Message from Sam Walton

Our first quarter results were real good, as predicted. Sales were up 45% for the quarter, and best of all, our old stores gained 24.7% in sales...the highest quarterly sales increase ever reported in our Company's history!

It's interesting to analyze what caused this phenomena during this February-March-April period. One factor has to be that we are much better balanced on merchandise this year than last year. Especially is this true on basic merchandise...and our inventories are cleaner, in my opinion, than last year. The best thing about our report is that our 25% sales increase has been achieved with only a slight increase in dollar inventory investment.

Another real plus going for us has been our aggressive V.P.I. and total promotional program that really got cranked up about last May or June.

So we've had a great first quarter, but let's not let it make any of us think it won't be getting a great deal tougher real soon as we go through this 1976 year. In fact, I was in New York last week, May 17th, meeting with some of the leading retail company executives, and they reported a definite slowing in sales in May. This has also occurred with us during the past three weeks. Our sales increases have been cut in half, and they seem to be getting increasingly more difficult each week. In fact, if it had not been for Phil Green & Company, District 13 Big "Bread & Milk" Sale in the Little Rock area, we would have been hard-pressed to have had a 10% increase last week. Reports are that brother M.I. Dillard and Green planned the Sale... brother Hawks is taking credit for same... but that brother Dillard will assume the markdowns... transferred naturally by his good friend, the leader of the Central Region, Mr. Hawks. So, as we've predicted, our work's cut out for us for the rest of the year. Each of us will have to pull all the stops on any kind of merchandise idea that will help us sell more at a good gross profit.

We're agreed here at Bentonville that our competitors have all improved greatly over the last two years. And I'm sure all of you associates agree, that have been price shopping their stores. We see it throughout our territory... the Alcos – Magic Marts - TG&Ys – Howards - Matt-Cos - Ben Franklins – and the Gibsons have all tremendously improved their operations, and offer Wal-Mart greater competition than ever before. As for the K-Marts, we've always contended that they are tough.

So let's meet these challenges head-on. Let's review some of the basic ingredients that have to do with keeping Wal-Mart Number 1, not only in the Mid-South, but nationally, as well.

1. Be a friendly store... from the front door throughout every department. A friendly, sincere smile or greeting or a polite "thank you for shopping with us". What a priceless ingredient for our success, and I know we do this as well, or better, than anybody in our business. Let's keep it up.

2. Keep in BASIC MERCHANDISE and seasonally right on our assortments at all times. As a Company policy, let us always strive to be as near 100% in stock on every basic item as possible, day after day. Let our goal be to at least be 95% in stock, regardless of what we have to do. Let's figure out a way.

3. Somehow, let's all work like never before to always have every item we advertise all during the Sale period. I know how hard it is, but if each of us in every store plans better... farther ahead... and even if we have to buy an item locally at a much higher price in order to have an advertised item, let's buy it and have it... regardless! Our customers will appreciate it and will keep coming back. We have not done a good job in this area as a Company, and now's the time for us to get right.

4. Don't make our customers wait and stand in line. Never disappoint a customer in any way. Customering to our cashiers and our customers, I'm sure this is an area that can be improved in every store. Good, friendly, fast service on the registers... Let's have each store discuss what we need to do tomorrow to improve in this area.

5. Tighten up and make our Loss Prevention program work throughout our Wal-Mart World. Let us all support our Loss Prevention director, Jack Cole, to the fullest, from top management down. I would encourage an active Loss Prevention Committee to be functioning in every one of our stores, and that it be totally directed by our associates without management being represented. That all of us work harder than ever to eliminate the shoplifting and stealing on the part of our customers, and more importantly, that we purge our own ranks of the thieves and crooks as they become known. It's hard to

believe, but I'm convinced that half of our shrinkage is internal, and management's policy is, and will continue to be, that whenever the thieves are recognized, they'll be not only discharged, but prosecuted to the fullest extent, as well.

6. Let's adhere to our twin policy statements... two basic tenets for our past and future success. Never disappoint a customer in any way. Customer Satisfaction Guaranteed. You... me... we all must stand by this guarantee... we've given our word. Secondly, Wal-Mart must be the price and value leader in every community we serve. Consistently, we have to be as low, or lower, on same items as any store in town. Two very important planks in our platform.

Our list could go on and on. I know many of you can add to it, as you have so often demonstrated your interest in our program at many of the store meetings that I've been privileged to hold with you. But let's concentrate for the moment on the six we've outlined. Each of you in your own meetings can set up some additional priorities and I know you will.

What a pleasure it is being associated with all of you. I count my blessings often when I realize what a great bunch of people we have in our Company.

So let's all get after our individual areas of responsibility for the balance of 1976; and regardless of our competitors, or the economy, or the politicians... I'm sure Wal-Mart will again come through on top, and we'll have another banner year in 1976.

As a parting reminder, did you know that over one million dollars was contributed to our Profit Sharing program last year by your Company?

Did you know that the average associate received $425 in his or her Profit Sharing account last year and that was equivalent to 20? an hour for every hour of work last year by the average associate? What was better is that it's being saved for you... put in a trust fund for you... half of it will go into Wal-Mart stock, and in a short time it is fully vested to your account, and hopefully, if we continue our partnership for another 10, 15, or 20 years, you could accumulate a very substantial sum of money in your account. Providing... we continue to improve our stores, and in taking care of our customers, we in turn, take care of our own futures.

The Orient trip will have to come later. It was a great experience. Right now I'm more concerned that we get our stores and our programs shaped up for the coming tough months ahead.

Let us know what we can do for you here in Bentonville, as our only reason for being here is to support each of our Wal-Mart stores.

Thanks for listening.