Walmart 2000 Annual Report Download - page 5

LEE SCOTT
DAVID GLASS
ROB WALTON
improvements we saw in Mexico.
We still have a tremendous amount
of work to do in some of our new and
emerging markets, but the lessons
will make us better able to serve our
customers in the future.
Q
Until Wal-Mart purchased
ASDA, you indicated that the
U.K. was not a key priority. What
changed your mind, and why did
you make this particular acquisition?
WALTON: ASDA was a
business we had watched
and admired for years.
They had a great manage-
ment team, a similar culture,
and their philosophy on
retailing was almost identi-
cal to ours. We didn’t have any immedi-
ate plans to go to the U.K., but another
company offered to buy ASDA in early
spring. They were our logical entry
point into the U.K. and we could
accomplish the transaction at a price
which would produce fair returns to
our shareholders. Therefore, we decid-
ed it was time for us to go ahead and
step into the market.
Q
Is there an update on the status
of the Neighborhood Markets?
SODERQUIST: We ended the year
with seven Neighborhood Market
stores and we plan to add five to 10
more throughout this year. We believe
this complements the existing
Supercenter strategy and offers extra
convenience. The smaller format also
gives us the flexibility to serve markets
where we may not have a Supercenter
due to demographic or real estate con-
straints. As with anything we do,
customers will ultimately decide if
this model serves their needs.
Q
Why did you put Wal-Mart.com
into a separate company?
SCOTT: Our opportunity to grow the
online business will be improved by
creating this separate company.
Wal-Mart.com will be located in
California, allowing us to attract the
best possible Internet and technology
talent to lead this effort. Under the
“dotcom” business, we are establishing
a dynamic team that uses the strength
of the Wal-Mart brand, new technolo-
gies, our existing store base and
current logistics to create a compelling
shopping experience for online customers.
Q
The U.S. has enjoyed one of the
longest periods of economic
expansion in history. How will
Wal-Mart be affected if the
economic environment becomes
more difficult?
GLASS: A
lthough there are no cur-
rent signs the economy is slowing, a
correction at some point in the future
is possible. Historically, we have pros-
pered during such periods, as our cus-
tomers become more value conscious.
Also, we now have a larger food and
pharmacy component to our business,
which will result in less volatility in
slower economic environments.
Q
Why doesn’t Wal-Mart pay more
in dividends to the shareholders?
WALTON: Although we are not neces-
sarily a dividend company, we have
increased our dividend every year
since 1974, and returned to sharehold-
ers over $1 billion in Company profits
this year. We believe it’s important to
pay a dividend, but we also think it’s
prudent and beneficial for the Company
to reinvest its cash and earn-
ings back into its growth. We
have tremendous opportunities
to serve new markets with our
Stores and Clubs, and new
growth allows us to support
the valuation of our Company.
Q
SAM’ S Club experienced good
results this last year. How
can you continue to address the
changing marketplace and remain
an industry leader in the ware-
house-club business?
SCOTT: SAM’S Club did have a good
year, with same store sales increases
of 6.7% and operating profits of $759
million. But we think we can do even
better with the warehouse-club business.
We believe we must continue to create
excitement at the Clubs through item
merchandising, and by providing such
great savings and value to people that
they want to become members and
return frequently to shop. Our new
Elite card provides SAM’S Club cus-
tomers unmatched buying power in
non-traditional service areas, and
takes our membership services to a
new level.
⋆
Over the next five years, 60 to 70 percent
of our growth in sales and earnings will
come from our Wal-Mart stores and
Supercenters in the domestic markets.
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