Named for its founder, Sam Walton, Wal-Mart Stores Inc. (WMT) has become the world’s largest public corporation by revenue, owning and operating a chain of large, discount department stores. Beginning in 1962, Sam Walton first opened his doors in Rogers, Arkansas as Wal-Mart Discount City. Shortly thereafter, the company’s popularity and success began to grow.
Sam Walton began his retail life in June 1940 when he began work at a local J.C. Penney store in Iowa. For more than a year-and-a-half, Walton remained with the company learning the ins-and-outs of the retail business, honing his business skills. In 1945, Walton befriended Edward Burgess Butler, founder of the regional five-and-dime stores Butler Brothers, in which Walton would later be a franchisee.
Butler Brothers, which ran variety stores throughout Arkansas, offered a store under the operating name of Ben Franklin Stores to Walton. Upon expiration of the franchise contract, Walton moved his store to Bentonville, Arkansas and called it Walton’s Five and Dime. It was here that Sam Walton first enjoyed success in his business venture.
With the opening of Wal-Mart Discount city, the company began to grow exponentially as the business savvy Walton marked-up his merchandise on a lower percentage basis than other retailers, attracting more customers with lower prices. By 1967, Walton had expanded the company to 24 stores throughout the state with revenues totaling nearly $13 million. The following year, the company opened its first stores outside of the state with one in Sikeston, Missouri and one in Claremore, Oklahoma.
In October 1969, the company became incorporated as Wal-Mart Stores Inc. and was headquartered out of Bentonville, Arkansas, along with the company’s first distribution center located there as well. By the end of the following year, 1970, Wal-Mart was operating 38 stores, with more than 1,500 employees generating more than $44 million in annual sales.
As the company continued to grow internally, Wal-Mart decided to go public three years after incorporating themselves. In 1972, the company was first listed on the New York Stock Exchange (NYSE) under the ticker symbol WMT. Prior to being listed on the NYSE, Wal-Mart had been trading over-the-counter (OTC) since 1970. During this time, Wal-Mart was operating stores in five states, including Arkansas, Kansas, Louisiana, Oklahoma and Missouri.
The company first surpassed the $1 billion sales mark that year, 1972, becoming the fastest company to ever reach that milestone. Over the next three years, the company would enter into Tennessee, Kentucky, Mississippi and Texas, while increasing their operating stores to more than 125 with nearly 8,000 employees generating more than $340 million in total sales.
Today, the company employs more than two million people worldwide, operates nearly 7,900 stores and generates more than $405 billion in annual sales. Offering an assortment of merchandise and services, Wal-Mart operates in three separate business segments, those being Wal-Mart U.S., Wal-Mart International and Sam’s Club.
Within the U.S. segment, Wal-Mart operates 891 discount stores, 2,612 super centers, 153 Neighborhood Markets, and 602 Sam’s Clubs by the end of January 2009. It is here that the company generates nearly 64% of Wal-Mart’s total sales. The U.S. division also includes the company’s online website, walmart.com.
Wal-Mart, through all of their retail subsidiaries, offers an extensive product line ranging from meat, produce, deli, bakery, dairy and frozen foods to health and beauty aids, electronics, fabrics and crafts, sporting goods, outdoor entertaining, and seasonal merchandise. These goods are easily accessible through the company’s discount stores, super centers, and neighborhood markets, as well as through walmart.com.
Domestic stores market a specific line of merchandise that include Wal-Mart’s private label brands of Great Value, Ol’ Roy, Sam’s Choice, Spring Valley, Faded Glory, Athletic Works, Secret Treasures, HomeTrends, Mainstays, Ozark Trail and Canopy. Nearly 40% of all products sold through Wal-Mart stores are private label. The company also markets additional merchandise under licensed brands that include McDonald’s, Disney, General Electric, Better Homes & Gardens, Starter and Ocean Pacific.
The U.S. segment also provides additional financial products and services, including wire transfers, money orders, bill payments and check cashing.
In the overseas markets, the International division operates in countless countries throughout the world. These businesses are anchored in such regions throughout Argentina, Brazil, Canada, Japan, India, Puerto Rico and the United Kingdom. Of recent, Wal-Mart has also expanded its practices into Central America, including Costa Rica, El Salvador, Guatemala, Nicaragua and Honduras, as well as Chile and Mexico.
With several unique retail formats for stores and restaurants, the International unit constitutes nearly 25% of Wal-Mart’s gross sales. The company currently conducts its business out of 146 distribution facilities located in the above countries, including the U.S.
The final operating segment within Wal-Mart is the company’s Sam’s Clubs, which first opened in 1983 in Midwest City, Oklahoma, is a chain of warehouse clubs that retails general merchandise and groceries, most often in large quantities. Operating as a “membership” store, Sam’s offers retail gasoline services, as well as becoming more in tune to the needs of local small business owners. Sam’s Club revenues accounted for nearly 12% of Wal-Mart’s total sales in fiscal 2009.
Within the U.S., Wal-Mart encounters many competitors, including department store retailers K-Mart (SHLD) and Target (TGT), as well as private companies such as ShopKo and Meijer. Other retailers compete with Wal-Mart but on a smaller scale, including Family Dollar (FDO) and Dollar General . Sam’s Club competes primarily with Costco (COST) and BJ’s Wholesale Club (BJ).