Small-Town Hit

"Give me a W!" shouts Sam Walton, 65, the chairman of Wal-Mart Stores, to employees at staff meetings. "Give me an A!" And so forth, down to the last T. Then he gives a final ringing cheer: "WalMart, we're No. 1!" Walton has plenty of reasons to shout. In April, sales at his 570 outlets were up 32% from the previous year. By comparison, Sears' revenues increased just 7.7%, K mart's by 5.5%, and J.C. Penney's were down 1.3%.

Thanks to a strategy of selling big in small-town stores and deep discounting, Wal-Mart is the fastest-growing major U.S. retailer. It is opening nearly two new stores a week, and its sales are increasing almost three times as fast as the average for the discount-store industry. They totaled $3.4 billion in 1982, up from $2.4 billion the year before. That made Wal-Mart the nation's ninth-largest shopkeeper, well behind the likes of Sears (sales: $30 billion) and K mart ($17 billion), but ahead of such old-time retailers as R.H. Macy and Carter Hawley Hale, parent of ultrachic Bergdorf Goodman and Neiman-Marcus.

Wal-Mart's profits last year mushroomed to $124.1 million, from $82.8 million in 1981. With first-quarter earnings up 51% over the same year-ago period, to $27.5 million, Wal-Mart has become a Wall Street darling. During the past year, its stock price has tripled, closing last week at $73.

Wal-Mart is based in the rolling Ozark hill country of Bentonville, Ark. (pop. 8,756). The sleepy mountain town was heretofore known chiefly as the birthplace of Louise McPhetridge Thaden, winner in 1929 of the first cross-country Powder Puff Air Derby for women aviators. Now it is famous as the home of Walton, an individualist who flies his own Piper Aztec, hunts quail, and is worth $500 million to $700 million.

Trim and suntanned, Walton is a 1940 graduate of the University of Missouri and worked for J.C. Penney briefly before World War II military service. He and his brother Bud, now a senior vice president, opened the first Wal-Mart Discount City in Rogers, Ark., in 1962.

In some ways, Sam Walton is James Cash Penney reincarnated, right down to strict adherence to the Golden Rule, the name of Penney's first store in Kemmerer, Wyo., in 1902. Says Wal-Mart President Jack Shewmaker: "We make no bones about the fact that we believe in God, that we think everybody should."

Walton's formula for retailing success resembles Penney's: grow in smalltown America and offer quality merchandise at a good price. Wal-Mart undersells competition at almost every turn, and most stores are in towns of 5,000 to 25,000. Says Walton: "There's a lot more business in those communities than people thought."

Wal-Mart today dots 15 states, chiefly in the South and Midwest. Yet the stores try to tailor themselves to individual communities. Golf slacks may move well in one store, Wrangler jeans in another. By contrast, the 2,117 stores in the K mart chain, Wal-Mart's principal rival, mostly offer identical merchandise.

Wal-Mart's 50,000 employees, called "associates," share in the company's profits, earn bonuses for reducing shoplifting or suggesting merchandising ideas. "Their morale is fantastic," says one Wall Street admirer. Each Saturday morning at 7:30 in the headquarters auditorium packed with new merchandise samples, "Mr. Sam" holds meetings with buyers and managers. Walton plans to continue expanding rapidly. The company will open more than 100 stores next year. At that sizzling pace, sales by 1987 would hit $10 billion. That would put Wal-Mart in a position to challenge K mart as the king of the discounters. This file is automatically generated by a robot program, so viewer discretion is required.