H. Lee Scott Jr.
• In a lousy retail environment, revenues grew about 13%, to $218 billion
• Low cost structure and focus on grocery sales are boosting market share
PHOTO BY REID HORN
Thanks to a recession, war, and tight-fisted consumers, 2001 will hardly go down as a barn burner for giant Wal-Mart Stores Inc. (WMT ) Earnings are likely to grow a meager 6% on a 13% revenue gain, to about $218 billion. But everything's relative. Many retail rivals are facing steep declines. And CEO H. Lee Scott Jr. is taking advantage of their misery by turning up the heat with sharper pricing, tighter cost controls, and better execution in his stores.
Scott has helped to perfect these strategies in past downturns. He's raising capital spending by nearly $1 billion, to $10 billion in 2002, while many others are being forced to pull back. Under Scott, 52, Wal-Mart's core discount and food-and-merchandise "supercenter" businesses appear to be thriving. And the international unit is posting vastly improved results. Even Sam's Club, the warehouse-clubs that were once company stepchildren, are seeing robust gains.
Scott, the son of a Kansas gas station owner, spends at least one day a week visiting stores. When same-store sales rose less than 4% in May, Scott sounded the alarm. Analysts say the company has improved operations since. "The real key is taking care of customers," says Scott. And as Wal-Mart's shares have amply demonstrated over the years, if customers aren't disappointed, shareholders won't be, either.