Walmart 2004 Annual Report Download - page 4

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To our Shareholders, Associates and Customers:
Let me begin by expressing how proud I am of everything
our Associates have accomplished during the fiscal year
ended January 31, 2004.
Wal-Mart generated over $256 billion in global revenue,
establishing a new record and adding more than
$26 billion in sales.Your Company earned almost
$9.1 billion in net income and grew earnings per share
by over 15 percent.
I also will report that Wal-Mart paid $4 billion in
U.S. federal income taxes in fiscal year 2004.To borrow
a page from my friend Warren Buffett's annual report
letter to the shareholders of Berkshire Hathaway, this
means that if 446 other taxpayers paid the same amount
as Wal-Mart, no other business or individual in the
United States would have had to pay federal taxes last
year (based on fiscal 2003 U.S. federal tax receipts of
$1.782 trillion). I appreciate that some may not consider
this to be particularly meaningful, but it is an interesting
way to look at the taxes we pay.
Even though our financial results were solid, I would
characterize the year as good overall, but not great.
The year started strong with earnings growing faster
than revenue, but we struggled in the second half due
to slower-than-planned sales and higher-than-normal
apparel markdowns.We have made the appropriate
adjustments to address these circumstances, and we
expect better results in the current fiscal year.
The SAM’S CLUB® and International divisions
distinguished themselves during the year.The
SAM’S CLUB business was re-energized by a new
management team and a renewed commitment to
satisfying the needs of our Business Members.
Sales and earnings at SAM’S CLUB exceeded
our plan, and we expect further progress this
year. Wal-Mart’s International operations
again exceeded their sales and earnings
plan, and we saw great performances from
the “big three”: Canada, the U.K. and Mexico.
We have also seen great improvement
from our Puerto Rico operation with
our Discount Stores, Supercenters and
SAM’S CLUB locations having the best
improvement in Return on Investment
in our International division.
At least once a day, I am asked whether
Wal-Mart can continue to grow. In the United
States,Wal-Mart’s sales are less than 10 percent of
the retail market, and this year we plan to add
more than 50 million square feet of new retail
space.This represents a growth in square footage
of more than 8 percent. In addition, our market
share outside the United States is even smaller, and
the opportunities in those markets are arguably
even greater. So there is definitely room for growth.
In fact, our growth is not limited by access to capital or by
the availability of attractive sites for new stores and Clubs.
Rather, our most significant challenge is attracting,
retaining and developing enough people who understand
and embrace our culture and who can help us fulfill our
growth potential.
Mr. Sam said,“Our Associates make the difference,”
and he was absolutely right. In order to continue your
Company’s growth, we must attract Associates to serve an
increasingly diverse customer base. We must continue to
recruit and promote from all segments of society and
provide a work environment in which individuals can
succeed based on their own merits.During the past year,
we announced the formation of a Diversity Office to
better focus our efforts on these objectives, and beginning
this fiscal year, a portion of management’s incentive will
be tied directly to achieving diversity goals.This is a top
priority for our management team.
As the largest, and possibly most visible, company in the
world, we are being held to an increasingly higher
standard of behavior. Our financial performance is an
important measure by which we are judged,but it is no
longer the only measure. Our Customers, our Associates,
the Communities in which we do business and the
general public expect more of us. In the past, we were
judged mainly by our accomplishments.Today,Wal-Mart is
increasingly defined by our actions as an employer,
corporate citizen and business partner.
We must always do the right things in the right way,
but we can also be more aggressive about telling
our story. It is, after all, a great story, from the jobs
we provide to the consumers we help, to the
Communities we serve. Also,Wal-Mart is a great
investment.We intend to do a lot more to
communicate these messages this year.
I am excited about the prospects for the
current year.The economy is improving.
Our work force is probably the best ever
assembled,and I am excited about the
quality and value of the merchandise we
have to offer to our Customers.
Finally, I want to thank all the constituencies
that make Wal-Mart successful, including our
loyal Customers, dedicated Associates and
valued Suppliers.We also appreciate our
Shareholders, who finance our growth, and
the Communities that welcome us to
their neighborhoods.
Have a great year, and I’ll see you in the stores
and Clubs.
Sincerely,
Lee Scott
A Letter from the President and CEO