LITTLE ROCK — Wal-Mart Stores Inc. likely hit bottom in the company's second quarter that ended Aug. 31 as it struggled to revive sales in existing stores, H. Lee Scott, president and chief executive officer, said Wednesday.
"I believe that that was the low point," Scott told retail analysts gathered at the John Q. Hammons Center in Rogers. "It would certainly be our plan that that would be the low point."
The company reported sales in stores open at least a year up only 0.8 percent in that quarter. The first half of the year, he said, raised "the most significant concerns" he's had in his seven years as CEO.
During the period, Wal-Mart was working its way through a backlog of inventory, particularly in home and apparel lines.
On Tuesday, the first day of the conference, Bentonville-based Wal-Mart disappointed some analysts and investors with news that, while cutting back on U.S. store expansion, it would pour more money into foreign expansion.
Wal-Mart said spending on U.S. expansion would shrink by as much as $4 billion by 2010 while foreign expansion would grow by about $2 billion. Much of its U.S. growth would be expanding discount stores to supercenters, the company said.
Wal-Mart's stock closed down slightly Wednesday at $43.87 a share, 6 cents lower, after plunging 3 percent Tuesday.
In a research note to clients, analyst Adrianne Shapira of the Goldman Sachs Group said Wednesday that the sell off probably was an over-reaction. She currently rates Wal-Mart a buy. She said shifting expansion to emerging, faster-growing markets "seems a solid long-term alternative."
Mike Duke, vice chairman of the international division, said 80 percent of Wal-Mart's new-store growth in the near term will be in Canada, Mexico and China.
Still, Wal-Mart executives came under pressure from analysts for a second straight day for the company's decision, announced Monday, to buy the outstanding shares of its Japanese subsidiary Seiyu Ltd. at a cost of more than $860 million. Seiyu is on course to lose money for a sixth straight year.
Scott said full ownership will give Wal-Mart "the full flexibility and freedom" needed to make Seiyu profitable in the world's second-largest economy.
"We have always run this company for the long term, and we will continue to do so," he said.
Some of Wal-Mart's struggles of late can be attributed to the fact that "retailing competition is getting better at all levels," Scott said.
But he said Wal-Mart, the world's largest retailer, will stay on top.
"No other retailer in the world is better or will be better at what we do than Wal-Mart," he said.
Business, Pages 29, 30 on 10/25/2007