Walmart

9-794-024
REV: NOVEMBER 6, 2002

STEPHEN P. BRADLEY
PANKAJ GHEMAWAT

Wal*Mart Stores, Inc.
In Forbes magazine’s annual ranking of the richest Americans, the heirs of Sam Walton, the
founder of Wal*Mart Stores, Inc., held spots five through nine in 1993 with $4.5 billion each. Sam
Walton, who died in April 1992, had built Wal*Mart into a phenomenal success, with a 20-year
average returnon equity of 33%, and compound average sales growth of 35%. At the end of 1993,
Wal*Mart had a market value of $57.5 billion, and its sales per square foot were nearly $300,
compared with the industry average of $210. It was widely believed that Wal*Mart had
revolutionized many aspects of retailing, and it was well known for its heavy investment in
information technology.
David Glass and DonSoderquist faced the challenge of following in Sam Walton’s footsteps.
Glass and Soderquist, CEO and COO, had been running the company since February 1988, when
Walton, retaining the chairmanship, turned the job of CEO over to Glass. Their record spoke for
itself—the company went from sales of $16 billion in 1987 to $67 billion in 1993, with earnings nearly
quadrupling from $628 million to$2.3 billion. At the beginning of 1994, the company operated 1,953
Wal*Mart stores (including 68 supercenters), 419 warehouse clubs (Sam’s Clubs), 81 warehouse
outlets (Bud’s), and four hypermarkets. During 1994 Wal*Mart planned to open 110 new Wal*Mart
stores, including 5 supercenters, and 20 Sam’s Clubs, and to expand or relocate approximately 70 of
the older Wal*Mart stores (65 of which wouldbe made into supercenters), and 5 Sam’s Clubs. Sales
were forecast to reach $84 billion in 1994, and capital expenditures were expected to total $3.2 billion.
Exhibit 1 summarizes Wal*Mart’s financial performance 1983–1993. Exhibit 2 maps Wal*Mart’s store
network.
The main issue Glass and Soderquist faced was how to sustain the company’s phenomenal
performance. Headlines in the press hadbegun to express some doubt: “Growth King Running Into
Roadblocks,” “Can Wal*Mart Keep Growing at Breakneck Speed?” and “Wal*Mart’s Uneasy
Throne.” In April 1993, the company confirmed in a meeting with analysts that 1993 growth in
comparable store sales would be in the 7%–8% range, the first time it had fallen under 10% since 1985.
Sellers lined up so quickly that the New York Stock Exchangetemporarily halted trading in the stock.
From early March through the end of April 1993, the stock price fell 22% to 265/8, destroying nearly
$17 billion in market value. With supercenters and international expansion targeted as the prime
growth vehicles, Glass and Soderquist had their work cut out for them.________________________________________________________________________________________________________________
This case was prepared by Research Associate Sharon Foley under the supervision of Professors Stephen P. Bradley and Pankaj Ghemawat. HBS
cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or
illustrations of effective or ineffective management. It is based in part on the case “Wal-MartStores’ Discount Operations” (HBS No. 387-018)
written by Profesor Ghemawat.
Copyright © 1994 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be
reproduced, stored in a retrieval system,used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical,
photocopying, recording, or otherwise—without the permission of Harvard Business School.

This document is authorized for use only in Managerial Economics by Josep M. Sayeras from March 2012 to
September 2012.

794-024

Wal*Mart Stores, Inc.

Discount Retailing
Discount stores emerged in the...