Wal-Mart Stores Inc.'s annual stockholders' meeting, an extravaganza of executive presentations and high-octane entertainment, gets under way Friday amid increasing pressure about blunders in apparel, the potential of a second-quarter earnings miss and challenges to the company's corporate image.

The world's largest retailer is facing myriad concerns as about 18,000 people, including more than 5,000 employees, suppliers, media and financial analysts, descend on headquarters in Bentonville, Ark.

The issues also include:

-- Turnaround plans for Wal-Mart's flagship U.S. division, which accounts for 65 percent of total revenue and, twice in the last 12 months, has fallen below Wall Street expectations on same-store sales.

-- Accusations by fired marketing officer Julie Roehm that Wal-Mart executives, including president and chief executive officer H. Lee Scott, violated company ethics policies. Wal-Mart had accused Roehm of accepting gifts from suppliers and having an affair with a subordinate. Roehm, who is suing for breach of contract, alleged in court papers that the executives received gifts and discounts from companies doing business with Wal-Mart.

-- Speculation that Wal-Mart has explored the sale or spin-off of the $41 billion Sam's Club division.

-- Fallout from an alleged clandestine investigation of some shareholder and activist groups by an internal Wal-Mart team, and electronic surveillance of a New York Times reporter.

Although the retailer declined to discuss the meeting agenda, Scott, possibly hinting at the tone, said in a letter to shareholders that 2006 was a "period perhaps of the most rapid and profound change in our company's history."

Most crucial for Wal-Mart, the stock has been lethargic for about five years, hovering around $50, after decades of share splits and stellar growth. The $226 billion U.S. division continues to struggle. Its core customer is under pressure from rising gas prices and low wage growth to such a degree that the retailer warned May 15 that it may not meet Wall Street's consensus for second-quarter earnings.

Affluent customers have been underwhelmed by Wal-Mart's forays into pricier, more fashionable apparel, and core basics for loyal shoppers have been missing. The Metro 7 line has been reduced and the first designer label, George ME by Mark Eisen, has been significantly scaled back. The Wall Street Journal reported Tuesday that Wal-Mart, with a glut of inventory, was cutting orders, creating shock waves in Chinese factories where the retailer produces goods on a monumental scale. Factories are scrambling to line up orders from other retailers to keep production lines full.

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