Message from Sam Walton

We’ve just completed what has to be the best year-end meeting with our Managers and Assistant Managers and their spouses ever. The emphasis was on merchandising. In fact, it was officially declared by all present that 1979 had to be the "Year of the Merchant" for Wal-Mart.

Our goals and objectives were very clearly spelled out by both Mr. Shewmaker and Mr. Glass, our two very effective top management officers, both of whom have contributed so much to Wal-Mart in 1978. We're on the line for $1,100,000,000 in sales, 21.2 percent expenses, 6.7 percent markdowns and 1.6 percent shrinkage and a 7.2 percent pre-tax profit for 1979.

Personally, I think we may beat that 1.1 billion figure slightly, and I'd like to see us accordingly reduce our expenses to below 21 percent, due to increased productivity. Incidentally, regarding productivity, the experts say that increased productivity is achieved by working smarter, not harder.

We've about wrapped up 1978, and although the figures aren't official yet, it appears that we've again broken all our past years' records in both sales and profits. Sales, with the $12,000,000 contributed by the Hutcheson Shoe acquisition, will be about $900,000,000, up 30 percent. We think at this time that profits will be increased by 35-38 percent range.

We can all be mighty proud of what was accomplished in 1978 by our Wal-Mart team. It couldn't have been done except for 100 percent support of dedicated, caring, involved Wal-Mart associates throughout our Company.

Wish all of you could have attended our merchandising show at the Manager/Assistant Manager Meeting. It was so well done. You would have been mighty proud of the excellent presentations in that five-day period made by our buyers and merchandisers. You wouldn't believe that a complete Wal-Mart store – merchandise and fixtures - was set up in only 1 1/2days, but they did it. It was another example of people working together-our Merchandise Department, operations and our suppliers-and not knowing it couldn't be done.

Let me share some of our common goals with you for 1979:

1. Better basic merchandise management. Let's all shoot for a 95 percent in-stock position this year, both in our Distribution Centers and at store level. We'll all have to really work smarter and together to achieve this goal. I'm convinced that if we do this one thing, we'll get at least a 15 percent sales increase in comparable stores, rather than the 10 percent goal we've set for ourselves. Let's all work on this one-at store level-in each department- in our distribution centers and in the merchandising department.

2. We've all vowed to cut our shrinkage (unknown losses) from 2.1 percent of sales to 1.6 percent of sales next year and divide the saving -50/50- with each of our associates throughout the Company. Ask your manager or supervisor about our new shrinkage incentive plan for 1979. It's great and can earn all of us a nice cash bonus at year-end, plus more profit sharing and Wal-Mart's profits as well.

3. FRIENDLY CUSTOMER SERVICE- Let's be the "friendly" ones in '79, even more than in the past. Let's be friendly, helpful, and never let a customer get upset with us because we like our jobs and Wal-Mart, and we work as a team, helping and listening to one another. What I'm saying is that we reflect daily our own attitudes to our customers and friends, and I hope we all manage and work with one another so well this year that we enjoy our jobs, are challenged by the opportunities we have in Wal-Mart-and will cause real "Customer Satisfaction."

4. Let's vow again to make our "Bottoms Up" program for communication and listening work. We should all, throughout Wal-Mart, hold regular meetings to discuss our programs, your jobs, our problems, and our correction of errors philosophy, plus some of our very best suggestions for improving our Wal-Mart Company have come from our associates. Let's continue to listen and let those ideas percolate through and give them a try.

I'm reminded that our fine associates over at the Distribution Center II in Bentonville have recently on their own figured out a way to save two or three days in processing our assembly orders. How about that one? No way to measure what that will mean to all of us. So let your ideas and suggestions flow. Set up a suggestion box if you want to, or do it in your talk sessions, but let's vow to communicate and listen to one another even better in 1979.

5. Housekeeping and Store Standards. Much has been done in this area, but it's most important. Our customers like and demand today a clean, neat, tidy store in which to shop. Ours must be that way. This also ties into our new insurance program. We've had average insurance losses in our stores of .4 percent of sales -last year an average of $20,000 per store -an unthinkable amount from customer liability claims and workmen's compensation claims alone. Since we're self-insured, I know by training and all of us being watchful and careful about accidents, this can be cut in half. Let's talk about this one, too.

Many other important subjects were covered at our meeting. I'm sure your managers and assistant managers will be reviewing all the above, and more, with you shortly.

Wal-Mart is the Number One retail chain in the U.S. today. Our record for the last three years proves it. Our future and opportunities have never been brighter. I've never felt better about our Company, and our capacity to continue to grow and improve than I do at this start of our "Billion Dollar Year of 1979." Together, we'll continue to build a company and a future for ourselves and families of which we can be proud.

Let me share with you the last paragraph of a recent report from The Value Line Investment Survey, a highly respected financial publication:

"What makes Wal-Mart run so fast? It's a combination of (1) location. Wal-Mart aims to operate the largest general merchandise store in small towns with populations of less than 25,000; (2) distribution. Both speed and savings are achieved by restricting store openings to a 400-mile radius of distribution centers at Bentonville and Searcy, Arkansas; (3) tight pricing. Wal-Mart moves quickly to price competitively, promote extensively. These are the three factors that have skyrocketed sales from $21 million to about $875 million, earnings from $600,000 to an estimated $27.5 million – in only ten years...

"Look for continued 'supergrowth' in the next 3-5 years. A new study by the Census Bureau predicts that the South and West – Wal-Mart territory – will grow twice as fast as the north through to 1999."

I agree with the above, except that writer left out the single most important ingredient from our Wal-Mart Formula – PEOPLE. As our President, Jack Shewmaker, stated so well at Tan-Tar-A, "Our people not only make the difference – they are the difference."