To our shareholders, associates and customers - Building the net generation Walmart
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Financial results
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Walmart delivered solid financial performance for fiscal year 2011. We increased net sales by 3.4 percent to $419 billion and operating income by 6.4 percent to more than $25 billion. Our diluted earnings per share from continuing operations rose 12 percent to $4.18 per share. We continued to deliver a stable return on investment of over 19 percent. We closed out the year with almost $11 billion in free cash flow. And I’m proud that we returned a record $19.2 billion to shareholders through dividends and share repurchases.
These results demonstrate the strength of our underlying business and our dedication to delivering shareholder value. In the coming year, I’m optimistic that Walmart will improve where we need to and continue to build momentum where we’re already succeeding. Our talented leadership team is fully aligned on executing plans to support our financial priorities of growth, leverage and returns.
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Business segments (Read more)
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We were simply not satisfied with the net sales results in Walmart U.S. last year. The team is implementing an aggressive plan to reinforce our commitment to EDLP and to offer a broad merchandise assortment and presentation that’s even more relevant to customers. My top priority this year is to work with Bill Simon, CEO of Walmart U.S., and his team to achieve positive comparable store sales. At the same time, there’s a tremendous opportunity to grow in the United States through supercenters and new formats, such as Walmart Express™, in urban and rural markets.
Under Doug McMillon, CEO of Walmart International, our international segment continued to be a growth engine last year – generating a 12 percent net sales increase and adding approximately 8 percent more selling space through 458 net new units. Walmart International leveraged expenses on a constant currency basis this past year, and we expect improving returns in the years ahead. We are pleased with the progress of the Massmart transaction in South Africa and continue to work on finalizing our acquisition of the Netto stores in the U.K. Our international leadership teams are accelerating organic growth in emerging markets, including Brazil, China, India and Mexico.
I am very pleased with Sam’s Club’s performance and the contributions they’re making to shareholder value. Brian Cornell, CEO of Sam’s Club®, and his team grew sales 3.5 percent, and we expect continued sales momentum this year. Sam’s top priority for this year is attracting new members through improved member experiences.
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Best-positioned retailer (Read more)
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There is no doubt that Walmart is the best-positioned global retailer to address the needs of customers around the world. Our customers remain pressured, particularly in mature markets, about job security and personal finances. In emerging markets, the economic recovery is stronger and fueling a growing middle class. All of this points to the incredible opportunity we have with the Next Generation Walmart and our mission of saving people money so they can live better.
At Walmart, we have so many great strengths to leverage throughout our company. Our new Global Business Processes team is developing and sharing improved processes, such as workforce productivity, across our business segments. Our Global Customer Insight Group will help drive growth by deepening our understanding of consumer trends and creating new analytical tools. I’m also pleased with the progress we’re making in developing the best talent in each market. Recruiting, developing and retaining future leaders is vital to Walmart’s success, and we have a special emphasis on women leaders. This is important because, globally, women represent 50 percent of the available talent and, according to an external study, directly influence over $20 trillion in annual consumer spending.
With customers adopting technology faster than ever, we’re entering an era of even greater price transparency. Our ASDA® price guarantee program is a great example of that transparency. Our focus on the productivity loop helps ensure we drive every day low cost, so we can deliver every day low prices across our business. Walmart U.S. is also leveraging multi-channel innovations like Site-to-Store®, Pick Up TodaySM and Fed-Ex® Site to Store to allow our customers to shop when and how they want. We have a web presence in many of our 15 countries and are working to coordinate those efforts and expand to new markets where we may not even have a physical presence. Through these and other initiatives, we will continue to leverage our resources, lower costs and increase our speed to market.
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Leading on social issues (Read more)
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We continue to play an even bigger leadership role on the social issues that matter to our customers. I am especially proud of how sustainability is integrated throughout our business, and how associates all over the world are involved in this initiative. This year, we’ve published a Global Responsibility Report, expanding the dialogue to a broader range of major issues beyond our environmental sustainability efforts. This is a natural evolution for the company as we work toward a globally responsible view of our impact on the world community.
Our culture is what makes us special at Walmart. The retailer that respects individuals, puts customers first, strives for excellence, and is trusted, will win the future. In particular, it is important that Walmart associates obsess about serving customers every day – listening to them and giving them what they want. Everywhere I travel, customers tell me that they care about quality products at an affordable price, and that’s what we need to deliver to them.
We can and do make a profound difference in people’s lives. At Walmart, we understand this opportunity and the responsibility that comes with it. And not a day goes by when I don’t think about how much our Board of Directors and the management team appreciate the hard work of our 2.1 million associates. Working together, we are building the Next Generation Walmart and making Sam Walton’s vision a reality around the world.
Michael T. Duke
President and Chief Executive Officer
Wal-Mart Stores, Inc.
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