Walmart 2002 Annual Report Download - page 4

2
A Look at 2002
and Beyond.
Reflecting on the events of last year, I
am struck not only by how difficult a year
it was, but also by how well our Associates
responded. We began the year following
one of the worst holiday seasons in recent
memory. Sluggish consumer spending,
rising unemployment, the energy crisis and
the events of September 11 all converged
to make the year a very challenging time
in retailing.
While other companies struggled to
increase sales in this environment, we
gained market share and added more than
$26 billion in revenues, for a 13.8 percent
increase over the prior year’s sales. Sales for
the year ending January 31, 2002 were just
under $218 billion, making us the largest
company in the world as measured by
annual revenue.
A lot has been said about us becoming
the world’s largest company. Our goal
was never to be the biggest, but rather to
be the best as measured by our stakeholders,
who are our customers, our Associates, our
suppliers, our communities and importantly,
our shareholders.
Our stated goal is for earnings to grow
at a rate equal to or better than sales. We
did not achieve that goal in the last fiscal
year, but we did end a difficult year with
improved earnings momentum. Net income
for the fourth quarter was almost $2.2
billion, more than 9 percent over the similar
prior-year quarter. Our earnings growth in
the second half of the year was 8.8 percent,
significantly better than the 2.7 percent
earnings growth rate experienced in the
first six months. Earnings for the total
year exceeded $6.6 billion and cash flow
from operations was over $10 billion. This
cash position allowed us to give almost
$2.5 billion back to our shareholders in
the form of dividends and share repurchases
in the last fiscal year.
Almost five years ago, we set a “total
shareholder return target” of 15 percent.
We did not achieve our goal in the last
fiscal year. However, since we established
this objective, our compound annual
return has averaged 17.9 percent.
With success comes the obligation to do
what is right for all of our stakeholders; and
in this area, I would stack our performance
against any business in the world.
There are a couple of distinctions we
received recently that are far more important
than those awarded based on size.
First, Fortune magazine named us as one
of the “100 Best Places to Work.” We were
the only discount retailer to achieve this
distinction, and we have now earned a place
on this list in four of the last five years.
Sam Walton knew that if we treated our
Associates well, they would provide great
customer service, and run the business as
if they were the owners.
Our second honor was ranking number
three in Fortune’s annual list of “America’s
Lee Scott
Dear Shareholders,
Associates and Customers: