Wal-Mart CEO: Growth doesn't lie merely in bricks and mortar(70092)

Wal-Mart s Chief pledges to pick up the pace online

Wal-Mart Stores Inc. plans to communicate its low-price message more aggressively online as retailing enters "a new era of price transparency," Chief Executive Mike Duke said Friday during the retail behemoth's annual annual shareholders meeting.

Speaking before a basketball arena packed with Wal-Mart workers on the University of Arkansas campus, Mr. Duke described a path forward for the world's largest retailer that would take it from serving 200 million customers a week to one billion over the next 20 years.

"These are achievable goals," Mr. Duke said, explaining that the discount chain Sam Walton founded translates world-wide from Mr. Duke's home state of Georgia, to Guatemala, to Guangdong, China.

Wal-Mart has struggled for four straight quarters with tepid U.S. sales growth and is encountering limitations to its once-breakneck domestic expansion after carpeting rural and suburban America with its trademark supercenters. The company also continues to contend with issues tied to its labor practices.

Meanwhile, Wal-Mart shares have fallen 5.7% this year, while shares of U.S. rival Target Corp. have risen 9.2%.

Still, the company's profits have remained steady because of cost cuts, and total revenue has continued to accelerate thanks to increasing international sales in developing nations such as Brazil and China. Annual revenue from Wal-Mart's international division now tops $100 billion, roughly a fourth of the company's $405 billion in annual sales.

Mr. Duke, who estimated that Wal-Mart would create 500,000 new jobs world-wide over the next five years, reiterated that the company plans smaller stores, which could break the U.S. growth logjam by making it easier for Wal-Mart to enter urban areas where it has met union opposition. Such plans were previously profiled in The Wall Street Journal.

Yet Mr. Duke emphasized that Wal-Mart's future expansion couldn't be limited to brick-and-mortar stores at a time when shoppers increasingly browse selections on smartphones. He said Wal-Mart would become more adroit at transferring its discount formula to the Web, an area where he conceded the company has fallen behind competitors.

Wal-Mart Chief Financial Officer Tom Schoewe also announced a new $15 billion stock buyback program, replacing a similarly sized one from last year that had $4.7 billion of authorization remaining.

While the tenor of Friday's meeting was upbeat, Wal-Mart's history of employee relations dogged the company, as stockholders questioned the liabilities it faced regarding labor violations and sexual discrimination.

In December 2008, Wal-Mart agreed to pay up to $640 million to settle 63 state class-action lawsuits pertaining to overtime. It also faces the largest sex-discrimination suit in U.S. history, which a federal appeals court recently ruled could proceed as a class action.

"I don't understand so many lawsuits," investor Johnny Self, 73 years old, of Tulsa, Okla., told the executives at the meeting.

Wal-Mart has repeatedly argued in court that no systemic discrimination existed at the company and the cases should be tried individually. However, six years before the sex-discrimination case was filed, the company hired a prominent national law firm that concluded Wal-Mart was vulnerable to just such a lawsuit.

The results of the 1995 report showed that, in fact, female workers were paid and promoted at significantly lower rates than their male counterparts. The New York Times on Friday first reported the study.

Law firm Aiken Gump Strauss Hauer & Feld conducted the confidential study, which found, among other things, that men employed by Wal-Mart as department managers, an hourly position, earned 5.8% more than women in those positions in 1993. In addition, men were 5 1/2 times as likely as women to be promoted into salaried, management positions.

Wal-Mart confirmed the existence of the study but questioned the validity of Akin Gump's methodology, saying the firm was asked to mimic the type of "aggressive" statistical analysis done by plaintiffs' lawyers in class-action cases, Wal-Mart spokesman David Tovar said.

As in the past, the Wal-Mart annual meeting, hosted this year by actor Jamie Foxx, was a spectacle of movie stars and musicians, including Enrique Iglesias, Mariah Carey and "American Idol" winner Lee DeWyze, performing before an audience of Wal-Mart employees, some of whom had traveled to Arkansas from as far away as Chile and Japan.

Wal-Mart CEO: Growth doesn't lie merely in bricks and mortar

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