Wal-Mart Takes the Offensive

ROGERS, Ark. — Wal-Mart chief executive officer H. Lee Scott and other top executives, seeking to rebut critics of the world’s largest retailer, told an unprecedented media conference convened by the company that they were confident in the...

ROGERS, Ark. — Wal-Mart chief executive officer H. Lee Scott and other top executives, seeking to rebut critics of the world’s largest retailer, told an unprecedented media conference convened by the company that they were confident in the discounter’s strong fundamentals and growth strategies.

Scott said Wal-Mart is a magnet for opposition because it challenges the status quo. Chief financial officer Thomas Schoewe said the company’s stock, trading near a two-year low and down about 15 percent in the last year, had been affected by a variety of factors, including bad publicity, or “headline risk,” and dismissed concerns that Wal-Mart is cannibalizing older stores by opening units nearby.

The two-day conference, in which access is being tightly controlled and photographs and one-on-one interviews with executives are prohibited, is the first of its kind for Wal-Mart and marks a major shift in the company’s protocol, which had roots in founder Sam Walton’s philosophy of shunning the media.

The event is part of an aggressive campaign that started in January and has included full-page advertisements in more than 100 newspapers touting Wal-Mart’s job creation and employee benefits. It is intended to polish the retailer’s public image and get out its message.

“Many of our competitors, let’s face it, would like to continue to be rewarded for operating in ways that are less efficient and less meaningful to their customers, and continue to pass those inefficiencies off in the form of higher prices,” said Scott, who read from a Teleprompter for about 20 minutes and took questions for 25 more.

“In some cases, I think some folks would like to hang on to a status quo that doesn’t exist in most of America today — the notion of the general store, which started to disappear in the 1950s,” Scott said.

Wal-Mart has come under fire from labor groups for its wage and benefits policies and allegedly anticompetitive practices, and faces battles in cities such as New York and Los Angeles over expansion plans. The company also has been challenged by scandals. Last month it agreed to pay a record $11 million to settle a civil investigation by federal law enforcement authorities involving contractors who hired illegal immigrants to clean stores. Wal-Mart also settled with the U.S. Department of Labor for violations of child labor laws.

This story first appeared in the April 6, 2005 issue of WWD.  Subscribe Today.

Schoewe, who preceded Scott in addressing journalists in a hotel about five miles from company headquarters in Bentonville, Ark., said same-store sales, which went up 2.9 percent in fiscal 2005 compared with 5.4 percent in fiscal 2001, “are very important but they are not the whole story.”

He cited as an example Kissimmee, Fla., where the discounter reached $100 million in sales with one Supercenter in 2001, and four years later had six Supercenters averaging $80 million annually. “Now we have half a billion dollars in sales in Kissimmee,” Schoewe said.

Wal-Mart still intends to open in New York, where it has been thwarted by unions and other opponents. “We are going to push ahead, but we need to do it in a way that’s beneficial to our shareholders,” Schoewe said. “We are definitely not curtailing our activity.”

And Mike Duke, president and ceo of Wal-Mart Stores U.S. division, said the company would improve the shopping experience for women customers with better merchandise and cleaner stores and bathrooms. Wal-Mart’s main rival,

Target, for years has focused on female shoppers, who constitute 70 percent of all discount business.

Scott, other than referring to the “sadness” he felt, did not discuss the ouster last month of former Wal-Mart vice chairman Thomas Coughlin, who was forced to resign from the board of directors after a company investigation of unauthorized use of corporate gift cards and personal reimbursements. The findings have been referred to federal prosecutors in Arkansas.

Executives also declined to comment in detail on pending litigation, which includes the biggest U.S. gender bias lawsuit filed on behalf of more than one million current and former Wal-mart female workers.

Wal-Mart has resisted all efforts to unionize its employees and Scott took aim at labor groups such as the United Food and Commercial Workers International Union. The union “with an eye on dues and membership has declared war on Wal-Mart,” he said.

But the union said it has started a campaign to protest Wal-Mart’s wage, health care and other policies it considers destructive.

Scott said he was “not immune to the personal cost of change” and recounted how his father’s gas station on Route 66 in Baxter Springs, Kan., went out of business when Interstate 41 was built.

Still, a community group from Inglewood, Calif., where voters last year defeated a plan for a Wal-Mart complex, failed in its efforts to meet with or deliver a letter to Scott, who in response to a question about the vote said, “We are not sensitive enough to the implications of our size.”