WAL-MART at50

FROM TO THE WORLD

a supplement to

. VOL. 29, NO. 27 • JULY 2, 2012

ARKANSASBUSINESS.COM/WALMART50 Fifty years old, and healthy as ever

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WAL-MART at 50 • 3 Wal-Mart: INSIDE: A Homegrown 6 The World of Wal-Mart Mapping the growth of a retail giant Phenomenon 8 Timeline: A not-so-short history of Wal-Mart Stores Inc. Thousands of Arkansans have a Wal-Mart experience to share from the past 50 years that goes far beyond the routine trip to a Supercenter last week. 10 IPO Set the Stage for Global Expansion Wal-Mart is an exciting, homegrown phenomenon engineered by the late Sam , a brilliant businessman who surrounded himself with smart people and proceeded to revolutionize 14 Influx of Workers Transforms retailing, logistics and, indeed, our state and the world. He created a heightened awareness of stock investments as investors from Arkansas to Wall Street watched the meteoric rise in share prices and wondered when the next stock split would occur. More importantly, he gave us an ultimate case Wal-Mart Stock Through the Years study for what it means to be an entrepreneur. 16 This state will always be indebted to Walton for resisting the naysayers who thought the company had to be based in or Dallas if he aspired to 18 List Tracks Walton Wealth be a national retail player. Instead, the company’s northwest Arkansas roots provided the foundation on which to build the world’s largest company. 20 Wealth Created by Wal-Mart After I became editor of Arkansas Business in 1993, my first task was to Supports Philanthropy in Arkansas hire a reporter in northwest Arkansas and research the region for a series of special sections highlighting the area’s growth. The development and growth 24 Commercial Development: we saw were stunning, and most of the focus was on the impact of the “Big Towns Before and After Wal-Mart Three”: Wal-Mart, Tyson Foods and J.B. Hunt Transport Services. The “Vendorville” phenomenon, created by Wal-Mart CEO David Glass’ Annual Report Covers 1972-2012 call for vendors to establish offices near the corporate headquarters, began in 26 the late ’90s and fueled a population explosion, particularly in Benton County. Charles Fishman: Founded by Walton To support Vendorville, the region needed millions of square feet of office space, thousands of new 29 houses and apartments, hotels, restaurants, retailers and the like. All this affected not only the region, Modernized by Scott but also the state. We’re pleased to present this commemorative publication, “Wal-Mart at 50,” to recognize multiple 30 Walton Scholarships Spread Education 2012 milestones for the company. Our writers have done an amazing job bringing together Wal- Through South America Mart’s past, present and future as an Arkansas-based global power. We hope you enjoy reading and reminiscing. 33 John Huey: and the Nickel 34 Ron Mayer: Early CEO Remembers Sam Walton Jeff Hankins President & Publisher 36 Wal-Mart Used Technology to Become Arkansas Business Supply Chain Leader

39 Real Men of Wal-Mart

President & Publisher Jeff Hankins DESIGN Executives commemorated as G.I. Joe heroes Associate Publisher Chip Taulbee Production Manager Tona Jolly Editor Gwen Moritz Senior Art Directors Irene Forbes, Wayne DePriest Art Directors Dean Wheeler, Marcus Boyce Art Director Waynette Traub 42 Sustainability Efforts Mean Advertising Art Directors Marcus Boyce, Erin Lang EDITORIAL Digital Operations Specialist Rebekah Eveland Big Environmental Impact Managing Editor Jan Cottingham Interactive Editor Lance Turner CIRCULATION Senior Editors Mark Friedman, George Waldon Circulation Manager Dana Meyer Assistant Editors Luke Jones, Kate Knable Circulation Coordinator Cara Gieringer 44 After Sam: Did Wal-Mart Lose Its Way? Editorial Intern Jennifer Ellis Managing Editor, Business & Sports Special Pubs Todd Traub ADMINISTRATION Researcher Roxanne Jones Accounting Manager Hal Lammey 46 Warren Stephens: Big for Stephens, Accounting Assistant Kim Clark SALES & MARKETING Human Resources Bill Page Bigger for Arkansas Vice President of Business Sales Bonnie Jacoby Executive Assistant Christine Harris Senior Account Executives Rosemary Bruton, Graham Cobb, Digital Media Assistant Mary McLachclan Rebecca Patton The Future of Wal-Mart: Account Executives Greg Churan, Neil Gray, Lee Major, Lauren Chairman & CEO Olivia Myers Farrell 48 Meredith President & Publisher Jeff Hankins The World’s Largest Retailer Marches Toward Advertising Coordinators Bekah Caraway, Chief Operating Officer Chuck Ballard Kristen Heldenbrand, Alissa Mathews Chief Information Officer Brent Birch $500 Billion in Annual Sales Events & Marketing Director Susan Cohen Consumer Publications Publisher Rachel Bradbury Interactive Marketing Director Jake Sligh Business & Sports Special Publications Publisher Chip Taulbee Multimedia Producer Trent Ogle Interactive Editor Lance Turner Marketing Coordinator Taylor Bowers Social Media Coordinator Lauren James ©2012 Arkansas Business Limited Partnership

4 • WAL-MART at 50 WAL-MART at 50 • 5 WAL-MART

at THE WORLD OF 50 WAL-MART WAL-MART’S RETAIL LOCATIONS

CANADA Wal-Mart entered market: 1994 Total units: 333 Employees: 86,000

UNITED STATES Wal-Mart entered market:1962 Total units: 4,479 Employees: 1,400,000

MEXICO Wal-Mart entered market:1991 Total units: 2,088 Employees: 188,983

CENTRAL AMERICA Wal-Mart entered market: 2005 Total units: 622 Employees: 30,707 Wal-Mart entered market: 1995 Total units: 512 Employees: 85,336

ARGENTINA Wal-Mart entered market:1995 Total units: 88 Employees: 10,640 Wal-Mart entered market: 2009 Total units: 316 Employees: 39,538

6 • WAL-MART at 50 Wal-Mart entered market:1999 Total units: 541 WAL-MART in 1972 Employees: 178,000

KANSAS

OKLAHOMA ARKANSAS

LOUISIANA

JAPAN Wal-Mart entered market:2002 Total units: 419 Employees: 35,892 Wal-Mart entered market:2009 Total units: 15 Employees: 2,068

CHINA Wal-Mart entered market:1996 Total units: 370 Employees: 101,302

SUB-SAHARAN AFRICA Wal-Mart entered market: 2011 Total units: 349 Employees: 28,000

Source: Wal-Mart Stores, Inc.

WAL-MART at 50 • 7 On Monday, July 2, 1962, the women of Rogers lined up for the grand opening of the first store to carry the Wal-Mart name. (Photo courtesy Wal-Mart Stores Inc.) A Not-So-Short History Of the World’s Largest Retailer

By Eric Francis TIMELINE: YEARS OF WAL-MART n Feb. 21, 1961, a 23-year-old student pilot named Howel Oliver 50 stole a small plane from the airport in Springdale, radioed the Oairport in Fayetteville with a false name and plane ID number, and filed a flight plan to Dallas. 1962 department store chain Minutes later the plane crashed, killing Oliver. ►On July 2, brothers Sam and opens its first four discount stores Even though it was insured, its stated value of just $6,000 suggests this wasn’t a particularly noteworthy James L. “Bud” Walton open Wal- under the Target name. aircraft. But the same couldn’t be said of its owner, Mart Discount City in Rogers. That ►Max Kohl opens the first Kohl’s a Bentonville businessman by the name of Sam first store measures about 35,000 Department Store in Brookfield, Wis. Walton. SF. Early marketing also spells The popular image of Walton is that he started Wal-Mart from scratch and built a world power in the store’s name as WALMART, 1963 retailing. But often overlooked is the fact that Sam without a hyphen. In fact, according ►Sam Walton meets Donald G. Walton was a self-made business success, already 44 to Wal-Mart’s own history, the Soderquist, then vice president of years old, before he and his brother opened the first name “was presented in just about Wal-Mart store 50 years ago this summer. data processing for Ben Franklin Sam Walton He was the biggest franchisee of the Ben Franklin any font/style available to the stores of and later its chain of variety stores, after all, and had the resources printer.” president and CEO. It will be to own a private plane. In 1961, he became the majority owner of the 17 years before Walton finally Bank of Bentonville, which has since evolved into , the largest banking operation based in Arkansas and No. 91 in the country ranked by persuades Soderquist to join Wal- assets. Mart as executive vice president. The lessons he learned during those early, successful years allowed him to ►The Kresge and Woolworth ►Walton’s bank investment grows build the most successful retail chain in history. And just like the times that companies open their first he took his planes up to search for potential Wal-Mart sites, it was Mr. Sam with the purchase of a bank at Pea himself who was behind the stick, deciding which direction to go. 50 and Woolco discount stores, and a Ridge.

8 • WAL-MART at 50 pioneer in inventory tracking TIMELINE and just-in-time delivery. 50 continued

1967 1964 ►A federal court rules that it ►Walton opens two more Wal- is “patently clear” that Walton Mart stores, in Springdale and is running his first stores as Harrison. Walton invites David separate corporations to avoid Glass, whom having to pay minimum wage. he was trying Taken together, their revenue to woo away is sufficient to make the from J.W. company subject to the 1938 Crank Co., Fair Labor Standards Act. to the grand opening of 1968 the Harrison In the fiscal year that ends store, which ► David Glass Jan. 31, Wal-Mart’s 24 stores is such a fiasco produce sales of $12.6 million that Glass and net income of almost turns Walton down cold. (From $482,000, or 9 cents per Glass: “Sam had brought a couple share. of trucks of watermelons in and stacked them on the sidewalk. 1969 He had a donkey ride out in the ►Wal-Mart Stores Inc. is parking lot. It was about 115 incorporated on Oct. 31. degrees, and the watermelons ►Total sales reach $30.8 began to pop, and the donkey million for 32 stores, with began to do what donkeys do, and the company adding, on it all mixed together and ran all average, two new stores per over the parking lot.”) Glass will year. finally join Wal-Mart in 1976 and ►Wal-Mart completes become CEO in 1988. construction of a 72,000-SF headquarters building in Bentonville and opens it in early 1970. Like everything ►The company adopts a else tied to the company, consistent logo. it is done with the bottom line An ad in the Rogers Daily News announced In April, just 10 months after its in mind. Nothing fancy — not the opening of the first Wal-Mart store and ► promised “plenty of parking.” first stock split, Wal-Mart stock is 1965 even carpeting, which Sam Walton again trading above $47 and is split ►The fourth Wal-Mart store thinks is a waste of money. opens. again. our customers, there would be no On Aug. 25, Wal-Mart stock ►, youngest son of Sam 1970 ► limits to us.” — Sam Walton in a begins trading on the New York and Helen and currently a member ►The company opens its first letter to Wal-Mart associates. Stock Exchange, opening at $32.50 of the Wal-Mart board of directors dedicated distribution center in ►In June, after the share price rises and closing at $33. and chairman of Arvest Bank Bentonville. to $47, early investors are treated Group, graduates from Bentonville ►On Oct. 1, Wal-Mart “goes to the first of 11 two-for-one stock High School. public” with a small initial public 1973 splits. ►Sears Roebuck & Co. surpasses offering of 300,000 shares priced at ►Wal-Mart establishes its ties to A&P to become the country’s $16.50 per share. the with a 1972 largest retailer with sales of $6.4 gift of 2,500 shares of stock, worth In an article datelined Bentonville, billion. 1971 ► about $85,000, the income from the Arkansas Gazette reports: “In ►Total sales for the fiscal year that which was “to supplement the 1966 ends in January top $44 million, 1945, two brothers, both in their salaries of one or more full ►Sam Walton attends an triple the level of just three years mid-30s, borrowed $25,000 to buy professors in the Marketing IBM training school to better earlier. a variety store at Newport. Today, Department.” The gift gets second understand the growing field ►”I had no vision of the scope of Sam and J.L. Walton own a chain billing in the Arkansas Gazette, after of computers and to scope out what I would start, but I always had of discount stores that stretches a donation of $100,000 from the talent to help automate his young confidence that as long as we did across five states and earned a educational trust established by company, which would become a our work well, and were good to profit last year of $2,900,000.” Robert E.L. Wilson.

WAL-MART at 50 • 9 TIMELINE 50 continued IPO Set the Stage ►The first Wal-Mart store is replaced by a 56,000-SF model on another corner of the same intersection in Rogers. for Global Expansion ►By the end of the year, Wal- By George Waldon Mart’s stock has dropped in value by more than half, closing n 1969, Sam Walton was searching the year at $13.38. for the one thing that was keeping his Iupstart retailing chain in Bentonville from achieving great things: more money. 1974 Walton and his cadre of executives ►In addition to touting the and store managers had put together an efficient, profitable model that brought company’s $167 million in sales big-city discounting on a broad line of and $6.1 million in earnings department store merchandise to markets in the annual report, Sam that others deemed too small. Walton adds this note: “In The only thing slowing the rollout of more Wal-Mart stores was working 1974, we rebuilt and opened capital, and the ambitious retailer was a 65,000 square foot store growing increasingly frustrated with the in Jonesboro, Arkansas, and a situation. 30,000 square foot store in Mike Smith, syndicate manager for Little Rock’s Stephens Inc. back then, Berryville, Arkansas. Both had approached Walton with a solution: Take been completely destroyed. the company public. Jonesboro was devastated by The more Smith learned about Wal- Mart’s operations in advance of the a tornado in May 1973, and initial public offering, the more he was Berryville was destroyed by fire convinced that he had wandered into an in December 1972.” epic business story in the making. ►Sam Walton retires. This lasts “If these guys can take this out of Bentonville and do what they’re doing, for one year before he unretires. they are going to take over the retailing ►The stock continues to struggle, world,” Smith recalled thinking at the closing at $9.50 on New Year’s Eve. time. Company officials were more worried about taking advantage of regional opportunities and maintaining the pace of opening stores than considering the global possibilities of their labors. Sales rocketed from $12.7 million in 1968 to $21.5 million 12 months later as more Wal-Mart stores contributed to the Mike Smith, left, was syndicate manager and J.D. Simpson was a corporate finance executive revenue stream. But the company needed when they led the initial public offering of Wal-Mart stock by their employer, Stephens Inc. of outside sources of cash to support its Little Rock, in 1970. growth plans. “In about ’69, the expansion took off,” said Ron Mayer, vice president and through the small banks in the towns that in Little Rock and was a senior vice treasurer of the company at the time. we put the stores in,” Mayer said. “That president at White Weld & Co., provided “We really were running out of money. was the catalyst for getting started.” Wall Street cachet to Walton’s IPO We were to the point where we either had Two Arkansas expatriates in key aspirations. to do something as far as an offering or positions helped Walton secure more White Weld & Co., a well-known firm curtail the expansion.” loans and make the IPO happen. Both that would be acquired by Merrill Lynch in 1978, joined Stephens Inc. as the 1975 In preparation for the IPO, a hodge- would be given seats on Wal-Mart’s board podge of ownership interests in different of directors. lead underwriters among a group of 44 ►The acquisition of three stores was consolidated under one James H. Jones, a native of Alpena investment firms that signed up to move Howard stores gives the chain a corporate banner: Wal-Mart Stores Inc. (Boone County), provided the company 300,000 shares of Wal-Mart stock at new location in southwest Little The corporation represented the with a $1 million loan, first as an $16.50 per share. executive at Republic National Bank of The bound volume of the Rock and its first in North Little merger of 78 partners that owned pieces of 32 stores, with the Dallas and later as president of First documentation associated with the Rock. Howard-Gibco Corp. of owning a majority stake in each. The National Bank of Commerce in New company’s IPO is as thick as a Gutenberg Texarkana had shuttered those stores also were a mixed bag of Wal-Mart Orleans. Bible, with 47 numbered tabs. stores as “unprofitable.” Wal- Discount City, Ben Franklin, Walton’s Jones also alerted Walton to the Stephens started with 30,000 shares in opportunity to acquire the Bank of the IPO but ended up moving more Wal- Mart promises to reopen them Family Center and Ben Franklin Family Center. Bentonville in 1961 and even arranged Mart stock than any of the other firms. within 60 days, and the Fort Smith In the years leading up to the IPO on for a $350,000 loan to make the deal “They didn’t know Wal-Mart anywhere location within 90. This brings the Oct. 1, 1970, the company turned to local happen. That purchase provided the near as well as we did, and we were still learning,” said J.D Simpson, a corporate total number of Wal-Marts to 102 bankers for funding the construction Walton family’s entry into banking, which of its stores and regional lenders for blossomed into today’s Arvest Bank finance exec with Stephens at the time. in eight states. working capital. Group. “I bet 100,000 shares came back to us “We financed the growth strictly H.L. “Buck” Remmel, who grew up after the IPO, and we placed it. We were

10 • WAL-MART at 50 accounting for a majority of the offering. “We could tell more people about IPO SNAPSHOT: 1970 TIMELINE Wal-Mart than anyone in New York, 50 continued and we knew where to sell it. We Wal-Mart Stores Inc. were buying it for our customers and Wal-Mart stock fights its way ourselves. I sold it to every friend I had. Total Assets: $10.1 million ► By the time it was all done, they thought back to $23 and splits for the third I was a genius. We were at the right 1966 1967 1968 1969 1970 time in August. place at the right time.” Revenue $6,276 $9,332 $12,703 $21,514 $31,085 Jack Stephens, president of Stephens, Net Income $246 $394 $506 $651 $1,239 1976 was named to the Wal-Mart board of Stores 16 19 24 27 32* directors in recognition of the company’s Dollars in thousands. ►In this bicentennial year, Wal- early support and work on the IPO. The * 20 Wal-Mart discount stores in three states: Arkansas (10); southern Missouri (eight); Mart Chairman and CEO Ronald net proceeds of the stock offering to , (two); seven Ben Franklin stores; and six expanded variety stores operating Mayer’s letter in the annual Wal-Mart were about $3 million. as a Walton’s Family Center or Ben Franklin Family Center. “Going public really turned the report lacks company loose to grow, and it took a the warm huge load off me,” Sam Walton recalled Wal-Mart Workforce: 875 Wal-Mart Sales fuzziness of in his self-titled “Made in America” autobiography published in June 1992, later editions, 14 Executives, supervisors Soft goods 33% or the two months after his death. and buyers Hard goods 18% Walton was relieved to get shed of the 35 Store managers Sporting goods & toys 13% cheerleader family’s personal guarantees on debt that excitement enabled the company to make modest 51 Assistant managers Health and beauty aids 10% expansions. However, his wife didn’t like 585 Sales personnel Stationery and candy 7% of future a non-monetary part of the transaction. 40 Accounting and clerical Photographic and miscellaneous 7% shareholder said that if she were personnel Footwear 5% meetings. going to be mad at her husband for 7 25 Total full-time employees* Gifts, records and electronics 5% But he does get down to anything, it would be the decision to go 150 Part-time employees Jewelry 2% public and the attendant cost to their business, noting that the just- family privacy. *Provided with medical insurance. Source: Company prospectus, 1970 ended fiscal year was the “I just hated the idea that we were company’s most successful with going to put all our financial interests out there for everybody to see,” she Little Rock investors and other investors, other than individuals affiliated $343 million in sales, an increase said in his autobiography. “When you Stephens clientele represented the largest with Wal-Mart. of 44 percent. go public, they can ask all kinds of contingency of Arkansas buyers of “I always thought people around questions, and the family gets involved. the IPO. In his autobiography, Walton here thought that we were doing it with We just became an open book, and I indicated the stock offering didn’t receive mirrors,” Walton said. “They couldn’t hated it.” much support from northwest Arkansas IPO Continued on P12

WAL-MART at 50 • 11 TIMELINE 50 continued Tidbits from the 1970 prospectus: 1977 ►“Since our first store was opened in Bentonville, we have ► “After the sale, Sam and J.L. “Bud” Walton and their families will own experienced twenty-seven 69% of outstanding shares.” consecutive years of sales and earnings growth,” Sam Walton ► “Wal-Mart stores maintain an writes in the annual report. Net ‘unconditional money back guarantee’ program to promote customer sales were nearly $479 million goodwill and acceptance.” and net income $16.5 million from the 153 stores in the ► “The company’s policy is to price all merchandise below the system. manufacturer’s suggested retail ►Wal-Mart buys 16 Mohr- price and to meet or undersell local Value stores in and competitors, except for items covered . by Fair Trade Laws which constitute a negligible portion of sales.” 1978 ► “In November 1969, the company ►Whither comes a corporate completed the construction and culture? The title of Bethany equipping of a 72,000-SF building E. Moreton’s essay, “It Came housing its Distribution Center and general offices in Bentonville, Ark., at a from Bentonville: The Agrarian cost of approximately $525,000.” Origins of Wal-Mart Culture,” pretty much says it all. The ► “The Distribution Center will permit savings from quantity buying caption under a photo of an and will also serve as a re-shipment idyllic Ozark farmscape notes center for bulk shipment of which that during this era, “Small-scale freight savings can be realized.” farms supplied many of Wal- ► “40% of Wal-Mart Store purchases Marts’ early employees, both flow through the Distribution Center, in management and in hourly and 60% will be shipped directly to positions.” stores from suppliers.” Wal-Mart Stores Inc. buys ► ► “Each store is managed by a store the Hutcheson Shoe Co. of Fort manager and one or more assistants ► “The Company is engaged in a 2-36842) covering 300,000 shares of Smith. who are compensated by a salary plus highly competitive business.” Common Stock of this corporation a bonus which is based on the profits ► Western Union communiqué to became effective at 10:15 o’clock a.m. of the stores.” the lead underwriters of Wal-Mart’s Eastern Daylight Savings Time on this ► “Most of its present managers IPO, White Weld & Co. and Stephens date. Inc. come to the Company with previous Very truly yours, retail experience, but the Company is Gentlemen: Wal-Mart Stores Inc. developing its own training program You are hereby informed that the S. Robson Walton and five managers began their retail Secretary experience with the Company.” Registration Statement (File No.

IPO Continued from pg 11 15-year loan of $2.5 million with Mass help but think we were just lucky. ... The IPO originally was Mutual. But Wal-Mart was required to I think it must be human nature that give the insurer a warrant for 45,000 when somebody homegrown gets on planned for May 1970 shares to land the crucial funding. to something, the folks around them The stock option made Mass Mutual sometimes are the last to recognize it.” but had to be delayed, the first huge winner in the history of The IPO originally was planned Wal-Mart’s shareholder sweepstakes. for May 1970 but had to be delayed, a a move that sent Sam The stock split twice 2-for-1 before move that sent Sam Walton scrambling Walton scrambling for Mass Mutual liquidated its Wal-Mart 1979 for short-term money to keep the holdings in 1972, turning 45,000 shares ►It takes just nine months to expansion timetable on track. short-term money to into 180,000. “The market wasn’t very good in the At a price of $47.50, the stock build and open a 390,000-SF mid part of ’70 and, all of a sudden, it keep the expansion produced a handsome profit of $7.8 distribution center in Searcy, switched,” said Mayer, the first Wal-Mart million in less than two years on a the company’s largest to date, executive to hold the title of CEO. “We timetable on track. $742,500 investment for Mass Mutual. which employs 200 people and were fortunate enough to be able to get Nine more 2-for-1 stock splits would out [the IPO], and we had some good line up a loan with two big life follow as Wal-Mart grew into the largest serves some 100 stores. The underwriters.” insurance companies: Prudential and retailer in the world. previous year the company had While waiting for the market Mutual. “It was a once-in-a-lifetime situation, to improve, Walton worked to He ended up striking a deal for a I guarantee you,” Mayer said. 50

12 • WAL-MART at 50 Low prices...We’re in it together

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a subsidiary of TIMELINE 50 continued announced earnings of $1.90 per share on sales of $870 million, driving its NYSE listing up 11 points, from 18 to 29. ►“Arkansas Empire Keeps on Growing” says the headline across the top of the Omnibus section front of the Arkansas Gazette. Reporter John Brummett sums things up nicely in the lead paragraph: “In the early 1960s, about a billion dollars ago ... .” The chain now has 237 stores and expects to hit $1 billion in sales soon. ►In a one-column, three- paragraph story at the bottom of a page gray with text, the Gazette reports that Mable Ironically, the presence of bargain-priced Wal-Mart in northwest Arkansas supercharged population growth and the development of decidedly Hardin of Little Rock has filed upscale shopping destinations like Pinnacle Hills Promenade in Rogers. a federal lawsuit claiming “her former employer, Wal-Mart, discriminated against blacks” Influx of Workers in hiring, promotion and job assignment. The suit is thrown out on March 4, 1981, because Transforms Northwest Arkansas Hardin’s lawyer fails to provide a list of witnesses in the time By Todd Traub of new office space from 1990-2010. people,” Clifford said. “But without the allowed. “The housing market was one of four anchor industries that we have we ►Three vice presidents of orthwest Arkansas as we know it the biggest areas that was impacted,” would still be growing apples and maybe Wal-Mart’s leading Arkansas has been shaped — deliberately Haynes said. a few chickens, but not too many. All of competitor, Sterling Stores Nand accidentally, for the better “Also retail. There wasn’t any retail it goes to mesh together.” and for the worse — by the presence of here. If you wanted to buy anything you Northwest Arkansas’ growth has Inc., are killed in a Dec. 21 Wal-Mart. went to the mall in Fayetteville or you included the building of Interstate 540 plane crash near Batesville. The From highways to airports, from went to Tulsa.” — championed by former congressman deaths of Ben Johns, David N. homes to banks, from dining to the arts, Haynes said the building boom, which John Paul Hammerschmidt in part also included homes for relocating to help move materials for Wal-Mart McClanahan, Frank A. Bauer the Wal-Mart presence is felt mightily in the Fayetteville-Springdale-Rogers employees and executives, could be distribution centers — and the opening and company pilot Jack Starr Metropolitan Statistical Area anchored traced to Wal-Mart decisions to deal of the Northwest Arkansas Regional proves to be the beginning of by the three cities plus Wal-Mart’s home directly with companies supplying its Airport in 1995. the end for Sterling Stores and in Bentonville. goods and to expand into the grocery “The only airport at the time was Ed Clifford, the president and CEO business. Drake Field in Fayetteville,” Haynes its promising discount store of the Bentonville-Bella Vista Chamber Those decisions meant companies said, noting the old airport was not division, Magic Mart. In 1983, the of Commerce, worked 17 years at needed representatives in northwest popular with a certain former Arkansas entire company is absorbed in a Wal-Mart before assuming his current Arkansas, and those representatives football coach. merger with Duckwall-Alco of post in 2001. He has seen not only the needed places to live, work and shop. “Lou Holtz used to say, ‘You don’t company’s growth and its impact on “I’d say out of 10 people, nine of buy tickets. You buy chances,’” Haynes . the region firsthand, but also how the them will be non-native,” Haynes said. said. region has evolved to accommodate that “And they will be people who have Without the growing community growth. moved here either because of Wal-Mart of retirees, Pinnacle Country Club in “When I came here in 1984 there or because of the economy here or a job Rogers might not exist, Haynes said, were about 6,000 people,” Clifford here or vendor relocation or whatever.” nor would massive infrastructure 1980 said of the Wal-Mart workforce in The four primary industries in the improvements that include miles of ►During the decade of the Bentonville. “There were about 400 northwest area include department fiberoptic cable for communications. 1970s, Wal-Mart has grown people in the office. We had stores in six and other general merchandise stores, But the Wal-Mart impact is measured states. So today we have about 29,000 accommodation and food services, by more than just population and 2,000 percent. Wal-Mart associates in the area.” In health care and educational services. construction. ►Another racial bias suit, also addition, he said, Wal-Mart has stores The northwest is also home to such It is measured in the types of alleging sexual discrimination, throughout the world, and “we have other major employers as Tyson Foods people who have come to work for is filed by Carl Williams in people living here from all over the Inc., J.B. Hunt Transport Services Inc. the company and their effect on local world.” and the University of Arkansas, but demographics. And that has, in turn, federal court. Williams claims Independent architect Collins the region’s largest industry is general impacted the way people in the area dine that he was denied a job in Haynes was involved in much of the merchandise, and that means Wal-Mart. out or spend their leisure time and what construction that created 4.5 million SF “I don’t even know how to explain to services they use.

14 • WAL-MART at 50 TIMELINE 50 continued

the “encoding department” at the Searcy distribution center because he is male, and that his current job pays less because he is black. He seeks $25,000 in damages and an order from the court to prohibit discriminatory hiring practices at the retailer. ►On Dec. 10, a letter delivered to Wal-Mart headquarters threatens that 10 stores “would be blown up” unless the chain coughed up $1 million “in untraceable cash.” That same letter leads officials to a box of dynamite stashed in a Rogers Wal-Mart. The company informs the FBI, and a week later an agent arrests Earl W. Lakebrink of Camdenton, Mo., in a Fayetteville telephone booth as Former Congressman John Paul Hammerschmidt and , daughter of Wal-Mart founder Sam Walton, were front-and-center at the he is demanding delivery of the “cloud-breaking” ceremony for the Northwest Arkansas Regional Airport near Bentonville on Aug. 10, 1995. million bucks from Wal-Mart President Jack Shewmaker. In pointing out Bentonville’s Asian For evidence, Clifford said, look dealerships, Haynes said, and executives ►Wal-Mart stock is split, two- population, the Hispanic influence in no further than the critically praised have big houses, but there are few outright Rogers and Springdale or Fayetteville’s Crystal Bridges Museum of American gaudy displays of wealth or success. for-one, in December. One African-American community, Clifford Art, which opened in November in “I’ve been here long enough to know hundred shares purchased at noted not just the necessity of Bentonville. that you cannot even pretend to know by the IPO in 1970 have grown to expanding services but tailoring them to “Up until Nov. 11 it was a very looking at a person — or by what they 1,600 shares. a variety of needs and tastes. business-oriented town,” Clifford drive or how they dress — what their level “I see an awful lot of our established said. “Of course, Crystal Bridges has of liquidity is. There are some people here businesses here changing the way they changed that immensely.” who have unimaginable wealth but who look at their commerce,” Clifford said. Crystal Bridges clearly would not are normal Joes.” “I think nobody here even turns their exist without Wal-Mart and the wealth it The work ethic that helped create Wal- head when they see folks from all over generated for the Walton family. The art Mart still exists in northwest Arkansas, the world. … That’s a part of who we museum is the project of Alice Walton, Clifford said. are now. daughter of Wal-Mart founder Sam “Who we are has evolved since 1962 “I think that when people come here Walton, and stands as another example when Sam put the first Wal-Mart up,” from other countries they get a flavor, of the broadened horizons in northwest Clifford said. “But I don’t know that the not a false sense of welcoming but a Arkansas. character of northwest Arkansas has sense of this is an area that knows how Now, Clifford said, the area is drawing changed a whole lot. It was all about it is, is comfortable with anybody being members of the art community in greater entrepreneurship then, and it’s still about part of what they do.” numbers and with them comes a still entrepreneurship. We’re seeing more and While goods and services may be greater variety of tastes and influences more small companies formed. tailored to specific elements of a with potential to affect the local scene. “Granted, they have a customer base diversifying market, it doesn’t mean But Clifford and Haynes point out that here for their services you maybe wouldn’t native Arkansans haven’t also benefited northwest Arkansas has not become so have in other areas, but still it’s about from the newer, more cosmopolitan way high society that it has lost its identity. entrepreneurship, schools. It’s about the of life. Yes, there are now Mercedes and BMW safety of the area.” 50 1981 ►Wal-Mart has just closed out a huge year, reporting more than $1.6 billion in sales for the fiscal year that ended Jan. 31, 1981, an increase of 32 percent over the year-earlier period, and $55.7 million in net income, a 35 percent jump. Per-share income is $1.73 in 1980, compared with $1.34 the year earlier. Walton credits the success to, among other

WAL-MART at 50 • 15 TIMELINE WAL-MART, INC. (WMT) 50 continued Common Stock Performance things, $120 per SF in sales productivity, a 12 percent 1972-2012 increase in comparable store sales and opening 54 new stores. ►Another competitor goes the way of the dodo as Wal-Mart 70 exchanges almost $13 million in 60 stock to absorb 92 Kuhn’s-Big K stores in a merger. 50 ►Clarence Archer is hired to 40 establish Wal-Mart’s pharmacy 30 division. When he retires 18 years later, the division has 2,200 in-store pharmacies, 20 five dedicated warehouses for pharmaceuticals and a staff of 200 at headquarters. By 2006, 10 the company’s 3,500 pharmacies are creating $11 billion in revenue.

►The company updates its logo to simple block letters.

1982 ►May’s sales of $284 million represent a 56 percent increase over May 1981. ► Wal-Mart announces another stock split in June, its fifth in 11 years. ►Sam and Helen Walton show more love for the University 1975 1980 1985 1990 1995 2000 2005 2010 of Arkansas, announcing “substantial donations” will be made during the next seven years to help finance a Splitting the Difference combined performing arts and On Oct. 1, 1970, Wal-Mart offered 300,000 shares of its common stock to the public at a price of $16.50 per business conference center on share. Since that time, the company has split its stock 11 times as shown: the Fayetteville campus. The Waltons — along with another Record Date Shares Cost per Share Market Price Distributed on Split Date Arkansas power couple, Jack On the Offering 100 $16.50 and Mary Anne Stephens — are May 19, 1971 200 $8.25 $47.00 6/11/1971 also named recipients of the March 22, 1972 400 $4.125 $47.50 4/5/1972 Fulbright College Medallion Aug. 19, 1975 800 $2.0625 $23.00 8/22/1975 from the university’s J. William Nov. 25, 1980 1,600 $1.03125 $50.00 12/16/1980 Fulbright College of Arts & June 21, 1982 3,200 $0.515625 $49.88 7/9/1982 Sciences, for their services to June 20, 1983 6,400 $0.257813 $81.63 7/8/1983 the college’s advancement. Sept. 3, 1985 12,800 $0.128906 $49.75 10/4/1985 ►Sam Walton, now 64, is June 19, 1987 25,600 $0.064453 $66.63 7/10/1987 treated for leukemia. June 15, 1990 51,200 $0.032227 $62.50 7/6/1990 Dun & Bradstreet declares ► Feb. 2, 1993 102,400 $0.016113 $63.63 2/25/1993 Wal-Mart “one of the five best- March 19, 1999 204,800 $0.008057 $89.75 4/19/1999 managed companies of 1982,”

16 • WAL-MART at 50 1975 1980 1985 1990 1995 2000 2005 2010 TIMELINE 50 continued

ranking it with IBM, Anheuser- Busch, Bristol-Meyers and Hospital Corp. of America. D&B cites “its abiding faith in detailed, grassroots management The Forbes 400 List Tracks Walton Wealth [which] led its industry in every measure of profitability.” 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1983 Sam M. Walton & Family $690 $2,150 $2,300 $2,800 $4,500 $8,500 $6,700 $9,000 $12,500 $22,000* ►In an Arkansas Gazette feature story on country stores in James L. “Bud” Walton $210 $400 $320 $415 $580 $1,000 $1,250 $1,100 $1,000 $1,005*

rural Arkansas towns like Helen R. Walton & Family $25,300 $23,000 $21,700 $21,500 $23,600 $32,000 $55,000 $80,000 Parthenon (Newton County), Clear Springs (Pike County) and Helen R. Walton $17,000 $17,500 $18,800 $20,500 $18,000 $15,400 $15,300* Gilbert (Searcy County), one S. Robson Walton $17,000 $17,500 $18,800 $20,500 $18,000 $15,600 $15,600 $16,300 $23,300 $19,000 $19,700 $20,500 owner blames their decline on John T. Walton $17,000 $17,500 $18,800 $20,500 $18,000* an inability to compete with supermarkets. They ain’t seen $15,700 $15,600 $16,300 $23,200 $21,500 $24,000 $24,500 nothin’ yet: Five years later, the Jim C. Walton $17,000 $17,500 $18,800 $20,500 $18,000 $15,700 $15,700 $16,300 $23,400 $19,600 $20,100 $21,100 first Wal-Mart Supercenter, Alice L. Walton $17,000 $17,500 $18,800 $20,500 $18,000 $15,500 $15,500 $16,100 $23,200 $19,300 $20,000 $20,900 combining grocery and general merchandise, opens in Missouri. of Columbia, Mo.** $540 $660 $990 $1,300 $2,800 $3,200 $3,000 $3,000 $3,000 $2,600 $2,600 $2,500 $3,400 $2,900 $3,200 $3,300

►The first Sam’s Wholesale of Henderson, Nev.** $540 $660 $990 $1,300 $2,000 $2,100 $2,600 $2,900 $2,800 $2,200 $2,200 $2,200 $2,900 $2,600 $2,600 $2,700 Club opens in Midwest City, Okla. ►Wal-Mart stock, trading in July at more than $81 a share, is

From one Arkansas company to another

Congratulations Wal‐Mart

years Congratulations on 50 QUATTLEBAUM, GROOMS, TULL & BURROW PLLC We thank Wal-Mart and all of its associates for making such a positive difference in so many lives. Little Rock Springdale 501.379.1700 Jonesboro www.QGTB.com

18 • WAL-MART at 50 TIMELINE 50 continued

split for the sixth time. ►Though Wal-Mart officials don’t address the issue publicly, a move in Congress to restrict The Forbes 400 List Tracks Walton Wealth access to tax-exempt bonds, including barring any one corporation from obtaining 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 more than $40 million in financing using them, raises Sam M. Walton & Family $690 $2,150 $2,300 $2,800 $4,500 $8,500 $6,700 $9,000 $12,500 $22,000* concerns about how that might James L. “Bud” Walton $210 $400 $320 $415 $580 $1,000 $1,250 $1,100 $1,000 $1,005* impact the giant retailer, which

Helen R. Walton & Family $25,300 $23,000 $21,700 $21,500 $23,600 $32,000 $55,000 $80,000 had, the Gazette reported, “relied heavily on tax-exempt Helen R. Walton $17,000 $17,500 $18,800 $20,500 $18,000 $15,400 $15,300* bonds” when building new S. Robson Walton $17,000 $17,500 $18,800 $20,500 $18,000 $15,600 $15,600 $16,300 $23,300 $19,000 $19,700 $20,500 stores and distribution centers.

John T. Walton $17,000 $17,500 $18,800 $20,500 $18,000* ►Wal-Mart acquires Woolco Stores and initiates its “People Christy Walton $15,700 $15,600 $16,300 $23,200 $21,500 $24,000 $24,500 Greeter” program. Jim C. Walton $17,000 $17,500 $18,800 $20,500 $18,000 $15,700 $15,700 $16,300 $23,400 $19,600 $20,100 $21,100

Alice L. Walton $17,000 $17,500 $18,800 $20,500 $18,000 $15,500 $15,500 $16,100 $23,200 $19,300 $20,000 $20,900 1984 ►The chain once again breaks Ann Walton Kroenke of Columbia, Mo.** $540 $660 $990 $1,300 $2,800 $3,200 $3,000 $3,000 $3,000 $2,600 $2,600 $2,500 $3,400 $2,900 $3,200 $3,300 its own records with sales Nancy Walton Laurie of Henderson, Nev.** $540 $660 $990 $1,300 $2,000 $2,100 $2,600 $2,900 $2,800 $2,200 $2,200 $2,200 $2,900 $2,600 $2,600 $2,700 exceeding $6.4 billion and net income of $270.8 million. (All dollars in millions) Those represented year-to-year *Died after list’s publication: Sam Walton died in 1992, James “Bud” Walton died in 1995, John Walton died in 2005 and Helen Walton died in 2007.

**Daughter of James L. “Bud” Walton increases of 37 percent and 38

percent, respectively.

Happy 50th, Walmart!

Congratulations to a CONGRATULATIONS half-century of growth and satisf ied customers. from all of us at We wish you continued success!

479.273.9600 … of your inspiring 50! kendalking.com Your friends and In-Store Network partners for over 17 years

WAL-MART at 50 • 19

Walmart at 50 Ad.indd 1 3/16/12 11:50 AM TIMELINE 50 continued

►On the recommendation of UA President Ray Thornton, the university’s board of trustees spends $2 million to buy stock in Walton Enterprises, an investment firm owned by various Walton family members, trusts and corporations, and which holds more than a third of Wal-Mart’s common stock. Income from the investment is dedicated to the new performing arts and business conference center. ►Worth $2.3 billion at age 66, Sam Walton is the second- richest man in the country after Gordon Peter Getty, scion of the Getty Oil family and worth $4.1 billion, according to Forbes. Walton is not pleased by the publicity and even calls into Crystal Bridges Museum of American Art, which Sam Walton’s daughter Alice opened in Bentonville on Nov. 11, 2011, represents the single largest philanthropic act made possible by Wal-Mart wealth in Arkansas, but innumerable other gifts have transformed medical, education and question the veracity of the athletic institutions across the state. claim, declaring: “Whatever I own may just be some Wal- Mart stock, see, and you can’t spend that.” Wealth Created by Wal-Mart Supports Massive Philanthropic Efforts in Arkansas

By Jan Cottingham Foundation) when ranked by total March 12, 2003, entirely in cash. giving. “As a result, the University al-Mart made a number of Almost every institution of higher endowment has increased from $214 Arkansans very rich, and that education in the state has benefited, but million (as of June 30, 2002) to more Wwealth has been manifested none more than the UA. than $500 million.” in billions of dollars worth of gifts In 2007, the year that Sam Walton’s Entire multibillion-dollar health care, to educational, medical and cultural widow, Helen, died, the Arkansas educational and athletic facilities and institutions in the state. Democrat-Gazette reported: “Since 1998, at least one college might not exist in Efforts to give away Wal-Mart- the Walton family has contributed more Arkansas without wealth created by Wal- generated wealth started with relatively than $359 million to the state’s flagship Mart. 1985 small steps. In 1973, for example, Wal- university through the Walton Family And in the last seven years, a cultural ►Another year, another record: Mart gave $85,000 worth of company Charitable Support Foundation, Wal- institution praised by the likes of The stock to the University of Arkansas at Mart Stores Inc. and private family gifts.” Economist and has Wal-Mart’s sales reached $8.5 Fayetteville. That included the $300 million gift arisen in a corner of the Ozarks because billion in the fiscal year ending During the next 39 years, the giving the Walton Family Charitable Support of one woman’s desire to use her Jan. 31, 1986. Net income for accelerated as the wealth grew and its Foundation announced in 2002. At the Wal-Mart money to serve her love of the year is reported to be owners began to consider their legacies. time, it was called the largest donation American art and history. By 2012, Wal-Mart money stood behind ever given to a public university. Ten $327.5 million. at least five of the 25 largest nonprofit years later, it is the 13th-largest gift ever ‘As Much Benefit as Possible’ ►Sam Walton, according to a organizations in the state — $2.2 billion to an institution of higher education, Wal-Mart’s founder laid out his New York Times News Service in assets — and a billion-dollar-plus art according to the Chronicle of Higher philanthropic philosophy in his 1992 museum. Education. autobiography, “Sam Walton: Made in article, is “upset about the flood And according to the Foundation On March 14, 2003, the UA reported America”: of imports, and he is aiming to Center of New York, the Walton that it had received “the entire sum of “[W]e are committed to using our do something about it.” Thus Family Foundation Inc., Arkansas’ $300 million that was committed to it by personal resources for as much benefit he asks his 3,000 suppliers largest nonprofit by asset size, is No. the Walton Family Charitable Support as possible — in the areas we feel need 50 on the center’s ranking of largest Foundation, as announced by Chancellor the most help, employing the methods in a February letter to “buy U.S. foundations by asset size but No. John A. White on April 11, 2002. The we think hold the most promise. And more American goods.” But by 2 (behind the Bill & Melinda Gates transfer of funds was made Wednesday, our family’s gifts reflect a wide variety

20 • WAL-MART at 50 of interests, spread across numerous TIMELINE organizations, with a heavy emphasis on 50 continued education.” Hurricane Katrina It’s almost impossible to overstate the October Walton is waving a importance to the state of charitable giving funded by Wal-Mart riches, just Is a Defining Moment white flag, at least in the face as it’s nigh impossible to list every of a flood of imported textiles, donation of consequence. In addition, In Wal-Mart Giving putting garments made overseas much giving is private. (or assembled in the U.S. from What follows are some of the Because Wal-Mart knows its critics, but few had anything but highlights — space precludes a cloth made overseas) in his comprehensive account — of public customers, the giant corporation praise for the behemoth’s response stores. also had a good idea of what those to what was for many the soul- acts of philanthropy in Arkansas. As has become almost customers would most need after shattering experience of Katrina. ► • In 1973, Wal-Mart Stores Inc. routine, Wal-Mart stock is split gives $85,000 in shares to the UA to everything they owned had been The August 2005 hurricane was supplement the salaries of professors in stripped away from them. responsible for an estimated 1,200 in October. An investor who the marketing department. Water. deaths, according to the National bought 100 shares for $1,650 at • In 1979, the Wal-Mart Foundation is Food. Hurricane Center, though almost the IPO in 1970 now has 12,800 incorporated as an avenue for giving by Medicine. seven years on, the actual death toll shares worth almost $320,000. the corporation to the growing number Toilet tissue. remains debated. Patricia Coker, who was of communities in which Wal-Mart Diapers. On Wal-Mart’s website, a couple ► Stores are located. Clean underwear. of weeks after Katrina, the company fired from her assistant store • In 1981, the Walton family, at manager job over alleged Helen’s urging, donates $5 million to the Toothbrushes. said that in addition to the cash UA for a performing arts center, seed Because Wal-Mart is a master of contributions to the Bush-Clinton “fraternization” with co- money for what became the Walton Arts logistics it got those items and more Katrina Fund to help in emergency workers, files a federal class Center in Fayetteville, which opened in to the victims of Hurricane Katrina, relief, the company had: action suit against Wal-Mart and one of the worst natural disasters • Given $1 million each to the 1992. three store employees, claiming • In 1986, Willard Walker and his ever to hit this country. And Wal- Salvation Army and the American Red wife, Pat, of Springdale give $100,000 Mart got those goods to the people Cross. her First Amendment right toward a $5 million capital campaign for of the devastated Gulf Coast faster • Provided $3 million worth of to free association had been the Arkansas Cancer Research Center at than did the government of the merchandise and in-kind donations violated. She asks for a total of the University of Arkansas for Medical . throughout , Sciences. (The center is later renamed $600,000 in damages. As the Post noted in a and to shelters and command to honor the late Arkansas Lt. Gov. Sept. 6, 2005, article: centers. Winthrop P. Rockefeller.) 1986 “During a tearful interview on • Provided more than $9.2 million Willard Walker was the first manager ►With Sam Walton’s likely of Sam Walton’s Five & Dime store in ‘Meet the Press’ on Sunday, Aaron in cash assistance to Wal-Mart Fayetteville and later managed a Wal- F. Broussard, president of Jefferson workers affected by the hurricane retirement a hot topic, Mart Store in Springdale. When the Parish in the suburbs, through Wal-Mart’s Associate speculation begins as to who company went public in 1970, Walker told host Tim Russert that if ‘the Disaster Relief Fund. will succeed the Wal-Mart took out bank loans to buy as much American government would • Given $20,000 in cash to animal founder. Leading candidates stock as he could. He retired from Wal- have responded like Wal-Mart has shelters and organizations taking in are two familiar names Mart a wealthy man. In 1986, Walker responded, we wouldn’t be in this lost animals in hurricane-affected and his wife founded the Willard & Pat crisis.’” areas. within the chain: 50-year-old Walker Charitable Foundation. That same article indicated that • Raised more than $7 million in president David Glass (“sharp • In 1987, Sam Walton starts the Walton Family Foundation in the business world had also noticed: contributions from customers at in finances, a good listener, Bentonville with $1,000. “‘Wal-Mart has raised the ante for its 3,800 Wal-Mart and Sam’s Club subtly demanding”) and 48-year- • In 1991, James L. “Bud” Walton, every company in the country,’ said locations. old CFO Jack Shewmaker (“a Adam Hanft, chief executive of Hanft • Dispatched 2,450 Wal-Mart brother of Sam and a Wal-Mart strategist, an innovator, and an executive, gives $15 million for a new Unlimited Inc., a New York branding truckloads to communities basketball arena at the UA. and marketing firm. ‘This is going throughout the Gulf States and Texas, organizer”). • Circa 1991, Charles “Charlie” Baum, to change the face of corporate including 100 truckloads of donated ►Walton tops the Forbes list an early Walton partner and Wal-Mart giving.’” merchandise. of richest Americans with an investor, gives $1 million toward Walton The Walton Family Foundation • Provided drivers and trucks estimated worth of $4.5 billion. Arena. gave $8 million to the Bush-Clinton to deliver relief supplies, water, • Also in about 1991, Baum gives $1 ►Sell! At least, that’s Financial Katrina Fund in third-quarter 2005, food and clothing donated by million-plus for a new baseball stadium World magazine’s advice according to the Million Dollar List, outside community members and at the UA, as do Pat and Willard Walker. regarding Wal-Mart stock, Their gifts to what would become Baum a website run by the Center on organizations. Stadium eventually total more than $4 Philanthropy at University. • Allowed people to post pictures which it calls “overvalued.” million. In 2006, the foundation donated of friends and loved ones at Wal-Mart This opinion is pooh-poohed • In 1994 and 1995, Sam and Helen another $8 million to the fund for a Photo Centers and Walmart.com to by a Little Rock broker for E.F. Walton’s only daughter, Alice, and her total of $16 million, more than any help find the missing. Hutton, who claims “they’ve family help raise $15 million to begin other donor, though Walgreens was As one Katrina survivor told been saying that for years about work on the Northwest Arkansas right behind at $15 million. National Public Radio: “God bless Regional Airport in Highfill. The Walton Wal-Mart has plenty of Wal-Mart and Sam’s.” Wal-Mart” and it had never family pledges the purchase of $5 proved true. million in bonds. Then-President Bill A decision to remove certain Clinton helps dedicate the $109 million, • In February 1996, Helen Walton center at the Harvey & Bernice Jones ► 2,185-acre airport when it opens in contributes $4 million to UA’s College Center for Families in Springdale. magazines from its shelves, 1998. The airport names its terminal the of Business, which creates the Alice L. • In 1998, the Walton Family including some rock ’n’ roll Alice L. Walton Terminal Building. She Walton Chair in Finance. Charitable Support Foundation publications aimed at youths, is described as essential to the creation • In December 1997, Helen Walton announces a $50 million gift to UA’s of the airport. donates $2 million to endow a child-care STORY Continued on pg 22

WAL-MART at 50 • 21 TIMELINE 50 continued Foundations in Arkansas Deriving results in criticism of Wal-Mart by literary, library and free Substantial Support From Wal-Mart Wealth speech groups. Responding to Rank Among an American Library Association Foundation Assets Mission Arkansas Nonprofits letter, President and COO David Glass says it is a standard Walton Family Foundation Inc. $1.3 billion* Supports systemic reform 1 Bentonville in education, with special policy to review merchandise emphasis on primary and periodically for “any items that secondary education we believe, in our opinion, to be offensive to our customers.” University of Arkansas Foundation Inc. $631 million** Provides private financial 2 Fayetteville support for all University of Arkansas campuses 1987 ►Sam’s Club proves to be just Walton Family Charitable $186 million* Supports Arkansas colleges, 4 as efficient a competitor in the Support Foundation Inc. universities, community Bentonville trusts and foundations wholesale market as its bigger operating in Arkansas, sibling is in the retail market Kansas, Missouri, Oklahoma as Wal-Mart Stores Inc. buys and Texas out the 21-store Super Saver Windgate Charitable Foundation Inc. $91 million* Supports projects that 12 Wholesale Warehouse Club Siloam Springs strengthen marriage Inc., eliminating one of Sam’s and family relationships Club’s competitors in one fell Wal-Mart Foundation $34.6 million* Makes charitable gifts and 23 swoop. Bentonville grants, including scholarships ►How big a deal is a stock split? In announcing another *As of 2010 **As of 2009 one, the company’s eighth, at the annual shareholders’ meeting in June, Vice Chairman STORY Continued from pg 21 Smith. Hutcheson is the mother of Bill Foundation gives $1.3 million to and CFO Jack Shewmaker tells College of Business Administration, at Hutcheson Jr., whose Hutcheson Shoe expand the Rogers Activity Center. that time the largest gift ever to a public shareholders that a Vietnam Co. of Fort Smith was bought out by • In 2001, the Walton Family business college in the U.S. The college Wal-Mart in 1978. Bill Hutcheson Jr. Charitable Support Foundation, veteran’s widow found in a is later renamed the Sam M. Walton became a vice president of Wal-Mart. founded in 1987, donates $1.4 closet the 200 shares her College of Business. • In June 2000, retired Wal- million to the Arkansas Community husband had bought in 1970. That same year, the foundation, at Mart President Ferold Arend and his Foundation in Little Rock. Helen Walton’s behest, gives $39.5 Factoring in the seven splits wife, Jane, give $5 million to build what • In April 2002, the Walton Family million to the University of the Ozarks would become the Arend Arts Center Charitable Support Foundation pledges since they were issued, she in Clarksville, immediately doubling that at Bentonville High School. Soon after, a $300 million challenge gift to the now held 40,000 shares worth school’s endowment. Jack Shewmaker, a member of the Wal- University of Arkansas. The money more than $1 million. (In fact, he • In April 1999, the Willard & Pat Mart board of directors and former allows the university to establish an Walker Charitable Foundation gives $4 chief financial officer, contributes $1 Honors College and more than doubles understated her fortune, which million to in million for a sound system and lights. the school’s endowment. would have been more than Siloam Springs for a community center • In October 2000, the Willard & • In May 2002, the Walkers pledge 50,000 shares worth some $1.7 and classrooms. The center is to house Pat Walker Charitable Foundation $6 million to the Harvey & Bernice the Donald G. Soderquist Center for million.) gives $7 million to the University of Jones Eye Institute at the University of Business Leadership & Ethics, named the Ozarks in Clarksville for a building Arkansas for Medical Sciences in Little ►Black Monday. The Dow for Wal-Mart’s vice chairman and chief to house teachers’ education and Rock. UAMS announces that it will plunges more than 500 points. operating officer, who is chairman of communications programs. rename the Arkansas Center for Eye Sam Walton, the nation’s richest JBU’s board of trustees. • In July 2001, the Walker foundation Research within the institute the Pat & • In May 1999, the Walton Family man, sees the worth of his Wal- gives $3 million for a cardiovascular Willard Walker Eye Research Center. Charitable Support Foundation center at Washington Regional Medical • In April 2003, two months after Mart stock shrink by $1.5 billion also gives $4 million for the Center in Fayetteville. Willard Walker’s death, the Walker overnight. “It’s paper, anyway,” Soderquist Center. • In August 2001, the Walker family donates $8 million for a he tells The . “It • In June 1999, Pauline Whitaker of foundation gives $3 million to the UA graduate school building at the UA’s Rogers gives $1 million to Northwest for a new health center. business college. The building will was paper when we started and Arkansas Community College in • In 2001, the Walkers donate $1.1 become the Willard J. Walker Hall. it’s paper afterward.” Of course, Bentonville, her fourth donation to the million to UAMS to endow a chair in • In 2003, the Walton Family he’s still worth $4.8 billion — school for a total of $1.7 million at the orthopedic surgery. Foundation gives $2 million to the time. Whitaker is the widow of Don on paper. • In 2001, Wal-Mart employees William J. Clinton Foundation. Whitaker, hired in 1962 to run the first donate $1 million to build a $4.6 • In April 2004, the Willard & Wal-Mart store in Rogers. million training center at Northwest Pat Walker Charitable Foundation 1988 • In 1999, the Windgate Charitable Arkansas Community College. announces a $21.5 million donation to ►While maintaining the title Foundation of Siloam Springs gives Shewmaker and his family also UAMS to go toward its eye institute, John Brown University about $2 pledge $1 million to the center, Alzheimer’s disease research and the of chairman of the board, Sam million. The foundation was endowed named the Shewmaker Center for school’s psychiatry program. Much of Walton hands over day-to- in 1993, using a gift of Wal-Mart stock Workforce Technologies. the money, $15 million, will pay for day operation of Wal-Mart from Dorothea Hutcheson of Fort • In 2001, the Walton Family a five-floor expansion of the Harvey

22 • WAL-MART at 50 & Bernice Jones Eye Institute. The November 2011. • In 2006 and 2007, the Wal-Mart expansion will be called the Pat Walker • In 2005, the Walton Family Foundation gives a total of $8 million TIMELINE Tower. Foundation donates $19 million to to Northwest Arkansas Community 50 continued • In April 2004, Wal-Mart Stores Crystal Bridges, $8.4 million to the College. In 2007, Jack Shewmaker and Inc. announces a gift of $5 million, its Children’s Educational Opportunity family give $2 million to NWACC. Stores Inc. to David Glass, the largest contribution ever to a hospital, Foundation America of Bentonville, • In 2007, the Walton Family company’s president and COO. to a fundraising campaign by Mercy a nonprofit that works for school Foundation gives $60 million to Crystal This ends a good two years Health System of Northwest Arkansas choice and $1 million to the Clinton Bridges. to build a new medical campus in Foundation. • In 2008, the Walton Family of speculation over whether Rogers. • On Sept. 16, 2005, in the wake Foundation contributes $1.25 million to Glass or Jack Shewmaker, • In June 2004, H. , at that of Hurricane Katrina, the Arkansas the Harvey & Bernice Jones Center for vice chairman and CFO, will time president and CEO of Wal-Mart Democrat-Gazette reports that Wal-Mart Families. Stores, and his wife, Linda, give $1.25 Stores so far had made $17 million • In 2009, the Walton Family be tapped for the top job. million to Mercy Health System for the in cash donations to victims of one Foundation donates $1.5 million to the Shewmaker retires instead — at new campus. of the worst natural disasters in U.S. UCA Foundation. the ripe old age of 49. • In December 2004, history. Meanwhile, the Walton Family • In 2010, the Walton Family Joe Chapelle, director and his wife, JoAnn, donate $1 million Foundation had made $15 million in Foundation gives $10.9 million to the ► to Mercy Health System. cash contributions, while customers of Nature Conservancy of Arkansas of the newly created USA • In 2004, the Walker foundation Wal-Mart had given $6.5 million. (See and almost $15 million to Southern Division of Wal-Mart Stores gives $2 million to build the Circle story, Page 21.) Bancorp of Arkadelphia, a rural Inc., announces the goal of of Life Hospice & Palliative Care • In 2006 alone, the Walton Family development bank. Complex at Har-Ber Meadows in Foundation donates $11.9 million to • In 2010, the Walton Family removing all imported items Springdale. It becomes the Willard & the University of the Ozarks, $11.8 Foundation gives more than $1.2 from the shelves of American Pat Walker Family Center. million to John Brown University and billion to Crystal Bridges. stores, while acknowledging it • In May 2005, Alice Walton pays $11.6 million to Harding University • In 2011, the Wal-Mart Foundation will be difficult to replace some an estimated $35 million for Asher B. to fund the Walton International gives Crystal Bridges $20 million to Durand’s painting “Kindred Spirits,” Scholarship Program for students from make admission free for all visitors. items, especially those with high and the Walton Family Foundation Latin America. (See story, Page 30.) • In 2011, Crystal Bridges announces domestic labor costs, without announces that the piece will be The foundation also gives$10 million a $10 million gift from the Willard & raising prices. displayed in an art museum planned to Crystal Bridges; $8 million to the Pat Walker Foundation to pay for visits With Sam Walton refusing for Bentonville. A few weeks later, Bush-Clinton Katrina Fund; $6.9 to the museum by schoolchildren. ► Walton officially announces plans for million to the Children’s Educational • In 2012, the Willard & Pat Walker to give a deposition, either Crystal Bridges Museum of American Opportunity Foundation America; $6 Charitable Foundation gives $1.5 in person or by videotape, Art, described as a $50 million project million to Camp War Eagle in Benton million for a student education center in a slip-and-fall case filed by projected to open in 2009. The County; $1.8 million to the Arkansas at the UAMS’ Northwest Arkansas value of the building and its artwork Department of Education; and $1.1 campus. It brings to at least $48 million Andrew Carrizales, a Texas eventually soar past the $1.2 billion million to the Fayetteville Public in donations that the Walkers have judge orders the company fined mark and Crystal Bridges opens in Education Foundation. given to UAMS. 50 $1 million per day. After Walton

The Birthplace of Walmart Congratulations on Celebrating 50 Years in Rogers, Arkansas

317 W. Walnut St. | Rogers, AR 72756 (479) 636-1240 | www.rogerslowell.com

WAL-MART at 50 • 23 TIMELINE 50 continued fails to appear for a scheduled deposition, the judge orders the company to pay an $11.55 million fine; however, that judge loses a re-election bid and his successor vacates the fine the following month. ►Not all that springs from Wal- Mart roots grows into full flower. A year into its much-hyped Hypermart USA experiment, even though CEO David Glass says the company is “having fun with it,” the four Texas stores aren’t growing at the expected pace, according to industry analysts.

The acreage required for a Wal-Mart store was one of several factors that helped move commercial development from downtown to the 1989 edge of town. Shopping malls and the post-WWII car culture also played their roles. ►Who goes on vacation and wants to visit a corporate HQ? Wal-Mart customers, apparently. An influx of tourists to Commercial Development: Bentonville prompts the company to plan a visitor’s center in Sam Towns Before and After Wal-Mart Walton’s original five-and-dime By Luke Jones retail sales and had evolved into “regional store on the town square. City Shops that sell trade centers.” tourism officials are delighted s recently as 50 years ago, “But one has to keep in mind that most and one sums up the appeal as downtown was still America’s fabric, drugs, of that gain was by Wal-Mart stores, and “Everybody knows somebody Acommercial center. A variety they did have negative impacts on a lot of of factors moved the center to orbital other businesses in town — mainly any who works for Wal-Mart.” suburbia. One of those factors was Wal- toys, hardware store that was selling essentially the same ►Having ascended to the top Mart. thing they were selling,” Stone said. of the command structure at Wal-Mart’s ubiquity on the edge of — strong areas Shops that sell fabric, drugs, toys, town didn’t happen overnight. Kenneth hardware — strong areas for Wal-Mart — the nation’s third-largest retailer, Stone, professor emeritus of economics at couldn’t compete. you’d think David Glass would be State University in Ames, has been for Wal-Mart In Wal-Mart’s early days, Stone said, enjoying the high life. Instead he studying Wal-Mart’s development for 25 competitors didn’t know how to react. tells the Gazette that there’s still a years. — couldn’t “They didn’t understand how potent According to a 10-year study Stone of a force Wal-Mart was,” he said. “They lot to do to ensure the continued published in 1997, small retail faced had to change their business models. success of the company, which adversity from the beginning of the 20th compete. They really started thinking about how to he describes as “plodding along” century and onward as Montgomery Ward compete.” at 20 percent year-over-year and Sears Roebuck catalogs offered better Hardware stores, for example, selection than mom-and-pop shops and retailer. once carried full lineups of general sales increases. Meanwhile, the railroad infrastructure provided effective “Furthermore, Wal-Mart’s founder, merchandise. Wal-Mart’s high-volume, paper notes, his humble office delivery. Sam Walton, did not want to outrun his deep-discount style quickly priced them furnishings wouldn’t look out of As the automobile developed into the logistical support, namely his distribution out, and surviving hardware stores scaled country’s main transportation mode, rural centers,” Stone said. back the general merchandise and focused place at a used car dealership. shoppers could more easily visit larger The reason for its positioning on the on specialty tools. ►Adweek gives Wal-Mart cities. After World War II, shopping malls outskirts of town was mostly necessity: Businesses with more niche markets — an “A” grade in advertising, delivered one of the greatest blows to One store requires between 25 and 30 video game and cell phone shops, shoe despite the fact the company downtowns due to “ease of access, large acres of land, and in some early Wal-Mart stores, chain restaurants and “category selections, controlled climate, easy and towns, that’s the same size as an entire killers” like Home Depot and Staples — isn’t even in the top 100 for free parking and their extended shopping downtown area. now also gain from the influx of Wal-Mart advertising expenditures. In fact, hours,” Stone said. “Shopping malls “Wal-Mart progressed methodically customers. its advertising bill amounts to fundamentally changed the way Americans across the United States, always “They are clearly an economic anchor building stores within a day’s drive of its wherever they locate their big stores,” just 0.2 percent of its sales. “Wal- shopped.” The year 1962 introduced the trinity of distribution centers, and taking over 30 said Rett Tucker, a partner in Little Rock’s mart’s marketing is bare bones,” Wal-Mart, K-Mart and Target. The latter years to become a fully national chain,” Moses Tucker Real Estate. “Other national Adweek notes, but “you can’t two grew in mostly larger communities, Stone said. retailers flock to be near them.” argue with success.” spreading fairly rapidly. Wal-Mart had a dramatic effect on the “So there’s a good educational process Wal-Mart’s strategy, however, was to small towns. Stone said his most recent that’s occurred over the years,” Stone move into smaller Southern towns where study, yet to be released, showed that Wal- said. “It’s quite a bit different than it was. it could easily become the dominant Mart host towns had greatly increased Many companies learned how to compete

24 • WAL-MART at 50 TIMELINE 50 continued

1990 ►In a letter sent to employees, Sam Walton announces he is being treated in Houston for bone cancer. He’s reported to be in good spirits, though, and even pays a visit to a Houston- area Sam’s Wholesale Club between treatments. ►Less than 30 years after he founded the chain with his brother, one of Sam Walton’s more audacious predictions comes true as Wal-Mart tops $1 billion in income for the first time. The deed is done with $25.8 billion in sales, and it drives per-share income up to $1.90. And this all Shelley Green, owner of the Green Corner Store in downtown Little Rock, says her customers are “more value-driven in the way they happens during a year in which make decisions, and they want to support local companies and locally owned business.” the company increases its workforce by 20 percent. How the Other Half Lives ►Stock prices soar to more than $58 after Wal-Mart How do modern mom-and-pop he said. “When we work with small “The focus we have is on our announces another stock shops compete with Wal-Mart? businesses, we tell them these days unique customers looking for split at the company’s annual Simple: They don’t. They find a if they’re open from 9 to 5, they’re healthy, safe and environmentally niche, some foothold outside the catering to the unemployed and friendly products for themselves, shareholder meeting in behemoth’s path. retirees.” their families, their babies and their Fayetteville. The move boosts “In a small town, we’re very limited Mitchell said she distinguishes her pets,” Green said. “They’re more the total number of Wal-Mart to where we can go and shop,” said business from Wal-Mart by tapping value-driven in the way they make stock shares to more than 1.1 Ruth Mitchell, owner of the Bottle into the town’s tourist market. In decisions, and they want to support billion. An investor who bought Tree Gallery in Heber Springs. “So if Rogers, Julie and John Colgan own an local companies and locally owned 100 shares of IPO stock 20 you need something, you pretty much antique shop called the Rusty Chair. business.” go to Wal-Mart. What I’ve done, and Their market lies distinctly outside of Main Street Arkansas pushes years earlier and held them now what other stores on Main Street Wal-Mart’s grasp, but they used one of for all downtown businesses to has 51,200 shares worth almost have done, is distinguish ourselves the big box’s techniques to help boost band together and provide novel $3 million. from Wal-Mart.” their business: They automated their experiences, something Wal-Mart in ►With the summit of the Helping with the task are inventory with a point-of sale-system. its sameness can’t do. retail trade in its sights, Wal- groups like Main Street Arkansas, a “Most antique stores don’t have “Shopping is entertainment; Mart sharpens its focus on the government-sponsored organization a POS system,” Julie Colgan said. it’s going above and beyond just that restructures, redesigns, organizes “Everything is computerized in our customer service,” Tyson said. grocery trade by purchasing the and promotes downtowns. Cary inventory. We have barcodes on all “The 20th century economy is an country’s sixth-largest grocery Tyson, director of Main Street our items.” experience economy. An experience distributer, McLane Co. of Texas, Arkansas, said it was important for The Green Corner Store in can’t be just one business owner. which has projected annual small businesses to examine routine downtown Little Rock stocks general You might get out of your car and sales of $3 billion and operates behavior like the setting of business merchandise, an area where Wal-Mart go into a restaurant, then our goal is in 11 states. hours. typically reigns. But owner Shelley to have you have coffee afterwards “Historically, businesses have Green markets to a different crowd, next door, then see a show down been comfortable being able to do one less concerned with the lowest the street.” 1991 things like stay open from 9 to 5,” price. — Luke Jones ►With its founder fighting cancer, Wal-Mart completes its gradual ascent to the top of its against Wal-Mart.” declined by 30 percent — or $1.5 billion about to peak out,” he said. “They’ve hit Stone said the non-Wal-Mart towns — in the time since Wal-Mart showed up. every county seat in the country and any niche, overtaking both Kmart survived, stabilizing mainly because “I think for smaller towns, and for city with a viable chance for business.” and perennial frontrunner Sears smaller chains like many towns, bigger and small, it really Wal-Mart’s final frontier in the U.S. is to become the nation’s largest appeared to soak up the local shoppers. hurts the downtown,” Stone said. “Wal- the biggest cities like New York and Los Now, Wal-Mart is seeking to emulate the Mart hurts the stores selling the same type Angeles. Stone said Wal-Mart was still retailer. Dollar General model with its Wal-Mart of merchandise as them.” growing overseas as well, with its main ►Remember the David Glass Express stores. As for Wal-Mart’s growth model, Stone footholds being and , but comment about “plodding Stone’s report examined Iowa towns. tends to think it may be nearing the end that it found success elusive in , along” at 20 percent growth? The smallest, he said, suffered greatly. In of its life. Korea and Germany. 50 towns with fewer than 2,500 people, sales “They deny this, but I think they are Well, do that for 20 years in a

WAL-MART at 50 • 25 A NEW KIND OF WAL-MART HELPS MAKE HISTORY Annual 2000 2000 1999 ANNUAL REPORT WAL MART WAL-MART ANNUAL REPORT 2001 WHO’S NO.1? LOOK Annual Report who’s on THE CUSTOMER! Food The People Greeter’s smile Store of the Community Food InnovationsInnovations thethe DOW!DOW! Store of the Community pagepage 14 14 is just the beginning of our BannerYear for pagepage 4 4 pagepage 11 11 customer focus. BannerYear for MAKING THE International Expansion Fine-tuned Management Merchandising How do you best serve the • Strategy pays off customer? By knowing what Q&A: Domestic • Asset management the customer wants! That’s where Wal-Mart’s leading-edge information Operations • Shareholder value systems come in. Drive Earnings • Tech leadership Growth • Inventory control Paul Harvey Culture interview: page 5 An inside look at Wal-Mart PLUS Retailtainment PLUS page 7 • PEOPLE POWER Everything We Do Revolves Around Our Customers. Retailer InternationalInternational of the pagepage 8 8 Century

GoodGood WorksWorks SAM’S Jewelry page 12 SAM’S Jewelry page 12 page 15 • SUPERCENTERS • GLOBAL GROWTH

2004 Annual Report 2006 Annual Report 2005 ANNUAL REPORT 2007 Annual Report BUILDING SMILES

It’s my

Store #1 Rogers, Arkansas Then and Now

26 • WAL-MART at 50 Good Jobs # Good Works # Good Citizen # Good Investment

Vested Interest 2003 Annual Report 50 years of helping customers Powering our future: save money and live better 2.2 million associates committed to our customers. 2012 Annual Report

WAL-MART ANNUAL REPORT 2001

Food Store of the Community Food InnovationsInnovations Store of the Community pagepage 14 14 Wal-Mart Stores, Inc. (NYSE: WMT)pagepage 4 4 pagepage 11 11 702 S. W. 8th Street Bentonville, Arkansas 72716 USA 479-273-4000 2012 Annual Report walmartstores.com

Culture page 5

Retailtainment page 7

Everything We Do Revolves Around Our Customers.

InternationalInternational pagepage 8 8

GoodGood WorksWorks SAM’S Jewelry page 12 SAM’S Jewelry page 12 page 15 Annual Report 2002

We save people money 2009 ANNUAL REPORT 2007 Annual Report 2010 AnnuAl RepoRRtt so they can live better. A LWAYS LOW PRICES. Every day our two million associates help customers and members save money at 2008 Annual Report more than 7,000 locations in 13 countries. SAve Money. lIve BetteR. 50 years

“Sam’s Club takes extraordinary steps to of helping customers make sure that we have case-ready goods Walmart U.S.: $258.2 billion in net sales Walmart U.S.: 3,708 units “Great prices, quick checkout, friendly greetings. for our small business customers. It saves Sam’s Club: $46.7 billion in net sales Sam’s Club: 596 u.S. Clubs save money and live better That’s what our customers want when they shop them time when they can count on Sam’s Powering our future: at Wal-Mart. I know so many customers by name Click ‘n’ Pull® service. We keep the shelves full Walmart International: $100.1 billion in net sales Walmart International: 4,112 units 2.2 million associates committed to our customers. because they shop here so often!” for our members every day.” : 43 Worldwide total: $405 billion in net sales We save people money Sonia B. – cashier, Wal-Mart supercenter, U.S. Jeff B. – forklift operator, Sam’s Club, U.S. Brazil: 434 United States ★ 3,656 Stores Sam’s Club ★ 602 U.S. Clubs : 317 Chile: 252 Every week around the world, our 2.1 million associates We save people money Sales for the year ended January 31, 2010 so they can live better. China: 279 work diligently to help more than 200 million customers : 170 More opportunities : 77 save money so they can live better. 2012 Annual Report

so they can live better. 2009 Annual Report Wal-Mart : 164 around the world to save money and live better. : 53 India: 1

Japan: 371 2011 Annual Report Mexico: 1,469 : 55 Walmart 2010 Annual Report Puerto Rico: 56* “We empower our associates to take the initiative United Kingdom: 371 in improving service for our Wal-Mart customers Total Units Worldwide: 8,416 in Beijing. Price leadership and great service – Argentina ★ 28 Units Brazil ★ 345 Units Canada ★ 318 Units Chile ★ 197 Units China ★ 243 Units that’s why sales are up and our customer traffic continues to increase.” Unit count as of January 31, 2010 Lucy L. – store manager, Wal-Mart supercenter, China * Effective February 1, 2010, Walmart stores and Sam’s Clubs in Puerto Rico became a part of their respective U.S. segments.

Costa Rica ★ 164 Units El Salvador ★ 77 Units Guatemala ★ 160 Units Honduras ★ 50 Units India ★ 24 Units* Building “At Wal-Mart, our trucks make deliveries every day. “Fresh produce and fruit are always on the table But today we do it more environmentally friendly with of our customers in Salvador. We source the WAL-MART at • better fuel efficiency, aerodynamics, a high-efficiency freshest coconuts and melons right here in 50 27 auxiliary power unit and emissions controls. I think that our own region.” the Next helps us all live a little better.” Wal-Mart Stores, Inc. Wal-Mart Stores, Inc. (NYSE: WMT) Maria S. – department manager, Hiper Bonocô, Brazil 702 S.W. 8th Street 702 S. W. 8th Street Allen B. – truck driver, Wal-Mart Logistics, U.S. Bentonville, Arkansas 72716 uSA Bentonville, Arkansas 72716 USA 479-273-4000 Japan ★ 371 Units Mexico ★ 1,197 Units Nicaragua ★ 51 Units Puerto Rico ★ 56 Units United Kingdom ★ 358 Units 2012 Annual Report 479-273-4000 walmartstores.com Generation Unit counts as of January 31, 2009. walmartstores.com *India retail locations are owned and operated by Bharti Retail. Wal-Mart India provides technical support to these stores through a franchise agreement. Wal-Mart Stores, Inc. (NYSE: WMT) Wal-Mart Stores, Inc. 702 S.W. 8th Street 702 S.W. 8th Street Bentonville, Arkansas 72716 USA Bentonville, Arkansas 72716 USA Walmart 479-273-4000 479-273-4000 walmartstores.com walmartstores.com Wal-Mart Stores, Inc. 702 S.W. 8th Street Bentonville, Arkansas 72716 USA 479-273-4000 walmartstores.com Now more than ever. A Walmart 2011 Annual Report

117039_CVR.indd 1 4/5/11 9:07 PM Crystal Bridges Museum of American Art congratulates Walmart on its fiftieth anniversary.

More than 400 American masterworks from Colonial times to the present.

And no admission fee. Ever.

Thanks to Walmart.

CrystalBridges.org General admission to Crystal Bridges is sponsored by Walmart. There is no cost to view the Museum’s permanent collection.

Photography by Timothy Hursley TIMELINE Founded by Walton, 50 continued row and you’re a Wall Street darling. That was the assessment of Kiplinger’s Personal Finance Modernized by Scott Magazine, which declared: “We don’t know of another The man who wrote the book on Wal-Mart says former Wal-Mart CEO major company offering such Lee Scott brought Sam Walton’s mid-20th century idea into the 21st century substantial growth prospects.” ►The winning streak that By Gwen Moritz themselves by acting like their critics had started with $1 billion in nothing valuable to say.” income and was followed by n 2003, Charles Fishman’s editor at When Scott retired as CEO in 2009, he taking over the top retailer Fast Company magazine sent him to left behind a company that is “no longer IBentonville to write about sophisticated living in a bunker,” Fishman said. Scott, spot continues with a record executives of vendor companies forced he said, should get as much credit for high price for Wal-Mart stock. It to leave New York and San Francisco and modernizing Wal-Mart as Sam Walton did ends the year at a split-adjusted move to godforsaken Arkansas to take care for creating it. price of $58.88, thanks to a of the all-important Wal-Mart account. “Wal-Mart is still Wal-Mart,” he said. He came back with an article called “The “The core mission is the same, but Wal- $2.25 jump on Dec. 30. Wal-Mart You Don’t Know,” which served Mart is a different company than it was 10 as the basis for his 2005 bestseller, “The years ago — and different in ways that are 1992 Wal-Mart Effect.” Through anecdotes very valuable.” ►With the 800-seat auditorium and empirical data, the article and then Charles Fishman, author of “The Wal-Mart Effect” In particular, Wal-Mart has embraced the book illustrated the effect of Wal- sustainability as both smart for business in Wal-Mart’s headquarters filled Mart’s relentless pursuit of savings: “price Mart Watch and Wake Up Wal-Mart turned and good for image. Wal-Mart invited to capacity, President George rollback” demands that forced vendors to public attention to Wal-Mart’s business executives from Target and Publix and W. Bush presents the nation’s outsource manufacturing to overseas plants, plan, including its reliance on cheaper Kmart to tour its first energy-efficient notoriously tightfisted wages and benefits, imports and part-time workers who didn’t stores and has made a point of sharing best highest civilian honor, the Medal pioneering work in energy-efficient store qualify for health insurance benefits. practices and techniques on sustainability. of Freedom, to Sam Walton on designs and building materials. After Sam Walton died in 1992, Time Environmental Defense Fund employees March 17. The president tells the “So I’ve been writing about Wal-Mart magazine called him “America’s favorite are given Wal-Mart employee badges and crowd of Wal-Mart employees, for nine years, and I think just in that time shopkeeper.” But by the mid-2000s, can wander the stores freely. Wal-Mart has there’s been as much of a dramatic change Wal-Mart was simultaneously one of the told its vendors that the amount of energy “The story of Sam Walton is in Wal-Mart’s approach to the world as country’s most-admired and least-admired used to produce merchandise must decline an illustration of the American there has been in the life of Wal-Mart,” companies. Rank-and-file consumers would by at least 10 percent between 2010 and dream.” 2020. “That’s Wal-Mart reaching into the Fishman said in a recent interview. express misgivings about the company even Sam Walton dies on April Quality may have been Job 1 at Ford; at as they flocked through the doors with the operations of their suppliers and doing ► Wal-Mart, the only job — the essence of assurance that they would never pay too with sustainability exactly what it did for 5 at age 74, earning a front- the company, its DNA — was getting as much for anything. price,” Fishman said. page banner headline in the much merchandise as possible to as many As long as sales continued to climb, and The company even publishes a Arkansas Democrat-Gazette. Less customers as possible at the lowest possible they did, the criticism was easy to ignore, sustainability report online for the world to price. And by focusing on that one goal, particularly by middle management. see. “Sam would have been furious about than a month after entering Wal-Mart was already doing “more business “The impact wasn’t relevant to individual how much data they share with the world,” the University of Arkansas for than Target, Sears, Kmart, J.C. Penney, [merchandise] buyers initially,” Fishman Fishman observed. 50 Medical Sciences hospital in Little Safeway, and combined,” Fishman said. “So that’s why it took someone at the Charles Fishman’s original 2003 article for Rock, the Wal-Mart founder wrote in 2003. top to say, ‘We can’t ignore the impact we’re Fast Company magazine, “The Wal-Mart succumbs to bone cancer. At the Wal-Mart, through its own pricing and having on the world or the impact that our You Don’t Know,” can be read online at the inevitable response by competitors, was impact has on people’s attitudes.’” FastCompany.com/Magazine/77/Walmart. time of his death his company credited with helping control inflation in That person was H. Lee Scott Jr., who has more than 2,000 stores and the United States. A study by McKinsey succeeded David Glass as Wal-Mart’s CEO 380,000 employees. Wal-Mart & Co. found that some 12 percent of in January 2000. productivity gains in the U.S. economy in A product of the Wal-Mart culture, President and CEO David Glass the 1990s could be traced to Wal-Mart. Scott was initially as inured to outside declares “we have lost more than But Fishman compares that Wal-Mart to opinion as anyone else. But according our chairman and founder ... we Baby Huey, the oversize duckling of classic to Fishman, who has interviewed Scott cartoons who was blissfully unaware of his extensively, Hurricane Katrina in 2005 was have lost a friend.” effect on his standard-size playmates. Wal- a turning point in Scott’s thought process. ►Two months after his death, Mart’s executives, he said, “were willfully The relentless efficiency that had been Sam Walton is on the cover ignorant and simply too focused on their badmouthed was now praised. of Time magazine: “How Sam own issues to be willing to take account of “Wal-Mart was the organization that the impact they were having.” was ready to deliver what the people of Walton Got Rich: The wit and When his original article came out, coastal Louisiana and Mississippi needed wisdom of America’s favorite Wal-Mart had virtually no public relations immediately,” Fishman said. “Wal-Mart shopkeeper.” mechanism, no media relations, no govern- got all this good press. They were ready. The trade publication Sports mental lobbying. “The word sustainability As soon as the National Guard lifted the ► did not exist in the company. They barriers, they came flooding in. And Lee Trend announces that Wal- considered any opposition to Wal-Mart as Scott said, ‘That’s what we do: deliver things Mart has assumed the mantle wrong if not downright evil,” he said. that people need when they need them.’” of nation’s top sporting goods And there was plenty of opposition, Scott ended up consulting with another particularly from labor unions itching to Arkansas institution, according to Fishman. retailer, with $1.3 billion in sales, get a foothold at the world’s single largest “And it was Bill Clinton who helped surpassing Kmart. employer. Campaigns with names like Wal- him understand that they were hurting WAL-MART at 50 • 29 TIMELINE 50 continued Walton Scholarships Spread Education Through South America ►The company logo is updated again, with a star replacing the By Luke Jones drain,” Boyd said. student of a lower socio-economic stature, hyphen. “The whole point of it is, they must but Boyd said the review teams try to or Emilia Faraj, a Honduran senior return home,” he said. “They can’t stay in visit families of lower to middle incomes, electrical engineering student at the U.S.” especially ones that couldn’t otherwise 1993 FHarding University, the Walton Each year, a school may accept up to 60 afford to send a student abroad. ►Following its established International Scholarship Program was Walton Scholars from Mexico, Guatemala, One scholar, Boyd said, was a shoe practice of splitting stock when it “the best thing ever.” El Salvador, Belize, Honduras, Nicaragua, seller in a market in El Salvador. When It’s an Arkansas-specific program Costa Rica and Panama. Among the three his family couldn’t afford local English exceeds $50 per share in value, available to South American students. universities, more than 1,000 students classes, he sat outside the classroom and Wal-Mart announces a two-for- Participants get a full ride, paid for entirely have received degrees through the Walton listened to the lectures. After graduating one deal that brings the total by the program, to either Harding in program. from college, he was immediately Searcy, John Brown University in Siloam Getting the scholarship is no small hired by Empresas Adoc, a large shoe number of outstanding shares to Springs or the University of the Ozarks in achievement. It’s a full ride, plus more: manufacturer. Boyd said he was now an almost 2.3 billion. The news sends Clarksville. Sam Walton himself started it “It pays them a monthly living executive with Wal-Mart in El Salvador. the stock’s value up by $3.25, to 26 years ago. allowance,” Boyd said. “It provides At Harding, the scholars form a small $62.63 on the New York Stock “Mr. Walton wanted this to help their insurance; it provides airfare to and from community. countries,” said Nicky Boyd, director of their home country each year. It’s a pretty “We tend to get together and meet,” Exchange. It is the company’s 10th the program at Harding. big deal.” Faraj said. “Even though we’re all from stock split. Specifically, Walton wanted to give the At Harding, it’s a deal worth $28,000 [different] countries, we are kind of the ►A Faulkner County judge finds students an alternative to a communist per year, and at any of the schools the same. The guys get together and play that Wal-Mart’s below-cost pricing education. According to the program whole thing is usually valued at more than soccer.” website, Walton had observed the smartest $100,000. Gary Torres, a junior computer science on prescription drugs “injured South American students getting their To choose the 60 students, the major from El Salvador, said he never competition” and violated the degrees from Moscow or Cuba, a far cry universities look at several factors, thought he could actually qualify for the state’s Unfair Practices Act, ruling from Walton’s values of democracy and foremost being grades and character. scholarship. “It was just a dream.” free enterprise. “We need people of high character that Torres wants to start his own business in favor of three local pharmacies Walton picked the three small faith- will keep their word and go back home,” in El Salvador, perhaps developing that had sued the retail giant. based universities so the students would Boyd said. “We look at grades; this is mobile apps. There aren’t many software Wal-Mart appeals to the state receive more attention from professors an academic scholarship. It’s also pretty developers back home, he said. Supreme Court. and the student body. important that their English is decent.” “Right now, I only know that Costa But he didn’t want to create a “brain The factors may seem to preclude a Rica has a lot, but a lot of other countries

Harding University’s Walton ScholarS continue S am Walton’s entrepreneurial s pirit in eight Central American countries.

30 • WAL-MART at 50 TIMELINE 50 continued

►The Democrat-Gazette profiles 68-year-old Elinor Blair of North Little Rock, who sells handmade quilts to supplement her modest Social Security income. Blair, who learned the craft at her grandmother’s knee, says cheaper imported quilts are hurting her: “If they can go ... to Wal-Mart and get one for $40 ... they won’t buy from us.” That week the company says it will not reorder the Chinese quilts, citing poor quality.

1994 ►In the company’s annual report, Wal-Mart’s top brass praise Emilia Faraj of Honduras and Gary Torres of El Salvador are recipients of the Walton International Scholarship and attend Harding University in associates for helping achieve a Searcy. Other Walton Scholars attend John Brown University at Siloam Springs and University of the Ozarks in Clarksville. $12 billion sales increase despite a don’t,” he said. Torres also feels the style of education at the University of the Ozarks, said that tough year and tout commitment Education in America has changed the he’s receiving at Harding will help him in the 25 years he’s worked with Walton to equal employment opportunity way he looks at his country, Torres said. when he returns. scholars he’s never seen anything like it. and being as environmentally For one thing, he said, the professors “I realize that there are so many “It’s been amazing,” he said. “The friendly as possible. But the first in El Salvador tend to go on strike and resources we can use,” he said. “We know kids understand the importance. They call off classes. That doesn’t happen in that there are needs there, but we don’t make the most of their time to take the word in the report comes from Searcy. know how to tackle them. Now that I’m education home and make a difference in husband-and-wife greeters Dave “The teachers here try to help you a here, I have some ideas that can be put their home countries. I could not imagine and Rita from Glenwood Springs, lot,” he said. “They’re in contact with you. into practice.” University of the Ozarks without those Colo., who say “[We] hope you They’re very close.” Rickey Casey, director of the program students on campus.” 50

Walmart, Congratulations on 50 years of helping people live better. We’re proud to be your Northwest Arkansas neighbors.

WAL-MART at 50 • 31

TIMELINE John Huey, Sam Walton and the Nickel 50 continued

By Eric Francis Arkansas, in the middle of winter and will enjoy reading this annual write all night,” Huey said. “Then I’d report.” pen the back flap of the 1993 go back in the morning and read him Sam Walton autobiography what I’d written so he could make his O“Made In America” and you’ll comments.” 1995 find a photo of Walton and John Huey, Walton never saw the finished ►Wal-Mart co-founder James L. the journalist and author who worked on product before he died in April 1992, “Bud” Walton, Mr. Sam’s brother, the book with him. Huey said, but he’d read most if it and suffers an abdominal aneurism Every picture tells a story, of course, was pleased. and this one happens to tell Huey’s “He said he knew that there were while on a Caribbean fishing favorite tale about Mr. Sam. going to be a lot of other people writing vacation. He dies at age 73 during “We were at an airport — he was about him, and he just wanted to make surgery after being flown from flying me and photographer Steve sure he had his version of the story out the island of St. Maarten to a Pumphrey around for a story, before we there,” Huey said. were working on the book,” recounts Sam Walton posed with journalist John For his part, Huey says he still tries as Miami hospital. Huey. Huey, who was helping him write his auto- a journalist to keep at an arm’s length ►In U.S. District Court, a biography shortly before his death in 1992. “Sam was off filing a flight plan or from Walton and Wal-Mart stories, and unanimous jury awards $50 something, and Steve said, ‘You know, project he was a writer for Fortune has recused himself from coverage by million to Peggy Kimzey in her it’s amazing to me how much money he Time’s journalists over the years. He’s covering Wal-Mart and its founder, sexual harassment suit against has, and yet he seems to pay attention who was not always overly fond of not an individual Wal-Mart stockholder to the smallest details of money and either. Wal-Mart. Kimzey says she journalists. Still, the two developed a purchasing anything.’” “However,” he added, “I live in South working relationship and got to know had been subjected to lewd So Pumphrey decided to test his Carolina and commute to New York, comments and unwanted theory. Taking a nickel out of his each other a little, and when Walton and I spend a lot of time out in the pocket, Pumphrey tossed it onto the finally decided it was time for his country, so I am not unfamiliar with advances while working in a tarmac, just to see if the Wal-Mart boss autobiography, he asked Huey help him Wal-Mart as a shopper.” Missouri store. Wal-Mart says it put it together. would even notice it. Huey says he’s happy with how the will appeal the verdict. Thus Huey moved to Arkansas for “So Sam comes out and I’m standing Walton book turned out and still finds Jonathan Fleck of Minnesota there in my sunglasses and Steve says, three months and spent virtually every the Walton family “fascinating,” just ► ‘Let me get a picture of you two,’” Huey day with the ailing retailer, talking for like the man with whom he posed for a strikes a deal with Wal-Mart to said. “And Sam says, ‘Where do you hours in the Walton family living room. photo on the airport tarmac more than sell Makin’ Bacon, a microwave want me to stand, on that nickel?’” “I would interview him and type 20 years ago. oven bacon-cooker invented Today Huey works as editor-in-chief notes on my laptop, then drive back “Of course,” Huey added, “when we several years earlier by his 8-year- of Time Inc., but back before the book to my lonely condo in Bella Vista, were done, he picked up that nickel.” 50

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WAL-MART at 50 • 33 TIMELINE 50 continued Early Wal-Mart CEO old daughter, Abbey. During the next 10 years, some 1.25 million Remembers Sam Walton are purchased by Wal-Mart shoppers. By Kate Knable get the city of Bentonville to back us on tax-free bonds to build the first warehouse al-Mart’s first chairman and there.” CEO was a variety store chain Mayer also became one of Sam Walton’s Wemployee from Kansas. regular tennis partners, and the two played Ron Mayer was Wal-Mart’s chairman in tournaments together. and CEO from 1974 to1976. And although “He was very gracious in his calling founder Sam Walton had served previously Ron Mayer, the first man to have the CEO of his opponents’ shots. I’ve never seen as de facto CEO, Mayer was the first to title at Wal-Mart, now lives in Indiana. anyone who called the shots in favor of hold the title. “He ... said that was the closest to death the opponent who wasn’t an outstanding Mayer, now 77, worked for Wal-Mart he ever came. I can guarantee: It was the person,” Mayer said. from July 1, 1969, to June 30, 1976. closest I’ve ever come,” Mayer said in a Mayer said he invested in Wal-Mart first Walton met Mayer at a 1968 IBM recent interview. “In retrospect, Wal-Mart as an employee, even before the company seminar in New York and hired him could have ended right there if Sam had went public, and after splits each share had away from his job as controller for A.L. been injured or affected.” cost him less than a penny. Duckwall Stores in Abilene, Kan. Walton Mayer began working with Sam Walton Wal-Mart has changed quite a bit since placed him in charge of Wal-Mart’s finance and Sam’s brother, Bud. “At that time, I Mayer’s days. and administration department. felt like the discounting was the right route “At the time, we were trying to do Thus began a relationship that evolved business with a lot of local manufacturing versus variety stores. I kind of felt like into friendship and lasted 23 years, until and distribution places in the areas where variety stores would be a dying business,” 1996 Walton’s death at age 74 in 1992. we put in stores. Now everything’s made in Before Mayer agreed to join the staff at Mayer said. “I bought into what they China. That’s the difference that 40 years ►Partnering with Microsoft, Wal-Mart at age 35, Walton took him by wanted to do.” makes,” Mayer said. Wal-Mart prepares to launch plane to visit Wal-Mart store Nos. 12 and Among Mayer’s accomplishments as a “Oh, you know, who’s to judge what Wal-Mart executive, in addition to helping its first online shopping website. 13 in Missouri. they call progress? It’s all in the eyes of the As they flew in to land at an airport in take the company public in 1972, was to Through it, customer orders beholder.” Carthage, Mo., Walton’s plane nearly struck lead the company’s transition to owning Mayer left Wal-Mart in 1976 to become will be forwarded to Wal- another aircraft. Walton pulled up his twin- warehouses for storing products. an owner of Ayr-Way, a discount store Mart’s suppliers, who will ship engine Beech Baron just in time to avoid a “We were just renting office space above chain in Indianapolis that was sold to the articles themselves, with student pilot’s plane that had pulled out in an attorney’s office on a square,” Mayer Target in 1982. He now lives in Carmel, front of the runway. said. “One of the first things I did was Ind. 50

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Northwest Regional Airport • www.flyxna.com • One Airport Boulevard • Bentonville, AR 72712 • 450.205.1000 TIMELINE 50 continued the retailer as the middleman. Meanwhile, Kmart and Sears mainly use their websites to direct customers to brick-and- mortar stores. ►After 99 consecutive quarters of growth — that’s almost 25 years — Wal-Mart finally sees a year-over-year decline in its earnings. Net income in the fourth quarter of 1995 is $942 million, a 9 percent drop from the $1.3 billion in the same quarter in 1994. Rating service Moody’s follows this news a week later with a downgrade of Wal-Mart’s credit to Aa2. ►Responding to analyst reports that its stock is undervalued, Wal-

Mart increases its investment in a “Two IBM 370-148 computers record performance of each store daily,” Wal-Mart bragged in its 1979 annual report. buyback program to $200 million, a one-third jump. By November, the company has increased the buyback amount to $400 million. Wal-Mart Used ►Wal-Mart enters the German market by buying 21 stores from the Wertkauf hypermarket chain. Less than a year later, Wal-Mart Technology to Become will buy 74 more stores from another German retailer, Interspar. Supply Chain Leader 1997 ► Wal-Mart surpasses $100 By Todd Traub ammunition could spell disaster for an chain. From 1993 to 2001, Wal-Mart grew billion in annual sales on Jan. 12 army on the move. For consumers and from doing $1 billion in business a week t is hard to talk about supply chain businesses, a supply chain breakdown to $1 billion every 36 hours, growth that and posts more than $2.7 billion management without mentioning Wal- means empty shelves and a loss of was attributed as much to supply chain in net income for the fiscal year IMart. revenue. management as to customer service. that will end that month. The sales In its relentless pursuit of low Through a combination of distribution Last year, Wal-Mart sold $1.22 billion milestone comes three years consumer prices, Wal-Mart embraced practices, truck fleet management and worth of merchandise every day. technology to become an innovator in technological innovations, Wal-Mart Under a Wal-Mart’s supply chain sooner than Sam Walton had the way stores track inventory and restock not only became the model of supply initiative called VMI — vendor managed predicted in 1991. their shelves, cutting costs and passing the chain efficiency and used it to become inventory — manufacturers became ► Wal-Mart stock is added to the savings along to customers. In the process the largest retailer and private sector responsible for managing their products in Dow-Jones Industrial Average. the company became synonymous with employer in the world. Wal-Mart’s warehouses. As a result, Wal- the concept of successful supply chain Even the U.S. military noticed. Army Mart could expect close to 100 percent Ruling that Wal-Mart had ► management. Col. Vernon L. Beatty, who commanded order fulfillment on merchandise. violated the Ontario Labour “I don’t believe there is a university in the Defense Distribution Depot in Wal-Mart streamlined supply Relations Act ahead of a the world that doesn’t talk about Wal- Kuwait, spent a year with Wal-Mart as part chain management by constructing unionization vote, a Canadian Mart and the supply chain,” said James of the military’s Training With Industry communication and relationship networks program. court approves a union for a store Crowell, director of the Supply Chain with suppliers to improve material flow Management Research Center at the “Supply chain management is moving with lower inventories. The network of in Windsor, Ontario. It’s the first Walton College of Business. “They are the right items to the right customer at the global suppliers, warehouses and retail time in the company’s 35-year just so well respected because they do it right time by the most efficient means,” stores has been described as behaving history that it will have to deal so well, and certainly I know a lot of peer Beatty said in article about his experience. almost like a single firm. with a unionized workforce at one institutions around our country … will “No one does that better than Wal-Mart.” “Wal-Mart’s whole thing was bring a Wal-Mart guest to speak.” collaboration,” Crowell said. “That’s a big of its locations. From ancient times through two Fewer Links part of what made them so successful.” ►Having taken on retail, groceries world wars to today’s global market, the Wal-Mart’s supply chain innovation Even in its early years, Wal-Mart’s and sporting goods, Wal-Mart logistics of supply chain management began with the company removing a few supply chain management contributed takes aim at the gasoline market. have challenged any enterprise that tries of the chain’s links. to its success. Founder Sam Walton, who to move goods and materials a long way In the 1980s Wal-Mart began working owned several Ben Franklin franchise In partnership with Gary-Williams in a timely manner. A break in the supply directly with manufacturers to cut costs stores before opening the first Wal-Mart in Energy Corp. of , it opens chain leading to a dearth of food or and more efficiently manage the supply Rogers in 1962, selectively purchased bulk

36 • WAL-MART at 50 merchandise and transported it directly to Wal-Mart’s approach meant frequent, TIMELINE his stores. “The big piece informal cooperation among stores, continued In 1989 Wal-Mart was named Retailer distribution centers and suppliers and 50 of the Decade, with distribution costs less centralized control. Furthermore, estimated at a mere 1.7 percent of its cost of supply chain the company’s supply chain, by tracking a gas station at its store in Rogers. of sales — far superior to competitors customer purchases and demand, allows It’s the first major retailer to take like Kmart (3.5 percent) and Sears (5 management is consumers to effectively pull merchandise this step. percent). to stores rather than having the company Wal-Mart introduces a 401(k) The company’s supply chain has only push goods onto shelves. ► become more effective since then. Wal-Mart has In recent years Wal-Mart has used radio retirement plan for its workers. Wal-Mart developed the concept of frequency identification tags (RFID), Available to employees who’ve “cross docking,” or direct transfers from the retail link” which use numerical codes that can be been there a year and put in 1,000 inbound or outbound truck trailers scanned from a distance to track pallets — James Crowell, director of the hours — about 20 hours a week, without extra storage. The company’s of merchandise moving along the supply truck fleet and corps of non-unionized Supply Chain Management Research chain. Even more recently the company has so even part-timers qualify — it drivers continuously deliver goods to Center at the Walton College of Business begun using smart tags, read by a handheld offers a range of options from distribution centers (located an average scanner, that allow employees to quickly company stock to mutual funds. 130 miles from the store), where they learn which items need to be replaced so are stored, repackaged and distributed information was immediately collected and that shelves are consistently stocked and Trading in the mid-$30 range at without sitting in inventory. analyzed, and the company devised Retail inventory is closely watched. the time, Wal-Mart sets aside Goods will cross from one loading dock Link, a mammoth Bentonville database. RFID and smart tags are just the next 10 million shares for the 401(k) Through a global satellite system, Retail to another, usually in 24 hours or less, generation in supply chain innovation that program. and company trucks that would otherwise Link is connected to analysts who forecast dates back to the 1960s, when Sam Walton return empty “back haul” unsold supplier demands to the supplier network, personally attended an IBM school in merchandise. which displays real-time sales data from upstate New York with the intention of 1998 cash registers and to Wal-Mart’s distribution landing experts to computerize operations. ►Remember that mid-$30 Wal- centers. Collaboration Wal-Mart reaps the benefits of its supply Mart stock? Well, it’s been on a Companies within the supply chain “The big piece of supply chain chain management in time saved, faster synchronize their demand projections management is Wal-Mart has the retail inventory turnover, increased warehouse 14-month tear, gaining 127 percent under a collaborative planning, forecasting link,” Crowell said, “the information from space and accurate forecasting of inventory and culminating with a $50 per and replenishment scheme, and every point-of-sale data, the cash register, that levels. share value. Happy are the Wal- link in the chain is connected through they put into their system and share with all “They really understand that if I’m Mart associates who ticked the technology that includes a central database, their partners. going to build some stores and build some store-level point-of-sale systems and a “What makes that so innovative is distribution centers, how am I going to “company stock” option while satellite network. at one time a lot of companies weren’t service them?” Crowell said. “If you look signing up for their 401(k) just Wal-Mart implemented the first sharing that. In fact, they were using third at some of their competitors, sometimes seven months (and $13 a share) companywide use of Universal Product parties where they had to pay for that they would put a store in and then think, ago. Code bar codes, in which store level information.” ‘How am I going to service it?’” 50

CongratulationsThe genius of Sam Walton’s vision of a totally new retail business model, integrated with the global supply chain, literally changed the way the world does business.

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WAL-MART at 50 • 37

TIMELINE REAL MEN 50 continued ►In July, the retailer announces of WAL-MART that it will call its new chain In 1990, nine years before Wal-Mart of grocery stores Wal-Mart would overtake Toys R Us as the Neighborhood Markets and nation’s largest seller of toys, Hasbro Inc. honored a major customer by opens prototypes in Sherwood issuing G.I. Joe “file cards” featuring and Benton. These smaller (by six Wal-Mart executives, starting with comparison) operations bolster “Stonewall Sam” Walton. the 473 Supercenters that are (continued on page 40) already selling groceries across the country. By the end of the year, Wal-Mart is the nation’s No. 2 seller of groceries.

1999 ►It’s Christmas in Bentonville! Wal-Mart overtakes Toys “R” Us as the nation’s largest seller of, well, toys, seizing a 17.4 percent share of the market. That’s only about a half-percentage point greater than the toy-centric chain’s share, but it marks a tipping point in a long-running battle that saw Toys R Us closing stores and cutting inventory in an effort to compete.

WAL-MART at 50 • 39 TIMELINE 50 continued REAL MEN ►With a mind toward expanding of WAL-MART its presence in Europe, Wal-Mart surprises the business world by (continued) offering $10.8 million to British retailer Group in exchange for its 229 “hypermarkets.” Buying Britain’s third-largest supermarket chain doubles Wal-Mart’s international sales to some $25 billion. ►How fast can you turn that around? A fire causes extensive smoke damage to an Indiana Wal- Mart, rendering the entire inventory a loss. The store is emptied, cleaned, repaired and restocked and reopens for business in just six days. ►In April, Wal-Mart stock splits for the 11th and last time (to date). One hundred of the original shares purchased for $1,650 in 1970 would Sets of limited edition Wal-Mart Battle have grown to 204,800 shares worth Force file cards were distributed more than $9 million. internally and are now collectors items commanding hundreds of dollars from hardcore G.I. Joe enthusiasts. (Images courtesy of YoJoe.com, with permission of Hasbro Inc.)

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40 • WAL-MART at 50 There’s nothing that can’t be achieved in Arkansas. Sam proved it.

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WAL-MART at 50 • 41 TIMELINE 50 continued

2000 ►David Glass steps down as CEO to take up a board position, and the reins are handed over Wal-Mart’s push for environmental sustainability, initiated by then-CEO Lee Scott in 2005, has ranged from small improvements in packaging to to H. Lee Scott, a man Glass ambitious experimentation with building materials and even hybrid-fuel delivery trucks. had hired away from a trucking contractor to run Wal-Mart’s fleet almost two decades before. Sustainability Efforts Mean In the company’s annual report, Scott praises the strides made by the company’s International Big Environmental Impact Division and notes, “We still have a tremendous amount of work By Todd Traub “It kept 1 billion feet of wire from from U.S. stores, energy efficiency going to the landfills, which was enough increases in Chinese factories, greenhouse to do in some of our new and f nothing else, Wal-Mart’s sustainability to wrap around the Earth nearly eight gas reduction at stores and distribution emerging markets, but the lessons efforts have made it easier to open toys. times,” Duke said. “This changed the centers worldwide, and labor and will make us better able to serve I In 2005 Wal-Mart launched its whole toy industry of how packaging was environmental law compliance from our customers in the future.” sustainability program, designed to done. ... With Wal-Mart little things add up Chinese suppliers. encourage corporate environmental to big things.” “And even where Wal-mart has made responsibility. In attempting to take And the sustainability efforts have its goals, questions linger,” the Mother 2001 leadership on the issue and drive the certainly accomplished more than Jones article said. “Wal-mart concedes ►Grocery sales reach $56 billion, global conversation, Wal-Mart established eliminating a few wires here and there. that the use of murky subcontractors is making Wal-Mart the nation’s three broad goals: to be supplied 100 In its 2012 Global Responsibility widespread in China, Africa, the Middle percent by renewable energy, create zero report, Wal-Mart touted achievements East, and Bangladesh. They won’t provide largest food retailer. waste and to sell products that sustain in 2011 that included reducing waste details about how they have achieved their ►In June, six women file an people and the environment. by 80 percent, expanding locally grown goals, whether suppliers were asked or employment discrimination Wal-Mart has annually described its produce sold, the Women’s Economic compelled to share factory information, progress toward those goals in what have Empowerment Initiative, U.S. customer and whether any suppliers lost orders or lawsuit against Wal-Mart in a become known as Global Responsibility savings of $1 billion on fresh fruits and were fired for unsatisfactory responses.” San Francisco federal court. It is reports, and while the company has vegetables, a new “Great for You” icon to Rajan Kamalanathan, Wal-Mart vice certified as a class-action case in received a number of awards for its help identify healthy food options, using president for ethical sourcing, said Wal- 2004, covering 1.5 million women initiatives, which have grown to include 1.1 billion kilowatt-hours of renewable Mart tries to hold suppliers accountable diversity efforts, it has also drawn criticism energy, an integrated sustainability index, through a system of third-party audits who have worked at the retailer and earned mixed reviews. response to natural disasters, expansion conducted by auditors who undergo and making it the largest class- To be sure, there have been tangible of the global direct farm program, and frequent training by the Global Social action suit in history. Wal-Mart achievements. At Wal-Mart’s recent 2012 an increase of diversity and inclusion for Compliance Programme. appeals the class-action status Global Sustainability Milestone Meeting, women and minorities. Suppliers, factories and workers CEO mentioned the example “We’re now seen as a leader on are provided a helpline or email to and in 2011, the United States of toy packaging. sustainability,” Chairman Rob Walton told confidentially report concerns, and Supreme Court rules that the “All those metal wires,” Duke said. the meeting via video hookup from Brazil. violations are handled in a collaborative plaintiffs do not constitute a class. “And why does it have to have so many “But with that recognition come higher manner with, as a last resort, out-of- metal wires to tie the toys to the package?” expectations. And that’s how it should compliance suppliers being denied access Duke praised the Wal-Mart team that be. We’ve set bold goals for ourselves. to Wal-Mart shelves. 2002 found a way to alter the packaging and And government leaders, NGOs and The company’s leadership ►Forty years after its founding, eliminate the wasteful wires. It may have customers are watching our progress.” acknowledges many goals are difficult to Wal-Mart ascends to the top of been a small change, he said, but he noted But not everyone likes what they’ve achieve but pledged to keep trying. that such changes add up when factored seen. A recent article in Mother Jones “It does take diligence. It does take hard Fortune magazine’s list of largest into the massive sales of a company that criticized Wal-Mart for falling short on a work,” Duke said. “I’d rather set a stretch American businesses. With $220 in fiscal 2012 rang up $447 billion in number of its announced sustainability goal that really is one that’s out there that revenue. goals, including solid waste elimination we have to work hard to achieve.” 42 • WAL-MART at 50 “As we celebrate this 50th anniversary through improved products, services and expect to see changes in inventory and of Wal-Mart and think about all the consumption. redesigns in packaging. TIMELINE 50 continued opportunities we have in the next 50 Part of the challenge has been to inspire 20th Century Fox Home Entertainment years, I want to ask you to redouble your consumers. has cut greenhouse gas emissions by efforts,” Rob Walton said in his video In an April webcast, Wal-Mart removing the plastic knob in the center of billion in revenues for 2001, it remarks. Director of Sust ainability Jeff Rice, its CD cases. Labels on clothing have been surpasses oil giant Exxon Mobile The Katrina Effect UL Environment Vice President Libby changed to allow for cold water washing, with $212.9 billion. The other also- Wal-Mart’s sustainability program Bernick and Lenovo Senior Engineer thus saving electricity. rans in the Top Five are General began in 2005 under former CEO Lee Mary Jacques addressed the challenge Wal-Mart has already made its truck Motors, Ford Motor Co. and Scott. Duke said the inspiration came at of raising consumer environmental fleet more efficient, and anything that least partly from Wal-Mart’s response to consciousness and getting customers to takes costs out of the supply chain allows General Electric. Hurricane Katrina, which struck New actually buy what they say they want when the company to continue to pass savings ►From the annual report: “One Orleans that year. it comes to green products. on to consumers and maintain the famous morning last September, Shawn “We saw that scale, being a big Often, while environmentally friendly competitively low prices. Saphore, assistant manager company, can really work for good,” products sound good, they aren’t in “At Wal-Mart, we know that being of Store 1591 in Harrisburg, Duke said. “We saw that our size and demand, and too often it is the company an efficient and profitable business and pushing green products on customers our scale was able to benefit thousands being a good steward of the environment , climbed onto the instead of the other way around. of customers and thousands of our are goals that can work together,” roof in a rainstorm and refused Rice said Wal-Mart is developing associates. It was really inspiring. And Kamalanathan said in an April 19 measurements and working with the to come down until Associates I think it really hit Lee also. … I really Q&A with ISEAL Alliance, the global believe that led on to the discussions Sustainability Consortium to set standards and customers raised $5,000 for association for social and environmental about the longer term impact that Wal- and get buy-in from companies. Wal-Mart standards. “Sustainability is about reducing the victims of the September 11 Mart could have.” is also planning a customer campaign, Rice waste in the supply chain and in our tragedy. The citizens of Harrisburg In 2009 Wal-Mart set out to establish said. a Sustainability Index by which to “We’re not just doing this because of operations. As Wal-Mart becomes more met the challenge so quickly that evaluate the sustainability of suppliers consumer pressure,” he said. “Frankly, efficient and environmentally friendly, he upped the ante to $10,000 and their products. The index has three we’re not getting enough consumer we’re also seeing that those same efforts before crawling into a sleeping bag are reducing our costs and allowing us to components: alignment with industry pressure.” to brave a soggy 36-degree night. stakeholders about the best scientific And what do Wal-Mart’s sustainability pass those savings on to our customers. metrics and information on product efforts mean to the consumer? In what “Through the work that our operations Cold, damp, but ecstatic, Shawn and category sustainability through the ways will their impact be felt? team has done to improve the efficiency came down the next evening Sustainability Consortium, integrating Like the example of wires in toy of our fleet and reduce the waste that after learning the community had comes out of a Wal-Mart store, they’ve that work into Wal-Mart’s core businesses, packaging, the impact will likely be felt by chipped in nearly $13,000.” and using the information to engage customers in a number of small ways that returned, just in the last year alone, nearly customers. add up to large-scale sustainability benefits. $1 billion — $800 million — back to the The Sustainability Consortium is a As suppliers are being asked to examine business for something that is also good diverse organization of global participants the carbon life cycle of products from for communities in which we live and the working toward world sustainability manufacturing to recycling, customers can planet we all share.” 50

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WAL-MART at 50 • 43 TIMELINE 50 continued

2003 ►An essay on Wal-Mart’s impact AFTER SAM: on global logistics in the transport of trade goods notes, “In a Did Wal-Mart Lose Its Way After Walton Died? 2003 Fortune article Wal-Mart is described as ‘the company that By Mark Friedman understood the customer.” 1962 because it had only seven letters, almost singlehandedly made the Still, not all of Wal-Mart’s initiatives meaning signs would be cheaper to buy am Walton would be amazed at the after Walton’s death backfired. It rolled out and repair than if the store’s name were bar code ubiquitous by demanding growth of his Wal-Mart Stores Inc. $4 generic prescription drugs in the fall of longer. 20 years ago that suppliers use S In the two decades since his 2006 and in-store health clinics in 2007. Walton said in his autobiography that it.’” A report that same year at death at the age of 74 in April 1992, the Wal-Mart also promoted environmentally even after Wal-Mart generated billions in Bentonville retail chain has become a friendly products on its shelves while annual sales, people asked him why the the Salon.com website notes a global retail Godzilla. building more green stores. company continued to pinch pennies. hacktivist group called Re-Code. When Walton died, Wal-Mart operated And some things stayed the same “That’s simple: because we believe in com is providing print-your-own 1,714 stores, 208 Sam’s Clubs and only at Wal-Mart, with or without Walton, the value of the dollar,” Walton said. “We Wal-Mart barcodes so you can six Supercenters. Wal-Mart’s international including allegations that Wal-Mart saved exist to provide value to our customers, division was a blip with eight locations in money at the unfair expense of employees which means that in addition to quality put a lower-priced item’s code Mexico and Puerto Rico. Those stores that have always been called “associates.” and service, we have to save them money. on more expensive goods. Salon generated $43.8 billion in revenue and $1.6 Wal-Mart was only 5 years old when, Every time Wal-Mart spends one dollar notes that the creators call it billion in net income in 1992. in 1967, a federal court ruled that Walton foolishly, it comes right out of our “satire” while Wal-Mart calls it “an Now a run-up in oil prices is the only had set up his first stores as separate customers’ pockets. Every time we save reason Exxon Mobil has displaced Wal- corporations to avoid having to pay them a dollar, that puts us one more step incitement to theft and fraud.” Mart at the top of the Fortune 500 list. minimum wage under the Fair Labor ahead of the competition — which is Wal-Mart sold $447 billion worth of Standards Act. where we always plan to be.” 2004 merchandise in the fiscal year that ended In 2001, a group of women sued Wal- in January, and profited $15.7 After Sam ►The New York Times reports billion on it. These days the After Walton’s death, Wal- that some 10 percent of Wal- company operates more than WAL-MART NUMBERS Mart hit its biggest growth Mart and Sam’s Club stores lock 4,400 stores in the United spurt. Wal-Mart’s first CEO in their overnight employees for States and another 5,651 SINCE SAM WALTON’S DEATH after Walton’s death was outlets in 26 countries. For fiscal years ended Jan. 31. Dollar amounts in millions. David Glass, who pushed both crime- and loss-prevention But behind the big numbers forward with the international reasons, raising questions of are some trends that disturb Year Sales Income Sales Change Stores expansion that fueled the 2012 $443,854 $15,766 5.9% 10,130 employee safety in the event of retail analysts. Competitors 2011 $418,952 $15,355 3.4% 8,970 retailer’s growth. emergencies. By the time the such as , Apple 2010 $405,132 $14,449 1.0% 8,459 Glass had been Wal-Mart’s and the category known as 2009 $401,087 $13,235 7.3% 7,909 longtime chief financial article is published, the company “dollar stores” have gained 2008 $373,821 $12,841 8.4% 7,288 officer, and Walton had has changed the policy to ensure a ground, especially in the 2007 $344,992 $11,284 11.7% 6,779 promoted him to president in 2006 $308,945 $11,231 9.8% 6,037 night manager with a key is always United States, where Wal- 2005 $281,488 $10,267 11.4% 5,182 1984. Between 1992 and 1995, Mart suffered through two 2004 $252,792 $9,054 11.6% 4,799 sales jumped 113.7 percent present at those stores. years of same-store sales 2003 $226,479 $7,955 12.6% 4,563 to $93.6 billion with profit of ►At the end of the year, Wal- declines between 2010 and 2002 $201,166 $6,592 13.0% 4,234 $2.7 billion. 2001 $178,028 $6,235 16.1% 4,073 Mart employs more than 1.5 2011 before managing the 2000 $165,013 $5,377 18.7% 3,884 But scrutiny of Wal- million people worldwide, and barest of increases in the fiscal 1999 $137,634 $4,430 15.3% 3,493 Mart’s business practices year that ended in January. 1998 $117,958 $3,526 12.4% 3,373 also intensified. Wal-Mart’s anticipates creating 100,000 new Same-store sales reflect sales 1997 $104,859 $3,056 12.0% 3,044 “Buy America” mantra came jobs during the coming year. at stores open at least a year 1996 $93,627 $2,740 13.0% 2,943 under inspection shortly after 1995 $82,494 $2,681 22.0% 2,784 and exclude gains from simply 1994 $67,344 $2,333 21.0% 2,463 Walton’s death, and some opening new stores. 1993 $55,484 $1,995 26.0% 2,148 communities began to resist Some put the blame on 1992 $43,887 $1,609 35.0% 1,932 the chain whose arrival often Wal-Mart’s management team, spelled the death of locally saying it has drifted away from Source: Wal-Mart Stores Inc. of Bentonville owned mom-and-pop retailers. Walton’s essential philosophy Even Walton’s brother, of offering the lowest price. James L. “Bud” Walton, “Wal-Mart has lost the most important Mart for allegedly discriminating in pay who co-founded Wal-Mart, criticized the thing it had, and that’s price leadership,” and promotions. In 2004, a federal judge company after Sam Walton’s death. Bud, said Howard Davidowitz, chairman of ruled that the case could proceed as a class who died in 1995, thought the company Davidowitz & Associates Inc., a retail action, making it the largest civil rights was moving away from Sam’s philosophy, consulting and investment banking firm lawsuit brought against a private employer especially between management and in New York. “It’s the most precious asset in the U.S. with a potential for 1.6 million workers, according to Bob Ortega’s 1998 they had, and they squandered it.” women in the class. Wal-Mart appealed the book, “In Sam We Trust.” 2005 Instead of focusing on low prices, Wal- case to the U.S. Supreme Court, which in Missed Opportunities As of January, more than 1,500 Mart turned its attention to fashionable 2011 tossed the class-action portion of the ► clothes and renovated stores, while complaint. Business groups cheered the While Wal-Mart focused on inter- Wal-Marts and Sam’s Clubs have practically shunning online sales. It even decision. national growth, it missed the biggest opened outside the United States. dropped the slogan “We Sell for Less.” shift in retail since the suburban mall: the ►A Wal-Mart investor who If Walton were alive today, “this never Mr. Sam’s Philosophy rise of the Internet. Wal-Mart’s online would have happened,” Davidowitz said. Wal-Mart succeeded because of adventures have been filled with a number bought 100 shares of company “There’s no way that Wal-Mart would have Walton’s focus on keeping prices low. In of missteps. stock for $1,650 when it first embarked on an insane assortment … fact, Walton wrote in his autobiography It launched a basic website in 1996, became available in 1970 and then remodeling, making the stores pretty. Sam that he settled on the name Wal-Mart in but early Internet surfers largely ignored

44 • WAL-MART at 50 it. The company renovated the site in the customers would see fashionable income focus to deep discounting and fall of 1999 but then had trouble getting clothes on the racks. But Wal-Mart then back to” one focused on low prices, TIMELINE continued merchandise in the hands of customers by has never been the store of choice for Grom said in his report. 50 Christmas. Wal-Mart again tried a major fashion trendsetters, and changing the He also said Wal-Mart was now at risk overhaul of its website in 2000, but it too merchandise mix doesn’t change that of losing its new customers along with just sat on them would have seen failed to gain sales momentum. fact. For the fiscal year that ended Jan. 31, the old ones as “Action Alley adds clutter them grow by 2000 to 204,800 In the meantime, Amazon.com Inc.’s 2009, apparel accounted for 11 percent of back to the store making the shopping shares worth about $11.25 sales took off, soaring from $3.9 billion in U.S. store sales; a year later, it was down to experience less appealing.” 2002 to $19.2 billion in 2008. Amazon’s 10 percent. Davidowitz said he thinks Wal-Mart’s million. And 100 shares of stock revenue stood at $48.1 billion with a profit And in 2009, with the U.S. suffering management’s decisions damaged the purchased in 1980 for $3,350 and of $10.8 billion in 2011, making it the through the worst economic recession in company in the eye of the consumer. held 15 years would be worth largest online retailer. Amazon’s profit decades, Wal-Mart launched a project to “I don’t know how they let themselves about $340,000. Growth has margin was an astounding 22.5 percent, renovate most of its U.S. stores. It planned go as far off track” from Walton’s compared with 3.5 percent for Wal-Mart. to streamline its inventory to make the low-price philosophy, he said. “I think since slowed: 100 shares bought Wal-Mart doesn’t break out its online stores easier to shop, even going as far as that’s indicative of some really bad in 1990 for about $4,500 and held sales in its financial reports, but sales removing “Action Alley,” where special management.” 15 years would be worth about from Walmart.com were estimated at $4.9 promotions are placed on a wooden pallet billion in 2011, which was up nearly 20 in the middle of an aisle. Back to Basics $20,000 percent from a year earlier, according to During other recessions, Wal-Mart’s In early 2011, Wal-Mart CEO Mike ►Wal-Mart closes a unionized Internet Retailer, an online retail industry revenue climbed because it was considered Duke announced a four-point plan to store in Quebec because the website. to be a low-price leader, said Britt Beemer, improve sales in Wal-Mart’s U.S. stores, union demanded a contract Another eye-opening development chairman of America’s Research Group which included returning to its focus came as a result of Wal-Mart putting its of Summerville, S.C. having the lowest prices. that required 30 new hires, online attention on the back burner. In But during the Great Recession, the More than a year into the new strategy, representing a 15 percent payroll 2008, Apple’s online iTunes Store passed dollar stores — which are typically smaller it’s unclear if it will be successful, although increase. It is the first time since Wal-Mart to become the No. 1 music and carry only a handful of items priced U.S. same-store sales were up 0.2 percent retailer in the United States, apparently the higher than $10 — experienced a surge for its fiscal year that ended in January. coming to Canada 11 years first time Wal-Mart led a category in sales in revenue. “There’s now a lower-price Wal-Mart no longer releases monthly sales previously that Wal-Mart, by then and then lost it to another retailer. alternative out there called the dollar figures. that nation’s largest retailer, has stores,” Beemer said. Most of the company’s sales growth permanently closed a store there. More Blunders Other analysts took notice that Wal- in the last fiscal year came from its One of the biggest miscalculations Mart was losing its customers. international division, which jumped 15.2 ►Wal-Mart responds to victims Wal-Mart’s management made occurred J.P. Morgan analyst Charles Grom said percent to $125.9 billion for its fiscal year of Hurricane Katrina on the Gulf in 2007 when it scrapped its “Always Low in a February 2011 research report that that ended in January. Coast so quickly and efficiently Prices” slogan after more than 20 years Wal-Mart confused its core shoppers by “I think they have a lot of work to that one economist later suggests and replaced it with “Save Money. Live shifting from one strategy to another. do,” Davidowitz said. “I think they lost a Better.” “Over the past few years the company tremendous amount of what made them that the company deserves a In 2008, Wal-Mart announced that has shifted strategies from an upper- great.” 50 Nobel Peace Prize.

WAL-MART at 50 • 45 TIMELINE 50 continued Wal-Mart Big for Stephens, 2006 ►With sales of more than $300 billion a year, Wal-Mart Bigger for Arkansas has revenue larger than that of Switzerland. By Gwen Moritz Inside the Wal-Mart Culture ►Wal-Mart gives up on Germany, al-Mart long ago outgrew bankers got their own taste of the Wal- where ingrained competition any need for the Little Rock After Stephens Inc. took Wal-Mart Mart culture. proves too strong. The retreat investment bank that took it public in 1970, Jack Stephens took a seat W on the board of directors and remained “I did get to know some of the guys public in 1970, and that initial offering was costs Wal-Mart $863 million. there for almost a decade. During that from Morgan Grenfell, and they wanted Font specs (full size as used in Page One nameplate): so small as to ARKANSAS BUSINESS: Antenna Condensed Bold 80 pt. ►Worldwide, so many people time, he took his teenage son Warren to to come up and meet David Glass, who be unthinkable THE STATE’S ... : Antenna Condensed Regular 10 pt. a board meeting in Bentonville, where was CFO at the time,” Stephens said. shop at Wal-Mart that this year, today. Color specs: C82 M40 Y10 K0 Sam Walton’s legendary frugality was on “We got into David Glass’ office, and Rule weight: 14 pt it’s estimated, 7.2 billion people But Wal- full display. it was two guys from Morgan Grenfell Leading: custom Mart boosted Alignment: fl ush right will go to a Wal-Mart store. “I remember we went in and sat at and me. And David had his chair and a Earth’s population is only 6.5 Stephens folding Formica-topped tables. And metal desk, and then he had two chairs Inc.’s cachet billion. they provided you lunch, but if you in front of him. And I had to stand considerably, wanted a cup of coffee or Coke, you up the whole time, and the Morgan ►Already one of the nation’s and its went over and put a dime — it was a Grenfell guys sat down because that’s all leading pharmacies in terms of importance dime then — in the vending machine. the room there was. to the state retail prescription drug sales, Wal- They didn’t pay for your soft drinks; “And that was in the ’80s. They were of Arkansas Warren Stephens they gave you a sandwich,” Warren very, very, very cost-conscious.” Mart introduces a $4 price point has been Stephens recalled. Three decades and trillions of dollars for generic prescription drugs. immeasurable, according to Stephens CEO After the meeting, as father and son in sales later, Walton’s tight-fisted Many other retail chains follow Warren Stephens. drove to Harrison to spend the night approach to management remains intact, “It’s not a once-in-a-generation story; New suit. with a family friend, Jack Stephens Stephens said, despite the recent I think it’s a once-in-a-century story,” contrasted Wal-Mart board meetings York Times report about widespread Stephens said in a recent interview. “These with those of another company bribery by Wal-Mart de Mexico. 2007 things don’t happen very often, and to have he served as a director, Burlington “David [Glass] succeeded as CEO, Sam [Walton] and his family and all the ►The group Human Rights Watch Northern Inc., which provided its and he wasn’t going to let that culture management and all these successes and board members with overnight change. And I know Lee Scott didn’t issues a report claiming Wal-Mart all of that based in Bentonville, Arkansas, accommodations and fine dining. let that change, and I know Mike Duke used numerous tactics, some has just been a huge blessing for the state “He said, ‘I think Sam’s hasn’t let that change,” of which the group said were and the people and, frankly, the image of got it about right,’” Stephens Stephens said. Arkansas. “It’s kind of a joke, but if illegal, to prevent employees from recounted. “People around the world knew where Jack Stephens’ tenure as you ask Mike Duke to go play organizing unions. Such tactics are Bill Clinton was from because of Wal-Mart a Wal-Mart director had golf, their internal rules are said to include monitoring people — and others by then. It wasn’t like they ended by the time Warren so stringent that he’s got to believed to be union supporters had never heard of Arkansas. They’d heard finished school and joined the be real careful that he doesn’t of Wal-Mart, and by then they had heard family business in 1981, but inadvertently break one of and banning talk of unions in of Tyson and they’d heard of J.B. Hunt Stephens Inc. was still helping them by doing something with stores. Wal-Mart dismisses the and Murphy Oil and Acxiom and a whole raise money for the retailer’s Jack Stephens somebody or taking something report as “pro-union” and says bunch of others. astonishing growth. Before that could be viewed as, not a a successful convertible bond offering bribe, but an inducement. associates have the right “to a free “But there’s no way to overestimate the positive effect of Wal-Mart on Arkansas, in the U.S., Stephens Inc. and Morgan “They are just so careful about all and fair unionization vote through Arkansas’ image, the economy of Arkansas Grenfell & Co. of London tried to put that, and I hate this thing that has a private, government-sponsored and the people.” together a European bond offering for happened to them in Mexico because I know how seriously they are taking all process.” Warren Stephens was just a kid, 13 Wal-Mart. $64.95 years old, when the firm founded by his That deal didn’t work out, Warren that. Their U.S. rules — that could never ►After a 2005 discussion on Uncle Witt and run by his father, Jack, co- Stephens said, but the British investment have happened.” global warming with scientists and managed the $5 million IPO. Even adjusted environmentalists, CEO H. Lee for four decades of inflation, that first around the U.S. and in the U.K., they would quite generate the growth that they want 1 YEAR Scott announces Wal-Mart will offering of stock was minuscule compared say, ‘Look, we really think this could be a anymore.” with, say, Facebook’s ballyhooed $104 embrace compact fluorescent billion-dollar company.’” The last work Stephens Inc. did for the billion IPO in May. Even that might have been aggressive Walton family was some estate planning light bulbs in a big way. “The “Quite amazing when you think about salesmanship since Wal-Mart’s annual in the 1990s, “which we were pleased to environment,” Scott says, “is it,” Stephens said. “But it goes right to the revenue at the time was about $33 million. do,” Stephens said. “But Wal-Mart doesn’t begging for the Wal-Mart business heart of a point I’ve made to other people: “And to say a billion-dollar company — really need any equity offerings; they don’t We’ve eliminated the ability of a company model.” Suppliers hesitate, but the well, yeah,” Stephens said. “Kinda sorta.” need any financing to speak of. They issue to go raise $40 or $50 million because it’s But for years, Wal-Mart was able to grow commercial paper, which we don’t really company stands behind its goal too expensive.” at a rate that first seemed unsustainable and do. They really don’t need any investment to sell 100 million a year by 2008. Jack and Witt Stephens already believed then seemed unstoppable. Its annual sales bank to speak of; they can do just about the young company was a good risk — Wal-Mart accomplishes this goal reached $1 billion in less than 10 years. anything.” their Union Life Insurance Co. had loaned “I think we’ve finally found some limit In other words, Wal-Mart outgrew by October 2007. money to Sam Walton to build stores — to the management’s ability to continue to Stephens Inc. years ago. but Warren Stephens says they certainly grow the firm at a 20 percent growth rate,” “We hope a lot of our clients outgrow 2008 didn’t imagine that it would become the Stephen said. “You know, at one time they us,” he said. “That’s what we want — and largest retailer on Earth. ►In the midst of the worst thought it was going to be a billion dollars, to get to be associated with great growth Visit ArkansasBusiness.com/Subscribe “There’s no way. Who would know and then they thought it would be $10 companies. And Wal-Mart is arguably the recession since the Great that? There’s no way,” he said. “When they billion and then $100 billion. And now it’s greatest growth company in our lifetime Depression, Wal-Mart is still would go around and talk to investors about half a trillion: That’s where they can’t and sustained over time.” 50

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WAL-MART at 50 • 47 TIMELINE THE FUTURE OF WAL-MART: 50 continued showing month-to-month sales gains. Why? Company officials The World’s Largest Retailer credit slowed growth in new stores, augmented by a program to remodel existing stores. CEO Marches Toward H. Lee Scott says of the economy, “This is the kind of environment that Sam Walton built this $500 Billion in Annual Sales company for.” ►Having conquered retail, By Mark Friedman grocery, sporting goods and t won’t be long before Wal-Mart Stores toys, what’s next for Wal-Mart? Inc. of Bentonville generates a half- Classified ads, apparently, but an Itrillion dollars in revenue in a single online venture started by the year. It’s close now. For its fiscal year that company in partnership with ended in January, Wal-Mart reported Oodle.com runs into a problem $446.95 billion in revenue, up 5.9 percent when ads from the Arkansas from the previous year. And for Wal- Democrat-Gazette turn up there Mart’s first quarter of this year, the world’s largest retailer reported revenue without the paper’s permission. of $113.02 billion, up 8.5 percent from the same quarter last year. Its profit was $15.7 billion for the fiscal year that ended in January, down 4.21 percent from a year ago. But for the first quarter, its profit was up 10.1 percent to $3.7 billion. ►Wal-Mart Stores Inc. adopts a The future looks bright for continued new logo for its flagship stores, sales growth for the retail chain, which has more than 4,400 stores in the Unites States one that dispenses with the and more than 5,600 locations scattered While domestic sales have flatted out, China is a growth market for Wal-Mart, which already hyphen: Walmart. The corporate across 26 countries. employs more than 100,000 in 370 Chinese stores. name, however, remains “They’ll keep growing because there’re hyphenated. plenty of countries to grow in,” said Howard Davidowitz, chairman of David- “They’ve not had stellar luck with small 135 larger-format stores, according to an owitz & Associates Inc., a retail consulting stores up to this point,” Stone said. But October news release from the company. and investment banking firm in New the smaller stores give Wal-Mart a chance York. “There are plenty of things to add.” to break into some of the larger cities that Room to Grow While the fuel of revenue growth is it hasn’t been able to crack, such as Los President and CEO Mike Duke said expected to come from its international Angeles and New York, he said. in the October analyst meeting that Wal- division, Wal-Mart is positioning itself to Wal-Mart officials, however, have been Mart’s biggest revenue growth would boost its disappointing online sales while pleased with the smaller stores, which come from international sales. continuing to tackle some of the few could compete with the surge of low- “The international business continues remaining areas in the United States that price retailers known collectively as “dollar to be a vibrant growth engine,” Duke it’s not in. stores” that have been snatching domestic said during the presentation in October. “I think you’ll see them going into sales from Wal-Mart. “And the team is growing market share in smaller stores in the United States, at In the United States, Wal-Mart suffered almost every market we operate.” least considerably more than they have through two straight years of same-store It is unclear how a Mexican bribery in the past,” said Ken Stone, an emeritus sales declines in fiscal 2010 and 2011 scandal will affect Wal-Mart’s growth. professor of economics at Iowa State before a modest rebound of 0.2 percent in Shareholders filed a flurry of lawsuits University, who has studied Wal-Mart the fiscal year that ended in January. The shortly after an April article in The since the 1980s. trend continued upward in the first quarter New York Times alleged that Wal-Mart of this year with same-store U.S. sales up de Mexico officials “had orchestrated 2009 In June 2011, the company introduced Wal-Mart Express stores, which average 2.6 percent. a campaign of bribery to win market ►With Michael T. Duke about 15,000 SF and offer groceries Same-stores sales are considered a key dominance.” succeeding H. Lee Scott as and general merchandise. By the end of indicator of a retailer’s health because sales One lawsuit filed by a shareholder seeks president and CEO, Wal-Mart April, Wal-Mart had opened 10 Wal-Mart are compared with stores that have been to recover “the hundreds of millions Express stores. open at least a year. of dollars of financial and reputational enters the market in Chile The smaller outlets give Wal-Mart “With the development of the damages caused by” the retailer’s alleged through its acqusition of a “flexibility in serving customers, especially Neighborhood Market as a medium bribes. “As a result, the Company is now majority stake in D&S S.A., and in rural and urban areas where shoppers format and the Express [store] as a test subject to serious legal liability,” the lawsuit sales surpass $400 billion for the may not have access to larger stores,” the small format, we’re seeing our customer said. company said on its website. respond to those smaller stores,” Karen Wal-Mart said in a U.S. Securities & first time. Another area of sales growth could be Roberts, a Wal-Mart U.S. executive vice Exchange Commission filing on May 17 ►When H. Lee Scott retires as Wal-Mart’s Neighborhood Markets. The president, said in a meeting for analysts that the investigation into its business president and CEO of Wal-Mart first of that kind of store opened in 1998. held in Bentonville in October. practices in Mexico could spill over into In Wal-Mart’s current fiscal year, it plans other areas of the company. Wal-Mart Stores Inc., his environmental They are about a quarter of the size of an 185,000-SF Supercenter. The company to add between 80 and 100 smaller format “could be exposed to a variety of negative initiatives garner some of the has 168 Neighborhood Markets stores stores, which are less than 60,000 SF, in consequences as a result of the matters,” it highest praise. Wal-Mart has across the country. the U.S. It plans to add between 130 and said in the filing.

48 • WAL-MART at 50 TIMELINE 50 continued

cut its energy use, insisted on reduced packaging from its suppliers and increased the efficiency of its trucking fleet by 25 percent. Mike Duke succeeds Scott in the top post. ►Having established firm dominance in the bricks-and- mortar world, Wal-Mart sets its sights on Amazon.com’s place as the No. 1 online retailer. In fact, the company even takes a page from Amazon’s playbook, deeply discounting books and allowing other retailers to sell online via the company’s website. An analyst says this could be a “tremendous bonanza” for Wal-Mart, which had just $1.74 billion in online sales the year before. Amazon, on the other hand, posts $15 billion through the first three quarters of 2009.

2010 ►Writing in the company’s annual report after his first year as president and CEO, Michael T. Duke says, “I was continually impressed with Wal-Mart’s opportunity to lead on big issues in the world. ... We live at a time To better compete with “dollar stores,” Wal-Mart Express stores with an average of about 15,000 SF were introduced in June 2011. Ten of the and in a world that I believe small-footprint stores had been opened by April 2012. truly calls out for Wal-Mart and the work that our two million Still, sales from the international workers in the next couple of years. online sales in other countries. “We have associates do every day.” By division have been soaring. Its sales were “The growth is explosive, and what’s a great opportunity to take [online sales] the way, that employee count is up 15.2 percent to $125.9 billion for its happening in China is that, much like … and build business faster than those equal to about two-thirds of the fiscal year that ended in January. And for in the United States many, many years markets would’ve been able to build on its first quarter of this year, sales were up ago, Mr. Sam brought products to rural their own,” McMillon said in October. population of Wal-Mart’s home 15 percent to $32.1 billion, which was America that customers in those markets Wal-Mart also will attempt to improve state, according to the 2010 about half of the U.S. Wal-Mart’s division did not have access to and brought them its online sales in the United States. Census. sales of $66.3 billion. at prices they could afford,” Eduardo Wal-Mart’s overseas growth strategy is Castro-Wright, Wal-Mart Store’s vice Online Sales the same that made it a retail powerhouse chairman, said in the October meeting. For more than a decade, Wal-Mart 2011 in the first place: a focus on low prices. So In addition to its low-price strategy, Wal- online sales have sputtered. Although ►, 49, is engrained is the “Everyday Low Prices” Mart plans to grow through acquisitions Wal-Mart doesn’t reveal its online sales in promoted to CEO of Wal-Mart’s mantra that it has been reduced to an and opening stores. U.S. Securities & Exchange Commission Sam’s Club division, becoming the internal acronym: EDLP. Wal-Mart said in an October news filings, Internet Retailer, an online retail “We will be an EDLP operator over release that it plans to spend between industry website, estimated Walmart.com first woman and the first African- time around the world,” Doug McMillon, $4.5 billion and $5 billion this fiscal year, sales at $4.9 million in 2011, up 20 percent American to hold the CEO Wal-Mart’s CEO of International an increase of 11.8 percent over the from a year earlier. position at a Wal-Mart business Operations, said in the October meeting previous year, to acquire companies for its Amazon.com Inc. is the leader in online for analysts. international division. sales with $48.1 billion in 2011. And unit. One of the markets for growth will be Not including the acquisitions, Wal- Amazon’s profit margin is vastly greater: ►After holding the top spot in China. Between 2010 and 2020, China Mart plans to add between 26 million Amazon earned two-thirds as much as the Fortune 500 rankings from is projected to add 189 million middle- SF and 28 million SF to its international Wal-Mart in their most recent fiscal years 2002 through 2009, then losing it income households. division. on barely one-tenth of the total revenue. Between January 2010 and January At the end of April, Wal-Mart had 1.04 Wal-Mart managers even agreed the to Exxon Mobil in 2010, Wal-Mart 2012, Wal-Mart opened more than 90 billion SF; of that, 330.8 million SF were online division wasn’t stellar. held onto the No. 1 position for stores in China, giving it 370 at the end of in its international division. “We didn’t have the tools to be able the second consecutive year with April. It planned to hire 160,000 Chinese Wal-Mart also plans to grow through to really compete online the way that $421.85 billion in earnings. That STORY Continued on pg 50 WAL-MART at 50 • 49 STORY Continued from pg 49 TIMELINE other online retailers have been doing,” 50 continued Castro-Wright, Wal-Mart Stores Inc. vice chairman, said in October. was more than the earnings of No. But that is changing. 3 Chevron Corp. ($196 billion) and In June, Wal-Mart shareholders elected No. 4 ConocoPhillips ($184 billion) Marissa Mayer, vice president of local and maps for Google Inc. of Mountain View, combined. Calif., to sit on its board. Her nomination ►Designed by legendary architect fits in with Wal-Mart’s plans to become Moshe Safdie and filled with some more aggressive with online sales. In of the most significant artistic works 2011, Wal-Mart bought the social and mobile media company Kosmix of from the 1700s to the present day, Mountain View, Calif., for $300 million. Crystal Bridges Museum of American Wal-Mart even created a new unit Art opens in Bentonville on 11/11/11. in May 2011, WalmartLabs of San The brainchild of Alice Walton, who Bruno, Calif., to handle social media and e-commerce initiatives for the retailer. It donated from her personal collection opened an office in India in November as well as overseeing a long acquisition 2011 and planned to hire 100 developers. process (that raised eyebrows and And its social media strategy perked hackles among many in the art world), up. In October, Wal-Mart launched an aggressive social media initiative by it is the first major museum focusing unveiling 3,500 Facebook pages, one for on American art to open in 50 years. It almost every U.S. store. receives rave reviews. The move generated praise from social media experts. Customers who “like” the Facebook page of their local store Walmart.com has struggled to compete in online sales with the likes of Amazon.com. then receive specially targeted offers. A Facebook strategy, if successful, could 6 percent of total retail sales, according and a logistics company to even more of add 5 percent in sales to a company, said to Forrester Research Inc., a research a customer-driven company that responds Michael Bolton, the chief technology firm in Cambridge, Mass. In 2011, online to how they want to shop,” Doug officer for Keyora Inc., an e-commerce sales in the U.S. hit $202 billion. By 2016, McMillon said in an April 12 meeting for software company in Oakville, Ontario. Forrester forecasts online sales will have analysts. “What the customers want, we And the timing couldn’t be better for grown to $327 billion and represent 9 will deliver. And we’re going to find a way Wal-Mart because online shopping is percent of total retail sales. to be a low-cost provider in each of those booming. In 2010, online sales in the U.S. “Basically, Wal-Mart is moving from instances so we can continue to grow our reached $177 billion and accounted for just being a company that operates stores business.” 50

ADVERTISER INDEX 2012 50 ►The New York Times reports that Allens Inc. 38 Wal-Mart de Mexico, the largest Arkansas Children’s Hospital Foundation 17 foreign subsidiary of Wal-Mart Stores Arkansas Economic Development Commission 41 Inc., has for years orchestrated a Arkansas State Chamber of Commerce/Associated Industries of Arkansas 37 campaign of bribery among Mexican Arvest Bank 34 officials in order to obtain permits to Coca-Cola Co. 32 build new stores. Questions are raised Crystal Bridges Museum of American Art 28 about whether the company broke First Security Bank 5 both Mexican and American laws by Harding University 30 doing so, and calls are made for a U.S. Henderson Engineers Inc. 33 government investigation. John Brown University 31 ►In its 50th anniversary year, Kendal King Group 19 Wal-Mart ranks No. 16 in Forbes Land O’ Frost 39 magazine’s Global 2000 ranking of McKee Foods Corp. 39 public companies (behind mostly oil Mercy Health Systems 2 companies and banking interests), Murphy Oil Corp. 13 though it is second in terms of overall Northwest Arkansas Regional Airport 35 sales and is the world’s largest private PRN 19 employer with 2.2 million associates. Its Quattlebaum Grooms Tull & Burrow PLLC 18 current annual report shows company Riceland Foods Inc. 51 notched $15.8 billion in earnings on Rogers-Lowell Area Chamber of Commerce 23 net sales of $443.9 billion for the Stephens Inc. 3 fiscal year that ended in January. Since The McLarty Cos./RLJ McLarty Landers Automotive 11 1962 it has returned $101 billion to University of Arkansas 52 shareholders. University of Arkansas at Fort Smith 40 University of the Ozarks 18 50 • WAL-MART at 50

Allens Inc. 38 Arkansas Children’s Hospital Foundation 17 Arkansas Economic Development Commission 41 Arkansas State Chamber of Commerce/Associated Industries of Arkansas 37 Arvest Bank 34 Coca-Cola Co. 32 Crystal Bridges Museum of American Art 28 First Security Bank 5 Harding University 30 Henderson Engineers Inc. 33 John Brown University 31 Kendal King Group 19 Land O’ Frost 39 McKee Foods Corp. 39 Mercy Health Systems 2 Murphy Oil Corp. 13 Northwest Arkansas Regional Airport 35 PRN 19 Quattlebaum Grooms Tull & Burrow PLLC 18 Riceland Foods Inc. 51 Rogers-Lowell Area Chamber of Commerce 23 Stephens Inc. 3 The McLarty Cos./RLJ McLarty Landers Automotive 11 University of Arkansas 52 University of Arkansas at Fort Smith 40 University of the Ozarks 18 WAL-MART at 50 • 51 52 • WAL-MART at 50

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