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To Our Shareholders

Looking back at 2020 brings with it a wide range of thoughts and emotions as the world faces one of the most challenging times in modern history. The pandemic brought extraordinary challenges, heartbreaking stories, significant loss and moments of inspiration as our associates overcame challenge after challenge. We witnessed their courage, kindness and generosity. Across the world in our stores, clubs and supply chain, they have come together to serve our customers, each other, and their communities.

As I wrote this letter last year, uncertainty over the length and severity of the health crisis was at its peak. I described five priorities for our company that would be our guide, and I outlined specific initiatives we had implemented to address urgent needs. The priorities were:

  • Support for associates
  • Service to customers
  • Help for others
  • Manage the business, and
  • Advance the strategy

These priorities remain unchanged today and to support them we paid $1.6 billion in special cash bonuses to our associates last year, implemented special COVID benefits, hired hundreds of thousands of displaced workers, set up COVID testing sites, provided relief to small businesses, donated more than 625 million pounds of food, pledged over $55 million in grants for hunger relief, and now we’re helping with vaccination efforts across the U.S., Canada and Mexico. As customers increasingly sought contactless shopping experiences, we expanded or launched pickup and delivery capabilities in most of our markets, and we dedicated more resources to support our rapidly growing eCommerce business. We’re also making longer term investments in our people, technology and supply chain to support strong growth. Last fall, we announced wage increases for 165,000 associates. And, in February, we announced wage increases for an additional 425,000 associates. We are able to do so much for our stakeholders because our business is strong, and we have momentum. Last fiscal year, we had record revenues of $560 billion. That’s an increase of more than $35 billion in one year. We also saw record operating cash flow of $36 billion.

We are constantly learning from new experiences and events and 2020 gave us plenty of opportunities to reflect, adjust, and plan for the future. It also confirmed our omni strategy is the right one. We have made tremendous progress on key elements of our customer value proposition. Our associates have done an amazing job serving customers and members and keeping them safe in our stores and clubs this past year. Our pickup and delivery businesses are scaling along with a global eCommerce business that should reach more than $100 billion in sales over the next couple of years. The pandemic also accelerated the shift from traditional retailing to a more digital experience where companies meet the customer on their terms.

We have a powerful set of assets that provide a strong foundation as we write the next chapter of the Walmart story. We have made gains in recent years that we’ll protect, including the value for customers we offer and the lead we’ve built in pickup services. We’re broadening the scope of products and services we offer to increase relevance in more customers lives, while layering in a more robust digital experience to improve engagement. And now we’ll accelerate investments in key areas to support faster sales growth and keep the current asset base fresh.

As we enter the next stage of our growth story, we’re doing it from a position of strength. Now is the time for us to be aggressive and invest to accelerate growth. We’re moving quickly. The decisions we make reflect confidence in our strategy. We’ve outlined a few key areas where we need to invest to move even faster to seize the opportunities for growth that lay before us.

  • First, we’ll add eCommerce fulfillment capacity and automation through new facilities and within or adjacent to stores to increase pickup and delivery capacity and improve productivity. The market has experienced outsized growth in online shopping since the beginning of the pandemic, and we believe this trend will continue. That means we need to stay ahead and build solutions that help us continue to earn primary destination with customers.
  • We’ll also continue to invest in the value proposition for Walmart+ to ensure high NPS and customer retention. The investments in fulfillment I just mentioned will play a key role here too as we invest in capacity to meet demand. With time, we’ll add new benefits to the membership, which will make it appealing to more customers and drive sustainable member and revenue growth.
  • Expanding our online assortment of general merchandise is also key to what we’ll accomplish. We must ensure we have the brands customers are looking for and we will accomplish this through our 1P owned inventory assortment or through our 3P marketplace.

Making targeted investments to help achieve our aggressive growth plans is important. It’s also important for us manage our portfolio so we are deploying capital where we see the best opportunity for growth while pulling back in other areas. Over the past few years, we have divested restaurants, specialty apparel, banks, eCommerce businesses in the U.S., and we exited or reduced our exposure in Brazil, Argentina, the U.K. and Japan. We made these moves while also investing in important partnerships like, Dada, Rakuten, Aditya Birla Fashion Retailer, Ninjacart and a fintech startup in the U.S. We have a lot of workstreams underway, and I’m confident that we’re spending our time and resources where they’ll provide the best returns over time.

Our Bold Objective: To Become
a Regenerative Company

Walmart is committed to doing more than reducing environmental impacts. Today we’re taking action to restore, renew and replenish our planet—and help reverse damage to the environment.

To pull these workstreams together into a cohesive, well-executed strategy the organization is thinking and working in new ways. Whether it’s working in an agile way, prioritizing digital acumen and diversity in our talent base, or developing new ownership structures around the world – we are evolving as a company and functioning in a way that supports innovation, speed and productivity. We’re doing all of this while keeping true to the core values we share at Walmart.

Our values are simple and guide our business decisions, but the outcomes also have a powerful impact on the world given Walmart’s scale. We believe trust is a competitive advantage. We run our business using a shared value approach. It’s an ideology that guides us in all aspects of the business. The best way to create a valuable company is to build for the long term, manage the short term, and serve all relevant stakeholders.

In September of 2020, Walmart announced its aspiration to become a regenerative company. This is a holistic approach through which we have set aggressive targets, including:

  • Zero emissions in our own operations by 2040, with no offsets
  • 100% renewable energy to power our facilities by 2035
  • Electrify our vehicles by 2040, and
  • Manage or restore at least 50 million acres of land and one million square miles of ocean by 2030

These are not one-off projects we’re working on. They are strategic and core to what we do. I encourage you to read more about our efforts on regeneration as well as our leadership on other priorities in the upcoming Environmental, Social and Governance report to be published in June.

Our company has also taken a leadership role to help tackle other challenges that face our society. I’m really proud of the work we’re doing on racial equity. It’s something we’re committed to. We’re finding ways to leverage our size and influence to shape financial, healthcare, education and criminal justice systems and create more equity, more often. Ensuring equality for all citizens is the right thing to do, and it’s smart business. A more diverse and inclusive workforce is a more powerful workforce.

In closing, I’ll once again thank our associates. They serve customers and their communities in a way that’s simply incredible. That’s why so many customers trust Walmart. They trust who we are as a company, our values and what motivates us. They also trust us to keep them at the center of all that we do. Our business model has evolved and will look different in the future than in the past. We’re innovating on behalf of our customers and increasingly touching more parts of their lives and providing solutions. We’re driven to create a seamless, value-added and more digital experience, and we have the assets to deliver that for them. We have momentum in our business, which is a direct result of investments we’ve made in recent years. Today, we see a unique opportunity to step up investments in key areas to make our business even stronger and grow faster. We’re confident our strategy will allow Walmart and its stakeholders to win for many years to come.

Doug McMillon
President and Chief Executive Officer
Walmart Inc.