Walmart 1998 Annual Report Download - page 5

merchandise categories to provide
a broader assortment and a one-
stop shopping experience. The
Supercenter is the next step in
those efforts, offering the customer
a full range of general merchandise
and food in one location. The result
is a new retail format that competes
effectively worldwide with dis-
count stores and grocery stores
alike. Acceptance of these stores
has exceeded our expecta-
tions, and we plan to add
an additional 120 to
125 units domestical-
ly in the coming
year.
The SAM’S Club
division had a good
year, with improve-
ments in both sales and
earnings. Mark Hansen
joined the talented team at SAM’S
Club as president, and together
they will reposition the concept for
the 21st century, offering members
even greater value and service.
Our enhanced membership bene-
fits and efforts to define the
“Millennium Club” will establish
SAM’S Club as the best ware-
house club in the business. I
believe Mark and his team will take
the concept to a new level in the
coming year and re-ignite growth
in the SAM’S Club business.
If Wal-Mart had been content to
be just an Arkansas retailer in the
early days, we probably would not
be where we are today. State bor-
ders were not barriers, and people
and ideas moved freely from one
area to another. The retailer who
incorporated the best practices,
gathered from various regions of
the country, and who offered the
best prices, assortment and service,
earned the customer. We believe
the successful retailers of the future
will be those that bring the best of
each nation to today’s consumer.
We call it “global learning.” We are
committed to being a successful
global retailer and we believe the
attributes that made us successful
in the United States will also lead
to success internationally.
Our first international goal was
to be the dominant retailer in each
country in North America. We
accomplished that goal this year.
Canada had an outstanding year.
This year’s double-digit sales gains
allowed us to almost triple sales
since we acquired 122 Woolco
stores four years ago. Profits
exceeded even our own estimates,
and market share continues to
grow. With the tender offer
for Cifra shares and
merger of the joint
ventures in Mexico,
we now have a con-
trolling interest in
Mexico’s largest
retailer. Cifra now
operates stores with a
variety of concepts in
every region of Mexico,
ranging from the nation’s largest
chain of sit-down restaurants to a
softlines department store.
Our second goal was to pene-
trate South America, and our start-
up operations in Argentina and
Brazil are progressing as planned.
Our emerging market focus in Asia
began in China, where we have
good customer acceptance but
insufficient critical mass, as yet, to
sustain profitability. Finally, on
Dec. 30, 1997, we completed the
acquisition of 21 hypermarkets in
Germany, marking our first entry
into Europe, one of the largest con-
sumer markets in the world.
The year was marked by other
notable accomplishments. Return
on assets and equity continued to
improve as we eliminated $1.4 bil-
lion from inventories. While the
financial community assumed the
impact of our asset management
would be on the interest expense
line in the financial statements, the
effect was even more far-reaching.
Sales increased as we offered cus-
tomers fresher inventory, margins
improved as markdowns and
shrink declined, and expenses
decreased as merchandise handling
was reduced in the stores. All this
allowed us to end the year with
almost $1.5 billion in cash.
We will aggressively expand
with budgeted capital expenditures
of approximately $4 billion in the
coming year and, at the same time,
we will look for further opportuni-
ties to increase our international
presence. Additionally, our cash
flow and earnings growth will
allow us to continue our share buy-
back with the expectation that we
will repurchase $2 billion more in
stock over the next 12 to 18
months. Despite the law of large
numbers, we believe that our stat-
ed target of total annual sharehold-
er return of 15% remains quite
achievable.
My congratulations and grati-
tude to our associates for their
sacrifices, dedication and enthusi-
asm that translated into one of the
best years this company ever expe-
rienced. Thanks also to our
shareholders and customers for
your support. I truly believe that
with the momentum we have, fiscal
1999 will be even better.
Allied Signal, Inc., Aluminum Co. of America,
American Express Co., AT&T, Boeing, Caterpillar,
Chevron, Coca-Cola, E.I. DuPont, etc.,
Eastman Kodak, Exxon, General Electric,
General Motors, Goodyear Tire & Rubber,
Hewlett-Packard, IBM, International Paper Co.,
J.P. Morgan, Phillip Morris Cos., Johnson & Johnson,
McDonald's, Merck, 3M, Procter & Gamble,
Sears Roebuck,Travelers Property/Casualty,
Union Carbide, United Technologies,
Wal-Mart, Walt Disney Co.
% growth in stock price 1997
DJIA WAL-MART
*Dow Jones Industrial Average
23%
73%
DJIADJIA
*
* 30
30
vs. the combined
DJIA
* 30
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