Walmart 1998 Annual Report Download - page 4

s I reflect on the year just
ended, I cannot help but
feel proud of what our
Wal-Mart associates have accom-
plished. Fiscal 1998 was another
record year. Every one of our oper-
ating divisions increased their
sales, earnings and return on
assets.
Sales increased by $13 billion,
or 12%, in fiscal 1998. More
importantly, earnings per share
grew by more than 17%, which
combined with our dividend yield,
exceeded our 15% total sharehold-
er return target. This last result
came at some personal cost
though. I promised our team that I
would work as a People Greeter in
one of our stores if we exceeded
15% earnings growth. This is a
promise I am happy to keep.
Our focus on asset management
continued to produce results, as
our return on assets improved
0.6% to 8.5%. We achieved this
improvement while continuing to
invest in the growth of the business
through an aggressive capital
expenditure program and interna-
tional acquisitions. Further, our
return on equity improved to
almost 20%.
Seldom can you count on every-
thing coming together as well as it
did this year. We believe we could
always do better, but we improved
more this year than I can ever
remember in the past. Our results
exceeded our own aggressive
internal goals and the stock market
rewarded us for our accomplish-
ments. As much as I would like to
tell you that the stock price will
increase this year by another 73%,
I can’t. If I did, I am sure some of
you would remind me that there
were years in recent history when
the share price didn’t increase at
all. However, over time our stock
will reflect the results of our
efforts. This year’s increase was a
well-deserved reward for our asso-
ciates and shareholders.
Not many years ago, it was widely
believed in the investment commu-
nity that Wal-Mart was a maturing
company in a maturing industry.
No matter how well we did,
according to many on Wall Street,
our prospects for growth were lim-
ited because we had simply gotten
too big. The “law of large numbers”
would hold us back. I am happy to
say that was not the case.
The Wal-Mart division had an
excellent year. Sales increased by
10%, while inventory actually
declined. This inventory reduction
was accomplished without reduc-
ing assortment or affecting in-stock
levels. Gross margin improved
through better merchandising,
without raising prices. Operating
expenses declined as a percentage
of sales, without sacrificing service.
Supercenters, our vehicle for
domestic growth, continued its
rapid unit growth while improving
profitability. Since we began that
business in 1987, Wal-Mart
Supercenters have grown to be the
largest hypermarket chain in the
world and one of the largest gro-
cery retailers in the United States.
The Supercenter was not really a
new idea but a logical extension of
the discount store. Throughout
Wal-Mart’s history, we have added
GROWTH
LETTER FROM THE PRESIDENT
With a strategy for improving returns on our
investment base,Wal-Mart focuses on customer and shareholder value.
by design
GROWTH
GROWTH
A
A
A
David D. Glass, President and Chief Executive Officer
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