \"We have the resources to chart our own destiny, we know where we are going, and we will win with a strategy that only Walmart can execute.\" Our work starts and ends with the customer. Technology has changed customer expectations. Customers used to compare us with the store down the street; now they compare us with 6 2016 Annual Report beyond just selling products to being the brand customers rely on to make their lives simpler and more meaningful as they save money. The winners in this time of change will be those who put the customer first. Our plan to win is clear. It starts with unparalleled assets that only Walmart has - our 2.3 million people; more than 11,500 retail locations; e-commerce websites and apps; and a dynamic, optimized supply chain. DOUG MCMILLON President and Chief Executive Officer, Wal-Mart Stores, Inc. the best online shopping experience. And beyond just retail, they compare us with every business they interact with in their lives. They compare our pickup experience to the speed and friendliness of the best drive-through. They compare our checkout process to the ease of paying with an app. Our customers have high expectations of us. And they absolutely should. People have limited time, limited money and limited patience. With so many options and technological tools available today, shopping shouldn't be a hassle. Our customers deserve and demand value, professional service and a simple, easy experience. And when they're searching for an item or paying for their purchase, they want it to be fast. Winning with customers today means being actively on their side - making their daily lives better. Customers should be able to shop on their own terms - in a great store or club, with a quick pickup stop on the way home from work, or with items reliably arriving at the front door. And customers want to have some money left over to put toward their priorities: an experience together as a family, a special gift every once in a while, or savings for a rainy day. Retail is not just about putting items on a shelf anymore. It's about fighting for our customers, cutting out the hassles and the headaches and advocating for them on price, too. We're moving But it also requires new capabilities and fresh thinking. This includes new digital tools for customers and frontline associates, as well as back-end software and platform work that benefits the entire enterprise. The use of data, algorithms, advanced forecasting capabilities - and more - is of extreme strategic significance. We will put these pieces together in a way no one else can. We will reimagine Walmart by being the first and only to deliver a truly seamless shopping experience at scale, with great savings and massive selection. 482 BILLION $ TOTAL REVENUE We want customers to: \u0007Trust us to save them money, \u0007Find it simple and easy to do business with us, whether digitally or physically, \u0007Know they can find whatever they're looking for, either in stores, on our e-commerce sites, or with our marketplace vendors, and \u0007Get items when and where they want them - in stores and clubs, through pickup on or off-site, or delivered to their door. Ultimately, customers don't care about what channel they're shopping in, or about how we deliver them a product or service. They simply know they're shopping with Walmart. Only Walmart 7 We made great progress against this strategy over the past year. To help our associates succeed and better serve our customers, we're making big changes - including investing approximately $2.7 billion over two years in higher wages, education and training to make Walmart U.S. a better place to work and shop. This is an investment to strengthen our company, and we're already seeing positive results: our fourth quarter of fiscal 2016 marked six consecutive quarters of positive comps and five straight quarters of positive traffic at Walmart U.S. There is an underlying strength to the U.S. business that was not there a year ago. Everything we're doing in omnichannel depends on customers having great interactions with us in our stores. We're also accelerating e-commerce and technology advances globally. We expanded Online Grocery shopping to new markets, ramped up in-store and in-club pickup, fully acquired the Chinese online retailer Yihaodian, and began to add new mobile services such as Walmart Pay. We developed a technology platform that we can scale across the business. We improved our fulfillment capabilities with new centers that are helping us get orders to customers' doors faster and more efficiently. 8 2016 Annual Report Last year, we also took difficult but necessary steps to sharpen the focus of our portfolio. The decision to close stores is not one we took lightly, but we must do what's right for the company. We'll continue to evaluate our portfolio as part of the normal course of business. Overall, we served nearly 260 million customers a week last year in 28 countries. In the United States, more than 78 percent of Americans shopped with us during the year, and traffic was up over last year. Excluding more than $17 billion in currency impacts, we delivered revenue of $499.4 billion, up 2.8 percent, which is $13.7 billion of growth. As we win with the customer, we will also create a great place to work. We will create tremendous opportunities for people from all walks of life, with all kinds of skill sets and education levels. We're striving to create a true meritocracy. Diversity and inclusion are core to who we are and make us a stronger company. No matter where you start from or what your unique and special characteristics are, you can fulfill your potential here. We believe in opportunity and that hard work, dedication and talent should be rewarded. We will also shape global systems using our size, mindset and policies and help make the world a better place. We create opportunity throughout our global supply chain - on farms and in factories, by buying more from women-owned businesses, by hiring veterans and by strengthening the retail industry workforce. We also work to be more sustainable, both in our own operations and in our supply chain. We have three big goals: creating zero waste, running on 100 percent renewable energy and selling products that sustain people and the environment. And we give back to the communities we serve - supporting American manufacturing, preparing for and responding to natural disasters and fighting hunger. Customers can be proud to shop at Walmart. When you put it all together, we'll enable customers around the world to save money and time, so they can invest more of both in the things they love. And we'll help make the world a better place one community at a time. We will win with a differentiated, disruptive strategy and a foundation of operational excellence. As we do, we believe shareholders will benefit by receiving above-average returns. We have a continued commitment to our shareholders that we're very proud of. Last year, we were able to return more than $10 billion to shareholders through dividends and share repurchases. This year, we announced a dividend increase to $2.00 per share, marking the 43rd consecutive year of dividend increases for Walmart. Although this will be another year of foundational investments, we believe we will soon be growing faster than the retail market. We are a growth company; we just happen to be a large one. The road ahead will not always be easy, but by being customerfocused, hungry, fast and accountable, we will win and have a good time doing it. Thank you for your continued interest in our company. It's an incredible time to be a part of Walmart. Sincerely, 2.3 MILLION ASSOCIATES 45-60 $ BILLION 3-YEAR PROJECTED SALES GROWTH* 16 WEBSITES IN 11 COUNTRIES ~11,530 STORES WORLDWIDE 10.4 BILLION $ DIVIDENDS/SHARE REPURCHASES * \u0007Projected net sales growth on a constant currency basis for fiscal years 2017-2019. Only Walmart 9 WALMART U.S. Investments that win with customers Customer experience Stores that are clean and easy to navigate, service that is helpful and friendly, relevant brands that are in stock, checkout that is fast and efficient - these are the ingredients of a great Walmart experience. Across our U.S. fleet, we're making big improvements in processes and technology, focusing on the retail fundamentals that result in a great customer experience. People and culture Optimizing Supercenters and Neighborhood Markets Supercenters are strong and profitable, providing customers one-stop shopping with a broad assortment at everyday low prices. We're enhancing them to meet evolving customer needs through a better fresh offering, e-commerce integration and expansion of Store Pickup and Online Grocery. Customers appreciate Neighborhood Markets for their convenience and access to fresh food, fuel, pharmacy and e-commerce order pickup. We're focused on refining processes and selecting quality locations to improve their profitability. 10 2016 Annual Report Throughout Walmart's history our people have made the difference. That's why we're investing approximately $2.7 billion to raise wages, increase training and expand opportunities for our U.S. associates. We're putting more highly engaged store associates closer to customers. We've added more than 8,000 new department managers and empowered them to be great merchants. These changes are helping us recruit and retain a motivated, customer-centric team. Adding supply chain capabilities Convenience/Online Grocery Order groceries through our website or mobile app and pick them up whenever it's convenient - what could be better for today's busy families? Customers love Online Grocery and it attracts new customers who on average purchase a bigger basket. We've expanded Online Grocery to more than 150 locations across more than 20 U.S. markets. And, we continue to grow. It's another great example of how only Walmart can deliver seamless shopping at scale. MILLION 85 average monthly unique visitors to walmart.com World-class e-commerce requires world-class distribution and fulfillment capabilities. We provide online shoppers with options - home delivery or in-store pickup as soon as today. To ensure that customers get items quickly, efficiently and in whatever way is most convenient for them, we've expanded our fleet of highly automated, next-generation fulfillment centers in Texas, California, Georgia, Pennsylvania and Indiana. Fresh food Appealing, high-quality fresh food is key to driving store traffic. As we work to improve store operations, enhancing the quality of our fresh offering is a key focus. We're emphasizing the basics - with better processes at every step of the supply chain - from farm to fork. We're also expanding our assortment of organic foods, healthy snacks and easy-prep meals. Only Walmart 11 WALMART INTERNATIONAL International Disciplined growth Mexico and Canada drove overall sales growth for the International segment in fiscal 2016. In China, despite ongoing economic challenges, we continued to gain share in the Hypermarket channel and are building a platform for sustainable growth. Our business in Brazil has been impacted by an increasingly challenging economic environment, while competitive intensity continued to increase in the U.K. All other markets had solid performance. with a focused portfolio Delivering balanced growth We're focused on delivering value to customers across income levels in each of our markets. We've grown comp sales in a majority of our markets for seven consecutive quarters, fueled by investments in price, private brands and our fresh offering. We continued to open stores across our markets and expanded our reach in Online Grocery to China and Canada, leveraging our experience from the U.K. 800,000 INTERNATIONAL ASSOCIATES Actively managing the portfolio We continue to review our portfolio, a key strategic priority aimed at sharpening our focus on our core food retail business, in both stores and online, and driving increased profitability. As a result, we sold properties in Canada, exited bank operations in Mexico, and closed underperforming stores in Latin America, while enhancing our portfolio by taking full ownership of Yihaodian in China. These actions position us for improved profitable growth. Lowering our costs We're reducing our cost of goods sold and overhead expenses to fuel growth in our core business. We started a cost analytics program in Canada and the U.K. to provide merchants with tools and cost visibility to lead fact-based negotiations with suppliers. We're continuing to see benefits from productivity initiatives in China as we build a platform for sustainable growth. SAM'S CLUB % 6.1 INCREASE IN MEMBERSHIP INCOME Deeper digital relationships Whether through Club Pickup or advances in mobile check-in capabilities, we are transforming the shopping experience with technology, simplifying the way members interact with and shop at Sam's Club. Driving value At Sam's Club, we are focused on delivering value for our members through price, quality and convenience. We are lowering our costs as part of our commitment to provide new products and services at a value that is unmatched. A member-centric approach to convenience and value Relevant merchandise We are doing more with data and analytics to enhance our assortment. Our members expect to be excited when they shop with us, and we are focused on delivering compelling merchandise across all categories both online and in our clubs. Member growth and retention We are creating winning moments with our members and exceeding their expectations through personal engagement and a value proposition designed to save them time and money. We know our members, and we are building a shopping experience for them that is seamless no matter how they choose to shop. Only Walmart 13 Delivering strong governance T he past year has been a period of transition for Walmart as we make strategic investments to position the company for sustainable growth. Management took bold steps focused on winning with customers by increasing wages and training for U.S. store associates, investing in the technology powering our websites and apps, and expanding our e-commerce fulfillment capabilities. Walmart's Board of Directors fully supports these investments in people and technology as they will strengthen the company's competitive position both now and in the future. We've challenged management to increase the pace of change even further, and we're tracking comp sales, customer satisfaction scores and growth in gross merchandise value to monitor progress on delivering this strategy. Walmart's Board also experienced changes this past year, and none was more notable than the retirement of my father-in-law, Rob Walton, as Chairman. We are fortunate that Rob continues to serve on our Board, offering his expertise and unequaled perspective derived from his more than two decades of effective leadership as Chairman. I'm honored to succeed him as Chairman and excited to lead a Board that is deeply committed to our company's success, to strong governance and to the interests of Walmart's shareholders. The members of our Board represent an exceptional array of talent, diversity and expertise in retail and a broad range of other industries and disciplines. We are committed to an independent Board, and Dr. James Cash is our Lead Independent Director. We've continued to improve our proxy statement disclosure. As you review the proxy, we hope you find it informative and we ask you to vote your shares. 14 2016 Annual Report GREG PENNER Chairman of the Board of Directors Wal-Mart Stores, Inc. Our Board members are dedicated in their service to shareholders, demonstrated by their attendance at 98 percent of Board and committee meetings last year. During this period of change, Board refreshment and succession planning remain top of mind. The Board is committed to continuous improvement, and we have adapted the way we operate to maximize our effectiveness. We're reducing the Board's size while maintaining its independence, changing our Board committee composition and ensuring that Walmart's strategic priorities are a key focus. Shareholders benefit as we leverage the Board's strategic expertise to guide Walmart's path forward. The past year has also brought an unprecedented level of engagement with Walmart shareholders. Members of management have actively engaged with the majority of our largest institutional shareholders to hear their perspectives on Walmart's strategy, Board structure and compensation programs. I participated in several of those meetings, as did Dr. Cash. Shareholders told us that we're focused on the right strategy to deliver a seamless shopping experience for customers. Shareholders value the quality and diversity of our director skill sets and believe that the Board is a strategic asset. And, most shareholders felt our executive compensation program was appropriately performance-based and aligned with Walmart's strategy and shareholder interests. The views of shareholders have always been important to us, and we continually strive to improve our level of disclosure and transparency with shareholders. Thank you for the feedback you provided this past year. As we look ahead, the Board is confident that Walmart's strategy is the right one, our governance processes are strong and management is fully aligned with an actionable plan for success. Sincerely, Board of Directors Pictured below from left to right: Linda S. Wolf Ms. Wolf is the retired Chairman of the Board of Directors and Chief Executive Officer of Leo Burnett Worldwide, Inc., an advertising agency and division of Publicis Groupe S.A. Steven S Reinemund James I. Cash, Jr., Ph.D. (Lead Independent Director) Dr. Cash is the James E. Robison Professor of Business Administration, Emeritus at Harvard Business School, where he served from July 1976 to October 2003. Mr. Reinemund is the retired Dean of Business and Professor of Leadership and Strategy at Wake Forest University. He previously served as the Chairman of the Board and Chairman and Chief Executive Officer of PepsiCo, Inc. Gregory B. Penner (Chairman) S. Robson Walton Kevin Y. Systrom Mr. Walton is the retired Chairman of the Board of Directors of Wal-Mart Stores, Inc. Mr. Penner is the Chairman of the Board of Directors of Wal-Mart Stores, Inc. and a General Partner at Madrone Capital Partners, an investment firm. Mr. Systrom is the Chief Executive Officer and co-founder of Instagram, a social media application. C. Douglas McMillon Mr. McMillon is the President and Chief Executive Officer of Wal-Mart Stores, Inc. Aida M. Alvarez Ms. Alvarez is the former Administrator of the U.S. Small Business Administration and was a member of President Clinton's Cabinet from 1997 to 2001. Roger C. Corbett Mr. Corbett is the retired Chief Executive Officer and Group Managing Director of Woolworths Limited, the largest retail company in Australia. Thomas W. Horton Marissa A. Mayer Ms. Mayer is the Chief Executive Officer and President and Director of Yahoo!, Inc., a digital media company. Mr. Horton is the former Chairman of American Airlines Group Inc. and the former Chairman of American Airlines, Inc. He also previously served as the Chairman and Chief Executive Officer of AMR Corporation and CEO of American Airlines, Inc. Michael T. Duke Mr. Duke is the former Chairman of the Executive Committee of the Board of Directors of Wal-Mart Stores, Inc., where he served in that capacity until January 31, 2015. He previously served as the President and Chief Executive Officer of Wal-Mart Stores, Inc. from February 2009 to January 2014. Timothy P. Flynn Mr. Flynn is the retired Chairman of KPMG International, a professional services firm. Jim C. Walton Mr. Walton is the Chairman of the Board of Directors and Chief Executive Officer of Arvest Bank Group, Inc., a group of banks operating in the states of Arkansas, Kansas, Missouri and Oklahoma. Pamela J. Craig Ms. Craig is the retired Chief Financial Officer of Accenture plc, a global management consulting, technology services, and outsourcing company. Board Committees: Name Comp., Strategic Nominating & Global Planning Tech & Audit Governance Executive Comp. & Finance e-commerce Linda S. Wolf Kevin Y. Systrom (C) Steven S Reinemund (C) Aida M. Alvarez (C) (C) Michael T. Duke Roger C. Corbett Timothy P. Flynn(FE) Marissa A. Mayer Jim C. Walton James I. Cash, Jr., Ph.D.(FE) Pamela J. Craig(FE) Gregory B. Penner (C) Committee Chair (FE) Financial Expert (C) Thomas W. Horton(FE) S. Robson Walton C. Douglas McMillon Name Comp., Strategic Nominating & Global Planning Tech & Audit Governance Executive Comp. & Finance e-commerce (C) Transforming the company from a position of great financial strength C hange is sweeping through today's retail marketplace. Yet change is nothing new for our industry - nor for Walmart. For more than 50 years, we have been a disruptor in retail, tailoring our proposition to align with evolving customer preferences. To continue leading, Walmart is making significant investments in people and technology to deliver results for our associates, customers and shareholders. We take these steps with confidence because Walmart is one of the strongest companies in the world, with a strong balance sheet and significant cash generation. In fiscal 2016, Walmart generated revenue of $482 billion, operating income of $24 billion, operating cash flow of $27 billion and return on investment of 15.5 percent. Excluding more than $17 billion in currency impacts, revenue would have been over $499 billion. Looking ahead, we expect to add approximately $45 billion to $60 billion of sales on a constant currency basis in the three years ending in fiscal 2019, an amount equivalent to a Fortune 50 company. However, running a healthy business sometimes requires Over the past 5 years sharpening the focus of the portfolio. After a thorough review of our stores from revenue growth both a financial and strategic standpoint, we made the cash flow from operations decision to close stores representing less than 1 percent of our global returned to shareholders revenue and square footage. A key takeaway from this (through dividends and portfolio review was the share repurchases) health of our overall store base. During fiscal 2017, we project to add more than 300 new stores globally. We are a growth company. $60B $129B $55B Our great financial strength positions us to make the necessary investments in our business to drive sustainable long-term results, even as shareholders see a solid return on their investment. 16 2016 Annual Report BRETT BIGGS Executive Vice President and Chief Financial Officer Wal-Mart Stores, Inc. During this past year, Walmart's financial strength allowed for shareholder returns in excess of $10 billion through dividends and share repurchases. Also, in February 2016, we raised our annual dividend for the 43rd consecutive year to $2.00 per share. I'm proud of Walmart's long record of shareholder returns. Only Walmart can deliver a seamless shopping experience at scale, and we are strengthening our proposition for customers. Winning with stores is critical to our strategy. That's why the approximately $2.7 billion wage and training investment in our U.S. associates that was started in fiscal 2016 is not only the right thing to do for our associates, but it positions us to be a stronger company going forward. We will continue to invest in our business, with capital investments of approximately $11 billion in fiscal 2017, including more than $1 billion in global e-commerce initiatives that will improve our technology and fulfillment capabilities to ensure that customers receive items efficiently and in a cost-effective manner. I'm excited that we are building one of the world's largest technology companies inside of one of the world's most financially strong companies. As I conclude my first letter to you as CFO, let me thank you for being a Walmart shareholder. I am honored to serve in this capacity during this exciting time at Walmart. Our business is strong, and we are making the strategic investments to become even stronger. As a result, I'm confident that we will serve customers more effectively, drive sales growth and continue to deliver strong returns for our shareholders. Sincerely, 2016 FINANCIALS 18 Five-Year Financial Summary 40 Notes to Consolidated Financial Statements 19 Management's Discussion and Analysis of Financial Condition and Results of Operations 60 Report of Independent Registered Public Accounting Firm 35 Consolidated Statements of Income 36 Consolidated Statements of Comprehensive Income 61\t\u0007Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting 37 Consolidated Balance Sheets 62 Management's Report to Our Shareholders 38\t\u0007Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interest 63 Unit Counts as of January 31, 2016 64 Corporate and Stock Information 39 Consolidated Statements of Cash Flows Executive Officers Neil M. Ashe Jacqueline P. Canney Jeffrey J. Gearhart Executive Vice President, President and Chief Executive Officer, Global eCommerce and Technology Executive Vice President, Global People Executive Vice President, Global Governance and Corporate Secretary Daniel J. Bartlett Executive Vice President, Corporate Affairs M. Brett Biggs Executive Vice President and Chief Financial Officer Rosalind G. Brewer Executive Vice President, President and Chief Executive Officer, Sam's Club David Cheesewright Executive Vice President, President and Chief Executive Officer, Walmart International C. Douglas McMillon Greg S. Foran Steven P. Whaley Executive Vice President, President and Chief Executive Officer, Walmart U.S. Senior Vice President and Controller President and Chief Executive Officer Rollin L. Ford Executive Vice President and Chief Administrative Officer Only Walmart 17 Five-Year Financial Summary As of and for the Fiscal Years Ended January 31, (Amounts in millions, except per share and unit count data) Operating results Total revenues Percentage change in total revenues from previous fiscal year Net sales Percentage change in net sales from previous fiscal year Increase (decrease) in calendar comparable sales(1) in the United States Walmart U.S. Sam's Club Gross profit margin Operating, selling, general and administrative expenses, as a percentage of net sales Operating income Income from continuing operations attributable to Walmart Net income per common share: Diluted income per common share from continuing operations attributable to Walmart Dividends declared per common share 2016 2015 2014 2013\t2012 $482,130 $485,651\t$476,294\t$468,651\t$446,509 (0.7)%\t2.0%\t1.6%\t5.0%\t6.0% $478,614 $482,229\t$473,076\t$465,604\t$443,416 (0.7)%\t1.9%\t1.6%\t5.0%\t6.0% 0.3% 0.5%\t(0.5)%\t2.4% 1.6% 1.0% 0.6%\t(0.6)%\t2.0% 0.3% (3.2)%\t0.0%\t0.3%\t4.1%\t8.4% 24.6% 24.3%\t24.3%\t24.3%\t24.5% 20.3% 19.4%\t19.3%\t19.0%\t19.2% $24,105 $27,147 $ 26,872\t$ 27,725\t$ 26,491 14,694 16,182\t15,918\t16,963\t15,734 $4.57 $4.99 $4.85 $5.01 $4.53 1.96 1.92\t1.88\t1.59\t1.46 Financial position Inventories $44,469 $45,141 $44,858 $43,803 $40,714 Property, equipment, capital lease and financing obligation assets, net 116,516\t116,655\t117,907\t116,681\t112,324 199,581 203,490\t204,541\t202,910\t193,120 Total assets(2) Long-term debt(2) and long-term capital lease and financing obligations (excluding amounts due within one year) 44,030 43,495\t44,368\t41,240\t46,818 Total Walmart shareholders' equity 80,546 81,394\t76,255\t76,343\t71,315 Unit counts(3) Walmart U.S. segment Walmart International segment Sam's Club segment Total units 4,574 4,516\t4,203\t4,005\t3,868 6,299 6,290\t6,107\t5,783\t5,287 655 647\t632\t620\t611 11,528 11,453\t10,942\t10,408 9,766 (1) C \u0007 omparable sales include sales from stores and clubs open for the previous 12 months, including remodels, relocations and expansions, as well as e-commerce sales. Comparable store and club sales include fuel. (2) \u0007Total assets and long-term debt were adjusted to reflect the adoption of ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost, for all periods. (3) \u0007Unit counts related to discontinued operations have been removed from all relevant periods. 18 2016 Annual Report Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Wal-Mart Stores, Inc. (\"Walmart,\" the \"Company\" or \"we\") is engaged in retail and wholesale operations in various formats around the world. Through our operations, we help 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 of the markets in which 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, invest to differentiate on access, be competitive on assortment and deliver a great experience. By leading on price we 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, which we are investing in to integrate, 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 consist of three reportable segments: Walmart U.S., Walmart International and Sam's Club. \u0007Walmart U.S. is our largest segment with three primary store formats, as well as digital retail. Of our three reportable segments, Walmart U.S. has historically had the highest gross profit as a percentage of net sales (\"gross profit rate\"). In addition, it has historically contributed the greatest amount to the Company's net sales and operating income. \u0007Walmart International consists of our operations outside of the U.S. and includes retail, wholesale and other businesses. These businesses 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 overall gross profit rate for Walmart International is lower than that of Walmart U.S. 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, and expanding digital retail. \u0007Sam's Club consists of membership-only warehouse clubs as well as digital retail. As a membership-only warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments. Each of our segments contributes to the Company's operating results differently, but each has generally maintained a consistent contribution rate to the Company's net sales and operating income in recent years. Our fiscal year ends on January 31 for our U.S. and Canadian operations. We consolidate all other operations generally using a one-month lag and on a calendar year basis. Our business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Historically, our highest sales volume and operating income have occurred in the fiscal quarter ending January 31. This discussion, which presents our results for periods occurring in the fiscal years ended January 31, 2016 (\"fiscal 2016\"), January 31, 2015 (\"fiscal 2015\") and January 31, 2014 (\"fiscal 2014\") should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period and the primary factors that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's performance. Additionally, the discussion provides information about the financial results of the three segments of our business to provide a better understanding of how each of those segments and its results of operations affect the financial condition and results of operations of the Company as a whole. Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, we discuss segment operating income, comparable store and club sales and other measures. Management measures the results of the Company's segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's operating income, including certain corporate overhead allocations, and other measures as determined by the information regularly reviewed by our chief operating decision maker. When we do so, the previous period amounts and balances are reclassified to conform to the current period's presentation. Comparable store and club sales is a metric that indicates the performance of our existing U.S. stores and clubs by measuring the change in sales for such stores and clubs, including e-commerce sales, for a particular period from the corresponding period in the previous year. Walmart's definition of comparable store and club sales includes sales from stores and clubs open for the previous 12 months, including remodels, relocations, expansions and conversions, as well as e-commerce sales. We measure the e-commerce sales impact by including those sales initiated through our websites and our mobile commerce applications and fulfilled through our e-commerce distribution facilities, as well as an estimate for sales initiated online and on our mobile commerce applications, but fulfilled through our stores and clubs. Sales of a store that has changed in format are excluded from comparable store and club sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in the store's retail square feet of more than five percent. Comparable store and club sales are also referred to as \"samestore\" sales by others within the retail industry. The method of calculating comparable store and club sales varies across the retail industry. As a result, our calculation of comparable store and club sales is not necessarily comparable to similarly titled measures reported by other companies. Only Walmart 19 Management's Discussion and Analysis of Financial Condition and Results of Operations In discussing our operating results, we use the term \"currency exchange rates\" to refer to the currency exchange rates we use to convert the operating results for all countries where the functional currency is not the U.S. dollar into U.S. dollars for financial reporting purposes. We calculate the effect of changes in currency exchange rates from the prior period to the current period as the difference between current period activity translated using the current period's currency exchange rates, and current period activity translated using the comparable prior year period's currency exchange rates. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company and the Walmart International segment in the future. We made certain reclassifications to prior period amounts or balances to conform to the presentation in the current fiscal year. These reclassifications did not impact the Company's operating income or consolidated net income. The Retail Industry We operate in the highly competitive retail industry in all of the markets we serve. We face strong sales competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as e-commerce and catalog businesses. Many of these competitors are national, regional or international chains or have a national or international online presence. We compete with a number of companies for prime retail site locations, as well as in attracting and retaining quality employees (whom we call \"associates\"). We, along with other retail companies, are influenced by a number of factors including, but not limited to: catastrophic events, weather, competitive pressures, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation, inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates, cybersecurity attacks and unemployment. Further information on the factors that can affect our operating results and on certain risks to our Company and an investment in its securities can be found under \"Item 1A. Risk Factors\" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2016, and in the discussion under \"Cautionary Statement Regarding Forward-Looking Statements and Information\" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2016. Company Performance Metrics We are committed to helping customers save money and live better through everyday low prices, supported by everyday low costs. At times, we adjust our business strategies to ensure we maintain our strong leadership position around the world and in the countries in which we operate. For several years, our performance metrics emphasized three financial priorities: growth, leverage and returns. We are currently making strategic investments in our associates and in the integration of digital and physical retail. These investments support long-term growth while we maintain our heritage of everyday low prices which are supported by everyday low cost. During this time of increased investments, we have shifted our financial priorities to focus primarily on growth, balanced by the long-term health of the Company including returns. We will continue to grow through new stores and clubs, and through increasing comparable store and club sales, which include our e-commerce sales. While leverage remains important to everyday low cost, during this time of increased investments, operating expenses may grow at a rate that is greater than or equal to the rate of our net sales growth, and operating income may grow at a rate that is equal to or less than the rate of our net sales growth. Our objective of balancing growth with returns means that we are focused on efficiently employing assets for return on investment and more effectively managing working capital to deliver strong free cash flow. We will also continue to provide returns to our shareholders through share repurchases and dividends. Growth We measure our growth primarily by the amount of the period-over-period growth in our net sales and our comparable store and club sales. We also review the progress of our digital retail investments by measuring the impact e-commerce sales have on our comparable store and club sales. At times, we make strategic investments which are focused on the long-term growth of the Company. These strategic investments may not benefit net sales and comparable store and club sales in the near term. Net Sales Fiscal Years Ended January 31, (Amounts in millions) 2016 2015 Net Sales 2014 Percent\tPercent Percent Percent Percent of Total Change Net Sales of Total Change Net Sales of Total Walmart U.S. Walmart International Sam's Club $298,378 62.3%\t3.6% $288,049 59.8%\t3.1% 123,408 25.8%\t(9.4)% 136,160 28.2%\t(0.3)% 56,828 11.9%\t(2.1)% 58,020 12.0%\t1.5% $279,406 59.0% 136,513 28.9% 57,157 12.1% Net sales $478,614\t100.0%\t(0.7)% $482,229 100.0% 1.9% $473,076\t100.0% Our consolidated net sales decreased $3.6 billion or 0.7% for fiscal 2016 and increased $9.2 billion or 1.9% for fiscal 2015, when compared to the previous fiscal year. Net sales for fiscal 2016 were negatively impacted by $17.1 billion or 3.5% as a result of fluctuations in currency exchange rates and a $1.9 billion decrease in fuel sales primarily due to the lower selling prices of fuel at our Sam's Club segment. The negative effect of such factors was offset by 1.3% year-over-year growth in retail square feet, positive comparable sales in the Walmart U.S. segment and higher e-commerce sales across the Company. The increase in net sales for fiscal 2015 was primarily due to 3.0% year-over-year growth in retail square feet, positive comparable sales in the U.S. and higher e-commerce sales across the Company. The increase was partially offset by $5.3 billion of negative impact from fluctuations in currency exchange rates for fiscal 2015. 20 2016 Annual Report Management's Discussion and Analysis of Financial Condition and Results of Operations Calendar Comparable Store and Club Sales Comparable store and club sales is a metric which indicates the performance of our existing U.S. stores and clubs by measuring the change in sales for such stores and clubs, including e-commerce sales, for a particular period over the corresponding period in the previous year. The retail industry generally reports comparable store and club sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry, we provide comparable store and club sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable store and club sales below, we are referring to our calendar comparable store and club sales calculated using our fiscal calendar. As our fiscal calendar differs from the retail calendar, our fiscal calendar comparable store and club sales also differ from the retail calendar comparable store and club sales provided in our quarterly earnings releases. Calendar comparable store and club sales, as well as the impact of fuel, for fiscal 2016 and 2015, were as follows: Fiscal Years Ended January31, 2016 2015 With Fuel 2016\t2015 Fuel Impact Walmart U.S. Sam's Club 1.0%\t0.6% 0.0%\t0.0% (3.2)%\t0.0% (3.4)%\t(0.6)% Total U.S. 0.3%\t0.5% (0.6)%\t(0.1)% Comparable store and club sales in the U.S., including fuel, increased 0.3% and 0.5% in fiscal 2016 and 2015, respectively, when compared to the previous fiscal year. The fiscal 2016 total U.S. comparable store and club sales were positively impacted by continued traffic improvement and higher e-commerce sales at the Walmart U.S. segment, offset to a significant degree by the negative impact of lower fuel sales primarily due to lower fuel prices at the Sam's Club segment. E-commerce sales positively impacted comparable sales approximately 0.2% and 0.6% for Walmart U.S. and Sam's Club, respectively, for fiscal 2016. The fiscal 2015 total U.S. comparable store and club sales were positively impacted by higher traffic during the end of the fiscal year. E-commerce sales positively impacted comparable sales approximately 0.3% and 0.2% for Walmart U.S. and Sam's Club, respectively, for fiscal 2015. As we continue to add new stores and clubs in the U.S., we do so with an understanding that additional stores and clubs may take sales away from existing units. We estimate the negative impact on comparable store and club sales as a result of opening new stores and clubs was approximately 0.8% and 0.9% in fiscal 2016 and 2015, respectively. Our estimate is calculated primarily by comparing the sales trends of the impacted stores and clubs, which are identified based on their proximity to the new stores and clubs, to those of nearby non-impacted stores and clubs, in each case, as measured after the new stores and clubs are opened. Strategic Growth Investments During fiscal 2016, we made capital investments globally of $11.5 billion. These capital investments primarily consisted of payments to add new stores and clubs, remodel existing stores and clubs, construct distribution centers and invest in technology. In addition, we made an incremental operational investment of $296 million in e-commerce in fiscal 2016 as compared to fiscal 2015. We also made operational investments of approximately $1.2 billion in fiscal 2016 in connection with the new associate wage structure and comprehensive associate training and educational programs announced in first quarter of fiscal 2016. These operational investments will continue into the year ending January 31, 2017 (\"fiscal 2017\"). Returns While we are focused primarily on growth, we also place a priority on generating returns to ensure our approach is appropriately balanced. We generate returns by efficiently deploying assets and effectively managing working capital. We monitor these efforts through our return on investment and free cash flow metrics, which we discuss below. In addition, we are focused on providing returns to our shareholders in the form of share repurchases and dividends, which are discussed in the Liquidity and Capital Resources section. Return on Investment Management believes return on investment (\"ROI\") is a meaningful metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term potential strategic initiatives with possible short-term impacts. ROI was 15.5% and 16.9% for the fiscal years ended January 31, 2016 and 2015, respectively. The decline in ROI was primarily due to our decrease in operating income, as well as continued capital investments. We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the fiscal year divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average accumulated amortization, less average accounts payable and average accrued liabilities for that period, plus a rent factor equal to the rent for the fiscal year multiplied by a factor of eight. When we have discontinued operations, we exclude the impact of the discontinued operations. Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the U.S. (\"GAAP\"). For example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the numerator of our calculation of ROI. In addition, we include Only Walmart 21 Management's Discussion and Analysis of Financial Condition and Results of Operations a factor of eight for rent expense that estimates the hypothetical capitalization of our operating leases. We consider return on assets (\"ROA\") to be the financial measure computed in accordance with GAAP that is the most directly comparable financial measure to our calculation of ROI. ROI differs from ROA (which is consolidated income from continuing operations for the period divided by average total assets of continuing operations for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets of continuing operations for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities; and incorporates a factor of rent to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more meaningful to investors than ROA. Although ROI is a standard financial metric, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI. The calculation of ROI, along with a reconciliation to the calculation of ROA, the most comparable GAAP financial measure, is as follows: Fiscal Years Ended January 31, (Amounts in millions) 2016\t2015 CALCULATION OF RETURN ON INVESTMENT Numerator Operating income $24,105 $27,147 + Interest income 81\t113 + Depreciation and amortization 9,454\t9,173 + Rent 2,532\t2,777 = Adjusted operating income $36,172 $39,210 Denominator Average total assets of continuing operations(1) $201,536\t$203,786 + Average accumulated depreciation and amortization(1) 68,759\t63,375 - Average accounts payable(1) 38,449\t37,913 - Average accrued liabilities(1) 19,380\t18,973 + Rent x 8 20,256\t22,216 Certain Balance Sheet Data Total assets of continuing operations(2) Accumulated depreciation and amortization Accounts payable Accrued liabilities As of January 31, 2016 2015\t2014 $199,581\t$203,490\t$204,081 71,538\t65,979\t60,771 38,487\t38,410\t37,415 19,607\t19,152\t18,793 (1) T\u0007 he average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by 2. (2) \u0007Total assets of continuing operations were adjusted to reflect the adoption of ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost, for all periods. Free Cash Flow Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated income from continuing operations as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We generated free cash flow of $15.9 billion, $16.4 billion and $10.1 billion for fiscal 2016, 2015 and 2014, respectively. The decrease in free cash flow in fiscal 2016 from fiscal 2015 was primarily due to lower income from continuing operations, partially offset by lower capital spending and improved working capital management. Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows. = Average invested capital $232,722\t$232,491 Return on investment (ROI) 15.5%\t16.9% CALCULATION OF RETURN ON ASSETS Numerator Income from continuing operations $15,080 $16,814 Denominator Average total assets of continuing operations(1) $201,536\t$203,786 Return on assets (ROA) 7.5%\t8.2% 22 2016 Annual Report Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by Walmart's management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow. Management's Discussion and Analysis of Financial Condition and Results of Operations The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities. Fiscal Years Ended January 31, 2016 2015\t2014 (Amounts in millions) Net cash provided by operating activities Payments for property and equipment $27,389 $28,564 $23,257 (11,477) (12,174)\t(13,115) Free cash flow $15,912 Net cash used in investing activities(1) $(10,675) $(11,125)\t$(12,526) Net cash used in financing activities (16,122) (15,071)\t(10,789) $16,390 $10,142 (1) \"\u0007 Net cash used in investing activities\" includes payments for property and equipment, which is also included in our computation of free cash flow. Results of Operations Consolidated Results of Operations (Amounts in millions, except unit counts) Total revenues Percentage change from comparable period Net sales Percentage change from comparable period Total U.S. calendar comparable store and club sales increase (decrease) Gross profit rate Operating income Operating income as a percentage of net sales Income from continuing operations Unit counts at period end Retail square feet at period end Fiscal Years Ended January 31, 2016 2015\t2014 $482,130 $485,651\t$476,294 (0.7)%\t2.0% 1.6% $478,614 $482,229\t$473,076 (0.7)%\t1.9% 1.6% 0.3% 0.5%\t(0.5)% 24.6%\t24.3%\t24.3% $24,105 $27,147 $26,872 5.0%\t5.6%\t5.7% $15,080 $16,814 $16,551 11,528 11,453\t10,942 1,149 1,135\t1,101 Our total revenues, which are mostly comprised of net sales, but also include membership and other income, decreased 0.7% for fiscal 2016 and increased 2.0% for fiscal 2015 when compared to the previous fiscal year. Net sales decreased 0.7% for fiscal 2016 and increased 1.9% for fiscal 2015 when compared to the previous fiscal year. For fiscal 2016, net sales were negatively impacted by $17.1 billion as a result of fluctuations in currency exchange rates and a decrease of $1.9 billion in fuel sales that resulted primarily from lower selling prices for fuel at our Sam's Club segment. The negative effect of such factors on our consolidated net sales was partially offset by the 1.3% year-over-year growth in retail square feet, positive comparable sales in the Walmart U.S. segment and higher e-commerce sales across the Company. For fiscal 2015, the increase in net sales was primarily due to 3.0% year-over-year growth in retail square feet, positive comparable sales in the U.S. and higher e-commerce sales across the Company. The increase was partially offset by $5.3 billion of negative impact from fluctuations in currency exchange rates for fiscal 2015. Our gross profit rate increased 29 basis points for fiscal 2016 when compared to fiscal 2015. Improved margins in food, general merchandise, and consumables in the Walmart U.S. segment positively impacted our gross profit rate. Changes in the merchandise mix in the Walmart International segment and a reduction in low margin fuel sales in the Sam's Club segment also positively impacted our gross profit rate, while continued pharmacy reimbursement pressure at the Walmart U.S. segment negatively impacted our gross profit rate. Our gross profit rate was relatively flat in fiscal 2015 when compared to fiscal 2014. Operating expenses as a percentage of net sales increased 91 and 6 basis points for fiscal 2016 and 2015, respectively, when compared to the previous fiscal year. For fiscal 2016, the increase in operating expenses as a percentage of net sales was primarily due to an increase in wage expense at the Walmart U.S. segment due to the new associate wage structure and increased associate hours to improve the overall customer experience, the approximately $0.9 billion charge for the store closures announced in January 2016 and our continued investments in digital retail and information technology. For fiscal 2015, the increase in operating expenses as a percentage of net sales was due to our continued investments in digital retail and higher health-care expenses in the U.S. from increased enrollment in our associate health-care plans and medical cost inflation, the $249 million impact of wage and hour litigation in the U.S., as well as expenses of $148 million related to the closure of approximately 30 underperforming stores in Japan. The impact of these factors in the increase of operating expenses as a percentage of net sales for fiscal 2015 was partially offset by nearly $1.0 billion of aggregated expenses incurred in fiscal 2014. Our effective income tax rate w