To Our Shareholders, Associates and Customers:

I'm fortunate to have assumed my new role as president and chief executive officer at this time in Wal-Mart's history. Our Company is so well positioned for today's difficult economy and tomorrow's changing world. We have an exceptionally strong management team, able to execute our strategy, perform every single day, and deliver results. This success is a tribute to the hard work of many people, but especially Lee Scott. We appreciate Lee for his service and outstanding leadership of our Company.

At Wal-Mart, we're very pleased with last year's annual performance, especially relative to competitors. Our U.S. stores are delivering faster checkouts, a friendlier shopping experience and cleaner presentations. Simply, they are just operating better. We are on the move internationally and today have more stores in more markets. People who have never shopped with us previously are now loyal customers. Sam's continues to show the distinct value of club membership.

We have so much to be proud of at Wal-Mart when it comes to last year's financial results. Earnings per share from continuing operations were up 6 percent to $3.35. We delivered strong returns to our shareholders through almost $7.3 billion in share repurchases and dividends. Total net sales increased 7.2 percent, as we helped customers save money, so they can live better.

Operating Segments Deliver Strong Performance

Each operating segment stepped up and contributed to our strong performance. Walmart U.S. had an extraordinary year by driving home our price message and driving up customer experience scores to record levels. At Wal-Mart International, currency fluctuations affected our reported sales, but overall results were solid. Doors continue to open for international growth, such as with our strategic acquisition of Distribución y Servicio – D&S – in Chile. This also continues to be a great time to be in the warehouse club segment. Sam's Club grew sales 5.6 percent for the year, and is further strengthening the member experience.

Continued Focus on ROI

Our team is very focused on working to improve return on investment (ROI). Our capital efficiency process drives expansion decisions. The Company has stepped up investments in technology to maintain leadership in an area that always has been a driver of our success. These efforts will contribute to Wal-Mart's increased efficiency through our use of capital, technology and logistics.

The fact is, Wal-Mart's performance last year would be considered strong at any time and for any retailer, and certainly during one of the most difficult global economies in decades. This tremendous success is a real tribute to our culture and every one of our 2.1 million associates around the world. Retail was tested this past year, and our associates made the difference for Wal-Mart shareholders.

Already this year, the global economy continues to be challenging. But even with this uncertainty, we're optimistic about Wal-Mart's opportunity, because we are so well positioned. Our customers expect us to offer the lowest prices. We simply cannot forget that what we do makes a difference in their lives.

Price Leadership Drives Global Performance

There's no doubt that we are bringing to life our global vision for Wal-Mart. Our strategy is working, and we're building more and more momentum. We will maintain our focus on price leadership in every market, whether we're talking to the working mom in São Paulo or the businessman in Tokyo.

As vice chairman responsible for Wal-Mart International, I saw firsthand how much our business model resonates around the world. I make it a habit not only to walk our stores, but also to visit our customers in their homes. I remember one woman's tiny house in Costa Rica. She told me that everything she needs is at our Pali store. We owe every customer our very best – lower prices, higher-quality goods and a better store experience.

We also must continue assuming the larger role that Lee helped us realize we can play in the world. People have been asking me, "Mike, during these difficult times, can we afford to do things like sustainability, responsible sourcing, associate opportunity and health care?" Every time my response has been, "We can't afford not to." At Wal-Mart, we have an opportunity and a responsibility to lead in the world.

Sustainability is a permanent part of our culture. It helps us remove waste, lower costs and provide savings to our customers. There will be no part of this Company anywhere in the world that does not contribute to making Wal-Mart more sustainable.

One way is through responsible sourcing. Last year, I stood in front of more than 1,000 suppliers in Beijing, China and committed our Company to building a more socially and environmentally responsible supply chain. We'll make a difference in responsible sourcing that no other retailer and no other company can make.

Job Creation and Advancement

We're also offering opportunities for associates. Last year, Wal-Mart created 33,000 jobs in the United States and thousands more in our other markets. These good jobs offer competitive wages and benefits and the opportunity to advance. We plan to create tens of thousands of jobs again this year. And, we'll continue to be a force for inclusiveness everywhere we operate. We need our associates more than ever.

We will find ways to make a difference through our participation in debates on issues, including energy, health care and trade. At Wal-Mart, we won't sit back and say, "That's someone else's job." We have a role to play. Wal-Mart has great relationships with governmental leaders in many countries around the world. Whether, for example, it's with Democrats or Republicans, or President Obama's new administration, Wal-Mart will play a role.

My first day in the new job fell on the first Sunday in February. So my wife Susan and I took a few hours to move some boxes and belongings into my new office. But we didn't replace the carpet, furniture, or even Sam Walton's old wood paneling. With the exception of a couple of pictures on the wall, we kept it as the same office in which Sam Walton, David Glass and Lee Scott made the decisions that built our great Company. I could not be more honored or more humbled to sit at their desk now.

Although there will continue to be many changes at Wal-Mart, there is one thing that will never change – our culture. Wal-Mart associates operate with honesty and integrity. We respect people as individuals and strive for excellence. And, most important, we obsess about our customers and ways to serve them better than ever before.

I'm certain of our strategy, our opportunity and our ability to perform as individuals and as a Company. By executing well and adhering to our values, we plan to distance ourselves even further from the competition and do even more to "save people money so they can live better."

Michael T. Duke
President and Chief Executive Officer,
Wal-Mart Stores, Inc.