June 10, 2009 > Wal-Mart: We'll keep customers gained in recession
Wal-Mart: We'll keep customers gained in recession
By Anne D'Innocenzio and Chuck Bartels, AP Business Writers
FAYETTEVILLE, Ark. (AP), Jun 05 _ Wal-Mart Stores Inc.'s newly installed President and CEO Mike Duke pledged to shareholders Friday that the world's largest retailer will build on its success by keeping its customers even when the economy improves.
But at an annual meeting that was often about celebrating recent business success, the CEO emphasized that the discounter also needs to make even more strides in larger issues of sustainability and health care.
``I believe the economic crisis has brought a fundamental shift in consumer attitudes and behavior,'' Duke told cheering shareholders packed into a University of Arkansas arena in Fayetteville, about 30 miles from its Bentonville headquarters.
``There is a 'new normal' in which people want to save money and are getting smarter about saving money. ... So let me be clear, and people ask me about this all the time: our customers will stay with us when this economy turns around,'' he said.
Wal-Mart has taken customers from competitors and been a bright light in a bleak recession for retailers. The company's challenge now is to make sure new shoppers stay when the economy recovers.
As a testament to recent success, Wal-Mart announced it would launch a new $15 billion share buyback. The program replaces a $15 billion program begun in 2007 that $3.4 billion of remaining authorization.
In his address, Duke touched on various issues from increasing career advancement and developing better training for its workers to acclerating its environmental efforts like further reducing waste.
Duke, who had been vice chairman of the company's international business, succeeded Lee Scott, who retired Feb. 1. Scott is continuing as chairman of the executive committee of the board until January 2011.
Chief Financial Officer Tom Schoewe told shareholders that the company was increasing sales and profits faster than its competitors. He noted that Wal-Mart forecast earnings per share for fiscal 2008 of between $3.30 and $3.43.
The company came in at $3.35. Meeting that projection came as the economy went into a nosedive.
``Did we know when we provided guidance that consumer confidence would look like this?'' Schoewe said, pointing at a graphic that featured a sharp downward arrow. He said the retail environment became increasingly difficult and that Wal-Mart was pressured internationally by a stronger dollar.
The meeting featured Wal-Mart's customary celebrity appearances. Miley Cyrus, who has a new apparel line with Wal-Mart, performed, as did American Idol winner Kris Allen, who is from Arkansas. Basketball legend Michael Jordan also spoke briefly.
Vice Chairman Eduardo Castro-Wright promised shareholders that the company will press for more diversity in its workforce and create more career opportunities for advancement.
``In the year ahead, we will take bold steps. We will not confuse efforts with results,'' said Castro-Wright Ark. Without offering specifics, Castro-Wright said that the company will do more to help associates, including hourly associates, advance in the workforce and get competitive pay.
The nation's biggest private employer has long been under pressure by labor-backed critics to keep improving its workplace practices, though criticism has diminished recently.
Castro-Wright says that 40 percent of regional general managers are ``of color.'' Twenty percent of that group are women.
Wal-Mart, which generated more than $400 billion in sales last year, has pulled shoppers away from rivals around the globe because its re-emphasis on low prices along with the right mix of merchandise and marketing have come together just as the economy went sour.
Even entertainer Ben Stiller, the host of the meeting, took the opportunity to take a jab at Target.
``You guys get up early,'' said Stiller, referring to the 7 a.m start of the meeting. ``I hear they are still sleeping over at Target.''
Still, after enjoying a 20 percent surge in its stock price in 2008, Wal-Mart has seen its shares fall 7.5 percent so far this year as Wall Street turns to retailers that sell more discretionary goods and could benefit when the economy improves. That has driven up share prices for such merchants as Macy's Inc. and Minneapolis-based Target.
Wal-Mart continues to move forward with an aggressive remodeling of its stores, which includes a better display of electronics and lower shelves to help shoppers navigate the store more easily. The company plans to remodel 500 of its more than 3,600 stores in the U.S. this year.
The company is also launching more exclusive launches in apparel and home furnishings that should help shoppers buy more than just detergent and groceries. This week, the company launched a new fashion line with teen star Cyrus and BCBG designer Max Azria for the critical back-to-school shopping season.