Wal-Mart focus: Recouping sales

Making progress but wish it were faster, CEO says in Rogers

 
Andrew Walker pushes a cart of merchandise across the floor at Sam's Club in Bentonville on Thursday, June 2, 2011.
Andrew Walker pushes a cart of merchandise across the floor at Sam's Club in Bentonville on Thursday, June 2, 2011.

— When Wal-Mart Stores Inc. embarked on a major destocking effort two years ago, it created a gap in both selection and price-point of which smart competitors took advantage, the company’s head of U.S. sales said Thursday.

Bill Simon, president and chief executive officer of Wal-Mart U.S., told journalists gathered Thursday at the Embassy Suites in Rogers that the company is still recovering two years later from the hit “Project Impact” had on sales. The company’s annual shareholders meeting is today at Bud Walton Arena in Fayetteville.

“The big question is, ‘When are we going to be positive [in same-store sales] again,’” Simon said. “We are making progress. I wish it could be faster.”







He said the company’s priority for the future is fixing same-store sales, or sales at U.S. stores open at least a year, a key measure of success in retailing.

In May, Wal-Mart reported net sales for the first quarter were $103.4 billion, up 4.4 percent from a year ago. Sales at Sam’s Club, the members-only, wholesale club division, rose 4.2 percent on a same-store basis. The figure excludes the effect of fluctuating fuel prices.

But sales at stores open at least a year in the U.S. were down 1.1 percent compared with the same period last year. It was the eighth straight quarter that same store sales declined.

Simon said the company’s return to a focus on everyday low prices rather than deeply discounting select items is important to restoring customer confidence in the stores.

He said that deep-discounting select products was playing against the company’s historical strength: an atmosphere where shoppers could count on consistently low prices on items they buy frequently.

That confidence is more important in the face of increasing fuel prices and high unemployment figures nationwide, the two economic factors that influence Wal-Mart customers’ shopping habits, Simon said.

Simon said small-format stores, like the stores Wal-Mart will open next week in Prairie Grove and Gentry, are a good growth strategy for putting the company in smaller rural communities and urban areas where supercenters would be too expensive to build.

But he stressed that the focus of the U.S. division would remain on increasing the same-store sales figures.

“We have to fix the stores we have,” he said.

Cindy Davis, executive vice president of Global Customer Insights, a newly created team, said Wal-Mart is developing ways to gain more feedback from its customers, including the use of social media. With 200 million shoppers a week, she said, “we have lots of data at Wal-Mart.”

The company, she said, needs to harness the power of that data. In her first few weeks in her new role, she said, she has listened to direct feedback from some of the millions of Wal-Mart’s Facebook “fans.”

“Listening to customers is part of our DNA,” Davis said.

A challenge for the company, she said, is to learn more about the similarities and differences among customers in the many countries where Wal-Mart operates.

One common desire, she said, is to save money and time.

“The praise of ELDP [everyday low price] is something that we hear in almost every market,” she said.

To meet that demand, she said, Wal-Mart must continue to drive costs out of its supply chain and store operations.

“We are relentless, relentless about our cost structure,” Davis said. “To deliver everyday low price, you have to have everyday low cost.”

Still, she said, local experts are critical to success in the company’s varied markets.

Cathy Smith, senior vice president of strategy and chief financial officer for Wal-Mart International, echoed that sentiment, saying that as Wal-Mart expands globally, “the first thing we’ve got to do is be locally relevant.”

She said that, as the company has expanded globally, it has taken a leadership role in promoting sustainable farming practices, economic empowerment for women, hunger relief and charitable giving.

“We create a global impact,” she said.

J.P Suarez, senior vice president for international business development, said new stores are the key to growth in international markets. The company will add as much as 24 million square feet of retail space in its international division this year, he said.

“It’s not about being everywhere. It’s about being where we can make a difference,” he said.

Wal-Mart won approval Tuesday to buy a majority interest in South Africa retailer Massmart Holdings Ltd. for $2.4 billion, opening the door to future expansion on a continent.

Shareholders submitted five proposals to be voted on, all of which the company recommends be rejected. They are:

A proposal by the Unitarian Universalist Association of Congregations of Boston to explicitly prohibit discrimination based on “gender identity or gender expression.” Wal-Mart says it has a broad policy against discrimination and harassment.

A proposal by the Firefighters Pension System, city of Kansas City, Mo., to require a semiannual report on political contributions. Wal-Mart says it complies with all laws concerning political contributions, including public disclosure.

A proposal by William Steiner of Piermont, N.Y., that would give holders of 10 percent of the company’s stock the power to call a special shareholders meeting. The company says that threshold could lead to special meetings that are not in the best interest of the company or shareholders.

A proposal by the comptroller of New York City, as custodian or trustee of several pension funds, requiring Wal-Mart suppliers to publish an annual sustainability report that addresses human rights, labor standards, corruption and environmental standards.The company says it has standards in place that, if not met, jeopardize a supplier’s continued business with Wal-Mart.

A proposal by the National Legal and Policy Center of Falls Church, Va., requiring the board to prepare, by October, a report detailing business risks related to climate change. Wal-Mart says it has taken a leadership position in corporate environmental sustainability and already discloses potential risks posed by weather conditions.

Wal-Mart submitted four proposals for shareholder approval. They are:

Election of the 15 nominees to serve on the company’s board of directors.

Ratification of Ernst & Young as the company’s independent accountants to audit financial statements.

A non-binding advisory vote on executive compensation, as now required by U.S. Securities and Exchange Commission rules.

A non-binding, advisory vote, also required by SEC rules, on whether to have the executive compensation vote every year, every other year or once every three years. The company’s board recommends an annual vote.

Business, Pages 25 on 06/03/2011

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