Welcome. This is Colleen Miller, Senior Director of Global Investor Relations for Walmart Stores Incorporated. Thanks for joining us today to review the results for the Q3 of fiscal 2016. The date of this call is November 17, 2015. This call is the property of Walmart Stores Incorporated and is intended for the use of Walmart shareholders in the investment community.
And should not be reproduced in any way. For those listening on the phone, you may navigate through this call as follows: Press 4 in the hashtag key to rewind playback for 20 seconds. Press 5 in the hashtag key to pause and resume playback. Press 6 and the hashtag key to fast forward playback 20 seconds. 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 statements provided by that act.
Please note that a cautionary statement regarding the forward looking statements will be made following Charles Holly's remarks later in this call. All materials related to today's news are available on the Investors portion of our corporate website, stocks. Walmart.com. The terms used in today's release include EPS, constant currency, gross profit, Gross profit rate and gross merchandise value are defined there as well. We recommend that you review the earnings press release in conjunction with the transcript of this call and the accompanying slide presentation.
Global unit count data is also on our Investors website. When we refer to traditional neighborhood markets in Walmart U. S, we're discussing those that average 42,000 square feet of retail space. The smaller neighborhood market range in size from 12000 to 16000 square feet. 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 Q3 reporting period ran from Saturday, August 1 through Friday, October 30, in 2015. Now let's get on to today's call. Doug McMillan, President and CEO of Walmart Stores Incorporated, will provide his thoughts about our results in the context of our overall strategy. Claire Babineau Fontenot, EVC and Treasurer will cover the financial details.
Next, we'll begin our operating segments 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. Last, Charles Holly, Walmart's CFO, We'll wrap up with details on guidance for the Q4 and the full year. Now, I'd like to introduce our CEO, Doug McMillan.
Doug? Thanks, Pauline,
and good morning, everyone. Thank you for joining us to hear more about our 3rd quarter earnings as well as the strategy we shared at our annual meeting for the investment community last month. Overall, we had a good quarter. We delivered earnings per share well within our guidance range, recorded our 5th straight quarter of positive comps in Walmart U. S.
And had solid international sales and profit growth on a constant currency basis. At the same time, we still have plenty of work to do, and there are areas of our business that must perform better. Our earnings per share were $1.03 and we posted total revenue of $117,400,000,000
I want to highlight that
on a constant currency basis, Our total revenue would have been $122,400,000,000 That's growth of $3,400,000,000 Or 2.8% on a constant currency basis, which is solid growth. Even if the percentage doesn't sound high because we have such a large denominator, Not many companies grow by this amount in a quarter. I call this out because I don't want the currency impacts to obscure the strength of our business. We are a growth company, and we're growing. As we expected, operating income continued to be pressured by our decision to invest in our frontline associates To improve the store experience with our customers and create a bridge to our future where digital capabilities will play an increasing role in our stores, We're making a $1,200,000,000 planned investment in our people this year that we understood would impact near term operating income.
This is by far the biggest driver of the decline in consolidated operating income. Before going into the details, I want to take a step back to talk about our strategy. At our investor meeting last month, we shared more detail than usual about the next 3 years of our growth plan. We've never been a company that manages only for the short term, and that's certainly true during this period of change. Although investments in our people and technology impact near term earnings, they will help us deliver sustainable growth and returns to shareholders over time.
We're confident these are the right steps because we know where and how we're going to win. We will be the 1st to deliver a seamless shopping experience at scale. No matter how you choose to shop with us, through your mobile device, online, in a store or a combination, it will be fast and easy. Online retailers are testing physical store experiences because they recognize the same customer desire that we do. It is a race to do this right.
But only Walmart can bring together a dense network of stores supported by supply chain and systems like ours with an emerging set of neutral capabilities to win with customers. As we create this seamless experience, we're positioning for growth in 5 key areas. First, we'll continue to win on value. We've won on value in the past, and that won't change. 2nd, convenience is increasingly important as customers want to save both money and time.
3rd, We will always work to be great merchants, whether in stores or online. 4th, we are focused on the Key geographies for customer growth, which are North America and China. Finally, we want to appeal to a blend of income levels. The way we're approaching e commerce, neighborhood markets, Sam's Club, grocery pickup and other areas will appeal to value purchase customers of all demographics. We already serve customers from all income levels around the world, but we have an opportunity to be even stronger.
By taking these steps, we will grow the company faster. We will add between $45,000,000,000 $60,000,000,000 of revenue to the company in the next 3 years. That's a lot of growth. It just happens to be on a big base. Turning to this quarter's results, one of the most important takeaways is that our U.
S. Stores continue to improve with total net sales up nearly 4%. In addition to positive comp sales, Walmart U. S. Had its 4th straight quarter of positive traffic.
We're now lapping positive comp sales and building on our progress. Our customers are telling us that our efforts around clean, fast and friendly are resonating. Neighborhood Markets continued to show strong sales, led by our newer stores and have posted positive comps for 19 consecutive quarters. A key part of creating a seamless shopping experience is to have great stores, and we feel good about where we're heading. We also made strides in the U.
S. On adding current capabilities to our supply chain. In the Q3, we opened a new e commerce fulfillment center in Atlanta with more than 1,000,000 square feet of space. This is our 5th next generation fulfillment center. As we build out our e commerce capabilities, We are deepening our digital relationships with our customers.
We've accelerated our expansion of online grocery pickup, And we've seen that customers who start using online grocery spend nearly 50% more than similar customers who shop only in stores. This is the customer we're going after, a shopper in our sweet spot who acts at his Walmart in multiple ways. We also began the chain wide use of a mobile service to tell us when a customer is coming to pick up an online general merchandise order before they even walk into the store, And we launched a new digital wish list that you can build at home or simply by scanning items in a store. We expect more than 210,000,000 visits to our app in November December, up from $18,000,000 in 2012. Last month, We told you about our longer term plans to grow e commerce sales and GMV.
That plan anticipates ebbs and flows along the way, but we are confident in our targets. We continue to expect to grow mid- to high teens for this fiscal year. During the Q3, global ecommerce sales and GMV growth both came in at around 10%. This was due primarily to continued economic Challenges in our major international markets, including Brazil, China and the U. K.
In the U. S, where we've seen good growth for the year, We continue to make progress on key initiatives, but we know we have more work to do. I was pleased that sansclub.com continued to deliver strong growth. In Walmart International, we're pleased with a solid 3.2% gross growth on a constant currency basis. Operating income grew faster than sales at 8 5% excluding currency.
Our North American market delivered strong performance, and Mexico, in particular, has already been fire on all cylinders. I'm pleased with our momentum in these markets. We continue to face specific challenges in the U. K. And Brazil.
China remains a huge long term opportunity. We started in China in 1996. We've grown the business, Reached profitability years ago and grown our level of profitability. We obviously learned a lot about Chinese customers and the market, and that's an asset. A few weeks ago, I was back in Beijing and Shanghai walking stores, clubs and visiting our e commerce offices.
We now have a total of 12 Sam's Clubs open, and they're performing very well. Our stores have clearly improved operationally in recent years, in particular, and now they're supported by Supply chain that positions us to win. We see that e commerce, online grocery and convenience are critical in the dense Urban areas that make up so much of the Chinese opportunity. That's why our E. Houdian acquisition is of such strategic significance.
We also recommitted to our work on food safety, environmental sustainability and empowering women during my visit, announcing another investment in the China Women's Development Foundation. With the improvements we've made to our stores and clubs and the full acquisition of Yajoutian, We have a unique opportunity and a plan altogether to win in China. While positive, Our U. S. Sam's Club comp sales without fuel were at the low end of our guidance.
We were pleased with the growth in membership income, but we can do better with our overall results. Sam's Club did take important steps this quarter to deepen digital relationships with our members through club pickup, expand its mobile checking capabilities and extended drive thru or curbside options. Ross will share more about our strategy going forward in a moment. In addition to releasing earnings, today is a good day at our home office. We're holding a sustainability milestone meeting to celebrate 10 years of progress on sustainability Since our then CEO, Lee Scott, delivered a landmark speech titled 21st Century Leadership.
In those remarks, Lee laid out 3 big goals for Walmart: to be powered by 100% renewable energy, to create 0 waste and to sell products to sustain people and the environment. It was a defining moment for our community. By looking through the lens of sustainability, Lee realized we could think about problems in creative ways, make our business more efficient and bring renewed passion to our work. It was and is inspiring to be part of this journey. Today, we'll mark how far we've come and what we've achieved.
For example, the savings we've generated from reducing waste, running our truck fleet more efficiently Pursuing energy efficiency has been good for society and good for our shareholders. We're getting excited to take the next steps in this journey early next year. In a true Walmart fashion, we're looking at ways to make a difference in the world, serve our stakeholders and drive our bottom line. Let me reiterate that we are excited about the unique opportunity we have to create a seamless shopping experience for our customers and ensure sustainable growth for the business. We're making critical investments to better serve our customers, associates and shareholders, and we are on the right path.
As I close, I want to pause to thank Charles Holly for his years of outstanding service to Walmart. As you know, he's made the decision to retire. He's been a huge asset to the company and a great partner to me and the leadership team. This is his last earnings call, and he will be missed. Thank you, Charles.
Now I'll turn it over to Claire. Claire?
Thanks, Doug. Today, I'll provide commentary on the company's consolidated financial statements. Further details are available in the accompanying presentation posted with the transcript. Prior to discussing our results, Let me talk about an item that although immaterial to tax comparability against last year. As we disclosed in the 2nd quarter, We
conducted a global review of the
accounting standard for leases. We concluded a focus on leases where our payment of certain structural component costs during the lessors construction of the leased store causes us to be deemed the owner of the property for accounting purposes. In the Q3, we finalized this review and recorded an immaterial cumulative adjustment. On a consolidated basis, the immaterial adjustment increased total assets by approximately $1,700,000,000 which was primarily an increase in property under capital lease and financing obligations increased total liabilities by approximately $1,600,000,000 This was primarily an increase in current and long term capital lease and financing obligations. And it positively impacted earnings per share by approximately 0 point 0 $4 Let's now move to our results for the quarter.
Diluted earnings per share from continuing to Walmart, EPS were $1.03 which includes the item mentioned above. Additionally, There were significant items that negatively impacted EPS, including investments in wages and training in the U. S. Of approximately $0.01 and currency exchange rate movements totaling $0.04 Last year's EPS was $1.15 Total revenue was $117,400,000,000 Currency negatively impacted net sales by approximately $5,000,000,000 On a constant currency basis, total revenue was $122,400,000,000 Operating expenses as a percentage of net sales increased 91 basis points compared to last year, primarily as a result of investments in store wages and labor hours in the U. S.
Additionally, FCPA and compliance related costs were approximately $30,000,000 comprised of $22,000,000 for ongoing employee investigations and $8,000,000 for our global compliance program and Organization Enhancements. Last year, FCCA and compliance related costs were approximately $41,000,000 The company's consolidated operating income decreased 8.8 percent to $5,700,000,000 Excluding the impact from currency of approximately $214,000,000 operating income increased 5.4%, primarily related to the factors that increased our operating expenses. I'll close today's discussion with a few comments on returns. At Walmart, we remain committed to providing good returns for our shareholders. During last month's meeting with our investment community, We announced new share repurchase authorization of $20,000,000,000 and stated our intention is to utilize this authorization over a 2 year period.
The company repurchased approximately 6,100,000 shares for $437,000,000 during the Q3. Return on investment, ROI, for the trailing 12 months ended October 31, 2015 was 15.9% versus 16.4% for the prior comparable period. The decline in ROI was primarily due to our operating income as well as continued capital investments. Thank you for listening. And now I'll turn it over to Greg.
Greg?
Thank you, Claire. Last month at our annual meeting for the investment community, I spoke in detail about how Walmart U. S. Will Our part of the plan to be the 1st to deliver a seamless shopping experience at scale. We will drive growth and deliver shareholder returns By winning with stores, delivering value, being great merchants and providing our customers with a convenient shopping experience That is fast and easy.
Although we're in the early stages of our journey, we're confident in AplaPlan and we're executing against it.
Now let's talk about our
Q3 performance. As we've said before, we continue to measure our success in terms of traffic, In stock and customer experience. Overall, we're pleased with the momentum in the top line. Net sales increased $2,700,000,000 or 3.8%. Unit sales picked up and traffic strengthened, improving 40 basis points from Q2 to 1.7%.
This is now the 4th consecutive quarter of positive comp traffic growth for Walmart U. S. Our comp sales growth of 1.5% was solidly within our guidance despite minimal food inflation. In stocks improved, while comp store inventory declined. Our customers told us they're happy with the improvement We're making in the shopping experience as reflected in our customer experience scores.
To date, 70% of our stores have achieved the initial goal we set for them, and we'll raise the bar for next year. We also saw some progress this quarter in gross margin with the work we've put in on pharmacy, markdowns However, as we've discussed before, the investments in our stores and our associates are significant and will continue to pressure the bottom line. All formats in our portfolio had positive prompts this quarter And we're happy with the progress we've made in our supercenters, which saw continued traffic growth and positive comps across all areas except entertainment. Our traditional format neighborhood markets delivered an approximate 8% comp in the 3rd quarter, A 70 basis point acceleration from our Q2 comp and aided by strong performance in our less mature stores. New technology and processes are improving in stocks and we're working hard on providing the best associated coverage to most effectively serve our customers.
Most importantly, fresh remains a key focus. We're encouraged by our newest prototype, It features better guidelines and displays. We've seen fresh penetration expand in the store relative to its peers. We've made solid progress this year, but we still have ways to go to ensure we're creating the best experience for our customer, while simultaneously improving the profitability of this format. In e commerce, We made strides on deepening the digital relationship with our customer.
This quarter, we accelerated our online grocery pickup offering to 85 additional locations. We now have almost 140 locations across 25 markets that offer the customer the ability to order their groceries online and conveniently pick up at a time of their choosing. We also launched the new mobile service, which alerts us when customers coming to pick up their online general merchandise order even before they walk into the store. In just in time for the holidays, we introduced a digital wish list They can be done at home or by simply scanning items while at the store. E commerce sales and traffic was softer than we would like.
We continue to strive to balance sales growth and profitability. Overall, e commerce sales contributed approximately 15 basis From a merchandise perspective, we saw growth across most of the store, particularly in our apparel, hardlines, home and seasonal businesses. While warmer weather somewhat slowed performance in October, Solid back to school and Halloween seasons along with new launches such as Pioneer Woman and Star Wars drove mid single digit comps across each of these departments. Continued growth in prescription count and branded drag inflation Drove mid single digit comps in health and wellness. OTC was also strong as better in stocks, particularly in vitamins helped drive sales.
In food, we saw our best top line results for the year Despite minimal inflation, which negatively impacted our total box comp by approximately 90 basis points. Momentum from a solid Labor Day weekend continued through to Halloween. We're particularly pleased with the results in Fresh where we brought in new products, developed strong price leadership through strategic buys and promoted locally sourced and organic product. While most of the box continue to grow, we still have considerable headwinds in entertainment. A slow adoption of new technology in televisions and the shift from postpaid to informant wireless plans contributed to disappointing sales results.
We're working on improving our operating model in this area, both in terms of service to our customers and in the layout of the department. We've made some progress this year, including the recent remodel of the Rogers Arkansas Supercenter We showed you last month, but it will take time to get this department where it needs to be. Moving on to the remainder of our financials, Gross margin increased 32 basis points versus last year. Gross margin rate improved in food, General merchandise and consumables, but was somewhat offset by declines in health and wellness. Reimbursement levels continue to pressure pharmacy profits.
However, we've made some strides across several initiatives that improved margins in this department versus Q2. Additionally, we remain focused on our urgent agenda items, including better management of markdowns to 0. Finally, while only just beginning to show in our results, We are pleased with our efforts thus far on addressing shrink, which has been a significant headwind for us this year. As we've said before, our top priority this year is to provide a better customer experience in our stores. We're committed to actions that help accomplish this goal as we've invested this year in our associates and in improving our stores.
These investments are substantial and continue to reflect in our bottom line performance. Specifically in the 3rd quarter, added store labor hours above our initial plans and incurred significant maintenance expenses related to the customer facing areas of the These investments along with the wage increases in the store structure changes implemented earlier this year drove the majority of the 116 basis point deleverage in operating expenses. As the store experience is being addressed and efficiencies are created through new tools, technology and processes, We've begun calibrating labor hours against these improvements. Over time, as the productivity loop begins turning faster, We know we can create a strong balance between experience and profitability. We did benefit this quarter From the immaterial lease accounting cumulative adjustment that Claire mentioned in her earlier remarks, which favorably impacted operating expenses by $74,000,000 As a result of our focus on improving customer experience, Along with our ongoing investments in e commerce and somewhat offset by the lease accounting adjustment I just mentioned, Operating income declined 8.6%.
Excluding the impact from the lease adjustment, Operating income declined approximately 10%. Moving on in the 3rd quarter, Total inventory grew around 1%, which was less than half the rate of sales. Inventory declined 1.9% in comp stores as new processes and technology have reduced inventory across the store, while simultaneously improving in stock levels. We are proud of the progress we have made this year on improving inventory levels across our network, but we have room to improve and we remain focused on these efforts. Finally, on the real estate side, We opened 15 supercenters in the 3rd quarter, including relocations and expansions in 35 traditional format neighborhood markets.
We're working hard on improving both of these formats to ensure we have the best customer offering alongside strong operating efficiency. We continue to test ideas honing in on the best options for each of these formats. Shifting now to the Q4, The holiday season is upon us. Our associates have been working hard all year to prepare and we're ready. We have the best value on great merchandise for the entire season without gimmicks.
Our merchants have done a terrific job of listening to our customers On what they're looking for this season. We're excited about programs such as Chosen by Kids and our Exclusive 1 hour guarantee of Mint. In this holiday, we're working to bring our customers an improved shopping experience, whether they're in the store, online or using our mobile app. We know the holidays will be competitive. Additionally, we expect food inflation to remain low relative to last year and will lap last year's significant drop in fuel prices, which will make the comparison for the Q4 more difficult.
But we're confident in our strategy and the actions we're taking. We believe that will help offset some of these pressures. Therefore, for the 14 week period ending January 29, We expect the comp sales increase of around 1%, which will represent a 50 basis point improvement in our 2 year comp stack from Q3. Last year's 4th quarter comp was up 1.5%, Our strongest comp performance of fiscal 2015. Now I will turn it over to Dave for an update on Walmart International.
Dave?
Thanks, Greg. We had a solid quarter with sales growth accelerating slightly from last quarter and operating income growing faster than sales, both on a constant currency basis. Comp trends in Mexico and Canada continued to be strong, which more than offset weaker sales performances in the UK, Brazil and China, where we continue to experience various competitive and economic challenges. Our markets remain focused on the strategic priorities discussed earlier this year, which include actively managing the existing portfolio, Delivering balanced growth, including e commerce, being the lowest cost operator, and building solid foundations in terms of talent, trust and Technology. Let me touch on some of the progress we've made.
We continue to take action this year to drive simplicity and focus in our portfolio. We sold a portfolio of properties under development with our shopping center joint venture partner in Canada exited our bank operations in Mexico. We're currently pursuing the sale of a portfolio of shopping centers in Chile, And we're closing our business to business sales operations in the U. K. At the same time, we've looked for ways to enhance our portfolio in core markets, Which we've done by taking full ownership of Yohoutian in China and acquiring 13 stores and 1 DC from a former competitor in Canada.
We'll continue to review our portfolio to simplify our operations and help our team stay focused on running great businesses. Our markets continue to invest heavily in price, quality and service aimed at driving comp sales. Our overall spend is improving and 7 of our 11 markets have now delivered positive comps in 6 straight quarters. We're delivering value and providing convenience that is attracting customers to our stores, pubs, websites and apps across our markets. I'm pleased with the innovation we're driving in e commerce, led by online grocery, and I'm excited about the potential we have to access a broader customer segment.
We continue to learn from our online grocery business in the U. K. As we test and roll out similar initiatives in Mexico and Canada And build a strong platform for growth in China. Doug mentioned the continued economic challenges in some of our major markets impacted on our overall Global ecommerce sales growth this quarter. We still have work to do, but I'm confident we're executing against this key strategic priority.
Now let's discuss our overall results. In the Q3, net sales grew 3.2% on a constant currency basis. Reported net sales declined 11.4%, impacted by an approximately $5,000,000,000 currency impact and the continued strength of the U. S. Dollar.
Fluctuations in currency exchange rates continue to negatively impact our quarterly results. So it's important to emphasize that our business on a constant currency basis is maintaining steady growth. We had strong positive comp sales in Mexico and Canada. The U. K, Brazil and China posted negative comps, although the costs were slightly better in Q3 versus Q2.
In each of our other markets, we had solid comps of at least 3%. Operating income grew faster than net sales at 8.5% on a constant currency basis, driven in large part by excellent performance in Mexico and Canada. In addition, as Claire mentioned earlier, There was an immaterial lease accounting adjustment this quarter, which favorably impacted operating expenses by approximately $49,000,000 on a constant currency basis. With the currency exchange impact, operating income increased 6.4%. On a constant currency basis, inventory grew faster than net sales at 7%, primarily driven by our decision in Mexico to flow inventory through our import network early for the upcoming holiday season.
On a reported basis, inventory declined 10%. Now let's discuss market results presented on a constant currency basis for our largest markets. In all countries except Brazil and China, financial results are inclusive of e commerce. Let's begin with the UK. Challenging competitive conditions persisted throughout the quarter as the market continues to experience rapid structural change.
Customers have now benefited from more than 12 months of continually falling prices, and the market has grown by less than 1% for 6 consecutive months, despite a healthier overall economy according to Kantar. The Q4 grosses continued to lose share from new counters. UK net sales declined by 2.2% and comp sales excluding fuel were down 4.6%. Large head traffic and food remain the primary challenges, while online grocery continues to grow. The online business is focused on improving its core service offering and is performing above target on key internal performance metrics.
Operating income increased driven by reduced expenses as well as lapping some organizational restructuring costs from last year. The U. K. Is focused on rebuilding momentum in its core business. Last month, we launched Project Renewal, An 18 month project that reaffirms the direction set out in the 5 year strategy, but prioritizes investments more clearly on price, Quality and service in large stores, while putting non core expansion such as remote petrol stations on hold.
Great position driving out inefficiencies across both buying and operations will enable the U. K. To build on its well established value credentials and strengthen its competitive position. Let's now discuss Mexico, which released their earnings on October 27. Please note the Walmart's release is under IFRS and the results here are under U.
S. GAAP. Therefore, some numbers may differ. Consolidated Walmex net sales increased 7.4% with strong pork sales in both Mexico and Central America. Mexico sales grew 7.6% and comp sales increased 6.3% driven by solid comp growth in both self-service and Sam's Club.
In self-service, we achieved mid Single digit growth in groceries and high single digit growth in GM and apparel. Self-service continues to gain share We delivered a 220 basis point improvement in market share at Uninta and Tab. Sam's Club is maintaining its steady improvement in comps, aided by ongoing events and campaigns to drive traffic and grow membership. We leveraged expenses in the quarter and grew operating income significantly faster than sales. Our e commerce business in Mexico is growing in line with the market, driven by strong growth in general merchandise.
Under the Walmart banner, we're significantly expanding our assortment of shipped from store items. We're rapidly growing store coverage for online grocery and customer orders are increasing. At Sam's Club, we've soft launched our new website while maintaining healthy growth with our existing platform. In Canada, we continue to maintain solid growth and gain share in a competitive and low growth environment. Net sales grew 5.7% and comps were up 4.3% driven by strong performance in our core grocery business as well as stronger performance in our GM business.
In the quarter, Canada saw share gains in food, health and wellness, Consumables and infants for the 12 weeks ended October 29 according to Nielsen. In addition to strong top line performance, The team continues to focus on our low cost operating model and drive a sustainable price advantage. Canada grew operating income faster than sales. We continue to invest in expanding customer access. We recently began a partnership with 711 And a pilot in grab and go lockers at some of their convenience stores in the Greater Toronto area.
We are pleased with the progress that Online grocery business is made since our pilot launched in July. Overall, I'm pleased with our results in Canada, And I expect reliable growth to continue. In Brazil, the economic challenges are largely unchanged as high inflation and unemployment Continued to impact consumer confidence and consumption levels. Net sales were down 0.4%, and comps were down 0.6%, driven by a decline in the hypermarket format, mostly offset by strong sales growth in our wholesale business. General Merchandise, primarily electronics, accounted for the largest portion of our supermarket sales decline.
These economic challenges are impacting both our store and e commerce sales. Operating income declined faster than sales due to increased labor claims, continued higher utility costs Higher markdown activity, and Europe has improved our inventory position going into the 4th quarter. Let's now shift to China, a key growth market. This quarter sales grew 2.9% driven by new store openings. Comp sales declined 0.7% amid slower consumption growth.
In the hypermarket channel, We gained share for an 11th consecutive quarter. We continue to invest in physical and digital to deliver a seamless shopping experience. We continue to drive efficiency in stores and at the home office. Operating income grew faster than net sales. We operate for less productivity initiatives remain a focus, allowing reinvestment in labor and customer experience, including fresh.
Ki Hao Dien, our e commerce business in China, is focused on further leveraging Walmart's global and local assets. The business improved margins and balanced marketing spend amid intense competition on price. While I'm not satisfied with recent results, I'm confident in the actions we're taking in China that position us to achieve success for many years to come. Now let me recap. We had a good quarter with solid sales momentum in our underlying business, driven by healthy comp sales in a majority of our markets.
In addition, we delivered a relatively high level of constant currency operating profit. Our strategy remains focused and our priorities are clear and we're well positioned for future growth. Now I'll turn it over to Roz for the update on Sam's. Roz?
Thanks, Dave. Today, I'll share details about our Q3 performance along with comp guidance for the Q4. Members are at the center of the decisions we make and I'll talk about our ongoing efforts this year to deliver value for them. I'll also share with you specifics around our strategy, which is based on an in-depth review of the business that we've conducted this year. Before I get started, let me recognize Charles Redfield for his many contributions to Sam's Club over the last 3 years as our Chief Merchandising Officer.
His passion for merchandising was experienced throughout the organization. We are excited for Charles as he takes on his new role as Head Merchant for Food and the Walmart U. S. Business. With Charles' transition, we are thrilled to have John Ferner back at Sam's Club as our new Chief Merchandising Officer after having served as the Chief Merchandising and Marketing Officer in China for nearly 3 years.
Let's move on to a few specifics around the 3rd quarter results. Unless otherwise noted, today's financial discussion will exclude fuel for purposes of comparability. For results with fuel and additional information, please refer to the accompanying presentation posted in this transcript. Comp sales for the Q3 were at the low end of our guidance. In key food categories, we faced comparisons to last year's steep in a situationary environment.
And in our wireless business, we continued to experience headwinds from changing industry dynamics. We saw positive results in areas of the business that introduced more newness such as Health and Wellness and Consumables. Net sales grew 1.6% as comp sales increased 0.4%. Slide Ken provides the components of our comp increase. Ticket grew 70 basis points during the period.
Positive momentum in traffic from savings members continued, but softness from our business member negatively impacted our results. Our gross profit rate increased 46 basis points from last year due to a disciplined focus on product acquisition costs, a favorable mix and logistics benefits. Operating expenses deleveraged during the quarter as we continue to invest in people and technology. We are confident that these are the right choices to make for our business and the benefits of these investments will help us deliver sustainable growth over time. Earlier, you heard Claire talk about an immaterial item related to the company's accounting for certain leases, which resulted in a benefit to operating expenses of approximately $27,000,000
for Sam's Club.
We were pleased with the growth in membership income during the quarter, which increased 5.4%. Investments in the Cash Rewards program for Plus members resulted in improved Plus renewal rates and Plus penetration is at an all time high. The impact of social media campaigns was also a contributing factor. Turning to our merchandising categories, let me talk about a few areas that had the most impact during the quarter. Please see Slide 11 of the accompanying presentation and the comp performance of the remaining categories.
Our fresh freezer cooler business faced significant headwinds as inflation in key areas including fresh meat and dairy weighed on our comps. We were pleased with our performance in produce. Technology and entertainment was pressured during the period, led by a decline in wireless. The industry shift to installment plans continued to negatively impact the category. In Electronics, Imaging and Audio performed well and we continued our efforts to refine the assortment.
Health and Wellness and Consumables benefited from innovation and newness. In pharmacy, the free four ten prescription program continued to drive growth in suite counts. New items in OTC led to a solid performance in the quarter and products like protein powder drove good results further supporting our initiatives around Healthy For You. Our consumables business benefited as several new items were launched and we continued to gain share in tabletop as a focus on private brands and quality resonated with members. In e commerce, we continue to make progress with integrating digital efforts to transform how members shop and interact with our club.
Business members have enjoyed the convenience of pre ordering merchandise for pickup at the club for more than a decade. Now through advances in technology along with innovation from the e commerce team, all of our members can enjoy similar access with an improved digital experience. This year's rollout of club pickup to all of our clubs has been well received and represents the fastest growing area of our business. Sales in this space increased 50% during the Q3.
We have also added features along
the way. During the quarter, we completed the implementation of mobile checking capabilities to provide members with a better experience and shorter wait times. We introduced geofencing technology that alerts our Associates when members drive onto the parking lot. We extended drive thru or curbside options to more clubs and members love the convenience. These new features build on earlier advances in club pickup, including easy reorder and a prepaid option.
Now let me move on to guidance for the Q4. As we move into the quarter, we will face last year's inflationary environment in a tough comparison. As a result, we believe comp sales without fuel for the 13 week period ending January 29, 2016 will be flat to up 1%. Members are at the center of the decisions we make. We've worked diligently this year to deliver on what we know they want.
They expect offerings that are relevant and convenient. They want excitement and newness. They want a seamless shopping experience that integrates the best of digital and physical. We see success where we are delivering on these expectations. For example, you've heard us talk about the expansion of organics in our assortment.
Members ask for an improved selection and we are delivering. Over the summer, we launched shocking values online, which has helped to instill a treasure hunt mentality with members. And the innovative free four ten prescription program is providing real savings to Plus members in helping to lift the overall health and wellness category. I'm pleased with the steps we've been taking throughout this year to deliver for We know we must do more with member relevant merchandise and new member growth. Today, I'm excited to share with you the plans we've developed as we look ahead.
We have been focused on developing a strategy at Sam's that will deliver our business into the future and build long term sustainable growth. The 4 key elements of our strategy include growth through higher household income members and high value business segments, relevant merchandise and increased value for our members, acquiring and retaining the right members and increasing the spend, and lastly, integrating digital to transform the club experience. In order to better align the business as we move forward, we made organizational changes and enhancements. John Ferner is returning to Sam's Club as the Executive Vice President and Chief Merchandising Officer. John has rejoined the team after nearly 3 years as Chief Merchandising and Chief Marketing Officer of Walmart China, where he led merchandising, procurement, marketing, supply chain, Financial Services and Mobile Commerce for the hypermarket division.
Prior to moving overseas, John was Senior Vice President of Home and Apparel Merchandise and Global Sourcing for Sam's Club. In addition, we've reallocated resources pertaining to merchandising and have created new positions in critical areas including data and analytics, fresh food, regional buying and proprietary brands. We also created a new leadership position dedicated to business and her merchandising. Moving forward, we will continue to serve both savings and business members. We have clarity around the categories of members we will target.
Data will drive our decisions and I'm confident we are focused on the right opportunities. As I close, let me summarize today's thoughts. As we look back at the Q3, we acknowledge that we need to improve our sales. Where we introduced new merchandise, we delivered strong results. We continue to make strategic investments in people and technology as these are critical enablers
of our
strategy. We're also pleased with our efforts to further integrate digital and physical retail. Our members are at the center of all of our decisions. We are making progress across the club and through online and mobile commerce capabilities to deliver value for them. Whether it's saving them time with club pickup or saving them money on their prescriptions with 3410, we continue to find new ways to innovate.
And we're confident the strategy and enhancements to our organizational structure will propel our business into the future. Now, I'll turn the call over to Charles.
Charles? Thanks, Ross. I'd like to start by highlighting That we are pleased with the sales increases we experienced in Walmart U. S. As well as in our international business considering constant currency.
Stronger traffic in our Walmart U. S. Stores and a 5th consecutive quarter of positive comp sales indicate that we are taking the right steps to win with customers, Rose sells and deliver a seamless shopping experience at scale. From an e commerce standpoint, we have long term plans in place to grow our business. We are making progress on several of our key initiatives and recognize we have more work to do.
As expected, The investments we are making in people and technology impacted both operating expenses and profits in the quarter. However, we delivered earnings per share well within our guidance and remain confident that these investments will better position Walmart for the future. Now let's turn our attention to guidance for the Q4 and the full year. Last quarter, we indicated that we expect our full year 2016 earnings per share to range between $4.40 $4.70 Today, we are narrowing our full year earnings per share guidance to range between $4.50 $4.65 including a range of $1.40 to $1.55 for the 4th quarter. These ranges The assumptions we provided in the Q2, which consists of the impact of our investments in wages, training and additional labor hours in our stores, The incremental investment in global e commerce and the headwinds in the U.
S. From pharmacy margins in shrink. Currency remains a significant headwind for us. As I indicated at our analyst meeting last month, we expect our total net sales growth to be relatively flat for fiscal year 2016. It's important to note that if we were to exclude the impact of currency, our total net sales growth would be around 3% for the year.
Now assuming currency exchange rates remain at current levels for the remainder of the year, we now expect the full year impact to earnings per share to be approximately rate is expected to range between 31% 33% for the full year. As we've indicated in the past, 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 law, outcomes of administrative audits, the impacts of discrete items and the mix of earnings among our U. S. And international operations. And in any given quarter, our effective tax rate can be higher or lower than the full year.
Now as I've mentioned at our analyst meeting last month, we are monitoring progress in Congress with respect to the extension of certain U. S. Income tax legislation which expired at the end of calendar year 2014. If the legislation is passed, we'll end up closer to the lower end of the updated range that we provided. As I mentioned at the October analyst meeting, we will continue to review our portfolio, including stores and clubs.
As in prior years, we may have charges related to corporate businesses or stores and clubs. These charges would not be included in our guidance. This is my last call as Chief Financial Officer as I'll be retiring effective January 31. I feel fortunate to be a small part of the Walmart story. I've enjoyed working with all of you over the past few years.
Brett Biggs will take over as the Chief Financial Officer for Walmart effective January 1. You're in very comfortable hands, and I'm proud of the strong team That we've left behind that Brett will be leading in the future. With that, thank you for listening today and for your interest in our company. And on behalf of the management team and our associates worldwide, we thank you for your support this year and wish you a happy, healthy and safe holiday season.
All includes certain forward looking statements intended to enjoy the Safe Harbor protections of the Private Incurby's Litigation Reform Act of 1995. As amended, such forward looking statements relate to management's guidance and forecasts As to and expectations for with respect to Walmart as a whole, Walmart's earnings per share for all of Fiscal 2016 and the Q4 of fiscal 2016. The total amount of Walmart's investment in people in 2016 and that such investment will impact near term operating income. Walmart's positioning on Self in 5 key areas with each step driving faster growth. Walmart adding $45,000,000 to $60,000,000 of revenue in the next 3 fiscal years.
Walmart's total net sales growth for fiscal 2016 And Walmart's total net sales growth for fiscal 2016 calculated excluding the impact of currency exchange rate fluctuations. The impact of currency exchange rate fluctuations on Walmart's earnings per share for fiscal 2016. The range of growth of Walmart's e commerce sales and gross merchandise value in fiscal 2016. The range of Walmart's effective tax rate for fiscal 2016. The area in such range in which Walmart's effective tax rate will fall if certain legislation is passed.
Walmart's effective tax rate fluctuating quarterly and factors that may affect such effective tax rate. Walmart's investments in people and technology help you to deliver sustainable growth and returns to shareholders over time. Walmart utilizing its $20,000,000,000 repurchase authorization
over a
2 year period. Walmart's goals of being powered by 100 percent renewable energy, creating 0 waste and selling products that sustain people and the environment. The number of visits to Walmart's mobile shopping app in November 2015 and December 2015. With respect to Walmart U. S, Walmart U.
S. Comparable store sales for the 13 week period ending January 29, 2016, Walmart U. S. Is planned to be the first Deliver a seamless shopping experience for its customers at scale. Walmart U.
S. Driving growth and delivering shareholder value by winning with stores, Delivering value, being great merchants and providing customers with a convenient shopping experience that is fast and easy. Walmart U. S. Investments in its stores and is looking for continuing to pressure Walmart U.
S. Bottom line. With respect to Walmart International, A 5% Walmart International's operations in the U. K. Reaffirming the directions set out in the 5 year strategy, Prioritizing investment more clearly on price, quality and service in large stores and putting non core expansion on hold.
Walmart International continuing to review its portfolio to simplify its operations. Walmart International's operations Canada continuing to have reliable growth. Walmart International continuing to invest in its physical and digital retail operations in China. With respect to Sam's Club, Sam's Club's comparable club sales without fuel for the 13 week period ending January 29, 2016. The benefits of Sam's Club's investment in people and technology helping Sam's Club deliver sustainable growth over time.
Sam's Club's strategy for delivering its business into the future and building long term sustainable growth, including the strategy's 4 key elements and Sam's Club continuing to serve both savings and business matters. Options on which any guidance or forecast As to and expectations for, Walmart and its segments are based on considered forward looking statements. Walmart's actual results may differ materially from the guidance provided in and the goals and forecasts or expected and forecast results Discussed in such forward looking statements is a result of changes in facts, assumptions not being realized and other risks, uncertainties and factors, including Economic and market factors, economic, geopolitical, capital markets and business conditions, trends in events around the world And in the markets in which Walmart operates, currency exchange rate fluctuations, changes in market interest rates, unemployment levels, Changes in market levels of wages initiatives of competitors and competitive pressures inflation or deflation Generally and in particular product categories consumer confidence, disposable income, food availability, spending levels, shopping patterns, levels of demand for certain merchandise trends in consumer shopping habits around the world and in the markets in which Walmart operates Consumer enrollment in health and drug insurance programs and such programs' reimbursement rates Commodity prices, including the prices of oil and natural gas, market prices of Walmart stock.
Operating factors. The amount of Walmart Smith sales and operating expenses denominated in the U. S. Dollar and various foreign currencies. The financial performance of Walmart in each of its segments, including the amounts of Walmart cash flow during various periods.
Walmart's effective tax rate and the factors can affect that rate discussed earlier in this call. Customer traffic And average ticket in Walmart Stores and Clubs and on its e commerce websites. Consumer acceptance of and response to Walmart Stores and clubs, e commerce websites, mobile apps, initiatives, programs and merchandise offerings, the availability of goods from suppliers and the cost Goods acquired from suppliers the effectiveness
of the
implementation and operation of Walmart's strategies, plans, programs and initiatives The mix of merchandise Walmart sells, transportation, energy and utility costs, the selling price of gasoline and diesel fuel, Walmart's gross profit margins, including pharmacy margins of other product categories, the amount of shrinkage Walmart experiences, Supply chain disruptions, disruption of seasonal buying patterns in Walmart's markets, the scalability of attractive e commerce acquisition opportunities, Walmart's expenditures for SCPA and compliance related matters, cybersecurity events affecting Walmart and related costs, Developments in and comes up and costs incurred in legal proceedings to which Walmart is a party, casualty and accident costs and insurance costs, the size of and turnover in Walmart's workforce, delays in opening new, Expanded or relocated units for various reasons. The availability of necessary personnel to staff Walmart Stores and units. Labor costs, including health care and other benefit costs unexpected changes in Walmart objectives and plans We anticipate changes in accounting estimates or judgments, regulatory and other factors. 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, financial disasters, public health emergencies, civil disturbances and terrorist attacks.
Such risks, uncertainties and factors also include risks relating to Walmart's operations and financial performance discussed in Walmart's most recent Annual Report on Form 10 ks filed with the SEC. You should consider the forward looking statements in this call in conjunction with that Annual Report on Form 10 ks and Walmart's quarterly reports on Form 10 Q and current reports on Form 8 ks filed with the SEC. Walmart urges you to consider all of the risks, uncertainties and factors identified above or discussed in such 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