Wal-Mart defines its three-pronged future

Discount Store News, June 19, 1995 by Don Longo

FAYETTEVILLE, ARK. -- During a shareholders' meeting light on news and numbers and heavy on associate recognition, Wal-Mart executives clearly defined the retailer's three-pronged future: grow domestically with supercenters, become the dominant retailer in North America and expand Wal-Mart's warehouse club and supercenter concepts to South America and the Pacific Rim.

After 97 consecutive quarters (since becoming a public company 25 years ago) of sales and profit growth, the future, according to president and ceo David Glass, "is not what it used to be. It's going to be a heck of a lot better."

Despite that optimistic assessment, the company's stagnant stock price continued to be the focus of shareholder concern at the meeting, attended here at the University of Arkansas' Bud Walton arena by more than 17,000 people, including more than 3,000 associates representing every Wal-Mart store in the world.

Glass admitted to being at a loss to explain the stock price, but assured shareholders that "if we continue to do well, the stock will track our performance."

Perhaps in an attempt to lower the usual high expectations of Wall Street, Glass expressed skepticism about the company being able to crack the $100 billion sales barrier this year. "We're at $82 billion now," Glass said. "We'd have to add $18 billion in sales in one year" to achieve that goal.

The late Wal-Mart founder, Sam Walton, had declared $100 billion an achievable goal by the year 2000. Wal-Mart sales grew by more than $15 billion in 1994, a 22.5% increase. A similar percentage increase this year would bring total company revenues to $101 billion in '95, beating Walton's deadline by five years.

Glass described Wal-Mart's supercenters as the fastest growing division and the one that will provide the lion's share of company sales growth in the future. Mark Schwartz, senior vp for operations, said the current 165-unit division will end the year with about 240 supercenters. J.J. Fitzsimmons, vp of finance, pegged the future potential store count of supercenters in the United States at between 1,200 and 1,500. That would be roughly equivalent to the number of conventional discount stores Wal-Mart operated in '90.

Wal-Mart will export its retail concept internationally "where the greatest opportunities exist," Glass said. A Sam's Club recently opened in Sao Paulo, Brazil, and a unit will open next month in Buenos Aries, Argentina. About 10 Sam's Club and supercenter units will open in each nation before Wal-Mart decides if further expansion is warranted, he said.

International division president Bob Martin noted the improved results in Canada. The 122 stores were doing between $75 and $80 (Canadian) per sq. ft. in sales when they were acquired from Woolco last year. Now they are generating $160 per sq. ft., and Martin expects productivity to reach $200 per sq. ft. this year.

Wal-Mart continues to pursue its environmental program. Innovative energy- and cost-saving stores are due to open this fall in Moore, Okla., (a supercenter) and City of Industry, Calif. Like the first environmental unit, which opened last year in Lawrence, Kan., the second-generation demo stores are being designed with advanced energy systems and building materials.

Glass summed up the optimism in typical Wal-Mart fashion: "Wal-Mart represents 14% of GAF sales in the United States -- more than any other company has ever done. That's an opportunity because there's still 86% available for us to go after."