On one hand, the world's largest company turned in another strong performance in its 2005 fiscal year. It added $29 billion in sales, finishing the year with a top line of $285.22 billion. Net income exceeded $10 billion for the first time, increasing nearly 16% and outpacing net sales growth of 11.3%--always a high priority for Wal-Mart management.
But in typical fashion, management was more concerned about what could have been achieved and was not.
"I'm pleased with our results but not satisfied," president and chief executive officer Lee Scott told analysts during Wal-Mart's fourth quarter conference call. "We left a lot on the table and have our share of opportunities ... sales in the Wal-Mart [Stores] division started strong but slowed in the second half.
"We were not aggressive enough in our merchandise plans and underbought in several key categories, particularly at the mid- and premium-price points. Although this resulted in lower markdowns and better inventory levels, the lack of sales resulted in greater expense pressures. We would have been better off if we had traded lower markdowns for sales, and we will be more aggressive on our merchandise planning this year."
Despite the self-criticism, the year yielded a number of impressive achievements. The fourth quarter saw the retailer grow its gross margin for the 13th time in the last 14 quarters--without increasing prices, as executives are quick to point out.
"Our continued improvement in gross margin for the quarter was the result of, No. 1, the benefits of global sourcing two, fewer markdowns and finally, lower inventory shrinkage," explained chief financial officer Tom Schoewe.
For the full fiscal year, gross margin was up 0.4 point to 22.9%. But, as Schoewe pointed ...