August 17, 2006

Walmart Shareholders' Meeting 2006

Remarks as Prepared for Delivery

Thank you. It’s great to be here. Please sit down.

Thank you. That means a lot to me.

I appreciate the warm welcome. And I am excited to be back.

Wasn’t it a thrill to see the American Idol, Taylor Hicks?

I love that song of his: “Do I make you proud?”

Let me ask you a question: Does Walmart make you proud?

That’s what I thought.

And let me say that all of you make Walmart proud.

This is my 27th shareholder meeting as a Walmart associate.

I remember my first one like it was yesterday. It was in a small room in Bentonville with about 30 to 40 people.

We’ve come a long way since then. We have seen and done a lot of exciting things.

But let me say, like Rob, I believe that this is one of the most exciting times in the history of our company.

I do not say that lightly. Walmart has been an incredible journey since day one.

In just 44 years, your company has gone from a single store in Rogers, Arkansas to more than 6,500 stores in 15 countries.

And here’s a new fact for you: Our stores now serve more than 176 million customers worldwide every week.

That’s enough customer visits to fill this arena more than 9,000 times over.

Our success did not come easy. We’ve faced a lot of competition over the years.

This was especially true at the start of this company.

It’s easy to forget that 1962 was not just the year of our founding.

It was also the year that S. S. Kreske opened the first K-Mart store … that F. W. Woolworth opened the first Woolco store … and that Dayton-Hudson opened the first Target store.

Who could have predicted that the store with the most humble roots -- from Northwest Arkansas -- would be the one that prospered most?

No one -- unless of course your last name was Walton.

So how did it happen?

How did Walmart earn the privilege to touch and improve the lives of millions of people around this world every single day?

I believe it goes back to two things.

First, change is constant at Walmart.

Sometimes we change because the tastes, needs and expectations of our customers change.

Often we change out of necessity. Sam Walton had to be very creative early on because he didn’t have the capital or the financing that our competitors had.

Frequently we change because we have the vision to change, which I believe is the case today.

My point is that change is woven into the Walmart culture.

We are constantly innovating and experimenting. So we are constantly finding ways to improve and build an even more successful company.

Second, this company is committed to working families.

I like to say that working families are who we are … who we serve … and who make Walmart a success.

Our associates come from working families.

They are seniors who need a paycheck to supplement their retirement income. They are students who want work experience and training.

They are mothers and fathers who want the opportunity to advance their careers and provide more for their children.

These men and women -- you -- are the heart of our company.

Every manager and every leader in our company knows this.

It’s why we care so deeply about Walmart’s 1.8 million associates.

And it’s why we are so proud of each and every one of the 15,000 associates in this arena today.

Working families are also our customers.

We believe that every family -- no matter where they live -- deserves the opportunity to save and stretch their budgets through discount shopping.

This is a unique mission.

Our competitors got their start by building stores in cities and suburbs.

They went where they thought the money was -- the most affluent markets in America.

The result was that working families were being left behind.

Walmart changed that. We built our stores in small, rural communities.

As a result, we have given countless working families the opportunity to improve their quality of life.

And we are bringing that same opportunity to neighborhoods everywhere -- like the West Side of Chicago, Illinois and Breck Road in Liverpool, England.

Walmart has real meaning for working families.

The recent Global Insight study -- which was independently-certified -- found that our U.S. stores save the average American household more than $2,300 per year.

Or think about it this way: Walmart will save that same household more than what they will pay for gasoline over the course of this entire year.

Don’t let anyone tell you that Walmart doesn’t make a positive difference for the working families in this country and around this world.

All of this brings me back to why I am so excited about our company right now.

Walmart is undergoing a transformation. And it’s real.

We are changing more rapidly and more profoundly than we ever have.

We’re building stronger relationships with the working families who are our associates and our customers.

And you know what else? The changes we are making are delivering results for our company.

So how did we begin this transformation? And what are the changes fueling it?

Our transformation came out of a time of tragedy for this country and for the Walmart family.

When Hurricane Katrina struck the Gulf Coast, thousands of lives were lost and countless lives were shattered.

The storm affected nearly 100,000 associates in our company alone.

Despite this devastation, we pulled together.

We responded with the best in our company and the best in the hearts of each and every associate.

We delivered food and water and clothes to families that had lost everything and had nowhere else to turn.

And we took care of our own.

Every displaced associate who wanted to work still had a job with Walmart.

I’m proud of what so many of you did to help the victims of this tragedy in their greatest hour of need.

Let me tell you about Trent Ward. And he’s just one example.

Trent is a loss prevention associate at our Supercenter in Kenner, Louisiana, which is just outside of New Orleans.

After securing the store in preparation for Katrina, Trent rode out the storm and its 150 mile-per-hour winds at a nearby hotel.

The next morning, Trent and an official from the mayor’s office headed to the Supercenter to get supplies.

Three miles and four hours later, the streets became impassable. So they turned around to find another route.

Then they heard a cry for help. It was coming from a local living center.

On instinct, Trent dove into six-foot deep waters and swam to the center.

He found about 100 senior citizens and staff. They were supposed to be evacuated, but help never came.

They were trapped. And they had no drinkable water.

Trent worked with the police to get water on the spot.

Then, over the course of the day, he went back and forth from the Supercenter.

He provided more than 1,000 gallons of water to the people stranded in the living center.

He provided ice to the local hospital.

He also got fresh diapers for mothers and clean socks and underwear for policemen and firefighters.

For nine days, this was Trent’s routine, which was anything but routine.

It was a remarkable display of compassion, courage and sacrifice.

And it was what this company was all about during the Katrina crisis.

Trent … on behalf of all the associates who were heroes during and after Hurricane Katrina, would you please stand?

In the aftermath of Katrina, we began to ask ourselves this question: How can we use our unique strengths to be that company all the time and in all the communities we serve?

We wanted to keep our values intact. After all, they made us one of the most successful businesses in the 20th century.

But we also wanted to change. And we wanted to change aggressively. We wanted to chart a course for the future.

We came up with a plan. And as you have heard today, our plan is in fact working.

That’s why we are strengthening our commitment to it … company-wide.

So today I am going to begin calling our plan -- and the transformation it put into motion: “Walmart Out In Front.”

Now where did we get that? It’s a nod to some of the best advice Sam Walton ever gave us.

He said, “You can’t just keep doing what works one time. Everything around you is always changing. To succeed, stay out in front of that change.”

Our plan to stay “Out In Front” has five pillars.

The first is broadening our appeal to all of our customers.

John Menzer and Eduardo Castro-Wright are doing a great job of leading this effort, along with Claire Watts, Doug Degn and Bill Simon in merchandizing, and John Fleming in marketing.

With more in-depth market research, we are developing a better understanding of our customers.

And our experimental stores are helping with this too.

Our Evergreen Park store in Chicago is helping us better understand our urban and multi-cultural customers.

Our new Plano, Texas Supercenter is teaching us a lot about appealing more to women and affluent customers.

And in the coming months, you will see us build more experimental stores to help us do an even better job of serving Hispanic customers, rural customers and Baby Boomers.

We are also working to communicate more effectively with our customers.

We are putting more contemporary ads on television and new signage in our stores.

This year you will see Walmart advertise in places we never have and many would never expect us to.

We are also continuing to update our merchandise and offer more exclusive merchandise to our loyal customers.

One example is our new urban men’s clothing line -- Exsto. We will be expanding Exsto to 300 select stores nationwide this summer.

I’ll tell you in a little bit about how well Exsto is already doing.

All of this is good for customers because they get the merchandise they need and, as always, at the lowest price possible.

It’s also good for our company because we are broadening our appeal to our existing customer base and attracting new customers into our stores.

The second pillar of our plan is making Walmart an even better place to work.

I just mentioned our Evergreen Park Store in Chicago, Illinois. What a story. 25,000 people applied for 325 jobs.

And this is on top of the store we opened last August in Oakland, California, where 11,000 people applied for 400 jobs.

It’s clear that people want Walmart jobs.

That’s because we offer good jobs. And most of all, we provide opportunities for advancement.

We are fully committed to a diverse workplace. We have a number of programs to make sure we fully represent the diverse communities we serve.

We also invest in our people.

And because we do -- and I truly believe this -- no retailer offers more opportunity to more people than Walmart stores.

We also offer affordable and accessible health care.

Thanks to Susan, Linda and their teams, we have made great progress in this area.

Every associate in the U.S. -- both full-time and part-time -- can become eligible for health care.

So can their children: Every child of a Walmart associate is eligible for health benefits as soon as the parent becomes eligible.

And these benefits are affordable.

Premiums start at just $23 per month anywhere in the U.S.

Some prescription drugs that treat common illnesses like high blood pressure are available at just a $3 co-pay.

And let’s not forget that after one year on a Walmart health plan, there is no lifetime maximum.

Our health care is affordable.

It’s accessible.

And it offers security from catastrophic medical expenses.

This is just another way that we’re working hard to care for our associates, and another reason why people want Walmart jobs.

The third pillar of “Walmart Out In Front” is improving business operations and efficiency.

Tom Schoewe just talked about return on investment and inventory management.

This is a major thrust of ours. And I am very pleased with the success we have had thus far this year.

Doug McMillon and the Sam’s Club team in particular are excelling in this area.

In fact, our return on investment at Sam’s Club is at a four year high.

A lot of this success is due to a partnership between Sam’s inventory team and our information systems division.

What amazes me is the impact we can have on our entire business with something as simple as inventory management.

We are making sure our aisles are clear of clutter.

We’re reducing inventory in back-rooms.

We’re eliminating inventory on the shelves that are out of reach for customers.

And we are shortening the time it takes for merchandise to go from our suppliers to our customers.

Better inventory management means a better customer experience in our stores.

It also means a more efficient business, doesn’t it? Fewer storage expenses, more consistent pricing and lower labor and transportation costs.

Our goal is to have the right product, in the right place, right when our customers need it.

And we have the logistics team to accomplish that.

Let me turn to our fourth pillar -- driving growth in our international business.

Our international division is really growing. Mike Duke and his team are doing just outstanding work in this area.

Last year, when I stood on this stage, Walmart operated stores in 11 countries. Today I stand here with Walmart stores in 15 countries.

That’s impressive. And it’s aggressive.

But listen to this fact: Last year, in the span of just one week, we finalized our purchase of Sonae in southern Brazil and our consolidation of Seiyu in Japan.

In that one week, we added 545 new international stores and 50,000 new associates.

We will continue to be aggressive on the international front. Of the nearly 600 stores we plan to open this year, more than a third will be outside the U.S.

That will include 20 new stores and three new Supercenters in Canada, 18 to 20 new stores in China, and more than 50 new stores in Central America, just to name a few.

We are also looking at new markets.

India is booming. And as Mike found out when he visited potential customers in their homes, the country has a growing middle class.

We look forward to the Indian government making more progress on opening its retail sector to direct foreign investment.

We have other opportunities on the international front, though, especially from a sourcing standpoint.

As our new president and CEO of global procurement, Lawrence Jackson is now leading the effort to make our global supply chain more efficient.

He’s also working to put products made by our U.S. suppliers in more of the international markets.

I have a lot of confidence in Lawrence and his team.

Walmart’s marketplace is the world.

With each store we open, our company has the opportunity to learn and grow.

And let me go back to our mission: We also offer working men and women everywhere the opportunity to improve their quality of life.

The final pillar of our “Walmart Out In Front” plan is the community.

We strive to be a valuable member of every community we serve.

As the largest corporate cash donor in America, your company gave well over $200 million to charity this past year.

But most importantly, we gave 90 percent of it at the local level, where we can have the biggest impact on individual lives.

As I mentioned earlier, Katrina played a pivotal role in sparking the transformation underway at Walmart.

It taught us that we can use our business strengths to solve some of the toughest challenges facing this country and this world.

That’s exactly what we’re doing with our health clinics, isn’t it?

The firms running our clinics tell us that 30 to 40 percent of their patients are uninsured.

And that 20 to 40 percent would have gone to urgent care or to the emergency room, which is the most expensive part of our health care system.

And listen to this: 10 to 20 percent of the patients say that they would have gone without treatment altogether were a clinic not available.

With in-store clinics, we are helping to bring affordable and accessible health care to the communities we serve.

That’s why we are leasing space in our stores for 50 more health clinics by the end of this year.

I am also personally excited about our sustainability efforts. Quite honestly, passionate might be the better word.

Our efforts include a number of initiatives to make Walmart more environmentally friendly.

And they have the added bonus of making us more efficient.

In just a second, I will talk more about our success in the first quarter with sustainability.

But let me just say that sustainability -- and being environmentally friendly -- is not a one-time program.

Sustainability is becoming an integral -- and always will be a lasting part -- of the Walmart culture.

Our “Walmart Out In Front” plan is real.

It is real for the working families who are our customers and our associates.

And it’s real for our business.

In fact, “Walmart Out In Front” is already delivering tangible results.

Let me just go through each pillar and give you some good, hard numbers.

While talking about appealing more to our customers, I mentioned our Evergreen Park store, our Plano store, and our Exsto men’s clothing line.

Well, at Evergreen Park, our sales per square foot are 25 percent higher than other area stores.

At our Plano store, our gross profit per linear foot is 24 percent higher than the average store.

And as for Exsto, the denim sold out in 10 days flat.

I also mentioned that we are making Walmart an even better place to work.

In March of this year, we surveyed associates in 750 stores, clubs and distribution centers here in the U.S.

We had a participation rate of 90 percent. And the results were very, very encouraging.

Compared to a survey we took last June, our associate engagement scores are up across the board by six to eight points.

For the third pillar of “Walmart Out In Front,” I talked about inventory management.

Well, we are getting results there too.

For example, we have reduced inventory throughout our U.S. stores by almost two percent since the end of last April.

And across the company, our efforts resulted in a $2.2 billion benefit.

Our international operations, the fourth pillar, had a superb first quarter.

Our sales were up almost 23 percent.

We had particularly strong sales in China and Brazil, where we had comp increases in the low double digits.

We also had great success in Argentina. And Mexico continues to be just awesome.

In Mexico, our sales were up almost 13 percent and our operating income rose nearly 30 percent during the first quarter.

Congratulations to the international team on an outstanding first quarter.

Finally, let me reinforce some of the facts that Andy Ruben mentioned earlier.

Last quarter, we established a “no idle” policy for our trucks and retrofitted them with high-efficiency generators.

Thanks to these actions, we will save nearly $26 million. We will conserve 10 million gallons of diesel fuel. And we will prevent 100,000 tons of carbon dioxide from entering the atmosphere.

And as part of our sandwich bale program, our waste team collected 150 truckloads of plastic in this first quarter alone.

We recycled all of that plastic, which kept it out of landfills.

It also generated $1.1 million in recycling revenue for the company.

Corporations can be more efficient and more environmentally friendly at the same time.

And we are proving that at Walmart.

It is easy to stand up here, year after year, and say that we had record earnings, record sales, and strong growth in earnings per share.

I feel so fortunate to be able to do that. And any CEO, anywhere in the world, would feel the same way.

But I have to say, for me, this has been one of the most enjoyable shareholder meetings I’ve ever been a part of.

And not just because of the musical you saw this morning from the management team.

I have enjoyed being here -- and I hope you have too -- because what’s going on at Walmart right now is exciting.

And it’s even more exciting to share our progress with the leaders and managers and, above all, the associates who are making this happen.

Walmart is out in front. And you are making a difference -- a real difference -- for our customers, for our company, and for the communities we serve.

Thank you all so much for being here and for all you do every day for our company.