September 15, 2007
Mr. S. Robson Walton
Chairman of the Board
Mr. William S. Simon
CEO, Wal-Mart U.S.
Wal-Mart Stores, Inc.
702 S.W. 8th Street
Bentonville, AR 72716
Dear Messers, Walton and Simon:
Thank you for your interest in our firm and for meeting with us on September 8th to discuss how we can assist you in analyzing certain aspects of Wal-Mart U.S. based operations. This letter serves as confirmation of our discussions and the agreements made between us at the meeting.
Background 1, 2, 6
Wal-Mart is considered one the largest global retailer with $419 billion in annual revenues and more than 2.2 million employees throughout the world. Wal-Mart is successful in its ...view middle of the document...
S. to reconsider its position.
Management is concerned with all of these issues and their impact on U.S. operations. As such, you have asked us to assist Wal-Mart in assessing the success of the four-point plan, to determine if improvements need to be implemented at the store level to ensure policies and procedures are upheld at the lowest levels, and to determine if unionization in the U.S. should be considered to support continued operational success of the U.S. segment.
Objectives of the Operational Review
Based upon our preliminary review and our discussions with your and your personnel, we believe that the objectives of the operational review would be to:
1. Determine if unionization would enable Wal-Mart to better leverage expenses
2. Review the U.S. financial data as of Q3 2012 against the four-point plan to determine if plan goals are being met. If plan goals are not being met, the factors impeding success will be identified so that the plan may be appropriately modified or other action taken to achieve the objectives.
3. Determine if all stores are adhering to the corporate policies on recording time worked and state or federally mandated work breaks.
Scope of our Engagement 3
Based on our discussions with you, as well as our preliminary review of Wal-Mart’s operations, we have identified the following areas for our concentration in the review of your company’s operations:
* Personnel in all areas of functionality at the non-corporate level: understand and review retention success of non-unionized Wal-Mart staff in comparison to comparable unionized operations to determine if employee stability can be improved upon; compare compensation expectations between Wal-Mart’s existing structure and comparable unionized operations to determine if complete compensation (inclusive of benefits) can create a cost savings; and review Wal-Mart’s historical workman’s compensation and other injury related claims against comparable unionized operational experiences to determine if unionization can aid in improving work place safety.
* Operations: compare streamlined functionality in all staff areas to determine if unionization can improve upon productivity.
2. U.S. Net Sales
* Financial Planning and Analysis/Budgeting:
Review actual financial performance for Q1 through Q3 2012 against the performance plan put in place by management to reinforce company’s EDLP guarantee to it’s customers; review of merchandising and presentation adjustments to identify areas of improvement, neutrality, or failure in increasing net sales.
3. Timekeeping and Work Breaks
* Personnel and Operations at the retail level based upon a sampling of 50% of the work sites (2,250 sites):
Review current corporate policies and procedures related to time keeping policies to ensure they are unambiguous and in alignment with federal, state and local statutes. Review historical time keeping and break...