Sam Walton understood how a retailer can make a difference for consumers. This commitment to the customer has helped improve the lives of more than 176 million consumers in 13 countries who shop at various formats of Wal-Mart.
In a year when many economies across the globe are facing a recession, the operating income of Wal-Mart was up 7.3 percent for the year with income from continuing operations up 5.8%. Diluted earnings per share from continuing operations for the fiscal year were $3.16 and increase of 8.2 per cent over the previous year.
Wal-Mart Stores, Inc. posted record sales and earnings for the fiscal year 2008. Total net sales for the Company were $374.5 billion, an 8.6 per cent increase over the previous fiscal year and a record for any retailer. Total net sales increased 8.6 per cent to $375 billion. The Company added about $30 billion in sales, which is equal to adding the annual sales of a Fortune 75 business. Even more impressive, Wal-Mart exceeded $100 billion in sales during the fourth quarter – a first for any global retailer.
Wal-Mart today operates more than 7,000 stores across the globe and believes that in many cases, it already is part of the solution to some of the most complex challenges in the World today. This case study analyses the growth of Wal-Mart and the components that have enabled it to become a colossus.
The birth of Wal-Mart can be traced back in the 1940s when Sam Walton was working with JC Penney, just before graduating from the University of Missouri in Columbia. During his employment there, Sam met with James Cash Penney, the department store’s founder and was further enthused towards retailing.
In September 1945 Walton acquired a franchise of Ben Franklin in New port, Arkansas. The variety store was part of a chain operated by the Butler Brothers a regional retailer. After three years, Walton increased annual sale from $80,000 to $225,000 by 1948. However, the landmark PK Holmes declined to renew the lease on favorable terms and Walton was forced to relocate before the end of 1950. Walton was prepared to purchase a five and dime from Jim Dodson in Siloam Springs, Arkansas but the two were $5,000 apart on agreement on a purchase price. On May 9, 1950, Walton purchased a store Luther E Harrison in Bentonville, Arkansas and opened Walton’s 5 & 10.
By 1962, the number of stores increased to eleven. At that time discount stores were a success and this inspired Walton to open the first discount store in Rogers, Arkansas that year. The stores now came to be called Wal-Mart. By 1967, the company grew to 24 stores across the state of Arkansas and had reached $12.6 million in sales and by 1968 the company opened its first stores outside of Arkansas. Over the year the chain continued to grow and by 1974 there were 78 stores. As the store continued to grow, an inter store computer network was also developed during this period.
By the company’s 25th anniversary in 1987, there were 1,198 stores with sales of $ 15.9 billion. Also, in the year the company completed its satellite network, a $24 million investment liking all operating units of the company with their Bentonville Office via two way voice, data, and one way video communication. At the time, this was the largest private satellite network and allowed the corporate office to track inventory sales, and send instant communication to their stores. Continuing their technological up grades, they had equipped 90% of their stores with barcode readers by 1988 , to further assist in keeping track of their large inventor.