Pauline Mohler - Senior Director-Corporate Finance C. Douglas McMillon - President, Chief Executive Officer & Director Gregory S. Foran - President & Chief Executive Officer, Walmart U.S. David Cheesewright - President & Chief Executive Officer, Walmart International, Wal-Mart Stores, Inc.

Rosalind Gates Brewer - President & Chief Executive Officer, Sam's Club, Wal-Mart Stores, Inc. Neil M. Ashe - President & Chief Executive Officer, Global eCommerce and Technology Brett M. Biggs - Chief Financial Officer & Executive Vice President.

Welcome. This is Pauline Mohler, Senior Director of Global Investor Relations for Wal-Mart Stores, Incorporated. Thanks for joining us today to review the results for the fourth quarter and full year of fiscal 2016. The date of this call is February 18, 2016.

This call is the property of Wal-Mart Stores, Incorporated and is intended for the use of Walmart shareholders and the investment community. It should not be reproduced in any way.

This call contains statements that Walmart believes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and that are intended to enjoy the protection of the safe harbor for forward-looking information provided by that act.

Please note that a cautionary statement regarding the forward-looking statements will be made following Brett Biggs' remarks later in this call. Today, in addition to the earnings release, we announced our annual dividend for fiscal year 2017 and you will hear more about that in today's call.

Information regarding today's news is available on the Investors portion of our corporate website, stock.walmart.com.

At this site, we also post earnings terminology, which includes our definition of adjusted earnings per share, our global unit counts and a slide presentation that we recommend you should review in conjunction with this call and the earnings press release.

The slide presentation has been updated to include the FCPA and compliance-related costs which we have typically discussed in the transcript. As a reminder for fiscal 2016, we utilized a 52-week comp reporting calendar. For this year, quarter-to-date and year-to-date comps will be based upon 13 and 52-week periods, respectively.

Our Q4 reporting period ran from Saturday, October 31, 2015, through Friday, January 29, 2016. Now, let's move on to today's call. Doug McMillon, President and CEO of Wal-Mart Stores, Incorporated, will provide his thoughts about our results for the quarter and year in the context of our overall strategy.

Then, we'll cover the three operating segments, starting with Greg Foran, President and CEO of Walmart U.S.; followed by Dave Cheesewright, President and CEO of Walmart International; and then Roz Brewer, President and CEO of Sam's Club.

Next, Neil Ashe, President and CEO of Global eCommerce and Technology, is joining us this quarter to share insights regarding our investments in e-commerce. And last, Brett Biggs, Walmart's CFO, will wrap up with context around the financial results, along with guidance for the first quarter and full year of fiscal 2017.

Now, I'd like to turn it over to our CEO, Doug McMillon.

Doug?.

Thanks, Pauline, and good morning, everyone. Thank you for joining us to hear more about our fourth quarter earnings, year-end results and progress against our strategy. We had a solid fourth quarter to close out our fiscal year, with adjusted earnings per share of $1.49.

It's important to note our numbers reflect some discrete items this quarter, including the impact of store closures and certain tax items. And Brett will share more details in a minute. For fiscal year 2016, adjusted EPS was $4.59.

And excluding the $17.2 billion impact of currency, we delivered revenue of $499.4 billion, up 2.8%, which is $13.7 billion of growth. We continue to be pleased with the fundamental trends. We're making progress with customers and associates and feel good about where we're heading.

We're improving our stores, adding critical capabilities and deepening our digital relationships with customers as we work to become the first to deliver a seamless shopping experience at scale. We'll save our customers not only money but time, and shopping with us will be simple, convenient and fun.

I also want to call out our continued commitment to our shareholders. In the fourth quarter, we were able to return $4 billion to our shareholders through dividends and share repurchases. In fact, today we announced a dividend increase. Our annual dividend was $1.96 and we've increased it to $2 per share.

This is the 43rd consecutive year of dividend increases for Walmart. Overall, this past year has been a year of investment, operational improvement and change, even while we delivered solid growth. We do see an underlying strength in our Walmart U.S. business that wasn't there a year ago. I want to share a few highlights.

As you know, our biggest investments have been in people and technology. On this call one year ago, we announced our investment in higher wages, better training and more department managers to make Walmart U.S. a better place to work and shop. We can only be successful with customers with engaged and empowered associates.

A few weeks ago, we announced the second part of the wage increase. And it's awesome to give a raise to more than 1 million people on the same day. We also announced a simplified paid time-off policy that will mean no waiting for associates to use their time off. These and other changes in the business are making a difference.

Our customer satisfaction scores have risen significantly this year and we now have had six consecutive quarters of positive comps and five straight quarters of positive traffic at Walmart U.S. In the technology and e-commerce space, we continued to innovate with a focus on the customer.

We have developed a new platform that we can scale across the business. We have improved our fulfillment capabilities with new fulfillment centers that are helping us get orders to customers' doors faster and more efficiently. And we continued to see growth in store pickup for online orders.

We also expanded online grocery shopping to over 150 locations across more than 20 markets in the U.S. Customers are ordering online and on their phones and then picking up their groceries on our parking lots without ever leaving their cars. Customer satisfaction for those who use our free pickup service is in the high 90s.

We are learning some interesting things along the way. We've found that 8:00 p.m. to 9:00 p.m. is one of the most popular times customers order groceries online, usually once the kids go to bed. We also see a healthy number of orders in the middle of the night.

These may be parents comforting or feeding infants and ordering more diapers or formula to pick up the next day. While it's been awhile since my kids were that age, I remember those days well. And I absolutely love that we're able to offer convenience and blend into our customers' lives when they need us most.

I'm also excited about the introduction of Walmart Pay. And I was very proud of how different parts of our company worked together on it with a relentless focus on the customer experience. I look forward to us rolling it out this coming year.

We recently aligned our technology teams because we want more speed and more customer-centric and cost-efficient innovations like this one. We will deliver one Walmart experience to our customers. Additionally, we took steps this quarter to sharpen the focus of our portfolio.

As part of this continuing portfolio review process, we looked at all of our stores from both a financial and strategic standpoint. One of the key takeaways for me was how strong our portfolio really is, in that we only closed stores representing less than 1% of our global revenue and square footage.

I'm pleased, but not surprised, that we have already found open positions for more than half of the impacted associates in the U.S., and we're moving aggressively to identify other open positions for the remaining associates who are interested in transferring to new locations. So we're doing what we said we'd do, and we're on the right path.

Still, we know we have a lot more work to do. And there are areas of the business that are not where they need to be. Let's look more closely at each of the segments. Walmart U.S. is on firm ground. We had comp sales of 0.6% on top of last year's 1.5% comp for the fourth quarter. As we lapped positive comps, we accelerated on a two-year stack basis.

We also had continued strong performance from Neighborhood Markets. In addition to our investments in our associates, we're getting better at the fundamentals of retail and managing the business better. We are reducing comp store inventory and improving our in-stock performance.

We also had a sound plan for the holiday season that ensured customers could rely on us for low prices throughout the season, not just at big moments. Walmart International again delivered solid financial performance. Nine of our 11 markets delivered positive comps for the quarter, and I'm very encouraged by the results overall.

Walmex, in particular, is in a good groove again. And Canada delivered strong performance. Although we face near-term headwinds with the economy in China, our business there is on track. Brazil, however, is proving to be an increasingly challenging economic environment, and the competitive intensity in the UK continues to increase.

As we review and act on our portfolio, we also announced that we were exploring selling both our clothing chain, called Suburbia, in Mexico and a property company in Chile. Our International business is healthy and growing. Global eCommerce sales and Gross Merchandise Value, or GMV, globally grew approximately 8% in the fourth quarter.

For the year, sales grew 12% and GMV grew 13%. The holiday season gave a good preview of how all the pieces we're putting in place will come together. We saw strong online sales in the U.S. on the big days from Thanksgiving through Cyber Monday, and nearly half of our customers bought their online orders on a mobile device.

We also saw growth in store pickup and online grocery. We have faced specific challenges in our largest e-commerce markets outside the U.S. Economic softness in Brazil and China continued to weigh on growth and we have been in a transition phase at Yihaodian since acquiring full ownership.

As mentioned before, the environment in the UK remains extremely competitive and it's important to remember our e-commerce business in UK is a food delivery and pickup business. In the U.S., we plan to build on the foundation we've built by delivering a significant assortment expansion and faster delivery at a lower cost this year.

We need more GMV growth from our e-commerce businesses. Sam's Club is in the early days with its new strategy. Comps for the quarter were below what we anticipated. And Food, in particular, underperformed outside of the holiday periods.

We're pleased with the work so far to address the fundamentals of the business, to improve merchandising and drive new membership, but we have more to do. There are encouraging signs in our membership numbers. As we address issues with the core business, we're excited by growth in new areas.

For example, Club Pickup continued to be the fastest-growing part of the business. Finally, even as we focus on our customers and our associates, we were reminded a few weeks ago about the opportunity we have to lead in our communities.

Walmart, Coca-Cola, Nestlé, and PepsiCo announced we will collectively donate water to meet the daily needs of over 10,000 school children in Flint, Michigan, for the balance of the calendar year. Whether it's hiring veterans, supporting U.S.

manufacturing, or driving new renewable energy production, we have strengths that can help others in important ways. During the first quarter, we will release our annual Global Responsibility Report, alongside our Annual Report, to share more on how we're making a difference.

Leading on social and environmental issues is good for our business, for our shareholders and for the world, and we will continue to move the needle this year. In summary, we continue to believe we are putting the right foundation in place to better serve customers, deliver stronger sales growth and ultimately strengthen bottom line performance.

As we begin this new year, I'm focused on continuing the momentum in our U.S. stores, getting all the ingredients in place for stronger growth in e-commerce and the strategic choices related to how we put them together. I'm also mindful of the need for balance. Improving productivity as we grow is important.

Brett will talk through our full-year forecast, with the first quarter being the most pressured from an earnings point of view due to the timing of the incremental wage investments. This will be another year where we digest foundational investments, and it's important that we build on what we've started as we go through the year.

Now, I'll turn it over to Greg..

Thank you, Doug. Over the last 12 months, we've laid out our plan to win in the U.S. now and in the future. We are executing against it and have taken several steps towards delivering on our commitment of growing the top line, increasing market share and delivering shareholder value.

We've still got a lot of work to do, but I'm pleased that our fourth quarter results demonstrated solid progress against this plan. Across the key metrics we track to measure our progress, we're right where we expected to be. Comp sales were positive for the sixth straight quarter and driven by our fifth straight quarter of positive traffic.

Our customers are increasingly pleased with the changes in our stores. And they're letting us and others know through improvements in the Net Promoter Score and improved customer experience feedback.

In fact, at the end of this fiscal year, more than 75% of stores had met or exceeded their customer experience goals set back at the beginning of the year. This was a significant improvement over the 16% that were meeting this mark at the beginning of the fiscal year. Additionally, our associates are more engaged, and turnover is lower.

Department managers have been hired in key areas of the stores, and our new training programs are underway. New technology is in our associates' hands, and better processes are creating efficiencies in the stores, driving higher in-stocks and a continuing decline in comp store inventory.

As we have discussed, there will be more investments necessary to further deliver on our plan, but we have remained on task and we're seeing progress. Before discussing our fourth quarter results, I want to address two announcements we've made recently. First, we announced the second phase of our two-year, $2.7 billion investment in our associates.

Just two days from now, on February the 20th, we'll raise the starting wage to at least $10 per hour for hourly associates hired before January 1, 2016. Additionally, we're continuing to simplify our business and enhance our benefits package by shifting to a paid time-off policy for all associates.

These changes, along with our previous announcements around training programs and store structure, are exciting for all our associates. We are providing our people with a ladder of opportunity to build a career with Walmart and to provide great service to our customers. Secondly, in January, we announced the closing of 150 U.S.

stores, including all 102 of our Express format locations. Closing stores is never an easy decision, but it's necessary to ensure we are positioned to deliver our long-term plan. Strengthening the Supercenter and Neighborhood Market formats, while simultaneously delivering a seamless experience with e-commerce, will require our full attention.

In fact, we expect to open more than 135 stores in fiscal 2017 alone. While we know that closing stores affected a number of our associates, I'm proud to say that more than half of these associates have already received offers or have been placed in open roles in nearby stores.

And we're moving aggressively to identify other open positions for the remaining associates who are interested in transferring to new locations. Due to the financial impact of the store closures, our reported results differ significantly from the adjusted results and the underlying business performance.

As reported, we incurred $729 million in charges related to these store closures. Therefore, unless otherwise noted, today's financial discussion will exclude the impact of store closures for purposes of comparability.

For reported results including the impact of store closures and additional information, please refer to the accompanying presentation posted with this transcript. Moving to our fourth quarter results, net sales grew $1.9 billion, or 2.4%, and comp store sales were up 0.6%.

We're pleased with the continued growth in customer traffic, which improved 0.7% this quarter on top of last year's 1.4% traffic gain. On a two-year stack basis, our fourth quarter comp sales improved to 2.1%. While customers benefited from lower gas prices, we experienced significant headwinds from deflation in meat and dairy products.

Additional sales pressure came from warmer than normal temperatures early in the quarter and delays in IRS tax refund checks impacted the very end of the quarter. Neil will cover our e-commerce initiatives in more detail in this call, but for this quarter, e-commerce contributed approximately 30 basis points to our comp.

Overall, we were pleased with our performance over the six-week holiday season. We made a strategic decision to sensibly pull back on short-term, deep price investments as we looked to simplify the experience for both our customers and associates, and shift back towards a more EDLP focus.

Investments in e-commerce fulfillment centers allowed us to extend the shipping cut-off date. And customers took full advantage of Pickup, ordering their gifts online and conveniently picking them up alongside their grocery trips.

As we approached the end of the season, customers transitioned from online to in-store, and we delivered, driving strong performance across the box as customers stocked up on last-minute gifts and food for their holiday meals. The Supercenter format delivered its sixth straight positive comp in the fourth quarter.

Additionally, our traditional-format Neighborhood Markets continued their strong performance, delivering a 7% comp. We're seeing steady progress in our efforts to improve each of these formats, with a focus on fresh offerings, clean stores, fast check-outs, friendly associates and better in-stocks.

We're pleased with our progress in Grocery, which saw a positive comp this quarter, led by improvement in Consumables. As I mentioned earlier, we experienced substantial deflation in both meat and dairy, which resulted in slight deflation across all of Food.

We estimate this deflation negatively impacted our segment comp by approximately 100 basis points, relative to last year's comp. Our Grocery business delivered positive comp traffic growth, even while lapping positive comp traffic from last year.

We continue to push forward with our Win in Fresh initiatives, including testing new layouts, reducing inventory while improving in-stocks in both Food and Consumables, and exceeding expectations in our urgent agenda items such as reducing waste and throwaways.

We still have work to do in our Fresh area, and many things we want to accomplish in the upcoming year, but we remain on track. In our General Merchandise areas, Apparel improved throughout the quarter, after a slow start due to warmer-than-usual temperatures. On-trend assortments, particularly in active wear, drove results in this area.

In Entertainment, we continued to experience soft wireless sales and a slower adoption of new technology in televisions. We're continuing to make progress in this space by focusing on our operating model, including service to our customers, assortment and department layout, but it will take time to get it right.

Across the rest of the General Merchandise and Home categories, solid performance came from better in-stocks, assortment updates and new products. Finally, Health & Wellness remained a positive comp driver for us, with growth coming from branded drug inflation and better in-stocks in OTC.

However, a slower flu season created a headwind to our Cold, Cough and Flu business this quarter. Moving to the remainder of our financials, gross margin was up 69 basis points versus last year. Gross margin rate improved in Food, General Merchandise and Consumables.

This was somewhat offset by declines in Health & Wellness, although we're still focused on providing better visibility and tools to help combat ongoing pharmacy reimbursement pressures. Transportation costs were helped by lower fuel rates.

Additionally, our intentional pullback on deep price investments during the holiday season meaningfully improved margins in Entertainment.

Lastly, we made additional progress on our urgent agent items, focused on reducing costs both in how we operate the business and in procuring merchandise, and remained diligent on improving processes related to shrink.

As expected, expenses increased 129 basis points in the fourth quarter, driven by our investments in associates and stores, including transitioning to a new paid time-off policy, along with building out our e-commerce capabilities.

However, we did a better job of aligning store labor hours with customer traffic by leveraging efficiencies gained from new processes and technology. The increase in expenses was partially offset by the improvements in gross margin, which resulted in an operating income decline of 5.3%. We continued to make progress in managing inventory.

Overall inventory grew 0.9%, or approximately 25% the rate of total sales growth. Comp store inventory declined 2.9%, as we remained focused on cleaning out our back rooms and using processes such as CAP and top-stock to ensure better in-stocks for our customers. Inventory will remain a key focus area for us in this new fiscal year.

Fiscal 2016 has been a year of redefinition, redefining our goals, redefining our focus and redefining our future. We've been intentional in our design and in our actions, and these actions have resulted in steady progress. To recap our performance for the year, net sales increased by $10.3 billion, or 3.6%.

Comp store sales grew 1.2%, driven by a 1.2% growth in comp traffic. E-commerce contributed approximately 25 basis points to our comp performance.

Gross margin improved 14 basis points for the year, helped by our ongoing focus on urgent agenda items and lower transportation costs, partially offset by headwinds from shrink and pharmacy reimbursement pressures.

However, the investments in our associates, stores and e-commerce drove expenses up 8.3% versus last year, which resulted in an operating income decline of 7.1%. We opened 69 Supercenters this year, including relocations and conversions, and 146 traditional-format Neighborhood Markets.

In FY 2017, we expect to open 50 to 60 Supercenters, including relocations and conversions. We'll also open 85 to 95 Neighborhood Markets. Additionally, we plan to further expand our online grocery program to more markets this year.

As we have discussed in the past, we are committed to growth, but we'll do it sensibly, with the customer in mind as we select the right locations, products and service offerings for each store.

We know the decisions we've made this year to improve our business pressured the bottom line, but we're confident they were in the best interest of our customers, our associates and our shareholders. We believe in our long-term plan. And we remain on track to achieve these goals.

In the new fiscal year, we're continuing to march down the path we've laid out. Our initiatives across the box are gaining steam. And we'll look forward to drive improvements in assortment and pricing, while focusing on building a seamless shopping experience across all channels.

We've just held our annual Year Beginning Meeting in Indianapolis, with nearly 7,000 of our operations and merchandising associates. I told the team that I was proud of their hard work and progress last year, and this year, we would build upon that as we work to execute with excellence.

In fact, we have raised the bar higher with new annual goals in our stores to drive an even cleaner, faster and friendlier customer experience as the year goes on. We expect these efforts, along with the ongoing investments in our stores and our associates, to drive continued growth in the top line. Lower fuel prices will also provide some tailwinds.

However, food deflation, which has accelerated in the last six weeks, will remain a challenge. Given these factors, for the 13-week period ended April 29, 2016, we expected a comp sales increase of around 50 basis points. Last year's 13-week comp ended May 1, 2015, increased 1.1%.

As a reminder, the investments in our associates will be an expense headwind this year, most significantly in the first quarter, as we implement phase two of these investments prior to lapping last year's phase one implementation, which started in April.

However, we will continue to focus on lowering costs through better buying and operating a better business. Now, I'll turn it over to Dave for an update on Walmart International.

Dave?.

actively manage the existing portfolio; deliver balanced growth; be the lowest cost operator; and build strong foundations in talent, trust and technology. In terms of the portfolio, we announced the closure of 115 small, underperforming stores in Brazil and other Latin American markets.

Whilst these are difficult decisions for our markets and associates, it better positions us for growth in the right formats and geographies. Recently, we also announced that we're pursuing the sale of our Suburbia apparel business in Mexico and we're in the process of selling our shopping centers in Chile.

These are successful businesses, but aren't a core part of our portfolio strategy. These changes would help drive greater simplicity to our operations and an increased focus on our strategic priorities.

For balanced growth, I'm pleased with our comp trends and look forward to opening between 200 and 240 stores this year across our portfolio, while at the same time expanding our reach in e-commerce. Our lowest cost operator initiative is focused on two key areas, cost of goods sold and overhead reductions.

On cost of goods sold, we started a cost analytics program that provides improved tools and cost visibility to our merchants, which enables them to lead fact-based negotiations with suppliers. We're pleased with early results from this program in Canada and the UK and will expand the program to additional markets later this year.

Now, let's discuss our overall results. In the fourth quarter, net sales grew 3.3% on a constant currency basis, slightly higher than last quarter. Reported net sales declined 9.7%, impacted by a $4.7 billion currency headwind from continued strength of the U.S. dollar. As mentioned, we had a strong quarter for comp sales.

In our five largest markets, Mexico, Canada and Brazil reported positive comps, while the UK and China reported negative comps. All other markets had solid positive comp sales.

Operating income declined 7.8% on a constant currency basis, negatively impacted by $215 million in charges, $153 million on a reported basis, related to previously-announced store closures.

Excluding this and certain other charges this year, such as restructuring costs, as well as last year's store closure costs in Japan, operating income would have increased. On a reported basis, operating income declined 19%. On a constant currency basis, inventory grew faster than net sales at 4.2%.

This increase was driven primarily by China, where inventory increased in preparation for Chinese New Year. On a reported basis, inventory declined 10.2%. For the full year, net sales grew 3.2% on a constant currency basis, with improved comp sales on top of 3.6% growth last year.

Currency exchange rate fluctuations had a significant impact of $17.1 billion on our reported results, by far the largest one year impact in our history, resulting in a net sales decline of 9.4% on a reported basis. Full year operating income declined 1% on a constant currency basis, driven by store closures this quarter.

Excluding this and last year's store closure costs in Japan, operating income would have increased. On a reported basis, operating income declined 13.4%. Now, let's discuss fourth quarter results for our largest markets, presented on a constant currency basis. In all countries except Brazil and China, financial results are inclusive of e-commerce.

Let's start with Mexico, which was the biggest driver of this quarter's results. Walmex released its earnings on February 16 under IFRS, while results here are under U.S. GAAP, so some numbers may differ. Walmex net sales increased 9.3%, with strong comp sales in both Mexico and Central America.

Mexico net sales grew 9.7% and comp sales increased 8.6%, driven by increased customer spending and solid execution from our stores. Self-service was particularly strong, with comp sales of 8.8%, while the rest of the market, according to ANTAD, grew only 4.9%.

Sam's Club also had its best performance of the year, delivering comp sales of 7%, driven by strong sales from Advantage, or non-business, members. Operating income declined versus last year, driven by a planned reduction in our gross profit rate. Let's next discuss Canada, which had another strong sales quarter.

Net sales grew 5.8%, benefiting by strong customer traffic as a result of our improved Fresh offer, continued price investments and improvement in operational standards. Comp sales were 4.3%, our seventh consecutive quarter in positive territory.

I'm especially pleased with our sales in Canada, given the economic pressures in the oil-producing provinces. We had positive market share gains in Food, Consumables and Health & Wellness, for the 12 weeks ended January 23, according to Nielsen. Our online sales continue to grow and perform well.

Operating income was down versus last year, due to certain land impairments and pre-opening expenses for 13 previously-announced stores acquired from a former competitor. Excluding these impacts, operating income would've been positive. Let's talk now about the UK, which continues to face challenging market conditions.

Grocery market sales fell 0.2% in the 12 weeks ended January 3, according to Kantar. This was driven by price deflation of 1.8% as a result of intense competition, and was the 17th consecutive period with deflation. The big four grocers remained under pressure as discounters continue to grow and gain share.

In the UK, we're striking a balance between investment in the customer offer, profit and cash flow. Overall, net sales declined 4.4%, and comp sales, excluding fuel, were down 5.5%, driven by declines in our large store format and in our Food business, partially offset by continued growth in online grocery.

We decided not to participate in Black Friday discounting, which impacted our comp sales, but helped profitability and allowed greater focus on operational standards and the customer offer in the core Food business. We delivered strong cash performance as a result of disciplined management of CapEx and working capital.

Asda is focused on repositioning its business through Project Renewal, which will simplify operations, lead to substantial reduction in costs and allow for significant investments in customer value. As part of this project, we're deploying a new cost analytics program to aid with buying.

We're also joining EMD, a European buying alliance, and we recently completed the purchase of two meat processing businesses. These actions will help increase buying efficiencies and remove costs from the supply chain, particularly for private label products.

The UK has also completed a restructuring of its home office aimed at increasing focus and improving operational agility. In addition, the UK will invest an additional £500 million in price during the period of its five-year strategy, on top of the £1 billion previously committed.

We're taking aggressive actions and we're focused on repositioning our offering to meet the changing needs of our customers. In China, despite ongoing economic challenges and slower GDP growth, we continue to gain share for the 12th consecutive quarter in the hypermarket channel, according to Nielsen.

Net sales grew 0.3%, driven by new store openings and improved performance from completed remodels. Comp sales fell 3%, in part, due to warmer weather and disappointing sales in winter seasonal categories. We continue to make progress in building a platform for sustainable growth in China.

We're benefiting from our earlier actions to centralize our buying offices and build out our supply chain. We've improved our gross margin rate and have realized benefits from productivity initiatives, while investing in labor and customer experience.

We can see momentum building as performance in Fresh has improved in recent quarters in both sales and margin. Operating income continues to grow faster than sales. The team in China is focused on delivering a trusted shopping experience through both physical and digital channels.

We're starting to see the benefits from tighter collaboration with Yihaodian. In Shenzhen and Guangzhou, Walmart now leverages Yihaodian's last mile network for online orders, which has led to greater delivery capacity. Overall, we're excited about the actions we're taking in China that are setting us up for long-term growth.

In Brazil, we continue to face political and economic instability. The deterioration in the macro environment, combined with persistent high inflation, continues to put a strain on customers. Net sales grew 1.2% and comps grew 0.8%, in a retail market that contracted by 5.7%, according to Serasa Experian.

We were encouraged by another quarter of double digit growth in our wholesale business, mostly offset by continued softness in the hypermarket format. Operating income was down versus last year, driven by the cost to close the 60 stores announced earlier. Excluding store closure costs, operating income would have been relatively flat to last year.

We're seeing positive results from some of our transformation initiatives, such as repositioning the customer proposition in our wholesale business, but there's still work to be done.

Brazil's focus for the year ahead will be to finalize store closures, revise and reposition the customer proposition for our hypermarket format, and complete the integration of systems and processes in our stores. We are committed to turnaround efforts in this important market.

As I wrap up, I'd like to recognize the efforts of our dedicated international associates operating in 28 countries around the globe that helped us achieve consistently good results throughout the year.

I'm confident in the management teams we have leading our markets and the strategic priorities we have in place to drive further growth in the year ahead. Now I'll turn it over to Roz for the update on Sam's.

Roz?.

additional organizational enhancements that will better align talent with critical needs; portfolio management through the closure of underperforming clubs; an extensive review of merchandise categories; and the expansion of private label brands in key areas. These are only a few examples, and we have many other work streams underway.

The totality of these efforts will address the fundamentals of our business, including membership and merchandising, as well as deliver new services and offerings. As I think about guidance for the first quarter, I'm reminded that, although we have accomplished a great deal over the previous months, it remains early days in our transformation.

As a result, comp sales, without fuel, for the 13-week period ending April 29, 2016, are expected to be around flat. Let me close today with a few thoughts. First, the new alignment of our organization will position the business to better serve our members.

It was a significant step in our transformation, and we will begin to see the benefits in the coming quarter. Secondly, our new Chief Merchandising Officer has conducted a comprehensive review of our merchandise based on identified markets and what he has gleaned from our strategy work. We are excited about his early insights at this stage.

I'm confident we're taking the business in the right direction now and for the future. Through a disciplined, refined approach to growth, we will deliver for our members a seamless shopping experience across app, site and club. Now, I'll turn the call over to Neil.

Neil?.

continuing to build a digital relationship with our customers; scaling our online assortment; and expanding online grocery. All these will combine to offer customers compelling experiences that let them shop seamlessly with Walmart in ways that help them save money and save time.

As we deliver that seamless experience across our app, site and store, we're building deeper relationships with customers. This relationship is key to building value for the enterprise. Now, I'll turn the call over to Brett.

Brett?.

Thanks, Neil. I'll wrap up today by providing some thoughts on the company's performance in fiscal year 2016, as well as our expectations for fiscal year 2017. Before we jump into guidance, I want to highlight a few items from the quarter and the year. Overall, we are pleased with the way we ended fiscal year 2016. In the fourth quarter, Walmart U.S.

comp sales increased 0.6%, representing the sixth consecutive quarter of positive comp sales and the fifth straight quarter of positive traffic. For the year, Walmart International delivered another solid financial performance, with very strong results in Canada and at Walmex.

We generated full year constant currency revenue growth of nearly $14 billion, or 2.8%. Currency impacted our full year revenue by over $17 billion. We continue to innovate and make progress toward a seamless shopping experience through a number of initiatives, including an increased number of online grocery markets.

While we would've liked to have seen higher e-commerce sales growth this quarter, we continue to make good foundational progress for the future. For the year, we generated approximately $27 billion in operating cash flow, which speaks to our continued financial strength as we transform the company.

I'm particularly pleased with our inventory performance in Walmart U.S. During the year, we returned over $10 billion in the form of dividends and share repurchases. We are able to deliver consistent returns to shareholders while investing for the future.

ROI decreased to 15.5%, primarily due to lower operating income as well as continued capital investments. Additionally, today, we announced an increase in our dividend from $1.96 per share to $2 per share in fiscal 2017. We've now increased our dividend for 43 consecutive years.

Now, I'd like to spend some time specifically on our EPS results for the fourth quarter and fiscal year 2016. Fourth quarter and full year adjusted EPS were $1.49 and $4.59, respectively. Our reported EPS for the same periods were $1.43 and $4.57, respectively. Let me briefly discuss the discrete items that were factored into our adjusted EPS.

Recall, in January, we announced the closure of 269 stores globally. Charges for these store closures, which impact both the fourth quarter and full year earnings, resulted in a negative impact of $0.20 per share.

Also, our effective tax rate for the fourth quarter and the full year benefited from the December passage by Congress of the tax extenders legislation, which we considered in our fourth quarter guidance. However, the fourth quarter and full year effective tax rate also benefited by $0.14 per share related to other discrete tax items in the quarter.

Finally, our full year adjusted EPS also excludes the effects of a benefit of approximately $0.04 from an adjustment for certain leases we disclosed in the third quarter of fiscal 2016. Now, let's shift gears and discuss fiscal year 2017 guidance.

We remain confident that the investments we are making in our associates, our stores and our digital capabilities are the right ones and are better preparing Walmart for the future. It's also important to note that, although we continue to invest in these important areas for the future, we will remain focused on managing expenses across the company.

Our guidance today includes several important assumptions, including that the economic conditions in our largest markets remain generally consistent and that the currency exchange rates remain at current levels.

From a capital standpoint, as we indicated at our October Investor Meeting, we expect capital investments to be approximately $11 billion in fiscal year 2017, down from fiscal year 2016. Currency remains a headwind for our business, as it is from many U.S. multinational companies.

Today, we expect a currency headwind of approximately $12 billion on net sales for fiscal year 2017. Additionally, currency is expected to impact EPS by approximately $0.10 per share this year, including approximately $0.03 in the first quarter. Now, let's turn to full year sales growth guidance.

In October, we guided that on a constant currency basis, net sales would grow 3% to 4% annually over the next three years. Excluding the impact of the recently-announced store closures and the continuing impact of a strengthening U.S. dollar, our fiscal 2017 sales growth guidance would have remained in that same range.

However, including store closures and the impact of the strengthening U.S. dollar, we now expect net sales growth to be relatively flat in fiscal year 2017. As for taxes, our earnings per share guidance is based on a fiscal 2017 estimated tax rate ranging between 31.5% and 33.5%.

As is the norm, our tax rate will fluctuate from quarter to quarter and may be impacted by a number of factors, including changes in our assessment of certain tax contingencies, valuation allowances, changes in laws, outcomes of administrative audits, the impacts of discrete items and the mix of earnings among our U.S. and international operations.

In any given quarter, our effective tax rate could be higher or lower than the full year range. I also want to note that historically, the tax extenders legislation has been approved at the end of each year, impacting the fourth quarter tax rate.

In the December legislation, many of the relevant tax provisions were either made permanent or passed through 2019. As a result, beginning in fiscal 2017, the benefits of the extenders will be spread across the full year, rather than all being in the fourth quarter.

Other discrete items as described above may still cause the effective tax rate to fluctuate from quarter to quarter. Taking into account the previously-mentioned assumptions, including currency rates at today's levels, tax rate and the incremental wage investments of $1.5 billion, we expect full year fiscal 2017 EPS to range between $4 and $4.30.

This most closely compares to our adjusted earnings per share of $4.59 in fiscal year 2016 and is broadly in line with our guidance from October for our earnings per share to be down 6% to 12% in fiscal year 2017. With respect to the first quarter, we expect earnings per share to range between $0.80 and $0.95.

This compares to the $1.03 we reported last year. When comparing to last year's EPS, it's important to note that the first quarter this year will be impacted somewhat more on a year-over-year basis than subsequent quarters due to the timing of wage investments.

In closing, I'm honored to serve as the Chief Financial Officer during this very exciting time at Walmart. All of us at Walmart are pleased with the progress we're making and the work of our great associates around the world. We look forward to building on that and serving our customers in the future..

changes in existing tax, labor and other laws and changes in tax rates, including the enactment of laws and the adoption and interpretation of administrative rules and regulations; governmental policies, programs, initiatives and actions in the markets in which Walmart operates and elsewhere; the level of public assistance payments; trade restrictions and tariff rates; and natural disasters, public health emergencies, civil disturbances and terrorist attacks.

Such risks, uncertainties and factors also include the risks relating to Walmart's operations and financial performance discussed in Walmart's most recent Annual Report on Form 10-K filed with the SEC.

You should consider the forward-looking statements in this call in conjunction with that Annual Report on Form 10-K and Walmart's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC.

Walmart urges you to consider all of the risks, uncertainties and factors identified above or discussed in such reports carefully in evaluating the forward-looking statements in this call.

Walmart cannot assure you that the results reflected or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects for or on Walmart's operations or financial performance.

The forward-looking statements made in this call are as of the date of this call. Walmart undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances..