wal mart store 2001Annual Report

W A L - M A R T A N N U A L R E P O R T 2 0 0 1

Innovationspage 11

Innovationspage 11

Store of the Communitypage 4Store of the Communitypage 4

Foodpage 14Foodpage 14

Internationalpage 8Internationalpage 8

Good Workspage 12

Good Workspage 12

Culturepage 5

Retailtainmentpage 7

Everything We Do Revolves Around Our Customers.

SAM’S Jewelrypage 15

SAM’S Jewelrypage 15

Table Of Contents:

2. Lee Looks at 2001 – Lee Scott takesa glance back at fiscal 2001 and to the year ahead.

4. This Store is Your StoreTailoring merchandise to individual communities hitsthe mark with Customers.

5. The Wal-Mart Way… – For almost 40 years, the Wal-Mart culture of respect for individuals has endured.

6. Every Store Counts – Year endcount of Wal-Mart’s operations by state and country.

7. That’s Retailtainment! – Frommerchandising opportunities with hit movies and DVDsto exclusive concerts by the hottest stars, Wal-Mart“Retailtainment” continues to grow.

8. Wal-Mart Around the WorldInternational operations continually adapt to the needsand cultures of Customers around the globe.

11. A Brief History of InnovationWal-Mart has always been an innovator, and isdedicated to uncovering more and better innovationsfor our Customers.

12. Low Prices and High PrioritiesBeing of real benefit to our communities is at the heartof every Wal-Mart Associate.

14. Fresh,Fresh,FreshFresh food in Supercenters, SAM’S CLUBS andNeighborhood Markets is just the beginning.

15.SAM’S Sparkles – SAM’S CLUBchanges the setting for quality jewelry.

16. Financial$

$ 11-Year Summary$ Management’s Discussion & Analysis$ Financial Statements$ Corporate Information

About The Cover: In every store, in every country, in everyway, our focus is as it has always been – on our Customers.

� � � � � � � � ��

Table Of Contents:

��

�

��

�

�

�

�

�

�

�

�

�

�

��

�

�

�

�

�

�

��

�

��

�

�

�

�

�

�

� � � � � � � � �

1

FINANCIAL HIGHLIGHTS

ANNUAL REPORT 2001

DIRECTORS:John T. Chambers

Stephen Friedman

Stanley C. Gault

David D. Glass

Roland Hernandez

Dr. Frederick S. Humphries

E. Stanley Kroenke

Elizabeth A. Sanders

H. Lee Scott

Jack C. Shewmaker

Donald G. Soderquist

Dr. Paula Stern

Jose Villarreal

John T. Walton

S. Robson Walton

OFFICERS:S. Robson Walton

Chairman of the Board

H. Lee ScottPresident & CEO

David D. GlassChairman, Executive Committee

of the Board

Paul R. CarterExecutive Vice President &President, Wal-Mart Realty

Bob ConnollyExecutive Vice President, Merchandise

Thomas M. CoughlinExecutive Vice President &

President & CEO, Wal-Mart Stores Division

David DibleExecutive Vice President, Specialty Division

Michael DukeExecutive Vice President, Administration

Thomas GrimmExecutive Vice President &

President & CEO, SAM’S CLUB

Don HarrisExecutive Vice President, Operations

John B. MenzerExecutive Vice President &

President & CEO, International Division

Coleman PetersonExecutive Vice President, People Division

Thomas M. SchoeweExecutive Vice President & Chief Financial Officer

Robert K. RhoadsSenior Vice President, General Counsel & Secretary

J. J. FitzsimmonsSenior Vice President, Finance & Treasurer

1997 $104.9

1998 $118.0

1999 $137.6

2000 $165.0

2001 $191.3

1997 $.67

1998 $.78

1999 $.99

2000 $1.21

2001 $1.41

1997 7.9%

1998 8.5%

1999 9.6%

2000 9.5%*

2001 8.7%

1997 19.2 %

1998 19.8%

1999 22.4%

2000 22.9%

2001 22.0%

Return on Assets Return on Shareholder’s Equity

Earnings Per ShareNet Sales

*Calculated giving effect to the amount by which a lawsuit settlementexceeded established reserves. If this settlement was not considered, the return was 9.8%.

Dear Fellow Shareholder:

It is truly an honor to serveas President and CEO of Wal-Mart Stores, Inc., and I appreciate the opportunityto share with you somethoughts from fiscal 2001 andour outlook for the future.What a year of milestones itwas! But before we get intothe details, I’d like to touchon a few highlights from the year.

Net sales in fiscal 2001increased almost 16 percentto more than $191 billion,representing a growth inrevenue of more than $26 billion. In addition, netincome reached $2 billion for the fourth quarter and almost$6.3 billion for the year, making it ourfirst “two-billion-dollar-incomequarter” and our first “six-billion-dollar-income year.”

FORTUNE magazine named Wal-Mart the third “most admired”company in America and one of the100 best companies to work for inAmerica. Our Company also rankedfifth on FORTUNE’s Global MostAdmired Companies list based oncharacteristics such as leadership,teamwork and the way we treat ourpeople. In addition, Americansnamed Wal-Mart the company theythink of first in supporting localcauses and issues, according toCone, Inc., a national research firm.

Whether it’s our domestic orinternational Associates in the stores,

clubs and distribution centers, orthose in the home office, our peopletruly deserve the credit for all theseaccomplishments. Let’s look a littlecloser at what our Associates wereable to achieve this year.

Fiscal 2001 was clearly one of thestrongest years in recent memory for the SAM’S CLUB division. Wesaw growth in both sales andearnings. Moreover, earnings growthoutpaced sales growth for the year.Membership renewals reachedrecord levels, demonstrating strongloyalty and Member acceptance, andillustrating that a SAM’S membership is the best value in the warehouseclub business. In fact, one in threehouseholds in America now has aSAM’S CLUB membership. SAM’Shas made great progress over thepast two years in upgrading our

facilities and addingservices, includingpharmacy, optical, 1-HourPhoto and fuel, to offer thehighest quality shoppingexperience to our Members.In short, our Memberscontinue to respondfavorably to SAM’S unique, high-qualitymerchandise at exceptional values.

The International Divisionhad an excellent year,growing sales by 41 percentand achieving more than$32 billion in revenues. Aswe travel internationally, it’sexciting not only to see ourstores and clubs operatingat such high standards, but

also to see the Wal-Mart culturebeing embraced throughout theworld. This just shows that treatingpeople with respect and raising theirstandard of living through Every DayLow Prices knows no boundaries.

I’ll highlight the exceptionalperformances by our three largestinternational operations: Canada,Mexico and the United Kingdom.

Fiscal 2001 was a great year for ourCanadian business. Sales andoperating profit increased for theyear by more than 14 percent,continuing the customer-focusedretailing traditions established in theU.S. almost 40 years ago.

Mexico also had an outstandingyear, exceeding both its sales andprofit goals. Our Customers there

2

A LOOK AT 2001AND BEYOND

A LOOK AT 2001AND BEYOND

3

have responded exceptionally well to the high level of customerservice our Associates provide, andto the introduction of Every DayLow Prices in all our retail formats in Mexico.

In particular, I’d like to thank ourASDA Colleagues (Associates) inthe United Kingdom for theirexceptional performance over thelast year. For the fourth straightyear, ASDA was voted “Supermarketof the Year” by Checkout magazine.The division exceeded the objectives set at the time weacquired ASDA, and our Colleaguesaccomplished our ultimate goal –taking care of our Customers andproviding them with an exceptionalvalue in the marketplace.

The Wal-Mart Stores Division, by far our largest, features our Discount Store, Supercenter andNeighborhood Market formats. Theyear brought some truly bright spotsfor this division as well.

We’ve made exceptional strides inour food offerings through theSupercenters and NeighborhoodMarkets. This year, Wal-Martbecame the largest retailer in theU.S. grocery industry, according toSupermarket News. That is truly aremarkable achievement, and I thinkSam Walton would be proud. Asalways, we will continue to ensurethat we are the best food retailer, notjust the largest.

In July, we challenged our Associatesto react to the slowing economy byreducing inventories by more than $1 billion, the majority of whichwould come from the Wal-MartDivision. Despite disappointingholiday sales, our Associates not onlymet this goal – they exceeded it.

The division had a strong first half ofthe year as our Associates built onlast year’s phenomenal growth. But

as we moved through the second halfof fiscal 2001, it became evident thatconsumer spending was slowing andwould not recover in time for thecrucial holiday shopping season. OurAssociates reacted appropriately,however, by continuing our focus on customer satisfaction.

Although we did not end the year theway we would have liked, the keys toour ability to manage a slowdown inthe economy remain simple andeffective. They are what we have builtour business on since the beginning.

First, we must maintain an in-stocklevel unequaled in the retail world.Our commitment is unchanged:provide the products our Customerswant at the moment they want tomake the purchase.

Second, we must provide the level ofservice our Customers expect anddeserve. It’s not enough to providemerchandise and a safe, comfortableenvironment in which to shop. Wemust generate the excitement andenthusiasm necessary to build arelationship with the Customer andmake each shopping experiencebetter than the one before. Thisincludes simple things like sayingthank you and greeting ourCustomers warmly as they enter thestore. Sam Walton called it“aggressive hospitality,” and it stillworks today.

Third, we must provide ourCustomers with top-qualitymerchandise and services at EveryDay Low Prices. After all, that’s whatthe sign says, and that’s ourcommitment to our Customers.

Finally, it is a personal priority ofmine to identify and develop the nextgeneration of Wal-Mart leaders. Foryears, it was enough to just developmanagers. But as the businessenvironment becomes morechallenging, it takes true leadershipto guide a successful business. SamWalton set the standard for our visionof leadership, and we are carrying itforward. We are committed togrowing the leaders today who willpropel this Company into tomorrow.It’s the right thing to do for ourCustomers, our Associates and our Shareholders.

On a more personal note, I wouldlike, on behalf of all Wal-MartAssociates, to thank David Glass forhis leadership over the past 25 years.David served as Chief ExecutiveOfficer for 12 years and presidedover more revenue and earningsgrowth than any other CEO in thehistory of retailing. We are fortunatethat David has agreed to stay on inhis present role, providing advice and counsel to me and the entireWal-Mart team.

At Wal-Mart, we’re passionate aboutdelivering value to our Customersand Shareholders. As Shareholders,you play a vital role in our success asyou invest in Wal-Mart stock andshop at our Wal-Mart stores andSAM’S CLUBS. While our history isrich with success, there’s no questionthat our best years are yet to come,and this time next year I expect toreport another record year for Wal-Mart. Thank you, and I lookforward to visiting with you againnext year.

Lee Scott

“Sam Walton setthe standard for ourvision of leadership,and we are carrying

it forward.”

THIS STORE IS YOUR STORE

Wal-Mart hastaken individualized assortment to a new level with its Store of theCommunity initiative. The Store of the Community is not a new line of stores, but rather an excitingmodel for existing Wal-Mart discountstores and Supercenters to meet theshopping needs of local storeCustomers. Introduced in fiscal 2001,these stores are specifically tailoredto mirror the demographic makeupof their respective communities.

“The one-size-fits-all concept simplydoesn’t work anymore in the retailindustry. Customers tell us what theywant and it is our responsibility tomeet those needs,” Tom Coughlin,President & CEO of the Wal-MartStores Division, said.

The Store of the Community isstocked based on a combination ofconsumer purchasing data, areademographics, customer preferencesand input from our store Associates.Evaluating the buying patterns ofCustomers enables Wal-Mart buyersto determine what is selling best ateach store and purchasemerchandise based on each store’s data.

All store managers, includinggeneral managers and departmentmanagers, submit yearly surveys,which include information such as when little league baseball or a hunting season begins in theircommunity. This specific data isinvaluable for developing a Store of the Community. For example, a Wal-Mart store located near a hospital may need a largerpharmacy area. Stores close torecreational bodies of water stocklife vests and fishing equipment notcarried in most land-locked stores.Other stores offer regional sportinggoods. Softball leagues in Louisianawould not know what to do with asoftball that is four inches larger indiameter like those used in Chicagoand other urban areas.

In addition to obvious assortmentflexibility, the program also allowsseasonal start and end dates to bedetermined by the needs of theCustomers and not by a store’sparticular geographic zone. Forexample, turkey-hunting season may extend longer in one state thanin an adjacent state. The Store of the Community concept allows us totailor the first store’s assortment so

that it can display turkeyhunting merchandise untilthe end of its season.

“Our store Associates live and workin each store’s community andinteract with over 100 millionCustomers each week. If we utilizeinformation from all availableresources including Customers,Associates and suppliers, our storewill reflect the interests of itscommunity. We will sell merchandisethe Customers want to buy, notmerchandise we want to sell. Byaccomplishing this goal, we createhappy, satisfied Customers because they cannowcompleteall of theirshoppingin onelocation,our store,”Coughlinadded.

The detailed knowledge of acommunity created by theCustomer/Associate partnershipallows each store to differentiatedepartment size, shelf-spaceallocation and departmentaladjacencies. The result is a moreefficient distribution of inventory bystocking our stores based oncustomer preferences rather thanstandardized assortments. It alsoincreases sales, reduces markdownsand lowers inventory investment inthe system. Most of all, it keepsCustomers coming back into ourstores because we’re attentive totheir needs.

THIS STORE IS YOUR STORE

5

The cornerstone of Wal-Mart’ssuccess has and will always be ourculture. Customers shop at Wal-Martfor the best values and the greatestselection of merchandise. We believeit is our culture that allows us tomeet their expectations. The roots of our culture are grounded in threefundamental principles: respect forthe individual (both our Associatesand Customers), the higheststandard of service to our Customersand a constant drive for excellence.

Culture is the value systemthat directs people’sthoughts, deeds and words.Our founder, Sam Walton,established the basic beliefsupon which our Company’sculture has evolved, but theperpetuation of our cultureis the responsibility of allAssociates. Wal-Martunderstands that a personcannot be forced to acceptour culture. Instead, everyAssociate must lead byexample and continue todevelop the trust thatmakes our culture work.Managers are expected tobe servant leaders whoencourage their Associatesto take advantage ofopportunities to expressand share ideas with others.This environment of respectis one of the most importantaspects of our culture.

Associates are encouraged to exceedCustomers’ expectations, and theresults are outstanding customertrust and loyalty. Mr. Sam called it“aggressive hospitality.” He believedthat by exceeding Customers’expectations, they will come backagain and again. Wal-Mart’s Ten-FootRule encourages Associates to speakto a Customer before that Customercan speak to them. Wal-Martcustomer service is legendary, andthe Ten-Foot Rule is one of thereasons why.

Wal-Mart knows the best ideas have come from our front lineAssociates – greeters, checkers andstockers. In fact, the idea to have agreeter at the door to welcome ourCustomers came from an Associate.Every Associate is not onlyempowered but is also driven tomake a difference and strive forexcellence. Our Associates – theirideas and energy – are what willdetermine our future success andwe encourage their input. Wal-Mart’sOpen Door Policy allows Associates

to share suggestions,observations or concernswith any supervisor, froma store manager to thePresident and CEO of Wal-Mart, with no fear of retaliation.

Our culture is what makesWal-Mart unique and willcontinue to make ussuccessful. Everyone inour Company is responsiblefor upholding the corebeliefs that help keep ourculture alive and well. Ourpurpose as a Company is toprovide our Customers andMembers with the verybest value and shoppingexperience possible. It allbegins with our culture. It is the cornerstone ofwhat our Company wasfounded on and it is ourmain focus. Always.

Our Culture, Our Attitude, Our Commitment

THE WAL-MARTWAY OF LIFE

THE WAL-MARTWAY OF LIFE

6

State Discou

nt Stor

es

Neighborh

ood M

arkets

Superce

nters

SAM’S CLUBS

State Discou

nt Stor

es

Neighborh

ood M

arkets

Superce

nters

SAM’S CLUBS

Mexico 429* 32 38 0

Puerto Rico 9 0 6 0

United Kingdom 0 241** 0 0

INT’l Total: 612 406 53 0

World WideGrand Total: 2348 1294 528 19

Argentina 0 11 0 0

Brazil 0 12 8 0

Canada 174 0 0 0

China 0 10 1 0

South Korea 0 6 0 0

Germany 0 94 0 0

* Includes: 37 Aurreras, 80 Bodegas, 54 Suburbias, 40 Superamas, and 218 Vips.**Includes: 238 ASDA Stores and 3 ASDA/Wal-Mart Supercentres.

Alabama 41 41 8 0

Alaska 5 0 3 0

Arizona 26 13 9 0

Arkansas 41 36 4 5

California 117 0 26 0

Colorado 23 18 12 0

Connecticut 19 1 3 0

Delaware 3 2 1 0

Florida 86 57 34 0

Georgia 51 45 16 0

Hawaii 5 0 1 0

Idaho 7 6 1 0

Illinois 86 25 27 0

Indiana 50 33 14 0

Iowa 33 18 7 0

Kansas 34 16 5 0

Kentucky 36 38 5 0

Louisiana 43 37 11 0

Maine 17 3 3 0

Maryland 27 3 11 0

Massachusetts 36 1 3 0

Michigan 55 2 21 0

Minnesota 37 2 9 0

Mississippi 30 31 4 0

Missouri 66 46 13 0

Montana 6 4 1 0

Nebraska 12 8 3 0

Nevada 12 4 4 0

New Hampshire18 4 4 0

New Jersey 23 0 6 0

New Mexico 9 13 4 0

New York 52 13 18 0

North Carolina 59 35 16 0

North Dakota 8 0 2 0

Ohio 76 12 25 0

Oklahoma 48 32 6 8

Oregon 25 0 0 0

Pennsylvania 49 29 19 0

Rhode Island 7 0 1 0

South Carolina 27 32 9 0

South Dakota 8 0 2 0

Tennessee 47 41 15 0

Texas 142 112 56 6

Utah 12 3 5 0

Vermont 4 0 0 0

Virginia 26 41 10 0

Washington 26 0 2 0

West Virginia 8 20 3 0

Wisconsin 53 7 11 0

Wyoming 5 4 2 0

U.S. Totals 1736 888 475 19

International/Worldwide

Fiscal 2001 End-of- Year Store Count

7

Wal-Mart understands thattoday’s consumers have anincredible array of shoppingchoices from which tochoose. Not only do they want the best value for theirhard-earned dollar, butthey also demandoutstanding customerservice. We realized earlyon that we must take careof Customers and thatpart of doing so is creating a fun, dynamic shopping environment.

At Wal-Mart, we call theconcept Retailtainment andour goal is to add excitementto the shopping experience.The result is a fun environment forthe Customers and our Associates,but other benefits include increasedcustomer traffic and loyalty becausethat Customer looks forward to theirtrip to Wal-Mart.

Every store is encouraged to create its own “wild and crazy”Retailtainment events specificallydesigned for its individualcommunity. Local stores invite clubsand civic organizations to set upexhibits, or ask police and firedepartments to conduct safetyseminars and demonstrations. Toraise money for local charities lastyear, stores engaged in everythingfrom a ladder drive (in whichAssociates volunteered to sit ontop of a ladderuntil they soliciteda certain amount indonations) to Bingofor Seniors, which

raised money for the Children’sMiracle Network.

Wal-Mart also organizes system-wideRetailtainment events. Last May, all Wal-Mart discount stores andSupercenters participated in an eventto support the direct-to-video releaseof The Rugrats Discover America.Kids were invited to stores to watchthe new Rugrats adventure whilethey ate snacks. Associates then took the children on their own“Discover America” adventurethrough the stores. To enhance theeducational value of this promotion, agroup of teachers developed acomplementary lesson plan, whichwas distributed to select schoolsacross the United States.

The Company, through itsWal-Mart Live ConcertSeries, broadcast an exclusivesatellite concert performanceby international singingsuperstar Ricky Martin in the home entertainmentdepartments of storesnationwide last year. Thistelevised event coincided with the release of Martin’ssecond English-languagealbum. Other concertspresented last year includedGarth Brooks, Faith Hill andBackstreet Boys.

“The concert series has been an extremely successfulRetailtainment event. It’s a

perfect example of how we provideour Customers with a fun,entertaining shopping environment.Customers can view a free concert ina comfortable atmosphere and alsobenefit from coinciding promotionsthat are only available at our stores,”Tom Coughlin, President & CEO ofWal-Mart Stores Division, said.

Retailtainment is an area that trulysets our Company apart from others, and it will continue to be animportant area of focus for Wal-Mart.Customers can expect to see moreevents and promotions exclusive toWal-Mart stores and their individualcommunities in the future. Bycreating a friendly, entertaining

atmosphere for our Customers,we provide a fun shoppingexperience thatkeeps them coming back.

�

�

�

���

�

�

�

���

�

�

�

�

�

�

�

�

�

��

�

�

� ��

�

�Hit Movies, Hot Stars And Hip Merchandising Keep Customers Shopping�

“That’s Retailtainment!”

�

�

�

Wal-Mart is truly a global company.The Company has proven that its culture transcends borders and translates into many differentlanguages. “All Customersappreciate good service, low pricingand great selection and that’s the foundation upon which everyWal-Mart store is built,” John B.Menzer, President & CEO of Wal-Mart International, explained.

In fiscal 2001, which ended January 31, close to 17 percent ofWal-Mart’s salescame from itsInternationalDivision.Internationalsales duringfiscal 2001 were$32 billion, anincrease of morethan 41 percentover theprevious year. Asinternationaloperations continue to become alarger portion of Wal-Mart’s totalgrowth, the Company is focused onaggressive, yet strategic expansionefforts abroad.

As of January 31, 2001, there were1,071 stores – approximately one-fourth of the Company’s total –outside the United States. Over 25 percent of Wal-Mart’s new stores in the current year will be in the nine countries that comprisethe International Division. Thisexpansion will be achieved througha combination of new buildings,expansions and relocations.

ARGENTINA ARGENTINA Wal-Mart expanded into Mendozawith the opening of a newSupercenter, bringing the totalnumber of discount retail stores in the country to 11. The Companyhas become an active corporatecitizen in Argentina and hasestablished programs to address the needs of the communities inwhich it does business. Wal-Martdonated more than $200,000 tocommunities in Argentina duringthe year and continues to givethrough merchandise donations,

sponsorships, marathons and othertypes of fund-raising events.

BRAZILBRAZILWal-Mart currently has 20 unitsthroughout Brazil. The Companyentered the Rio de Janeiro marketduring the year, opening two SAM’SCLUBS and one Supercenter. It alsoopened two additional Supercentersand one SAM’S CLUB in thecountry and began construction of a distribution center, which openedin April 2001. Additionally, severalSAM’S CLUBS were remodeled tooffer Customers an expanded freshfood selection.

PUERPUER TO RICO TO RICO In fiscal 2001, Wal-Mart opened its first distribution center in Puerto Rico. Remodeling two of theCompany’s highest volume SAM’SCLUBS also highlighted the year.Of the six clubs on the island, the 106,000-square-foot SAM’SCLUB at Bayamon has consistentlyranked as the top-producing clubinternationally since it opened in1993. Another club at Carolina,Puerto Rico, is ranked secondinternationally in sales.

MEXICO MEXICO Mexico is home toWal-Mart’s oldestand most extensiveinternationaloperations, with 499 units at theend of the year,featuring sixdifferent retailformats and thecountry’s largestsit-down restaurant

chain. The Company changed thename from Cifra to Wal-Mart deMexico and began trading its stockas WALMEX on the Bolsa,Mexico’s stock market. Wal-Martde Mexico is the country’s largestretailer and commands the secondlargest market capitalization on the Bolsa.

Wal-Mart de Mexico opened39 new stores in fiscal 2001 andplans to open several new stores in the current year. Wal-Mart deMexico implemented its Every DayLow Price program in all of itsretail formats, including its

8

Supercenters, warehouseclub and discount generalmerchandise stores. As a result, Wal-Mart deMexico has experiencedextensive growth andcustomer support.

GERMANY GERMANY Dave Ferguson, formerdirector of Wal-Mart’sCanadian operations, wasnamed in fiscal 2001 as the newPresident & CEO of Wal-MartEurope. He will continue to help the Company develop itsbusiness strategies and processesin Europe.

In fiscal 2001, Wal-Mart completedrenovation of 23 of its 94 stores in Germany. Wal-Mart Germanyintroduced Smart Price® and GreatValue® private-label items in selectstores across the country, whichproved quite popular withCustomers. There are now morethan 250 Great Value® items andover 120 Smart Price® productsavailable in Germany. The Equate®

private-label body care line wasintroduced in June 2000.

UNITED KINGDOMUNITED KINGDOMAfter joining the Wal-Mart family in1999, ASDA has proven to be a verysuccessful international venture.With 241 stores across the UnitedKingdom, 100,000 Associates, orColleagues as they are called withinASDA, and an average of 7.8 millionCustomers each week, ASDA islikely to become the second largestsupermarket chain in Britain in thecoming year.

ASDA has long been a favorite placeto shop for Britons and customerloyalty continues to grow under thedirection of Wal-Mart Stores, Inc.When Wal-Mart purchased ASDA in 1999, the best practices of both

companies were combinedto best meet the needs ofthe Customer.

Primarily known as a foodretailer, ASDA’s profile hasbegun to change with theaddition of the ASDA/Wal-Mart Supercentreconcept to the retailingmix. There are now threeASDA/Wal-Mart

Supercentres in the country andplans call for others to be locatedthere in the near future. ASDAcontinues to support the suppliers,Customers and organizationswithin its communities. To date,around 200 new suppliers, most ofthem British, have been recruitedto source the new Supercentresand more will be added to meet the local tastes and demands of Customers.

CANADA CANADA Canada has been an extremelysuccessful and profitableinternational market for Wal-Martsince the Company entered thecountry in 1994. With 174 stores,eight of which opened during fiscal

9

10

2001, Wal-Mart is now Canada’slargest retailer. Canadian Wal-MartStores have also become leaders in terms of generating new retailingconcepts and merchandisingtechniques, which have beenadopted both in the U.S. and abroad.

CHINA CHINA Wal-Mart began operations in theworld’s most populous nation in 1996,opening a Wal-Mart Supercenter anda SAM’S CLUB. China is an idealexample of how Wal-Martsynthesizes practices to adapt to thecommunities it serves. Wal-Martmodified its shopping bags to fit theneeds of Chinese Customers whousually shop daily for products andoften arrive on a motorcycle orbicycle. During fiscal 2001, Wal-Martopened a new underground store inDalian beneath a new soccerstadium. The subterranean formatwas chosen to accommodate localneeds and to address citizens’aesthetic concerns.

SOUTH KOREA SOUTH KOREA With the world’s 11th largesteconomy and a population of 47 million, South Korea holds awealth of opportunity to introduceCustomers to the Wal-Mart retailingpractices of Every Day Low Prices,great value and outstandingcustomer service. Wal-Mart enteredthis new market with a Supercenterin Taegu and now has six units. The Taegu Supercenter featuresthree floors of merchandise – twobelow ground and one above – andsix floors of parking above the store.The Company plans to increase Wal-Mart’s presence in the countryduring the current fiscal year.

In July 2000, ASDA openedthe first ASDA/Wal-MartSupercentre in Patchway,Bristol, which instantlychanged the face of U.K.retailing. With the addition of Supercentres in Havant in late October and Minworthin November, the format has become an excitinggrowth vehicle for our U.K. operations.

Traditionally, ASDA has been a food-oriented retailer,choosing to devoteapproximately 80 to 85percent of available retailsquare footage to foodmerchandising. Currently,each ASDA/Wal-MartSupercentre dedicatesapproximately 60 percent ofits space for grocery itemscompared to the typicalSupercenter in the UnitedStates which only has 30percent allotted for groceries.

Supercentres offer Britonsover 40,000 products ranging

from local Avon and Somersetcheeses and breads tosporting goods and opticalservices. Among other things,each store features freshproduce, a deli with morethan 200 products includingspecialty meats, and ready-to-eat meals. The Supercentresalso include an electronicsdepartment and a photocenter. Among many otherofferings found at ASDA/Wal-Mart Supercentres are alarge number of global brands and products.

According to Wal-MartInternational President & CEO,John B. Menzer, “ASDA hasproven to be a good fit forWal-Mart. The cultures of bothcompanies mesh well and theSupercentres have beenembraced by Customers whowant the widest range ofproducts at the best valuewith the friendliest service.”

Wal-Mart is committed tocontinued growth in the U.K. The Company plans to open three Supercentres in fiscal 2002.

“This is an exciting time forASDA in the United Kingdomand we are particularlyexcited about the strongconsumer acceptance of our new ASDA/Wal-MartSupercentres,” Menzer said.

FROM SUPERCENTERTO SUPERCENTRE

11

Wal-Mart has long been aninnovator. Our founder, Sam Walton,spent his life coming up with ways tobetter serve Customers. Mr. Sam’sculture of innovation still drives Wal-Mart today during the mostdynamic growth plan in our history.

Technology and logistics are amongthe Company’s most innovativeareas. Our computer system is themost powerful in the corporateworld – only the U.S. governmenthas a larger computer network. Wal-Mart’s philosophy of building“people supportive” systems hasgiven us a competitive edge that hasand will be instrumental in theCompany’s success.

Wal-Mart believes in building acollaborative environment with oursuppliers in which we work togetherto grow both businesses and lowerretail prices for Customers. Whilesome retailers have been reluctant toshare sales or other proprietary datawith suppliers, Wal-Mart has allowedsuppliers this type of access sinceearly 1991. This system evolved intoa web-based product called RetailLinkTM. It allows the Company and

suppliers to track merchandise tostudy how products sell in any storeby region or by individual unit. Theycan also review inventory levels,returns and inventory adjustments.

“We think sharing information withsuppliers allows for better inputfrom them about how to maximize

sales and profits. We can thenimplement best practices and passthe savings on to Customers,” KevinTurner, the Company’s ChiefInformation Officer, said.

Wal-Mart also uses its computernetwork to directly enhance servicein specialty divisions like Tire andLube Express. Using it, Associatescan quickly identify vehicle servicerecords, and Customers can use bar-coded cards at price scanners in the store to see when their serviceis completed.

Wal-Mart’s sophisticated distributionsystem has allowed the Company toeasily manage over 3,100 domesticstores in all 50 states. The Companycontinues to make advancements indistribution and transportation andnow moves over 50 million cartons ofmerchandise perweek to storesand clubs. Thisallows continuedimprovements ininventoryturnover andmerchandise in stock.

Wal-Mart works with suppliers todevelop PDQ displays for stores.PDQs are self-contained displays thateliminate stocking individualmerchandise on a shelf or hanger.Many times merchandise can godirectly from the stockroom to thefloor with little more than opening abox. One example of how PDQs savetime and money is our new batterydisplay. Before PDQs, an Associatehad to hang each battery pack byhand, which was labor-intensive.Now, batteries come in prepackageddisposable trays and an Associateonly has to remove plastic wrap tomove it onto the sales floor.

Drive-thru pharmacy service isrelatively new in retailing. AllNeighborhood Markets built lastyear feature this service. “Customerconvenience is the focus of ourNeighborhood Markets and we seedrive-thru pharmacies as yet anotherservice we can offer Customers,”said Ed Kolodzieski, Senior VicePresident of Neighborhood Markets.

Wal-Mart loves to test new ideas andhas little resistance to change. We

believe the surest way to predictthe future is to continue toinvent it and all of ourAssociates are encouraged toshare ideas. Their thoughts andideas have helped establish Wal-Mart as a pacesetter in thedynamic world of retail and willcontinue to push us forward.

A HISTORY OFINNOVATIONForward-thinking is a Wal-Mart tradition.

12

Wal-Mart Stores, Inc. is committedto strengthening and enhancing thequality of life in the communitieswhere our Customers andAssociates live and work. In fiscal2001, over $190 million was raisedand contributed by our Associatesand Customers and given back toour local communities. This is anincrease of over $32 million, all givenback to those who need it most.

Associates are the lifeblood of Wal-Mart’s community support.Associates direct 97 percent of Wal-Mart’s community involvementinitiatives. “Our Associates knowbest what organizations and causesare the most important in theircommunities, so we believe thatthey should be the ones whodetermine how their Companysupports the organizations who are making a difference in the livesof our Associates and Customers,”

Tom Coughlin,President & CEO,Wal-Mart StoresDivision, said.

Wal-Mart Associatesare dedicated to a wide range ofprograms. Since the Foundation’sinception in 1979,one of our primaryareas of focus hasbeen education. In 2000, ourAssociates raisedand contributednearly $11 million

for their local schools. In addition,Wal-Mart awarded scholarshipstotaling nearly $12 million tograduating high school seniors and other students pursuing higher education. Our commitmentto education includes the Teacherof the Year awards, Students in Free Enterprise, the United Negro College Fund and theHispanic Association of Collegesand Universities.

The Community Matching Grantsprogram is one of Wal-Mart’slargest community initiatives withover 3,000 locations participating.Last year, the Company awardedmore than 50,000 grants to localorganizations that held fundraiserswith our Associates.

Throughout the year, Associates in the United States and Canadasponsored a variety of fundraisingactivities to support children’shospitals across North Americathrough the Children’s MiracleNetwork. Our Associates’ hardwork will help over 14 millionchildren receive the best medicalcare possible as well as addressoverall health care in ourcommunities. Last year, ourAssociates and Customers raisedand contributed around $31 milliondollars for their children’s hospitals.One hundred percent of the fundsremain with the children’s hospitalto fund medical research, providemedical treatment to local childrenand supply money for hospitals topurchase new equipment.

On June 6th, Associates and WorldWar II veterans presented a gift ofalmost $14.8 million to Senator Bob Dole, Chairman of the NationalWorld War II Memorial Campaign,during a special ceremony inWashington, D.C. The donation wasthe largest gift given toward theconstruction of the memorial. Thereare approximately 1,900 World War IIveterans who are Wal-MartAssociates. The memorial willhonor the 16 million Americanswho served in uniform during thewar, the more than 400,000 whogave their lives and the millionswho supported the war effort from home.

One of Wal-Mart’s fastest growingprograms is Volunteerism AlwaysPays, or V.A.P. This programdonates funds to local non-profitorganizations where Associatesvolunteer at least 15 hours aquarter. According to Jay Allen,Vice President of Wal-MartCorporate Affairs, Wal-MartAssociates give back to theircommunities 80 work years involunteer hours annually. Inaddition to the Associates’ valuablecontribution of time, Wal-Martdonated $1,500,000 to various localcharitable organizations across the United States in honor of our Associates.

Wal-Mart’s corporate citizenshipextends well beyond U.S. bordersand into every country in which theCompany operates. For example,Associates and suppliers in Chinadonated time and provided financialassistance last year to senior

Wal-Mart’s Associates Lead by Example

CARING IN ACTIONCARING IN ACTIONC

omm

unity

Com

mun

ity

citizens and orphans. Wal-MartGermany Associates raised moneyto fight Duchenne MuscularDystrophy (DMD), a debilitatingdisease for which there is no cure.In South Korea, Wal-Mart’s Inchonstore donated glasses to needychildren and provided scholarshipsfor students in their localcommunities. Wal-Mart de Mexico,along with the National VaccineCenter, organized three nationalweeks throughout the year whenpeople were given free vaccinationsin stores across the country.

These are just a few of the manyways in which Wal-Mart Associatesare making a difference in theircommunities. Their generousdonation of time, talent and moneyhas made corporate citizenship an

integral way of life at Wal-Mart. Our pledge isthat we willnever lose sightof theresponsibilitiesof goodcorporatecitizenship, andthat Wal-Mart will continue to supportworthyprogramsthrough financial grants, in-kind donations, and mostimportantly, through the leadershipand volunteer efforts of our caring Associates.

$3

1,19

5,2

96

$1,

879

,111

$5

,20

0,0

00

$1,

30

2,8

17

$2

0,4

32

,65

7

$3

,14

5,1

86

$7,3

65

,34

2

$3

,02

4,7

52

$7,6

30

,94

6

$2

,13

2,0

01

$1,

513

,00

0

$19

,39

1,75

2

$14

,75

1,3

60

$71,

36

5,9

80

Grand Total: $190,330,200

Child

ren’

s M

iracl

e Ne

twor

k

Volu

ntee

rism

Alw

ays

Pays

Holid

ay C

harit

able

Con

tribu

tion

Envi

ronm

ent

Stor

e Co

ntrib

utio

n Ac

coun

t

In-K

ind

Cont

ribut

ions

Scho

lars

hips

Mak

e A

Diffe

renc

e Da

y

Othe

r Don

atio

ns

Econ

omic

Dev

elop

men

t

Teac

her o

f the

Yea

r

Unite

d W

ay

Wor

ld W

ar II

Mem

oria

l

Com

mun

ity M

atch

ing

Gran

ts

Wal-Mart Stores, Inc. Community Involvement In Fiscal Year 2001

REUNITINGFAMILIES

Wal-Mart’s Missing Children’s Network

Every day, thousands of childrenare reported missing from theirfamilies, according to the NationalCenter for Missing and ExploitedChildren (NCMEC). Thanks to Wal-Mart and SAM’S CLUBCustomers and Associates, 20 children – a record number –were reunited last year as a direct result of recognizing andresponding to the pictures on our Missing Children’s Networkbulletin boards.

In 1996, Wal-Mart teamed withNCMEC to begin the MissingChildren’s Network bulletin boards,which include photos of missingchildren, relevant personal data about each child and the toll-freeNCMEC hotline. The boards areposted in Wal-Mart stores, SAM’SCLUBS and NeighborhoodMarkets across the country.

Since the program began, 3,400 children have been featuredon our boards and more than2,100 have been recovered. There have been more than 50 recoveries as a direct result of our Customers or Associatesrecognizing one of the photos andreporting it to the NCMEC hotline.

“The Missing Children’s Network is a program that our Associates andCustomers feel strongly about.Every parent can empathize withthe heartache a family must feeleach and every day their child ismissing. I really have to give creditto our Customers and Associatesfor the tremendous success of this program,” H. Lee Scott,President & CEO of Wal-MartStores, Inc., said.

Educ

atio

nEd

ucat

ion

Growing food sales is a majoremphasis as Wal-Mart seeks to offerCustomers exceptional value andquality in food. Wal-Mart understands

Customers want to purchase alltheir food and general

merchandise in one location.Our goal is to provide them

with the freshest, most wellrounded assortment at the

lowest possible prices.

According to Supermarket News, Wal-Mart became the largestdomestic food retailer during fiscal2001. Sales in Supercenters nowroutinely exceed those achieved bydiscount stores. This accomplishmentalone demonstrates the greatCustomer acceptance of our food offering.

Supercenters havebeen the Company’snatural vehicle forexpanded food sales.Customers look toSupercenters toprovide one-stopshopping, and a larger food selectionaddresses their need for convenience,selection and Every Day Low Prices.“Customers told us what they want –a wider selection of fresh bakeryitems, meat and produce. We’resimply meeting their needs by

providing the items

they look for every day,” Doug Degn,Executive Vice President of FoodMerchandising, said.

Freshness in food is a strategicadvantage at Wal-Mart and is a keyelement to our growth. Wal-Mart buysproducts from all over the world toensure Customers have the best eachseason offers. Our logistics teamquickly moves the merchandisethrough the distribution network.Turning merchandise quickly is keyto all fresh food areas. Associatesensure food is stocked immediatelyafter it arrives. Last year, Wal-Martopened six new food distributioncenters to support the growth ofSupercenters, SAM’S CLUBS andNeighborhood Markets.

“Freshness is the mostimportant indicator of value and quality.Price is meaningless if products do not meetor exceed Customers’

expectations of freshnessbecause Customers lose confidenceand trust,” Degn said. One initiative to enhance the fresh food concept is“Fresh and Alive at Five.” Thisprogram emphasizes rotation,presentation and efficient distributionof fresh items when Customers aremost likely to be shopping – afterwork and on weekends. In this way,Wal-Mart can provide Customers withthe freshest assortment possible.

In addition tonationalbrands, Wal-Mart has also

focused on expanding its private-labelitems. The Great Value® line offersEvery Day Low Price alternatives tobrand names, while maintainingquality equal to or better thancompeting name brands. The Sam’sChoice® line offers products withunique and innovative featuresdemonstrating the highest qualityavailable at Wal-Mart. Our privatelabel products are very well receivedby Customers and continue to growas an important partof our business.

Wal-Mart’s growth infood translates intounique job opportunitiesfor Associates. Our success in foodwill be led by Associates who arewilling to try new approaches and arecommitted to providing Customersthe outstanding service and valuethey expect. “Our Associates arededicated, driven people and weencourage them to seek anyopportunities that arise within theCompany. Our food operations allowthem another avenue for careeradvancement,” Tom Coughlin,President & CEO of Wal-Mart StoresDivision, said.

“We are bringing Wal-Mart’straditional philosophy of great qualityat the lowest price to food. Weunderstand the differences involved infood retailing and we strive to provideCustomers with the freshest productat the lowest price, Always! In return,they come back and allow us to servethem again. That’s what it’s all about,”

Degn said.

A FRESH LOOK AT FOOD.A FRESH LOOK AT FOOD.

SAM’S CLUB hasdynamically redesigned itsjewelry program and now

features a widerarray of high-quality

jewelry, crystal anddesigner fragrances.

SAM’S CLUB Jewelrydepartments are no

longer leased but arenow operated solely by

our SAM’S Associates,enabling clubs

to deliver exceptionalitems to our Membersat extraordinaryvalues. Members canfind an impressiveselection of itemsfrom such well-knowndesigners as Waterford,Versace, Cartier and MontBlanc, for a fraction of

jewelry-store prices.

“By bringing the SAM’SCLUB jewelryoperations in-house, we can now

bring betterjewelry and

luxury gifts toour Members. The quality andpricing of our fine jewelry itemsoffer amazing value, and we areexcited to be able to pass thesesavings on to our Members,” Tom Grimm, President & CEO of SAM’S CLUB, said.

The transition started withalmost 30 clubs in select testmarkets and rapidlyexpanded to include everySAM’S CLUB in thenation. Jewelryselections vary bylocation, but everyclub offersInternationalGemological Institute (IGI)-certified diamond solitaires, three-stone rings and diamond studearrings. IGI is the world’s most

recognizable standard fordetermining the values of

precious stones andassures Members

they are receiving thehighest quality and value.

Other jewelry selections at SAM’SCLUB include gold merchandise,cultured and fresh water pearls andseasonal merchandise, such asdiamond heart-shaped pendants. In addition, SAM’S CLUB offers a variety of quality diamond engagement rings, anniversary bands, earrings and pendants.

The Company’s buyers carefully select diamonds to ensure Members receive top-qualityjewelry

merchandise at the best possibleprices. In every area, SAM’S CLUBjewelry ranks as high or higher thanother retail chain jewelry stores.

Just one example of the outstanding value provided throughthis program is a 14k yellow gold oval sapphire (8.60cttw) and diamond (.96cttw) bracelet that sells at SAM’S CLUB for $733.97. The same bracelet sells at other jewelry retailers for $1,695.00.

“Our Members can always count on us to select finediamonds, gemstones and gift itemsthat both meet their needs andreflect an exceptionalvalue. Our goal is toprovide Members withthe merchandisethey desire at thevery best possibleprice. This newjewelry program issimply anotherway in which weare doing just that,”Grimm said.

SAM’SSPARKLES!

15

Corporate Information

Registrar and Transfer Agent:EquiServe Trust Company, N.A.525 Washington Blvd.Jersey City, New Jersey 073101-800-438-6278 (GET-MART)TDD for hearing impaired inside the U.S.: 1-201-222-4955Internet: http://www.equiserve.comDividend Reinvestment and Direct Stock Purchase Available

Listings – Stock Symbol: WMTNew York Stock ExchangePacific Stock Exchange

Annual Meeting:Our Annual Meeting of Shareholders will be held on Friday, June 1, 2001, at 9:00 a.m. in Bud Walton Arena on the University of Arkansas campus, Fayetteville, Arkansas.

Communication with Shareholders:Wal-Mart Stores, Inc. periodically communicates with its Shareholders and other members of the investment communityabout our operations. For further information regarding thosecommunications, please refer to our Form 8-K filing with the SEC dated October 20, 2000.

Market Price of Common Stock

Fiscal years ended January 31,2001 2000

Quarter Ended Hi Low Hi LowApril 30 $63.56 $44.50 $52.44 $40.47July 31 $62.00 $51.00 $49.19 $41.13 October 31 $57.63 $43.25 $57.06 $40.19 January 31 $58.44 $43.69 $69.44 $54.75

5.75%, 5 7/8%, 5.955%,6.15%, 6 3/8%, 6 1/2%,6.55%, 6 3/4%, 6.875%,7 1/4%, 7 1/2%, 7.55%,8.0%, 8 1/2%, 8 5/8%Notes, MarksSM, 13 monthFloating Rate Notes: Bank One Trust Company, N.A.(Formerly known as The First National Bank of Chicago)Attn: Global Corp. Trust Services1 Bank One Plaza Suite IL 1-0126Chicago, Illinois 60670-0126

Pass Through Certificates1992-A-2-8.07%First Security Trust Company of Nevada79 South Main Street3rd FloorSalt Lake City, Utah 84151

Sale/Leaseback TransactionSeries A - 8.25%Series B - 8.75%Series C - 8.875%Bank One Trust Company, N.A.(Formerly known as The FirstNational Bank of Chicago)Attn: Global Corp. Trust Services1 Bank One Plaza Suite IL 1-0126Chicago, Illinois 60670-0126

Pass Through Certificates1994-A-1-8.57%1994-A-2-8.85%1994-B-1-8.45%1994-B-2-8.62%Bank One Trust Company, N.A.(Formerly known as The FirstNational Bank of Chicago)Attn: Global Corp. Trust Services1 Bank One Plaza Suite IL 1-0126Chicago, Illinois 60670-0126

Sale/Leaseback TransactionWMS I Series B - 8.01%WMS I Series C - 8.72%WMS II Series A - 7.39%WMS II Series B - 8.27%Bank One Trust Company, N.A. (Formerly known as The FirstNational Bank of Chicago)Attn: Global Corp. Trust Services1 Bank One Plaza Suite IL 1-0126Chicago, Illinois 60670-0126

Pass Through Certificates(Wal-Mart Retail Trust IV, V):1994-B-3-8.80%Bank One Trust Company, N.A. (Formerly known as The First National Bank of Chicago)Attn: Global Corp. Trust Services1 Bank One Plaza Suite IL 1-0126Chicago, Illinois 60670-0126

Sale/Leaseback Transaction(Wal-Mart Retail Trust I, II, III):State Street Bank and TrustCompany of Connecticut, N.A.C/O State Street CorporationGlobal Investor Services GroupCorporate Trust P.O. Box 778Boston, Massachusetts 02102-0778

Pass Through Certificates1992-A-1-7.49%First Security Bank, N.A. Company of Nevada79 South Main Street3rd FloorSalt Lake City, Utah 84111

6 3/4% Eurobonds:Bank One, N.A.1 Triton SquareLondon, England NW13FN

Trustees

Independent Auditors:Ernst & Young LLP3900 One Williams CenterTulsa, Oklahoma 74172

Corporate Address:Wal-Mart Stores, Inc.Bentonville, Arkansas 72716Telephone: 501-273-4000Retail Internet Site: http://www.wal-mart.comCorporate Internet Site: http://www.walmartstores.com

The following reports are available upon request by writing theCompany or by calling 501-273-8446.

Annual Report on Form 10-K*Quarterly Financial Information on Form 10-Q*Current Press Releases*Current Sales and Earnings Releases*Copy of Proxy Statement*Diversity Programs ReportVendor Standards Report

* These reports are also available via fax or corporate website.

Dividends Paid Per Share

Fiscal years ended January 31,Quarterly

2000 1999April 10 $0.0600 April 19 $0.0500 July 10 $0.0600 July 12 $0.0500 October 10 $0.0600 October 12 $0.0500 January 8 $0.0600 January 10 $0.0500

®

www.miss ingk ids.com

If you recognize one of these children, please

Call 1•800•THE•LOST

Nadia DabbaghDOB: 2/3/90Missing Date: 12/25/92Age Now: 11Missing From:Medina, OH

Fred WrightDOB: 2/4/85Missing Date: 12/6/98Age Now: 16Missing From:Tuskegee, AL

Rachel MellonDOB: 10/13/82Missing Date: 1/31/96Age Now: 18Missing From:Bolingbrook, IL

Manuel MendezDOB: 11/15/84Missing Date: 12/22/96Age Now: 16Missing From:Modesto, CA

Crystal MarlerDOB: 11/28/82Missing Date: 10/8/98Age Now: 19Missing From:Whitley City, KY

Uchechi AnyanwuDOB: 6/1/85Missing Date: 7/15/97Age Now: 15Missing From:Boonton, NJ

Joshua AdamsDOB: 3/14/91Missing Date: 12/26/95Age Now: 10Missing From:Houston, TX

When Wal-Mart teamed up with

the National Center for Missing

& Exploited Children in 1996, there

were high hopes of a happy reunion.

If we could help f ind even one child

featured on our missing children’s

boards, all involved would have

considered the effort a resounding

success. With the help of our

Customers and Associates more

than 50 missing children have

been reunited with their families.

All of us at Wal-Mart, SAM’S CLUB,

and the National Center for Missing

& Exploited Children applaud you

for making this dream a reality.

Picture Them Home . . . Where They Belong

© 2001 Wal-Mart Stores, Inc.