Walmart Culture

Wal-Mart's Culture

The corporate culture of Wal-Mart is one of the biggest contributing factors that make it one of the world's most admired companies. When Sam Walton founded the company, he instilled in his people and his business a belief system that is still very much in place today.

From the three basic beliefs to the sundown rule, we respect our customers, Associates and suppliers and strive to treat them as we ourselves want to be treated. In building and nurturing these relationships, as well as serving the communities where we live, we've helped build a better business-one committed to excellence.

To our shareholders, associates and customers:

Last year, Wal-Mart Stores, Inc. delivered both record sales and earnings from continuing operations. We also stepped out and took on some of the toughest challenges facing the communities we serve. But we did not achieve these things while doing business as usual.We did them during a period of perhaps the most rapid and profound change in our Company's history. With our transformation plan, we are committed to staying "Out in Front" of the changes around us.

This success is a tribute toWal-Mart associates around the world, and the culture they live and carry forward every day. At Wal-Mart, we save people money so they can live better. We are proud of that purpose, and I am proud of our associates, our Company, and the results we achieved together this past year.

Record Sales

When it comes to the fifi scal year's fifi nancial results,Wal-Mart again delivered solid performance.We had record net sales of $345 billion, an increase of 11.7 percent over fifi scal year 2006. Our net income from continuing operations rose 6.7 percent over last year to a record $12.2 billion. Earnings per share from continuing operations were $2.92.

I am also very pleased with our results inWal-Mart's International division, headed by Mike Duke. Led byMexico and increasing momentum at Asda in the United Kingdom, international sales increased more than 30 percent to $77 billion for the year. Doug McMillon and his Sam's Club team also turned in a solid performance, with sales growing 4.5 percent for the year. For the sixth quarter in a row, Sam's Club grew operating income faster than sales.

Of course, there were a couple of disappointments. In particular, total U.S. comparable store sales were 2.0 percent last year, which was below our plan. However, theWal-Mart Stores division, led by Eduardo Castro-Wright, continued its trend of improving labor productivity and inventory management. The U.S. team also delivered an increase in return on investment. Considering our goal was only to have flfl attened the downward trend by the end of the fifiscal year, an increase in ROI is a great accomplishment for Wal-Mart U.S.

Unlocking the Value

At Wal-Mart, our growth has been guided by a strategy of focusing our fifinancial and human resources in areas where we can unlock the most value. In our International division, we call this approach "major in the majors."Our results clearly demonstrate that this is the right strategy.

Last year, we opened the doors to seven newWal-Mart Supercentres in Canada. The response from our customers has been excellent, and we plan to open 21 new supercentres this year.We increased our ownership stake of Seiyu in Japan to 53.3 percent. Seiyu's total comparable store sales for fifi scal 2007 were positive for the fifi rst time in 15 years. We increased our stake in CARHCO to 51 percent, and we renamed CARHCO Wal-Mart Central America. We also added 120 new stores in Mexico and are very encouraged by the performance and continued growth opportunities for all six store formats there.

Asda's turn-around strategy continues to deliver results. The team improved the basics, introduced a new store format, and upgraded several departments.

At the beginning of fifi scal 2008,we announced an investment in Trust-Mart, a leading hypermarket operator with 101 retail stores in 34 cities in China. This brought additional scale to our China retail business as we develop a foundation for greater long-range business opportunities in China.

Exiting Germany and South Korea last year was the right decision, and we have redeployed resources from those countries to other critical areas of our International division.

Customer Relevancy

In our stores and clubs last year, we spent a lot of time, energy and resources to better understand the people we serve. We wanted to know who shops our stores and clubs and who does not; what type of merchandise they want and what they do not; what they value most in the store and club experience and what is less important. As a Company, there is no question in my mind that we understand our customers better today than we have in years, and we understand them all around the world.

In working to broaden our appeal to our customers, we moved too quickly in the rollout of some of our fashionforward apparel in the United States.We are making adjustments this year to improve our core basics. We continue to strive to make sure every Wal-Mart store is a "Store of the Community"- one that reflflects the individual needs of each neighborhood we serve.

The three-year plan launched by Eduardo last year is providing momentum to drive returns and growth for Wal-Mart U.S. I am confifident that these changes will contribute to continued improvements in our U.S. stores.

Giving our associates the tools and opportunities they need to be as productive as possible also is critical to improving our operations and effifficiencies. I am very pleased that our Company has delivered workforce productivity gains in every quarter of the last two years. And there are a lot of other changes we can make - and have been making - to improve the productivity of our core business.

Taking Care of Associates

Of course, the most important part of taking care of customers is taking care of associates. They are the point of contact for our customers in the stores.

Every year, Wal-Mart creates tens of thousands of jobs throughout the United States, many of them in neighborhoods that desperately need economic opportunities. These jobs pay competitive wages and offer good benefifits.We are also proud of the fact that 90 percent of U.S. associates have health coverage, and Wal-Mart insures more than 1 million lives. We are committed to affordable and accessible healthcare.

In order to continue to attract and retain excellent associates, we are listening to them - especially our valued long-term associates - about

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