Message from Sam Walton

My good friends, we were honored in Chicago this week at the National Hardware Show at a banquet for manufacturers and retailers where I was awarded a large trophy and acclaimed the “Discounter of the Year.” This was the event that was originally scheduled last January, but was cancelled, due to that big January Chicago snow storm. It is significant recognition, and as we know in this Company, it is a team effort and has been for many years. Again I want to thank you all sincerely from the bottom of my heart for your support and efforts through the years. That’s what has made Wal-Mart, and will continue to, in the future. Our outstanding people and their dedication to consistently perform above the norm. Let’s not lose that tremendous advantage.

Another Good Quarter

We now have six months of the year in, and we’ve had another good quarter. Our numbers that should be released this week are respectable, though not as good as we normally do. However, in face of the present economic climate and the inflationary factors present, I’d say we can be real proud of this second quarter. We were up about 43 percent overall in sales – $291,685,000 – for the second quarter, and about 36 percent in net profit. Sales in comparable stores were up 16.9 percent in July, in comparison with 19 percent year to date. Many of our competitors are not faring so well – notably, J.C. Penney and Sears, both of whom are having losses in volume and profit over last year. Our discount store industry and its members, such as K-Mart, Caldor, Heck’s, TG&Y, etc., are performing above most retailers.

The last six months – and this third quarter – will be tough for us, but our sales continue reasonably strong. We are planning for slowing sales, but for Wal-Mart – a 10 percent sales increase is a slower pace. That will be our goal on comparable stores this last six months and corresponding profit percentagewise to sales.

Stay in Stock

Let me take a minute to voice the largest concern I have today about our Company. It is the overall importance of staying in stock at store level on all basic seasonable merchandise. And when I say in stock, I mean the 94 percent range of being in stock – not any higher or lower – on a consistent basis. What a challenge that is for us all! We all know we don’t approach this figure at this time for various reasons. I’m convinced, though, we will need this kind of performance for our customers for us to compete effectively is the 1980s

We’re one of the real holdouts in retailing on decentralized merchandising. We leave almost 80 percent of the ordering responsibility with our management teams and associates at store level. We’ve contended that we need their total involvement and interest in our merchandising to really be effective, and that each of you at store level can tailor and order your needs consistently for your particular store better than having it done centrally.

As I see it at this time, we all need to rededicate ourselves to making our present merchandising system work. We need to all close ranks and do a better job throughout our Company in every area that affects our merchandising in-stock position. And these areas include our Distribution Centers – receiving and shipping the goods on schedule; our Rebuying Department – keeping those distribution centers stocked at that 94 percent level; Transportation – our trucking fleet and Traffic playing their important role; Data Processing – providing necessary information for us; Merchandising Department – planning and ordering the assortments and keeping the manufacturers prepared to ship promptly. Then lastly and most importantly, the process of ordering our basic and assembly orders at store level by our department managers and management. I would be remiss not to mention the very important role played by those Receiving and Marking Crews in each store where the rapid processing, receiving and marking, is so essential in getting that merchandise on sale as quickly as possible.

A Total Team Effort

So it’s really a total team effort – this thing of being 94 percent in stock for our Wal-Mart customers. Really, all 19,000 of us have a responsibility to make it happen. However, so much of the responsibility lies at store level, that I would make a special appeal once more to all of our very fine store associates to rededicate themselves to making our system of replenishment really work at this 94 percent level during these last six months. It must start by staying on our ordering schedules, counting accurately, ordering according to rate of sale and lead time, and keeping your books updated with price changes, markdowns, markups, etc. To do all these things effectively you must be trained, interested, and have the total support and involvement of your Assistant Managers and Managers. That merchandise meeting with the department managers weekly is a must in every store. I’ve got a feeling we can do it. I pledge you we’ll do all we can to support you at every other level in our Company. We’ll let our customersdecide. After all, they vote on us every day. Let’s work hard not to disappointthem.

Thanks again to all of you for all you’re doing to help.