A ‘global brand’:Hometown values circle the globe

Message from Miss Helen FutureFuture StockStock Supercenters: tomorrow’s success stores

Price Plus! The value of SAM’S Club membership KeepingKeeping thethe FUNFUN inin QUALITYQUALITY&& VALUE!VALUE! EveryEvery DAYDAY

available exclusively at TABLE OF CONTENTS

About the cover Tracey Murphy, her father Bob Brown and her husband Dale Murphy are all managers with Wal-Mart — and don’t forget her brother, mother-in-law and brother-in-law! For more on Tracey 2 President’s Message and her Wal-Mart family, see page 16. 4 Inside Track Looking up Wal-Mart’s latest 9 Rebirth in Vermont year was record- Wal-Mart anchors revitalized downtown shattering ... and the best is yet to come, 9 Making miracles David Glass says in the President’s Our associates’ own “Children’s Miracle” Message. See page 2. 10 Letters 11 Trivia

Star power! 12 Magic Wand Washington powerhouse Life in the technological fast lane (and sculptor) Paula Stern is just one of the 14 Everybody’s Hometown notables who lend their know-how to Wal-Mart’s Wal-Mart culture drives international growth Board of Directors. See Inside Track, page 4. 16 The Future of Retailing Supercenters lead way to 21st century Cutting edge state-of-the-art 20 The Value Equation technology is a key competitive Building membership benefits at SAM’S Club advantage for Wal-Mart. See FINANCIALS page 12. 22 11 Year Financial Summary 24 Management’s Discussion and Analysis Wal-Mart’s world 26 Consolidated Statements of Income Agnes Seto is “having much more 27 Consolidated Balance Sheets fun” now that Wal-Mart has 28 Consolidated Statements of Shareholders’ Equity expanded to Canada — not to mention 29 Consolidated Statements of Cash Flows six other countries worldwide. 37 Corporate Information See page 14.

1 as 9% y 2 xt s cash y’ wth. wth he first w ailable for xpenditures v as to increase er the ne v ompan alue. T w can finance our ed us to announce e capital e w e no xcess cash a ur first priority remains e e his strong sustainable cash wth in the C w, w w allo v o actions to enhance ailability of our gro O T orth of stock o uture increases in the v gro flo 12 to 18 months. profitable internal gro F dividend and repurchase program will depend on the a opportunities. aggressiv program internally and still ha distribution to our shareholders. flo to increase our dividend b and the second w the size of our share repurchase program with the intent to repurchase up to $2 billion w tw shareholder v eholder value . - ear solid ed v ith the ed xperienced ur 5 billion fter a w merchan ear in fiscal er $3 billion in v themes this y o lub sho y w and increased . Sales for the fiscal 7 wth and impro 9 al scores in our history ement in comparable ere ke EO David Glass looks forward to a world of future prospects. EO David Glass looks forward to a world v v AM’S C 6, our associates responded C 9 sset management and cash w w A al-Mart operations e e generated disappointing y 19 al-Mart has a history of rising to the challenge. A ear approached $10 FUTURE STOCK FUTURE Building shar with a solid performance in fiscal 19 dise selection and income. flo W free cash flo our return on assets. W sales, membership, y and earnings topped $3 billion. Each operating division generated higher comparable sales gro operating margins. O W some of the best customer appro and S impro FUTURE STOCK FUTURE

PRESIDENT’S LETTER W . . d . s ficer y ficer ficer t Realty esident esident esident esident alton alton esident - esident - esident - esident - national oughlin roenke alton man er ible arter arter hite wmaker riedman ooper, Jr center ice Pr ice Pr ice Pr ice Pr . Humphries al-Mar . W y K ice Pr ice Pr ice Pr ice Pr . Hardin, Jr y C. Gault esident easur chandising r vid D ee Scott, Jr , General Counsel Pr T a y aula Stern Operations vid D. Glass vid D. Glass DIRECTORS: ice Chair Super man of the Boar esident - Sam’ Nick W P a a aul R. C aul R. C erri Bertsch D V Mer Bob L. Martin P P T Pr Specialty Division D D John T . Robson W . Robson W H. L John B. Menzer etar Stanle esident - Inter Robert K. Rhoads S S onald G. Soderquist onald G. Soderquist homas M. C Stephen F Stephen Chief Financial Of John A. C Chief Executive Of E. Stanle esident, W Chair Chief Operating Of Jack C. She Executive V Executive V Executive V Executive V Joseph S Pr Elizabeth A. Sanders T D D rederick S Executive V Executive V Executive V Executive V Secr Pr F 2 plenty of room left to grow. The value our customers In the United States, Wal-Mart respond to in the United States holds only 7% of a $1.4 trillion is enthusiastically received retail market. That leaves a wherever we go. In China, tremendous opportunity for where we recently opened our future growth. first units, the people already The supermarket industry, know what Wal-Mart is all amounting to $425 billion a about. Our three story year, is a great opportunity for Supercenter had 80,000 visitors continued growth. It’s almost on its first Saturday. three times the size of the With over 300 locations and discount store industry, where more than 50,000 associates Wal-Mart is one of the three outside the United States, retailers that, combined, hold Wal-Mart has become a true almost 85 percent of the market. global brand name, with Yet in the grocery segment, the worldwide appeal resembling top five players constitute less Coca-Cola or McDonald’s. than 25%. The Wal-Mart way of doing The significant increase in Then there is the rest of the business makes us one of both the dividend and the world. Our international the world’s most recognizable share repurchase program division reported sales in companies - which translates demonstrate our confidence excess of $5 billion and these to loyal customers and steady in the Company’s future earn- operations could represent profitable growth. ings and cash flow growth. 10 percent of our total sales in Wal-Mart associates have We believe our double digit the next 5 years. every right to be proud of what earnings growth combined with The international division we’ve built, from our very first the new shareholder initiatives was profitable for the year with store to today’s worldwide will allow us to achieve network of nearly 3,000 our targeted annual In June of 1990, Sam stores and clubs. We’re the total shareholder return company that works of 15%. Walton predicted Wal-Mart because of our people - the In June of 1990, at our associates who make it annual shareholder’s would reach $100 billion in happen every day. meeting, Sam Walton So if anyone wonders predicted Wal-Mart sales by the year 2000. At where our next $100 would reach $100 billion billion will come from – it in sales by the year that time, we thought the will come from customers 2000. At that time, we goal was quite a stretch. who recognize value thought the goal was throughout the world and quite a stretch. After all, from our associates who it took us 10 years to reach Canada and Puerto Rico will deliver it with a smile. $100 million and another 7 to showing excellent results and I am really excited about the reach our first billion. But our Mexico achieving profitability next year. We have so much strength has always been our in a difficult economy. opportunity and our team is dedicated associates, their ability Only three years after focused on continuing to serve to work together, and the acquiring the Woolco stores in our customers in such a way support of our loyal customers. Canada, Wal-Mart has become that clearly indicates they are So 3 years ahead of schedule, Canada’s highest volume the boss. But more importantly, we reached that goal. discount retailer and in Mexico they are focused on value. Even though we exceeded our joint venture is also the Value to our customers and that lofty goal, there is still country’s largest retailer. value to our shareholders.

3 INSIDE TRACK

‘Wal-Mart is welcoming’: Values are the ties that bind our extended ‘family’

A sense of community draws Paula Stern to Wal-Mart. The Washington, D.C.-based international trade consultant feels at home shopping at Wal-Mart, where the associates are friendly and the customers diverse. “Wal-Mart is so inclusive,” she says. Stern, one of nine outside directors on the Wal-Mart board, is proud to be associated with the company because of its positive impact.

“In significant ways, Wal-Mart has affected the Frederick Humphries bought his Prince tennis standard of living of American families,” agrees racket at Wal-Mart, along with another important outdoor item. “I have found a wonderful barbecue director Betsy Sanders, a management consultant. grill,” he says. “I like the quality of goods there.” Humphries, the president of Florida A&M Here’s an inside look at the values these University in Tallahassee since 1985, also likes the “upbeatness” of Wal-Mart associates. Humphries important members bring to our Wal-Mart family. is pretty upbeat himself — about Wal-Mart’s community involvement and associate recruitment programs, and its efforts to create jobs.

Artistry helps consultant sculpt trade policy Paula Stern advises President Clinton on international trade policy and is chairwoman of the Advisory Committee of the U.S. Export-Import bank. She’s an important figure in Washington. But there’s also an artistic side to this former chairwoman of the International Trade Commission. Stern loves to sculpt in clay, especially busts of family members. If she weren’t an international trade consultant, Stern says, she’d spend her days in artistic pursuits. “Instead of intellectualizing, I’d be reading a lot more poetry and listening to a lot more individual expression,” she says. She also would spend more time with her family before her children leave the nest.

4 A personal ‘search for excellence’ Stephen Friedman, senior chairman and limited partner of Goldman Sachs & Co., equates Wal-Mart with excellence. The company constantly strives to satisfy customers and refuses to settle for “good enough,” he says. “It is one of the very few companies in the world which has genuinely

t beat the upbeat... sparked a revolution.” Besides his position on the Wal-Mart board, Friedman holds leadership roles including vice

Can’ chairman of the Columbia University trustees and executive committee chairman of the Brookings Institution.

Jack Shewmaker somehow finds time to fish in the Patagonia Mountains of South America, consult with retail, distribution and manufacturing companies in South Africa, Australia and Asia, and ski with his grandchildren. He announced his “semi- retirement” from Wal-Mart in 1988 after 18 years with our company, during which he rose from district manager to Vice Chairman and Chief Financial Officer. “I started there when Wal-Mart was small, with $30 million ision, mission and camaraderie’ in sales,” he says. “No one ‘V imagined it would be as big as it is today.” Shewmaker, named one of the 10 Most Influential People in Mass Retail Today by Discount Merchandiser in 1997, says Wal-Mart is a phenomenon that grew from “a desire to do something different, better, and more efficiently with a sense of vision, mission, and camaraderie.”

5 INSIDE TRACK

Hobbies? Service is his hobby! etailing Raised on r

Stan Kroenke. Retailing has been part of Stan Kroenke’s life since he swept out his father’s hard- ware store as a child. Kroenke later worked in retail to put himself through college and graduate school. “Being exposed to people like Bud and Sam Walton had a major impact on my life,” Kroenke says. Today, he owns the Kroenke Group, a nation- al investment, development, and commercial real estate company based in Columbia, Missouri. He’s also co-owner of the St. Louis Rams football team. “Expanding into the sports business has been an interesting and challenging experience,” he says. John Cooper, chairman of the Arkansas land development company, Cooper Communities Inc., could retire and take the time to enjoy the beauty of the Arkansas outdoors. But there’s no golfing or fishing or other leisurely pursuits for Cooper, who believes one of his most important roles is serving the community. “I really think all a person can do is to be helpful to somebody,” he said. Cooper has helped his neighbors — and helped protect the outdoors — as a founding member of the Arkansas Nature Conservancy. When he’s not lending his experience to the Wal-Mart board, he also serves on the boards of J.B. Hunt and Entergy Corp.

Elizabeth A. “Betsy” Sanders needs solitude to meditate, write and “be a friend,” to balance out her heavy business and community commitments. That’s why she left corporate life in 1990 to form The Sanders Partnership, a consulting firm. Sanders and her family live near the Sierra Nevada mountains in northern California. Before heading for the hills, Sanders was vice president and general manager for Nordstrom Inc., earning national recognition as an expert on customer service. She’s always admired Wal-Mart for low prices, top-quality products and, yes, customer service. This, she says, helps American families stretch their dollars for other goods and improves their standard of living. “There’s nothing ordinary about this company,” she says. Family, friendship first

6 The modesty of a man who’s reached the top

Stanley Gault, retired chairman of the Goodyear Tire & Rubber Co. and, before that, Rubbermaid Inc., has been honored by countless business groups and publications such as Fortune magazine. Perhaps most notably, two years ago he was named International Executive of the Year by Brigham Young University for his leadership and high moral and ethical standards. In addition, he brings the perspective of Wal-Mart’s vendor-partners to our board. Despite the accolades he’s received, Gault is modest about his role at Wal-Mart. “I hope to use my almost 50 years of (business) experience to the benefit of Wal-Mart associates, customers and shareholders,” he says.

John Walton likes to have his “old van worked on” in the Wal-Mart automotive department while he shops. Walton enjoys the associates at his local Making business better Wal-Mart — they’re almost family. “I’ve grown up with the company,” says the son of founder Sam Walton. In fact, John Walton was Wal-Mart’s second pilot (Sam was No. 1). John’s current business interests include invest- ments in small companies in a wide variety of industries. As he considers American business, Walton is convinced that Wal-Mart has been a positive force because of its integrity, customer service, and its “influence on the shopping experience.” Before Sam Walton died, John told him that “what he had done went far beyond Wal-Mart to make American business better.” When he’s not involved with business, John Walton is working to make a difference in American education.

7 HandHand TToolsools ThatThat AreAre PPopularopular WithWith MechanicsMechanics

When it comes to getting the highest quality and the best values, Wal-Mart is the do-it-yourselfer’s best friend. Available exclusively at Wal-Mart, Popular Mechanics-brand hand tools are a household name when it comes to car repairs, home remodeling and just about any project in between. That’s because Popular Mechanics tools are made to last and backed by a lifetime guarantee.

From socket sets, wrenches and screw drivers to hammers, drills, extension cords and more—you name it, Wal-Mart’s got the tools you need to get the job done right. GOOD NEIGHBORS Associates Help Make Miracles Wal-Mart Sponsors Children’s Miracle Network Taylor Dippery is no ordinary Wal-Mart associate. At Store #1607 in Lewistown, PA, the associates consider little Taylor their special miracle. At 18 months of age, Taylor Rebirth in Rutland: From left to right, Mayor Jeff Wennberg and Wal-Mart learned to walk at Wal-Mart. associates Chet Landon, Gail Scribner and Brenda Heath proudly show off Using her special walker, she a revitalized downtown. now scoots all over the store with her grandfather, wearing ‘THE JEWEL IN OUR CROWN’ her honorary associate’s name Wal-Mart helps set downtown on the right track tag and giving smiles and greet- ings to everyone she passes. “Phenomenal” is a word Jeff on an aging, 1960s-vintage It was a hospital in the Wennberg uses a lot — especially strip center. when he’s talking about Wal-Mart. Then began years of planning Wennberg is the mayor of to revitalize the city’s core. Rutland, VT, where a Wal-Mart When the Wal-Mart lease was store that opened this January announced as the anchor of is the linchpin of an eight-year the project, the Rutland Daily downtown revitalization project. Herald wrote in an April “Wal-Mart has been better 1996 editorial: than expected for us, and we There is a feel of life on the streets had extraordinarily high of downtown Rutland that is expectations,” Wennberg said. new. It is the result of Rutland, population 18,000, all these developments. It is is the second-largest city in the payoff for years of work Vermont. Because its business “Associate” Taylor Dippery by numerous people in the district serves a sizable community who have refused to Children’s Miracle Network surrounding region, downtown give in to drift and defeatism. (CMN) that made it possible Rutland is “about what you’d With the new Wal-Mart, of expect for a city of 60,000,” for Taylor to get around, and course, Rutland added 140 new Wennberg said. Store #1607 did its part to help. jobs and learned the Wal-Mart Or anyway, it is now — thanks Last year, that store’s associates way of doing business. to the redevelopment project raised $20,500 for their local “Their philanthropy is and Wal-Mart. CMN hospital, and helped “Eight years ago, downtown legendary, not to mention their hundreds of children like Taylor. Rutland was perceived as being involvement in the community,” Wal-Mart associates have in a serious decline,” Wennberg Wennberg said. “What Wal-Mart raised more than $71 million for said. “There’d been no significant represents is economic prosper- CMN since Wal-Mart became private-sector investment in quite ity and growth in our central official retail sponsor in 1988. some time. Downtown was business district, because they In calendar 1996, Wal-Mart suffering a slow death.” are such a phenomenal draw. donated $14.3 million, or 10 per- Rutland’s central business The Wal-Mart opening is the cent, of the $143 million raised district, built around 20 acres jewel in our crown.” in the entire CMN campaign. of railroad yards, was focused

9 LETTERS

THE “CLAM JUNIOR“ This was an extreme act of I am writing because customer service, beyond the of an experience that I shall call of duty. For this excellent always remember with a smile. service (that did not have to This experience involved many happen), Wal-Mart has earned a different Wal-Mart associates faithful shopper in me. in various Wal-Mart stores. Helen Walton, Wal-Mart’s First Lady Sincerely, After making many calls Roberta DeLeon searching for an ice fishing A HISTORY OF CHANGE Chula Vista, CA shelter, the “Clam Junior,” Recently, Helen Walton took I reached Dan Curtis at the a moment to share her thoughts Concord, NH, store. At 8:45 GUARDIAN ANGEL on Wal-Mart’s focus, leadership in the evening, this gentleman I am writing this letter to and legacy: without reservation and commend one of your assistant “As our Company has grown, with total willingness, was managers, Ms. Sue Cantu. questions have come up about helping me and then apologized She went well above and where Wal-Mart is going and if because he would have to call beyond what any store manager Sam would approve,” Helen said. me back in 15 minutes. would normally do to help me. “I believe he would. I feel good about our leadership, especially As promised, the phone rang The heat had been out all day in this last year. People have at 9 p.m. Dan Curtis was return- in my granddaughter’s dorm accepted the fact that there is new ing my call with not only the room, and the temperature leadership and they are doing a store locations, but with all the was in the teens. I tried calling phone numbers and the quantity good job. I think their stewardship the residence hall; but they that each store might still have. has been absolutely marvelous,” were closed because of the The actions and reactions she said. weather. I then thought of the of these employees display the “We need to continue to Wal-Mart Store in Waco — essence of a quality organization. emphasize putting the customer I suppose because our local first. Everyone has a customer and Very Sincerely, Wal-Mart is so helpful to they need to see that the people Linda A. Betti our community. needing information or attention Mendon, MA I called Ms. Cantu and asked are getting it. Another thing that if there was any way she could Sam always said was ‘respect the WAL-MART DELIVERS help. She was shorthanded individual.’ That is so important. On 1-9-97 I went to Wal-Mart because of the weather; but “Never fail to be open to change in Chula Vista to purchase a within the hour, she had when there are ways to improve ping-pong table. Juan Wood, delivered two blankets and what you’re doing,” Helen said. an employee in sporting goods, an electric heater to the dorm. “We can’t say, ‘That’s not the way assisted me. I told him I did not Saint Augustine said, “Every we do it.’ The world is changing have a truck to transport the visible thing in the world is too fast. We’ve got to be ready to change with it. table. He spoke to his manager, put in charge of an angel.” “If we keep these things in mind, Don Olson, to see if they could Ms. Cantu is truly an angel. deliver it. Wal-Mart is going to keep growing On 1-10-97 Juan Wood and Sincerely, and getting better,” said Helen. Don Olson delivered the table June Arnold to my residence. Carthage, TX

10 Wal-Mart TRIVIA Savings EVERYWHERE 1. Where is the first 11. Name Sam’s favorite dog. Wal-Mart located? 12. What did Wal-Mart stock You Shop 2. Wal-Mart’s first people actually sell for the very greeter was in first day it was traded? which store? 13. What year did the first 3. What charity receives Wal-Mart open? money from sales of 14. What year did Wal-Mart Sam’s American Choice become a publicly products? owned company? 4. Where did Sam and 15. Wal-Mart satellite Helen meet? network began 5. Wal-Mart first hit broadcasting in $1 billion in profits in what year? what year? 16. SAM’S Club was started 6. What year was Sam in what year? Now, no matter where you Walton born? 17. Helen Walton holds a 7. What year did Sam write B.S. in what field? shop or what you buy, you can his autobiography? 18. What percentage of sales take advantage of Wal-Mart’s 8. Sam was presented with goes to run the entire legendary savings and value. the Presidential Medal of general offices, from the With the Wal-Mart MasterCard® Freedom in what year? chairman of the board to from Chase you pay no annual 9. What year did Sam do the secretaries? the Hula on Wall Street? 19. Who came up with the fee and a low 14.48% APR 10. How much did Wal-Mart idea of profit sharing? fixed rate for purchases. Store #1 do in its first 20. Sam thought about Plus, save even more with year of operation? running for what political office? our low 9.9% fixed APR on transferred balances.

Did you know? Best of all, the Wal-Mart Companywide, Wal-Mart recycles over 700,000 tons of cardboard, name is recognized around paper and plastic each year. the world. So, you can use Wal-Mart sold about 80 million Valentine cards this February your new MasterCard at more across the United States. than 13 million locations. Wal-Mart is the largest private sector employer in the United States. Wal-Mart’s Private Fleet drives more than 1 million miles a day. Don’t wait to get great Making this happen requires the purchase of more than $50 million Wal-Mart savings every day, of fuel a year.

apply in the store or call:

esident of the United States. United the of esident Pr 20.

alton. alton. W Helen 2%. Finance. 1983. 1983. 1970. 19. 18. 17. 16. 15. 14.

1962. $16.50. . Roy Old million. $1 1984. 1992. 1992. 13. 12. 11. 10. 9. 8. 7.

1918. 1918. 1990. . alley bowling a In ogram. Competitive Edge Scholarship Pr Scholarship Edge Competitive 1-800-858-3100 6. 5. 4. 3.

, Louisiana. Louisiana. , owley Cr Arkansas. Rogers, 2. 1. Answers s ant ” . y w . erbial tip D al-Mart v D fficer 00, W 1,2 not to get too high-tech iceberg. resident and ant, when the N just the pro s N w s really about is alls” to find what our s w ice P Information O hat it’ re careful ith an annual technology al-Mart’ e’ 00 million and an information stems staff of W “W s there to support people. A hief y A enamored with all the bells and whistles of technology It’ and communication budget of $5 s putting information in people’ through hands,” said Randy Mott, Senior V C “W customers it. But that’ of W handise. - Mart merc y help al- he ork to ands seeing al-Mart ands,” s a high-tech ery associate orld of v es e magic w C W C entory on hand, C W C v w on the w al-Mart store. T w on a world of W I eries and backup mer I here are “ he computerized w ery W stem that giv al-Mart merchandise. T T t v sy a windo a radio-frequency netw in-store terminals. It’ conduit to an internal information W sometimes dozens of them, in the hands of associates at e deliv chandise in stock at W us keep up-to-the-minute track of the in distribution centers. are amazing enough, “ y G e G v vice en a v y al-Mar e w A 0,000 A ives our associates a windo ery one of

ont on price v

and” is actually . e do it? W 0,000 standard iscount Store has

and ser

en moment, a typical ic wand g and! in fr magic w in stock. E

keep W w do w

y giv M

technology helps M al-Mart D

he mag e to be reordered frequently, hat “ “Space age” entoried and replenished. v T t an more than 7 items W T So ho A typical Supercenter is e v a magic w a handheld computer, linked b sometimes daily tougher to stock, since it also carries more than 2 ha in additional grocery items, a lot of them perishable. So the them has to be identified, ordered, A

TECHNOLOGY 12 leads the industry in information expense in planning their where our technology comes technology — and we’re not production and distribution, in, because the best way to slowing down. We know our which translates to lower improve both service and future earnings growth has merchandise costs. merchandising is to get it to to come not just from increased For another example of our customers faster and market share, but from increased leveraging technology, Mott more efficiently. productivity. That means mentioned the item locator “Speed of delivery is a key Wal-Mart is dedicated to giving system. This system enables competitive advantage, Mott every associate the technological associates to scan an item and said. Fortunately, he added, tools to work smarter every day. electronically check on its here at Wal-Mart, one thing But this is Wal-Mart, we’re availability in other area stores. people are comfortable with not just developing technology “That’s a function that lets is change.” for technology’s sake. From “magic Our investments in wands” to the systems are measured “Our technology helps us buy millions of lines of in terms of their the right merchandise at the effectiveness for our our own computer stores and customers. right time, and have it in the code and the world’s “With this technology, largest commercial we’re getting better, right place at the right price.” database, Wal-Mart quicker and more is out in front — and picking up speed. accurate information to manage associates leverage our shared and control every aspect of our information to provide even As Don Soderquist, our Chief business,” Mott said. “Wal-Mart better customer service,” Operating Officer, is fond of has always been intensely Mott said. “It’s taking saying, ‘we don’t sell to our conscious of holding down advantage of technology to customers. We buy for our expenses, because that’s add a little extra service customers,’ Mott said. “Our another way we can have lower without adding a lot of cost.” technology helps us buy the prices, better merchandise and Wal-Mart’s constant drive to right merchandise at the right service for our customers and improve can be summed up in time, and have it in the right better returns for our investors. one word: Efficiency! And that’s place at the right price.” “We may be talking about state-of-the-art computer systems, but the way we manage them is pure Wal-Mart.” In the world of information technology, Wal-Mart has long been known as a leader. Earlier this year, we were recognized by Computerworld and Smithsonian Magazine as one of the top five innovators in information technology within business. The award recognized the Retail Link system, which provides sales data — by item, by store, by day — to our vendor-partners. That helps suppliers save time and CIO Randy Mott: a bigger bang for the technology buck.

13 AA‘GL‘GLOOBBALAL BRAND’BRAND’ WAL-MART: HOMETOWN VALUE IN ANY LANGUAGE gnes Seto will be the first person to tell you. A “I consider myself very fortunate to be part of the Wal-Mart International family,” Seto said. “I am having

INTERN much more fun than before.” She leaves no doubt about that, at least when it comes to her job. After a long career with

A the Woolco chain in Canada, TION Seto is now a buyer with Wal-Mart Canada in Toronto.

AL Wal-Mart acquired 122 Canadian Woolco stores in 1994, and immediately embarked on a multimillion- dollar plan that saw the stores revamped and remerchandised in less than a year. Wal-Mart Canada has already become that nation’s No. 1 discount chain, and is on the verge of becoming Canada’s largest retailer of any sort. And Canada is just one of the seven countries worldwide in Wal-Mart’s international expansion. With more than 50,000 associates and over 300 locations outside the United States, Wal-Mart is already serving some 5 million customers every week. The International Division was profitable in fiscal 1997, driven by a strong fourth quarter. And Even in Shenzen, China, “Wal-Mart” translates to value. the division’s profitability is expected to improve this year.

14 “We set specific goals for sales, “We have always been very inventory and gross margins. proud of the company,” Garza “We treat our customers said. “My husband was so as No. 1. excited when he heard about “We are all equal in this this, he came home and said, company–we just have different ‘Guess what? We’re going to jobs to do.” Monterey! We’re going to pass Part of the credit for the on the Wal-Mart culture!’ Agnes Seto, Wal-Mart Canada worldwide expansion of “Our associates in Mexico “The Wal-Mart name is better Wal-Mart culture should go to know retail; it’s the culture known outside the United the 170-some associates who we brought that makes the States than any of us imagine,” are affectionately known as difference,” Garza said. “It was said Bob L. Martin, President “expatriates” — associates who so easy for us to work together, of the International Division. go to work in international like big kids having fun.” “We are a global brand name. locations for two or three years, Community involvement, To customers everywhere it sharing their knowledge with responding to local needs, means low cost, best value, greatest selection of quality merchandise and highest standards of customer service. “It takes time to make money in these markets, but the fact that International has grown to $5 billion in sales in less than five years gives us an idea of how great the potential is.” The Wal-Mart culture has proven that it is transportable The Wal-Mart Supercenter looks right at home anywhere in the world. to other cultures worldwide. The international market is new international associates. merchandise preferences, and virtually unlimited, and the “It doesn’t become dull, buying locally are all hallmarks farther the Wal-Mart “global not for one moment,” laughed of the international Wal-Marts, brand” reaches around the Erlinda Garza, who is nearing just as they are in the world, the greater the opportunity the end of her stint in Monterey, United States. for long-term growth. Mexico. Garza is a co-manager Perhaps it is Wal-Mart’s To see just how distinctive — of a Supercenter that was emphasis on serving its and advantageous — the built from the ground up hometown — wherever that Wal-Mart culture is, you only with the help of a small team may be — that makes Wal-Mart have to meet someone like of expatriates. culture travel so well. Garza’s Seto, who knows the other Garza and her husband Mexican associates, for side of the street from first-hand Chris, who works at another example, quickly became experience. Asked how things are different store in Monterey, are both devotees of the Wal-Mart way. now at Wal-Mart Canada, Seto’s natives of Corpus Christi, Texas. “I’ll miss the people,” Garza list included: They had worked at several said as she prepared to return “We have the most advanced Wal-Marts in Texas and to the United States. “They’re computer technology as tools to Arkansas before they were so motivated, they’re so willing do our job, whereas before a lot asked if they’d like to help in the to say, ‘I’m going to do it.’ As of reports were not available for international expansion. Their long as we have people like us to analyze our business. answer? “You bet we would!” that, we’ll be in good shape.”

15 TTOOMMOORRRROOWW’’SS SSUUCCESSCCESS SSTTORES:ORES: SUPERCENTERS LEAD THE WAY TO THE FUTURE OF RETAILING SUPERCENTERS

16 Truly a Wal-Mart family: Front row, left to right: Mike Murphy, Barbara Murphy, Tracey Murphy and Dale Murphy; back row: Bob Brown and Mike Brown.

hen Tracey Murphy W was introduced on the main stage at Wal-Mart’s 1997 year-beginning store managers’ meeting, the term “Wal-Mart family” took on a whole new meaning. Her husband, Dale Murphy, manages a store in Kansas City, Missouri. Her father, Bob Brown, is a district manager with the Supercenter division. Her brother, Mike Brown, man- ages a SAM’S Club location. She has a mother-in-law who’s a department manager and a brother-in-law who’s a store manager too. “Truly a Wal-Mart family,” as CEO David Glass told the 3,500 Wal-Mart associates at the meeting. One-stop shopping: Convenience “I grew up with Wal-Mart,” is key for Supercenter manager Tracey Murphy said later, Tracey Murphy. over a cup of coffee at the

17 CONTINUED STORY

Ann Burchett: Personal shopper in cyberspace.

Supercenter she manages in an age when consumers “Before you needed to go to a in Harrisonville, Missouri. “My complain that they don’t have grocery store and any number dad has been with Wal-Mart for enough time to shop. of specialty retailers to get what 20 years, and I always had an The Supercenter “works you needed. Now you can just interest in retail. So here I am, everywhere, and we think it go to the Supercenter. after 14 years with Wal-Mart.” is quite likely going to prove “We always preach that we There are many families to be the most flexible retail sell for less, so we’re saving like Murphy’s represented concept ever and, by definition, people both time and money,” in Wal-Mart, and it’s only to have the longest life yet she said. “It’s real convenient appropriate that she works achieved,” according to a recent for most customers.” in the Supercenter division, analyst’s report by CS First And while the Supercenter where Wal-Mart “family Boston Corp. offers the shopping of tomorrow, values” combine with the Focusing on the Supercenter Ann Burchett is in a stockroom industry’s hottest shopping division as a growth vehicle, the at the back of the Harrisonville format to lead our company CS First Boston analyst gave store, getting a peek at the day into the future of retailing. Wal-Mart stock a “strong after tomorrow. With its blend of a discount buy” rating. That’s where Burchett, store with groceries and The Company’s fastest- a seven-year Wal-Mart associate, such additional services growing division, Supercenters handles fulfillment for orders as restaurants, Vision Centers, combine one-stop convenience received through Wal-Mart Lube Express, hair styling, dry with Wal-Mart’s focus on top- Online, our World Wide Web cleaning, shoe repair and bank- quality merchandise, services site, on which an experimental ing, the Supercenter is designed and food at everyday low prices. online shopping service was for shopping convenience — “It’s one-stop shopping for rolled out last November. a sizable competitive advantage most people,” Murphy said. Wal-Mart changes because

18 the world changes. Our customers are constantly looking for new FISCAL 1997 END OF ways to meet their needs. YEAR STORE COUNTS That’s why, after studying Discount Stores Supercenters SAM'S Clubs catalog shopping and TV shopping and a plethora of Alabama 54 22 8 Alberta 14 0 0 Alaska Information Age innovations, 3 0 3 British Columbia 12 0 0 Arizona 33 0 6 Manitoba 9 0 0 Wal-Mart has gone on line, Arkansas 54 22 4 New Brunswick 4 0 0 testing one of today’s most excit- California 95 0 24 Newfoundland 7 0 0 ing ways to shop without shops. Colorado 32 4 10 Nova Scotia 7 0 0 Internet or no, Burchett said, Connecticut 9 0 3 NW Territories 1 0 0 the basics of Wal-Mart Online Delaware 2 1 1 Ontario 50 0 0 are pure Wal-Mart. Florida 109 23 31 Quebec 24 0 0 “Really, I’m like their personal Georgia 65 22 15 Saskatchewan 8 0 0 shopper,” she said. “They may Hawaii 5 0 1 CANADA TOTAL 136 0 0 Idaho 9 0 1 be surfing the Web on their 0 3 3 Illinois 98 8 24 Argentina computer, but when they hit our 0 2 3 Indiana 62 11 14 Brazil 18 28 site, we want the service to be Iowa 45 0 7 Mexico 106* 7 0 4 just as good as they get walking Kansas 44 3 5 Puerto Rico 0 1 1 into a Wal-Mart.” Kentucky 53 15 5 China 0 2 0 So far, Murphy noted, U.S. Louisiana 58 17 9 Indonesia military personnel stationed Maine 19 0 3 INT'L. TOTAL 249 26 39 Maryland 21 0 10 overseas have been among the *Includes 3 Superamas, most enthusiastic customers Massachusetts 25 0 4 25 Bodegas, 4 Aurreras, Michigan 44 0 21 67 Vips and 7 Suburbias of Wal-Mart Online. The electronics Minnesota 33 0 9 department is a particularly big Mississippi 45 11 4 hit with these cyber-customers. Missouri 79 29 11 U.S. INT'L. “Even after shipping cost, Montana 7 0 1 they’re getting a great price and Nebraska 13 4 3 selection”, Murphy said. Nevada 10 0 2 (You can check out the on-line New Hampshire 16 0 4 shopping experience of Wal-Mart New Jersey 14 0 6 New Mexico 19 0 3 on the Web by going to New York 48 5 17 http://www.wal-mart.com and U.S. INT'L. North Carolina 82 3 14 clicking on “Go Shopping.”) North Dakota 8 0 2 From the growth of the Ohio 77 0 22 Supercenter concept to such Oklahoma 61 17 6 futuristic ideas as Internet shop- Oregon 20 0 0 ping, Wal-Mart is still on the Pennsylvania 49 10 18 leading edge of retailing — driven Rhode Island 5 0 1 South Carolina 46 6 8 by associates like Murphy and U.S. South Dakota 8 0 2 INT'L. her own Wal-Mart family. Tennessee 63 25 10 David Glass, President and Texas 173 69 51 CEO, sums up the Supercenter Utah 14 0 5 concept simply: “I believe Vermont 3 0 0 Supercenters will be to the next Virginia 35 14 10 decade what discount stores Washington 18 0 2 were to the last, and that means West Virginia 12 3 3 Wal-Mart will continue to be Wisconsin 54 0 11 Wyoming 9 0 2 a better company with each 1,960 344 436 2,209 370 475 passing year.” U.S. TOTAL GRAND TOTAL TOTAL

19 ariety e our en more v antage ” alue is equally dv lub members — Business hile wholesale prices on ant to both kinds of v hat kind of v “W T aluable with our wide v AM’S C quality merchandise driv business,” King said, “the membership gets e v of additional services and member benefits. rele S Members and A er v E. , King SM ive members the best value in the business. lub e program 6 clubs alue than e Club g s membership AM’S C Y, to Bangor, M M’S lub members. more v A an intensiv xtending from al-Mart’ ork and her ideas help AM’S C xington, K arehouse division as it e resident for S ing helps S for S in the northeast United States — an area e guide W w continues P is responsible for 7 L Her w of creating ALUE FOR MEMBERS ice s been y ork a ears ago, as that s, w y

ork standpoint y has alw s a Regional V

ed in that kind

al-Mart nine y handise, price and more! Dayna K yna King sa vironment,” King added. a

SAM’S CLUB SAM’S CLUB BUILDS V he first thing she noticed when she came to w D for W Merc Indeed. A “I thriv “this compan of en interested in what I could offer, both from a w and an idea standpoint. T SAM’S CLUB 20 (individual) Members. program offers a 1 percent something we just do once “We strive to create value rebate on everything they buy. and forget about it,” Hardin for our members, first and • And the list of membership said. “We’re trying to exceed foremost by providing small benefits just goes on and members’ expectations by businesses with top-quality on... significant discounts working to be more consistent.” merchandise at exceptional on cruises through the And so SAM’S Club strides prices,” said Joe Hardin, Travel Department; into the future. As always President of SAM’S Club. discounts on rental cars, at Wal-Mart, change is not And that membership value hotels, car and boat only expected, but encouraged, translates into shareholder purchases; discounted through the ideas and enthusiasm value, as SAM’S Club showed long-distance telephone of associates like King. improvement in sales and service; and more. “I’m a product of the invest- operating profit in the latest The process of building ment the company makes in its fiscal year. Membership income membership value also people,” King said. “The company was also up, driven by growth includes an aggressive remodel- allows you to have total owner- in new Advantage memberships ing program for many clubs, ship of your ideas by letting you and renewals. and an effort to expand the put them in action and watch Among the ways SAM’S Club clubs’ selection in the fresh them succeed. creates membership value: categories — bakery, fresh “That approach, that openness • SAM’S Club offers quality meat and produce. “These are to associates’ ideas, has been through branded merchan- commodity categories that around since the company was dise at exceptional prices. build excitement, and started,” she said. “And what I find very promising is that, • The clubs also emphasize encourage people to shop even today, you can still see bringing in the best regional at a warehouse club more it happening. brands — the brands many frequently,” Hardin said. “The company is always of our members grew up using. In a simple but effective move to build business, the new lower pushing us to wherever our • SAM’S Club has moved price points are combined with capabilities will take us. aggressively to lower price a new layout, which encourages Wal-Mart will open the door points on the vast majority impulse purchases. to opportunity any time of its merchandise without Building membership value somebody knocks on it.” giving up quality, through is “a work in progress, not better prices from our vendors or, in some cases, Whether it’s a small business or a large family, SAM’S Club alternative vendors. membership means value. This enables the clubs to encourage impulse buying with prominent displays of those items. • By lowering the number of individual items a club stocks, SAM’S Club has been able to merchandise the items more effectively. This reduces operational costs and enables the clubs to move huge quantities of merchandise. • For qualified members, Business and Advantage alike, the SAM’S Club credit

21 exclusively at MembershipMembership ValueValue

Use this SAM’S Club one-day guest membership ShopShop atat anyany SAM’SSAM’S ClubClub today!today! and see how great these values really are.

Get behind the wheels of a SAM’S ClubSM cart and suddenly One-Day Guest Membership you’ve got the purchasing power of more than $20 billion Name: behind you. That means significant everyday savings on Address: quality brand names from groceries to computers and City ⁄ State ⁄ ZIP Code: electronics, casual clothes, sporting goods, seasonal items, Phone #: Membership# 176969285 Expiration Date: 12/31/97 travel and more. Shop from the most unique product 5% upcharge applies on all purchases when shopping with this One-Day Guest Membership. selection under one roof. Cash, Discover¨ or Novus¨ Card SM only (no checks). You may apply for membership, subject to qualifications, while visiting any All it takes is a SAM’S Club membership. Now that’s real value! SAM’S Club SM .

Visit our web site at http://www.samsclub.com Item selection may vary by club location.