- The Washington Times - Wednesday, April 19, 2006

ROGERS, Ark. (AP) — Wal-Mart Stores Inc. is making genuine changes aimed at growing and keeping customers happy, Chief Executive Officer Lee Scott said yesterday, rejecting charges from union-backed critics that the world’s largest retailer was just pulling a publicity stunt.

Mr. Scott said a raft of initiatives at the company begun over the past six months — from boosting the number of organic products it sells to committing to greater diversity in the work force — would help the business and its millions of customers.

“We did not become one of the most successful companies in the world by doing things the same way for 44 years. We have succeeded by sticking to our core values while always looking to improve,” Mr. Scott told reporters at a press conference hosted by Wal-Mart.

Mr. Scott challenged union critics to talk with the 130 million U.S. customers who visit its stores weekly and ask them “if what Wal-Mart does for their lives and communities is a publicity stunt.”

Mr. Scott spoke to about 70 journalists attending Wal-Mart’s second press conference, which it started last year amid twin pressures of weak sales growth and bad publicity.

A year later, Wal-Mart is still struggling to regain the growth rates of years past. The company remains beset by organized critics, including labor unions.

WakeUpWalMart.com, a campaign group funded by the United Food and Commercial Workers union, dismissed Mr. Scott’s comments.

“After two more days of publicity stunts, Wal-Mart CEO Lee Scott again missed an incredible opportunity to change Wal-Mart and change America for the better,” WakeUpWalMart.com spokesman Chris Kofinis said.

Mr. Scott outlined a number of changes in Wal-Mart’s strategy aimed at getting existing customers to buy more products by offering trendier and better quality items. Other steps include better tailoring stores to their surrounding communities and taking a leading environmental role in reducing waste and greenhouse gases.

“We will grow this company as long as the customer allows us to grow. The power is in their hands, not in the legislature,” Mr. Scott said. Some states, including Maryland, have backed bills that would force the retailer to pay more for employee health care.

Wal-Mart will continue to add new stores in the United States at a rate that increases square footage by about 8 percent, in line with the past few years, Chief Financial Officer Tom Schoewe said.

The big challenge, he said, is balancing sales growth with return on investment, a key metric that drives its stock price. Wal-Mart’s return on investment has been on the decline but should stabilize in the next year as the company improves its operations, Mr. Schoewe said.

Mr. Schoewe said high oil prices will crimp the spending power of Wal-Mart’s core lower-income customers and continue to drive up Wal-Mart’s own utility costs.

Without being more specific, Mr. Scott said Wal-Mart would still grow “but I think it won’t be as big a rose as it could have been.”

Wal-Mart executives said major growth opportunities exist in the Hispanic market, which is expected to hold about 10 percent of U.S. buying power by 2010, and in environmentally friendly products.

Mr. Scott said that Wal-Mart is spending $45 million a year in Spanish-language advertising, and the company is building marketing programs around major events like Cinco de Mayo and World Cup Soccer.

Mr. Scott said Wal-Mart had long underestimated the sales potential of green products, citing energy efficient light bulbs as an example. Company officials said spending $2 on an efficient bulb rather than 19 cents for a standard one can save a customer $8 to $10 in power costs per bulb. If every Wal-Mart customer bought one efficient bulb, it would save U.S. consumers $3 billion in utility bills.

Asked about Wal-Mart’s plans in case a deadly strain of avian flu spreads from overseas to U.S. poultry, Mr. Scott said the company has a “very good plan” for dealing with food safety but gave no specifics. He added Wal-Mart has already seen a “slowdown in sales of poultry” in weekly tracking reports.

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