wal mart store 1997Annual Report


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wal mart store 1997Annual Report

  1. 1. A ‘global brand’: Hometown values circle the globe Message from Miss Helen Future Stock Supercenters: tomorrow’s success stores Price Plus! The value of SAM’S Club membership
  2. 2. Keeping the FUN in QUALITY& VALUE! Every DAY available exclusively at
  3. 3. TABLE OF CONTENTS About the cover Tracey Murphy, her father Bob Brown and her husband Dale Murphy are all managers with Wal-Mart — and don’t forget her brother, mother-in-law and brother-in-law! For more on Tracey 2 President’s Message and her Wal-Mart family, see page 16. 4 Inside Track Looking up Wal-Mart’s latest 9 Rebirth in Vermont year was record- Wal-Mart anchors revitalized downtown shattering ... and the best is yet to come, 9 Making miracles David Glass says in the President’s Our associates’ own “Children’s Miracle” Message. See page 2. 10 Letters 11 Trivia Star power! 12 Magic Wand Washington powerhouse Life in the technological fast lane (and sculptor) Paula Stern is just one of the 14 Everybody’s Hometown notables who lend their know-how to Wal-Mart’s Wal-Mart culture drives international growth Board of Directors. See Inside Track, page 4. 16 The Future of Retailing Supercenters lead way to 21st century Cutting edge state-of-the-art 20 The Value Equation technology is a key competitive Building membership benefits at SAM’S Club advantage for Wal-Mart. See FINANCIALS page 12. 22 11 Year Financial Summary 24 Management’s Discussion and Analysis Wal-Mart’s world 26 Consolidated Statements of Income Agnes Seto is “having much more 27 Consolidated Balance Sheets fun” now that Wal-Mart has 28 Consolidated Statements of Shareholders’ Equity expanded to Canada — not to mention 29 Consolidated Statements of Cash Flows six other countries worldwide. See page 14. 37 Corporate Information 1
  4. 4. DIRECTORS: Paul R. Carter John A. Cooper, Jr. PRESIDENT’S LETTER Stephen Friedman Stanley C. Gault David D. Glass Frederick S. Humphries E. Stanley Kroenke Elizabeth A. Sanders Jack C. Shewmaker Donald G. Soderquist Paula Stern John T. Walton S. Robson Walton Chairman of the Board S. Robson Walton Chief Executive Officer President CEO David Glass looks forward to a world of future prospects. David D. Glass Vice Chairman Chief Operating Officer FUTURE STOCK Donald G. Soderquist Executive Vice President President, Wal-Mart Realty Building shareholder value Paul R. Carter Executive Vice President - Operations al-Mart has a history of rising growth in the Company’s cash W Thomas M. Coughlin to the challenge. After a flow, we now can finance our Executive Vice President - disappointing year in fiscal aggressive capital expenditures Specialty Division 1996, our associates responded program internally and still David Dible with a solid performance in have excess cash available for Executive Vice President fiscal 1997. Sales for the fiscal distribution to our shareholders. President - Sam’s year approached $105 billion This strong sustainable cash Joseph S. Hardin, Jr. and earnings topped $3 billion. flow allowed us to announce Executive Vice President Each operating division two actions to enhance President - International generated higher comparable shareholder value. The first was Bob L. Martin sales growth and improved to increase our dividend by 29% Executive Vice President operating margins. Our and the second was to increase Chief Financial Officer Wal-Mart operations experienced the size of our share repurchase John B. Menzer some of the best customer program with the intent to approval scores in our history repurchase up to $2 billion Executive Vice President - Merchandising and SAM’S Club showed solid worth of stock over the next H. Lee Scott, Jr. improvement in comparable 12 to 18 months. sales, membership, merchan- Our first priority remains Executive Vice President - Supercenter dise selection and income. profitable internal growth. Nick White Asset management and cash Future increases in the flow were key themes this year. dividend and repurchase Secretary, General Counsel We generated over $3 billion in program will depend on the Robert K. Rhoads free cash flow and increased availability of our growth Treasurer our return on assets. With the opportunities. Terri Bertschy 2
  5. 5. plenty of room left to grow. The value our customers In the United States, Wal-Mart respond to in the United States holds only 7% of a $1.4 trillion is enthusiastically received retail market. That leaves a wherever we go. In China, tremendous opportunity for where we recently opened our future growth. first units, the people already The supermarket industry, know what Wal-Mart is all amounting to $425 billion a about. Our three story year, is a great opportunity for Supercenter had 80,000 visitors continued growth. It’s almost on its first Saturday. three times the size of the With over 300 locations and discount store industry, where more than 50,000 associates Wal-Mart is one of the three outside the United States, retailers that, combined, hold Wal-Mart has become a true almost 85 percent of the market. global brand name, with Yet in the grocery segment, the worldwide appeal resembling top five players constitute less Coca-Cola or McDonald’s. than 25%. The Wal-Mart way of doing The significant increase in Then there is the rest of the business makes us one of both the dividend and the world. Our international the world’s most recognizable share repurchase program division reported sales in companies - which translates demonstrate our confidence excess of $5 billion and these to loyal customers and steady in the Company’s future earn- operations could represent profitable growth. ings and cash flow growth. 10 percent of our total sales in Wal-Mart associates have We believe our double digit the next 5 years. every right to be proud of what earnings growth combined with The international division we’ve built, from our very first the new shareholder initiatives was profitable for the year with store to today’s worldwide will allow us to achieve network of nearly 3,000 our targeted annual In June of 1990, Sam stores and clubs. We’re the total shareholder return company that works Walton predicted Wal-Mart of 15%. because of our people - the In June of 1990, at our associates who make it would reach $100 billion in annual shareholder’s happen every day. meeting, Sam Walton So if anyone wonders sales by the year 2000. At predicted Wal-Mart where our next $100 would reach $100 billion billion will come from – it that time, we thought the in sales by the year will come from customers goal was quite a stretch. 2000. At that time, we who recognize value thought the goal was throughout the world and quite a stretch. After all, from our associates who it took us 10 years to reach Canada and Puerto Rico will deliver it with a smile. $100 million and another 7 to showing excellent results and I am really excited about the reach our first billion. But our Mexico achieving profitability next year. We have so much strength has always been our in a difficult economy. opportunity and our team is dedicated associates, their ability Only three years after focused on continuing to serve to work together, and the acquiring the Woolco stores in our customers in such a way support of our loyal customers. Canada, Wal-Mart has become that clearly indicates they are So 3 years ahead of schedule, Canada’s highest volume the boss. But more importantly, we reached that goal. discount retailer and in Mexico they are focused on value. Even though we exceeded our joint venture is also the Value to our customers and that lofty goal, there is still country’s largest retailer. value to our shareholders. 3
  6. 6. INSIDE TRACK ‘Wal-Mart is welcoming’: Values are the ties that bind our extended ‘family’ A sense of community draws Paula Stern to Wal-Mart. The Washington, D.C.-based international trade consultant feels at home shopping at Wal-Mart, where the associates are friendly and the customers diverse. “Wal-Mart is so inclusive,” she says. Stern, one of nine outside directors on the Wal-Mart board, is proud to be associated with the company because of its positive impact. “In significant ways, Wal-Mart has affected the Frederick Humphries bought his Prince tennis racket at Wal-Mart, along with another important standard of living of American families,” agrees outdoor item. “I have found a wonderful barbecue grill,” he says. “I like the quality of goods there.” director Betsy Sanders, a management consultant. Humphries, the president of Florida A&M Here’s an inside look at the values these University in Tallahassee since 1985, also likes the “upbeatness” of Wal-Mart associates. Humphries important members bring to our Wal-Mart family. is pretty upbeat himself — about Wal-Mart’s community involvement and associate recruitment programs, and its efforts to create jobs. Artistry helps consultant sculpt trade policy Paula Stern advises President Clinton on international trade policy and is chairwoman of the Advisory Committee of the U.S. Export-Import bank. She’s an important figure in Washington. But there’s also an artistic side to this former chairwoman of the International Trade Commission. Stern loves to sculpt in clay, especially busts of family members. If she weren’t an international trade consultant, Stern says, she’d spend her days in artistic pursuits. “Instead of intellectualizing, I’d be reading a lot more poetry and listening to a lot more individual expression,” she says. She also would spend more time with her family before her children leave the nest. 4
  7. 7. Can’t beat the upbeat... A personal ‘search for excellence’ Stephen Friedman, senior chairman and limited partner of Goldman Sachs & Co., equates Wal-Mart with excellence. The company constantly strives to satisfy customers and refuses to settle for “good enough,” he says. “It is one of the very few companies in the world which has genuinely sparked a revolution.” Besides his position on the Wal-Mart board, Friedman holds leadership roles including vice chairman of the Columbia University trustees and executive committee chairman of the Brookings Institution. Jack Shewmaker somehow finds time to fish in the ‘Vision, mission and camaraderie’ Patagonia Mountains of South America, consult with retail, distribution and manufacturing companies in South Africa, Australia and Asia, and ski with his grandchildren. He announced his “semi- retirement” from Wal-Mart in 1988 after 18 years with our company, during which he rose from district manager to Vice Chairman and Chief Financial Officer. “I started there when Wal-Mart was small, with $30 million in sales,” he says. “No one imagined it would be as big as it is today.” Shewmaker, named one of the 10 Most Influential People in Mass Retail Today by Discount Merchandiser in 1997, says Wal-Mart is a phenomenon that grew from “a desire to do something different, better, and more efficiently with a sense of vision, mission, and camaraderie.” 5
  8. 8. INSIDE TRACK Hobbies? Service is his hobby! Raised on retailing Stan Kroenke. Retailing has been part of Stan Kroenke’s life since he swept out his father’s hard- ware store as a child. Kroenke later worked in retail to put himself through college and graduate school. “Being exposed to people like Bud and Sam Walton had a major impact on my life,” Kroenke says. Today, he owns the Kroenke Group, a nation- al investment, development, and commercial real estate company based in Columbia, Missouri. He’s also co-owner of the St. Louis Rams football team. “Expanding into the sports business has been an interesting and challenging experience,” he says. John Cooper, chairman of the Arkansas land development company, Cooper Communities Inc., could retire and take the time to enjoy the beauty of the Arkansas outdoors. But there’s no golfing or fishing or other leisurely pursuits for Cooper, who believes one of his most important roles is serving the community. “I really think all a person can do is to be helpful to somebody,” he said. Cooper has helped his neighbors — and helped protect the outdoors — as a founding member of the Arkansas Nature Conservancy. When he’s not lending his experience to the Wal-Mart board, he also serves on the boards of J.B. Hunt and Entergy Corp. Elizabeth A. “Betsy” Sanders needs solitude to meditate, write and “be a friend,” to balance out her heavy business and community commitments. That’s why she left corporate life in 1990 to form The Sanders Partnership, a consulting firm. Sanders and her family live near the Sierra Nevada mountains in northern California. Before heading for the hills, Sanders was vice president and general manager for Nordstrom Inc., earning national recognition as an expert on customer service. She’s always admired Wal-Mart for low prices, top-quality products and, yes, customer service. This, she says, helps American families stretch their dollars for other goods and improves their standard of living. “There’s nothing ordinary Family, friendship first about this company,” she says. 6
  9. 9. The modesty of a man who’s reached the top Stanley Gault, retired chairman of the Goodyear Tire & Rubber Co. and, before that, Rubbermaid Inc., has been honored by countless business groups and publications such as Fortune magazine. Perhaps most notably, two years ago he was named International Executive of the Year by Brigham Young University for his leadership and high moral and ethical standards. In addition, he brings the perspective of Wal-Mart’s vendor-partners to our board. Despite the accolades he’s received, Gault is modest about his role at Wal-Mart. “I hope to use my almost 50 years of (business) experience to the benefit of Wal-Mart associates, customers and shareholders,” he says. Making business better John Walton likes to have his “old van worked on” in the Wal-Mart automotive department while he shops. Walton enjoys the associates at his local Wal-Mart — they’re almost family. “I’ve grown up with the company,” says the son of founder Sam Walton. In fact, John Walton was Wal-Mart’s second pilot (Sam was No. 1). John’s current business interests include invest- ments in small companies in a wide variety of industries. As he considers American business, Walton is convinced that Wal-Mart has been a positive force because of its integrity, customer service, and its “influence on the shopping experience.” Before Sam Walton died, John told him that “what he had done went far beyond Wal-Mart to make American business better.” When he’s not involved with business, John Walton is working to make a difference in American education. 7
  10. 10. Hand Tools That Are Popular With Mechanics When it comes to getting the highest quality and the best values, Wal-Mart is the do-it-yourselfer’s best friend. Available exclusively at Wal-Mart, Popular Mechanics™-brand hand tools are a household name when it comes to car repairs, home remodeling and just about any project in between. That’s because Popular Mechanics tools are made to last and backed by a lifetime guarantee. From socket sets, wrenches and screw drivers to hammers, drills, extension cords and more—you name it, Wal-Mart’s got the tools you need to get the job done right.
  11. 11. Associates Help GOOD NEIGHBORS Make Miracles Wal-Mart Sponsors Children’s Miracle Network Taylor Dippery is no ordinary Wal-Mart associate. At Store #1607 in Lewistown, PA, the associates consider little Taylor their special miracle. At 18 months of age, Taylor learned to walk at Wal-Mart. Rebirth in Rutland: From left to right, Mayor Jeff Wennberg and Wal-Mart associates Chet Landon, Gail Scribner and Brenda Heath proudly show off Using her special walker, she a revitalized downtown. now scoots all over the store with her grandfather, wearing ‘THE JEWEL IN OUR CROWN’ her honorary associate’s name Wal-Mart helps set downtown on the right track tag and giving smiles and greet- ings to everyone she passes. “Phenomenal” is a word Jeff on an aging, 1960s-vintage It was a hospital in the Wennberg uses a lot — especially strip center. when he’s talking about Wal-Mart. Then began years of planning Wennberg is the mayor of to revitalize the city’s core. Rutland, VT, where a Wal-Mart When the Wal-Mart lease was store that opened this January announced as the anchor of is the linchpin of an eight-year the project, the Rutland Daily downtown revitalization project. Herald wrote in an April “Wal-Mart has been better 1996 editorial: than expected for us, and we There is a feel of life on the streets had extraordinarily high of downtown Rutland that is expectations,” Wennberg said. new. It is the result of Rutland, population 18,000, all these developments. It is is the second-largest city in the payoff for years of work “Associate” Taylor Dippery Vermont. Because its business by numerous people in the district serves a sizable community who have refused to Children’s Miracle Network surrounding region, downtown give in to drift and defeatism. (CMN) that made it possible Rutland is “about what you’d With the new Wal-Mart, of for Taylor to get around, and expect for a city of 60,000,” course, Rutland added 140 new Store #1607 did its part to help. Wennberg said. jobs and learned the Wal-Mart Last year, that store’s associates Or anyway, it is now — thanks way of doing business. raised $20,500 for their local to the redevelopment project “Their philanthropy is CMN hospital, and helped and Wal-Mart. legendary, not to mention their hundreds of children like Taylor. “Eight years ago, downtown involvement in the community,” Wal-Mart associates have Rutland was perceived as being Wennberg said. “What Wal-Mart raised more than $71 million for in a serious decline,” Wennberg represents is economic prosper- CMN since Wal-Mart became said. “There’d been no significant ity and growth in our central official retail sponsor in 1988. private-sector investment in quite business district, because they In calendar 1996, Wal-Mart some time. Downtown was are such a phenomenal draw. donated $14.3 million, or 10 per- suffering a slow death.” The Wal-Mart opening is the Rutland’s central business cent, of the $143 million raised jewel in our crown.” district, built around 20 acres in the entire CMN campaign. of railroad yards, was focused 9
  12. 12. LETTERS THE “CLAM JUNIOR“ This was an extreme act of customer service, beyond the I am writing because call of duty. For this excellent of an experience that I shall always remember with a smile. service (that did not have to This experience involved many happen), Wal-Mart has earned a different Wal-Mart associates faithful shopper in me. in various Wal-Mart stores. Helen Walton, Wal-Mart’s First Lady Sincerely, After making many calls Roberta DeLeon A HISTORY OF CHANGE searching for an ice fishing Chula Vista, CA Recently, Helen Walton took shelter, the “Clam Junior,” a moment to share her thoughts I reached Dan Curtis at the GUARDIAN ANGEL on Wal-Mart’s focus, leadership Concord, NH, store. At 8:45 and legacy: I am writing this letter to in the evening, this gentleman “As our Company has grown, without reservation and commend one of your assistant questions have come up about with total willingness, was managers, Ms. Sue Cantu. where Wal-Mart is going and if helping me and then apologized She went well above and Sam would approve,” Helen said. because he would have to call beyond what any store manager “I believe he would. I feel good me back in 15 minutes. would normally do to help me. about our leadership, especially As promised, the phone rang The heat had been out all day in this last year. People have at 9 p.m. Dan Curtis was return- in my granddaughter’s dorm accepted the fact that there is new ing my call with not only the room, and the temperature leadership and they are doing a store locations, but with all the was in the teens. I tried calling good job. I think their stewardship phone numbers and the quantity the residence hall; but they has been absolutely marvelous,” that each store might still have. were closed because of the she said. The actions and reactions weather. I then thought of the “We need to continue to of these employees display the Wal-Mart Store in Waco — emphasize putting the customer essence of a quality organization. I suppose because our local first. Everyone has a customer and Very Sincerely, Wal-Mart is so helpful to they need to see that the people Linda A. Betti our community. needing information or attention Mendon, MA I called Ms. Cantu and asked are getting it. Another thing that if there was any way she could Sam always said was ‘respect the WAL-MART DELIVERS individual.’ That is so important. help. She was shorthanded “Never fail to be open to change On 1-9-97 I went to Wal-Mart because of the weather; but when there are ways to improve in Chula Vista to purchase a within the hour, she had what you’re doing,” Helen said. ping-pong table. Juan Wood, delivered two blankets and “We can’t say, ‘That’s not the way an employee in sporting goods, an electric heater to the dorm. we do it.’ The world is changing assisted me. I told him I did not Saint Augustine said, “Every too fast. We’ve got to be ready to have a truck to transport the visible thing in the world is change with it. table. He spoke to his manager, put in charge of an angel.” “If we keep these things in mind, Don Olson, to see if they could Ms. Cantu is truly an angel. Wal-Mart is going to keep growing deliver it. Sincerely, and getting better,” said Helen. On 1-10-97 Juan Wood and June Arnold Don Olson delivered the table Carthage, TX to my residence. 10
  13. 13. Wal-Mart TRIVIA Savings EVERYWHERE 1. 11. Name Sam’s favorite dog. Where is the first Y Shop ou Wal-Mart located? 12. What did Wal-Mart stock 2. Wal-Mart’s first people actually sell for the very greeter was in first day it was traded? which store? 13. What year did the first 3. What charity receives Wal-Mart open? money from sales of 14. What year did Wal-Mart Sam’s American Choice become a publicly products? owned company? 4. Where did Sam and 15. Wal-Mart satellite Helen meet? network began 5. Wal-Mart first hit broadcasting in $1 billion in profits in what year? what year? 16. SAM’S Club was started 6. What year was Sam in what year? Now, no matter where you Walton born? 17. Helen Walton holds a shop or what you buy, you can 7. What year did Sam write B.S. in what field? his autobiography? take advantage of Wal-Mart’s 18. What percentage of sales 8. Sam was presented with goes to run the entire legendary savings and value. the Presidential Medal of general offices, from the With the Wal-Mart MasterCard® Freedom in what year? chairman of the board to from Chase you pay no annual the secretaries? 9. What year did Sam do fee and a low 14.48% APR 19. Who came up with the the Hula on Wall Street? idea of profit sharing? 10. How much did Wal-Mart fixed rate for purchases. 20. Sam thought about Store #1 do in its first Plus, save even more with year of operation? running for what our low 9.9% fixed APR political office? on transferred balances. Did you know? Best of all, the Wal-Mart name is recognized around Companywide, Wal-Mart recycles over 700,000 tons of cardboard, paper and plastic each year. the world. So, you can use Wal-Mart sold about 80 million Valentine cards this February your new MasterCard at more across the United States. than 13 million locations. Wal-Mart is the largest private sector employer in the United States. Don’t wait to get great Wal-Mart’s Private Fleet drives more than 1 million miles a day. Making this happen requires the purchase of more than $50 million Wal-Mart savings every day, of fuel a year. apply in the store or call: 20. President of the United States. 14. 1970. 15. 1983. 16. 1983. 17. Finance. 18. 2%. 19. Helen Walton. 1-800-858-3100 7. 1992. 8. 1992. 9. 1984. 10. $1 million. 11. Old Roy. 12. $16.50. 13. 1962. 3. Competitive Edge Scholarship Program. 4. In a bowling alley. 5. 1990. 6. 1918. Answers 1. Rogers, Arkansas. 2. Crowley, Louisiana.
  14. 14. MAGIC WAND “Space age” technology helps keep Wal-Mart in front on price TECHNOLOGY and service The magic wand gives our associates a window on a world of Wal-Mart merchandise. t any given moment, a typical a radio-frequency network to through walls” to find what our A Wal-Mart Discount Store has in-store terminals. It’s a high-tech customers want, when they want more than 70,000 standard conduit to an internal information it. But that’s just the proverbial tip items in stock. Every one of system that gives every associate of Wal-Mart’s high-tech iceberg. them has to be identified, ordered, a window on the world of “What it’s really about is inventoried and replenished. Wal-Mart merchandise. putting information in people’s A typical Supercenter is even There are “magic wands,” hands,” said Randy Mott, tougher to stock, since it also sometimes dozens of them, Senior Vice President and carries more than 20,000 in the hands of associates at Chief Information Officer. additional grocery items, a lot every Wal-Mart store. They help “We’re careful not to get too of them perishable. So they us keep up-to-the-minute track enamored with all the bells have to be reordered frequently, of the inventory on hand, and whistles of technology. sometimes daily. deliveries and backup mer- It’s there to support people.” So how do we do it? We wave chandise in stock at Wal-Mart With an annual technology a magic wand! distribution centers. and communication budget of That “magic wand” is actually The computerized wands $500 million and an information a handheld computer, linked by are amazing enough, “seeing systems staff of 1,200, Wal-Mart 12
  15. 15. leads the industry in information expense in planning their where our technology comes technology — and we’re not production and distribution, in, because the best way to slowing down. We know our which translates to lower improve both service and future earnings growth has merchandise costs. merchandising is to get it to to come not just from increased For another example of our customers faster and market share, but from increased leveraging technology, Mott more efficiently. productivity. That means mentioned the item locator “Speed of delivery is a key Wal-Mart is dedicated to giving system. This system enables competitive advantage, Mott every associate the technological associates to scan an item and said. Fortunately, he added, tools to work smarter every day. electronically check on its here at Wal-Mart, one thing But this is Wal-Mart, we’re availability in other area stores. people are comfortable with not just developing technology “That’s a function that lets is change.” for technology’s sake. From “magic Our investments in “Our technology helps us buy wands” to the systems are measured millions of lines of the right merchandise at the in terms of their our own computer effectiveness for our right time, and have it in the code and the world’s stores and customers. largest commercial “With this technology, right place at the right price.” database, Wal-Mart we’re getting better, is out in front — and quicker and more picking up speed. accurate information to manage associates leverage our shared As Don Soderquist, our Chief and control every aspect of our information to provide even Operating Officer, is fond of business,” Mott said. “Wal-Mart better customer service,” saying, ‘we don’t sell to our has always been intensely Mott said. “It’s taking conscious of holding down customers. We buy for our advantage of technology to expenses, because that’s customers,’ Mott said. “Our add a little extra service another way we can have lower technology helps us buy the without adding a lot of cost.” prices, better merchandise and right merchandise at the right Wal-Mart’s constant drive to service for our customers and time, and have it in the right improve can be summed up in better returns for our investors. place at the right price.” one word: Efficiency! And that’s “We may be talking about state-of-the-art computer systems, but the way we manage them is pure Wal-Mart.” In the world of information technology, Wal-Mart has long been known as a leader. Earlier this year, we were recognized by Computerworld and Smithsonian Magazine as one of the top five innovators in information technology within business. The award recognized the Retail Link system, which provides sales data — by item, by store, by day — to our vendor-partners. That helps suppliers save time and CIO Randy Mott: a bigger bang for the technology buck. 13
  16. 16. A ‘GLOBAL BRAND’ WAL-MART: HOMETOWN VALUE IN ANY LANGUAGE gnes Seto will be the A first person to tell you. “I consider myself very fortunate to be part of the Wal-Mart International family,” Seto said. “I am having much more fun than before.” INTERNATIONAL She leaves no doubt about that, at least when it comes to her job. After a long career with the Woolco chain in Canada, Seto is now a buyer with Wal-Mart Canada in Toronto. Wal-Mart acquired 122 Canadian Woolco stores in 1994, and immediately embarked on a multimillion- dollar plan that saw the stores revamped and remerchandised in less than a year. Wal-Mart Canada has already become that nation’s No. 1 discount chain, and is on the verge of becoming Canada’s largest retailer of any sort. And Canada is just one of the seven countries worldwide in Wal-Mart’s international expansion. With more than 50,000 associates and over 300 locations outside the United States, Wal-Mart is already serving some 5 million customers every week. The International Division was profitable in fiscal 1997, driven by a strong fourth quarter. And Even in Shenzen, China, “Wal-Mart” translates to value. the division’s profitability is expected to improve this year. 14
  17. 17. “We set specific goals for sales, “We have always been very inventory and gross margins. proud of the company,” Garza “We treat our customers said. “My husband was so as No. 1. excited when he heard about “We are all equal in this this, he came home and said, company–we just have different ‘Guess what? We’re going to jobs to do.” Monterey! We’re going to pass Part of the credit for the on the Wal-Mart culture!’ Agnes Seto, Wal-Mart Canada worldwide expansion of “Our associates in Mexico Wal-Mart culture should go to know retail; it’s the culture “The Wal-Mart name is better known outside the United the 170-some associates who we brought that makes the States than any of us imagine,” are affectionately known as difference,” Garza said. “It was said Bob L. Martin, President “expatriates” — associates who so easy for us to work together, of the International Division. go to work in international like big kids having fun.” “We are a global brand name. locations for two or three years, Community involvement, To customers everywhere it sharing their knowledge with responding to local needs, means low cost, best value, greatest selection of quality merchandise and highest standards of customer service. “It takes time to make money in these markets, but the fact that International has grown to $5 billion in sales in less than five years gives us an idea of how great the potential is.” The Wal-Mart culture has proven that it is transportable The Wal-Mart Supercenter looks right at home anywhere in the world. to other cultures worldwide. The international market is new international associates. merchandise preferences, and virtually unlimited, and the “It doesn’t become dull, buying locally are all hallmarks farther the Wal-Mart “global not for one moment,” laughed of the international Wal-Marts, brand” reaches around the Erlinda Garza, who is nearing just as they are in the world, the greater the opportunity the end of her stint in Monterey, United States. for long-term growth. Mexico. Garza is a co-manager Perhaps it is Wal-Mart’s To see just how distinctive — of a Supercenter that was emphasis on serving its and advantageous — the built from the ground up hometown — wherever that Wal-Mart culture is, you only with the help of a small team may be — that makes Wal-Mart have to meet someone like of expatriates. culture travel so well. Garza’s Seto, who knows the other Garza and her husband Mexican associates, for side of the street from first-hand Chris, who works at another example, quickly became experience. store in Monterey, are both devotees of the Wal-Mart way. Asked how things are different natives of Corpus Christi, Texas. “I’ll miss the people,” Garza now at Wal-Mart Canada, Seto’s They had worked at several said as she prepared to return list included: Wal-Marts in Texas and to the United States. “They’re “We have the most advanced Arkansas before they were so motivated, they’re so willing computer technology as tools to asked if they’d like to help in the to say, ‘I’m going to do it.’ As do our job, whereas before a lot international expansion. Their long as we have people like of reports were not available for us to analyze our business. answer? “You bet we would!” that, we’ll be in good shape.” 15
  19. 19. Truly a Wal-Mart family: Front row, left to right: Mike Murphy, Barbara Murphy, Tracey Murphy and Dale Murphy; back row: Bob Brown and Mike Brown. hen Tracey Murphy W was introduced on the main stage at Wal-Mart’s 1997 year-beginning store managers’ meeting, the term “Wal-Mart family” took on a whole new meaning. Her husband, Dale Murphy, manages a store in Kansas City, Missouri. Her father, Bob Brown, is a district manager with the Supercenter division. Her brother, Mike Brown, man- ages a SAM’S Club location. She has a mother-in-law who’s a department manager and a brother-in-law who’s a store manager too. “Truly a Wal-Mart family,” as CEO David Glass told the 3,500 Wal-Mart associates at the meeting. One-stop shopping: Convenience “I grew up with Wal-Mart,” Tracey Murphy said later, is key for Supercenter manager over a cup of coffee at the Tracey Murphy. 17
  20. 20. CONTINUED STORY Ann Burchett: Personal shopper in cyberspace. Supercenter she manages in an age when consumers “Before you needed to go to a in Harrisonville, Missouri. “My complain that they don’t have grocery store and any number dad has been with Wal-Mart for enough time to shop. of specialty retailers to get what 20 years, and I always had an The Supercenter “works you needed. Now you can just interest in retail. So here I am, everywhere, and we think it go to the Supercenter. after 14 years with Wal-Mart.” is quite likely going to prove “We always preach that we There are many families to be the most flexible retail sell for less, so we’re saving like Murphy’s represented concept ever and, by definition, people both time and money,” in Wal-Mart, and it’s only to have the longest life yet she said. “It’s real convenient appropriate that she works achieved,” according to a recent for most customers.” in the Supercenter division, analyst’s report by CS First And while the Supercenter where Wal-Mart “family Boston Corp. offers the shopping of tomorrow, values” combine with the Focusing on the Supercenter Ann Burchett is in a stockroom industry’s hottest shopping division as a growth vehicle, the at the back of the Harrisonville format to lead our company CS First Boston analyst gave store, getting a peek at the day into the future of retailing. Wal-Mart stock a “strong after tomorrow. With its blend of a discount buy” rating. That’s where Burchett, store with groceries and The Company’s fastest- a seven-year Wal-Mart associate, such additional services growing division, Supercenters handles fulfillment for orders as restaurants, Vision Centers, combine one-stop convenience received through Wal-Mart Lube Express, hair styling, dry with Wal-Mart’s focus on top- Online, our World Wide Web cleaning, shoe repair and bank- quality merchandise, services site, on which an experimental ing, the Supercenter is designed and food at everyday low prices. online shopping service was for shopping convenience — “It’s one-stop shopping for rolled out last November. Wal-Mart changes because a sizable competitive advantage most people,” Murphy said. 18
  21. 21. the world changes. Our customers FISCAL 1997 END OF are constantly looking for new YEAR STORE COUNTS ways to meet their needs. That’s why, after studying Supercenters Discount Stores SAM'S Clubs catalog shopping and TV Alabama 54 22 8 14 0 Alberta 0 shopping and a plethora of Alaska 0 3 3 12 0 British Columbia 0 Information Age innovations, Arizona 33 0 6 9 0 Manitoba 0 Wal-Mart has gone on line, Arkansas 54 22 4 4 0 New Brunswick 0 testing one of today’s most excit- California 95 0 24 7 0 Newfoundland 0 ing ways to shop without shops. Colorado 32 4 10 7 0 Nova Scotia 0 Internet or no, Burchett said, Connecticut 0 3 9 1 0 NW Territories 0 the basics of Wal-Mart Online Delaware 1 1 2 50 0 Ontario 0 Florida 109 23 31 24 0 Quebec 0 are pure Wal-Mart. Georgia 65 22 15 8 0 Saskatchewan 0 “Really, I’m like their personal Hawaii 0 1 5 136 0 0 CANADA TOTAL shopper,” she said. “They may Idaho 0 1 9 be surfing the Web on their 3 0 3 Argentina Illinois 98 8 24 computer, but when they hit our 2 0 3 Brazil Indiana 62 11 14 18 28 Mexico site, we want the service to be 106* Iowa 45 0 7 0 7 4 Puerto Rico just as good as they get walking Kansas 44 3 5 1 0 1 China into a Wal-Mart.” Kentucky 53 15 5 2 0 0 Indonesia Louisiana 58 17 So far, Murphy noted, U.S. 9 Maine 19 0 3 military personnel stationed 249 26 39 INT'L. TOTAL Maryland 21 0 10 overseas have been among the *Includes 3 Superamas, Massachusetts 25 0 4 25 Bodegas, 4 Aurreras, most enthusiastic customers 67 Vips and 7 Suburbias Michigan 44 0 21 of Wal-Mart Online. The electronics Minnesota 33 0 9 department is a particularly big Mississippi 45 11 4 hit with these cyber-customers. Missouri 79 29 11 INT'L. U.S. “Even after shipping cost, Montana 0 1 7 they’re getting a great price and Nebraska 13 4 3 Nevada 10 0 2 selection”, Murphy said. New Hampshire 16 0 4 (You can check out the on-line New Jersey 14 0 6 shopping experience of Wal-Mart New Mexico 19 0 3 on the Web by going to New York 48 5 17 http://www.wal-mart.com and INT'L. U.S. North Carolina 82 3 14 clicking on “Go Shopping.”) North Dakota 0 2 8 From the growth of the Ohio 77 0 22 Supercenter concept to such Oklahoma 61 17 6 Oregon 20 futuristic ideas as Internet shop- 0 0 Pennsylvania 49 10 18 ping, Wal-Mart is still on the Rhode Island 0 1 5 leading edge of retailing — driven South Carolina 46 6 8 by associates like Murphy and U.S. INT'L. South Dakota 0 2 8 her own Wal-Mart family. Tennessee 63 25 10 David Glass, President and Texas 173 69 51 CEO, sums up the Supercenter Utah 14 0 5 concept simply: “I believe Vermont 0 0 3 Supercenters will be to the next Virginia 35 14 10 Washington 18 0 2 decade what discount stores West Virginia 12 3 3 were to the last, and that means Wisconsin 54 0 11 Wal-Mart will continue to be Wyoming 0 2 9 a better company with each U.S. TOTAL 1,960 344 436 2,209 370 475 GRAND TOTAL GRAND TOTAL passing year.” 19
  22. 22. SAM’S CLUB Merchandise, price and more! Dayna King helps SAM’S Club give members the best value in the business. SAM’S CLUB BUILDS VALUE FOR MEMBERS SM he first thing she noticed President for SAM’S Club , King “While wholesale prices on T when she came to work is responsible for 76 clubs quality merchandise drive our for Wal-Mart nine years ago, in the northeast United States — business,” King said, “the Dayna King says, was that an area extending from membership gets even more “this company has always been Lexington, KY, to Bangor, ME. valuable with our wide variety interested in what I could offer, Her work and her ideas help of additional services and both from a work standpoint guide Wal-Mart’s membership member benefits.” and an idea standpoint. warehouse division as it That kind of value is equally “I thrived in that kind continues an intensive program relevant to both kinds of of environment,” King added. of creating more value than ever SAM’S Club members — Business Indeed. As a Regional Vice for SAM’S Club members. Members and Advantage 20
  23. 23. (individual) Members. program offers a 1 percent something we just do once “We strive to create value rebate on everything they buy. and forget about it,” Hardin for our members, first and said. “We’re trying to exceed • And the list of membership foremost by providing small members’ expectations by benefits just goes on and businesses with top-quality working to be more consistent.” on... significant discounts merchandise at exceptional And so SAM’S Club strides on cruises through the prices,” said Joe Hardin, into the future. As always Travel Department; President of SAM’S Club. at Wal-Mart, change is not discounts on rental cars, And that membership value only expected, but encouraged, hotels, car and boat translates into shareholder through the ideas and enthusiasm purchases; discounted value, as SAM’S Club showed of associates like King. long-distance telephone improvement in sales and “I’m a product of the invest- service; and more. operating profit in the latest ment the company makes in its The process of building fiscal year. Membership income people,” King said. “The company membership value also was also up, driven by growth allows you to have total owner- includes an aggressive remodel- in new Advantage memberships ship of your ideas by letting you ing program for many clubs, and renewals. put them in action and watch and an effort to expand the Among the ways SAM’S Club them succeed. clubs’ selection in the fresh creates membership value: “That approach, that openness categories — bakery, fresh to associates’ ideas, has been • SAM’S Club offers quality meat and produce. “These are around since the company was through branded merchan- commodity categories that started,” she said. “And what dise at exceptional prices. build excitement, and I find very promising is that, encourage people to shop • The clubs also emphasize even today, you can still see at a warehouse club more bringing in the best regional it happening. frequently,” Hardin said. brands — the brands many “The company is always In a simple but effective move of our members grew up using. pushing us to wherever our to build business, the new lower • SAM’S Club has moved capabilities will take us. price points are combined with aggressively to lower price Wal-Mart will open the door a new layout, which encourages points on the vast majority to opportunity any time impulse purchases. of its merchandise without somebody knocks on it.” Building membership value giving up quality, through is “a work in progress, not better prices from our vendors or, in some cases, Whether it’s a small business or a large family, SAM’S Club alternative vendors. membership means value. This enables the clubs to encourage impulse buying with prominent displays of those items. • By lowering the number of individual items a club stocks, SAM’S Club has been able to merchandise the items more effectively. This reduces operational costs and enables the clubs to move huge quantities of merchandise. • For qualified members, Business and Advantage alike, the SAM’S Club credit 21
  24. 24. exclusively at
  25. 25. Membership Value Shop at any SAM’S Club today! Use this SAM’S Club one-day guest membership and see how great these values really are. Get behind the wheels of a SAM’S Club cart and suddenly One-Day Guest Membership SM you’ve got the purchasing power of more than $20 billion Name: behind you. That means significant everyday savings on Address: quality brand names from groceries to computers and City ⁄ State ⁄ ZIP Code: electronics, casual clothes, sporting goods, seasonal items, Membership# 176969285 Phone #: Expiration Date: 12/31/97 travel and more. Shop from the most unique product 5% upcharge applies on all purchases when shopping with this One-Day Guest Membership. selection under one roof. Cash, Discover® or Novus® Card SM only (no checks). You may apply for membership, subject to qualifications, while visiting any All it takes is a SAM’S Club membership. Now that’s real value! SAM’S Club SM. Visit our web site at http://www.samsclub.com Item selection may vary by club location.