Predicting that Wal-Mart Stores Inc.'s U.S. division has turned a corner, president and chief executive officer H. Lee Scott said Wednesday the giant retailer is "properly positioned'' for holiday selling and to cope with a slowing economy.
Scott defended the decision to focus resources on international growth during a presentation to financial analysts in Rogers, Ark., arguing that it was in the best long-term interest of shareholders.
He forecast "continual improvement month-to-month over the next three to five years" in the U.S., adding that he is more confident about the company's management team and prospects than at last year's analyst meeting.
He conceded that slowing sales and profit growth in the U.S. division, Wal-Mart's largest with $226 billion in revenue, made him "very concerned about the second quarter — the merchandise and the quantities we had. I believe that [second quarter] was the low point.''
Wal-Mart made plan during the second quarter, but Scott said at the time he was disappointed in the U.S. division's results and cut the retailer's full-year earnings per share projections to $3.05 to $3.13, from $3.15 to $3.23. The move sent the stock down five percent.
"Of all the things I've worried about in my seven years in this job, the first half of this year was the most significant concern I've had,'' he said. "We lived through that, we managed through that — [chief merchant] John Fleming...and other people you don't know."
Amid the U.S. housing slump and a credit crunch, Scott declared that "our low-cost, value model should give us the advantage we have historically had" when consumer spending tightens.
Analysts applauded after Scott concluded a 30-minute question-and-answer session.
The $345 billion retailer has struggled with a stagnant stock price, decreasing returns on the U.S. business and operational missteps, as well as a core customer under increasing financial pressure.
Scott said the strategy for apparel — volume basics priced at $10 and less with limited fashion exposure — is "stronger than it was 12 months ago when neither you nor we could figure out what the direction was."
"You start one way as a baby, but why shouldn't you be able to choose your own path as opposed to culturally people telling you which way to go?" - Thom Browne at his men's spring 2018 show, where he celebrated gender fluidity. #pfw #wwdmens (📷: @delphineachard)
"I think that all anyone really wants in life is to have people understand us for who we actually are, despite everything," says Ruth Negga. The actress talks "Preachers" season 2 and more on WWD.com. #wwdeye (📷: Dan Doperalski)