Walmart analysis

Wal-Mart Stores, Inc., branded as Walmart /ˈwɒlmɑrt/, is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. The company is the world's second largest public corporation, according to the Fortune Global 500 list in 2013, the biggest private employer in the world with over two million employees, and is the largest retailer in the world. Walmart remains a family-owned business, as the company is controlled by the Walton family, who own over 50 percent of Walmart.[7]

It is also one of the world's most valuable companies.[8] The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas. Walmart is also the largest grocery retailer in the United States. In 2009, it generated 51 percent of its US$258 billion sales in the U.S. from grocery business.[9] It also owns and operates the Sam's Club retail warehouses in North America.[1][10] In the late 1980s and early 1990s the company rose from a regional to national giant.

By 1988, Walmart was the most profitable retailer in the US[11] and by October 1989 it had become the largest in terms of revenue.[12] Geographically limited to the South and Lower Midwest up to the mid 1980s, by the early 1990s Walmart's presence spanned coast to coast - Sam's Club opened in New Jersey in November 1989 and the first California outlet opened in Lancaster on July 28, 1990. A Walmart in York, Pennsylvania was opened in October 1990 bringing the main store into the Northeast.[13] Walmart has 8,500 stores in 15 countries, under 55 different names.[14]

The company operates under the Walmart name in the United States, including the 50 states and Puerto Rico. It operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada. Walmart's investments outside North America have had mixed results: its operations in the United Kingdom, South America, and China are highly successful, whereas ventures in Germany and South Korea were unsuccessful.

In 1945 a businessman and former J. C. Penney employee, Sam Walton, purchased a branch of the Ben Franklin Stores from the Butler Brothers.[15] Sam's focus was on selling products at low prices to get higher-volume sales at a lower-profit margin. He portrayed it as a crusade for the consumer.

He experienced setbacks, because the lease price and branch purchase were unusually high, but he was able to find lower-cost suppliers than the ones used by other stores. He passed on the savings in the product pricing.[16] Sales increased 45 percent in his first year of ownership to $105,000 in annual revenue, which increased to $140,000 the next year and $175,000 the year after that. Within the fifth year, the store was making $250,000 in revenue. When the lease for the location expired, he couldn't reach an agreement for renewal, so he opened a new Ben Franklin franchise in Bentonville, Arkansas and called it "Walton's Five and Dime."[16][17]

On July 2, 1962, Walton opened the first Walmart Discount City store located at 719 W. Walnut Street in Rogers, Arkansas. The building is now occupied by a hardware store and an antique mall, while the company's "Store #1" — since converted to a Supercenter concept — is located several blocks west down Walnut Street as of 2013. Within its first five years, the company expanded to 24 stores across Arkansas and reached $12.6 million in sales.[18] In 1968, it opened its first stores outside Arkansas, in Sikeston, Missouri and Claremore, Oklahoma.

The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. In 1970, it opened its home office and first distribution center in Bentonville, Arkansas. It had 38 stores operating with 1,500 employees and sales of $44.2 million. It began trading stock as a publicly held company on October 1, 1970, and was soon listed on the New York Stock Exchange. The first stock split occurred in May 1971 at a market price of $47.

By this time, Walmart was operating in five states: Arkansas, Kansas, Louisiana, Missouri, and Oklahoma; it entered Tennessee in 1973 and Kentucky and Mississippi in 1974. As it moved into Texas in 1975, there were 125 stores with 7,500 employees and total sales of $340.3 million.[19] Walmart opened its first Texas store in Mount Pleasant on November 11, 1975.[20] In the 1980s, Walmart continued to grow rapidly, and by its 25th anniversary in 1987 there were 1,198 stores with sales of $15.9 billion and 200,000 associates.[19]

This year also marked the completion of the company's satellite network, a $24 million investment linking all operating units of the company with its Bentonville office via two-way voice and data transmission and one-way video communication. At that time, it was the largest private satellite network, allowing the corporate office to track inventory and sales and to instantly communicate to stores.[21] In 1988, Sam Walton stepped down as CEO and was replaced by David Glass.[22] Walton remained as Chairman of the Board, and the company also rearranged other people in senior positions.

Inside a Walmart Supercenter in West Plains, Missouri In 1988, the first Wal-Mart Supercenter opened in Washington, Missouri.[23] Thanks to its superstores, it surpassed Toys "R" Us in toy sales in the late 1990s.[24] The company also opened overseas stores, entering South America in 1995 with stores in Argentina and Brazil; and Europe in 1999, buying Asda in the UK for $10 billion.