By  on September 19, 2007

Despite positive steps, Wal-Mart Stores Inc. is "still struggling'' in the key apparel and home categories, the retail giant's chief financial officer said Tuesday.

"We told you that during second quarter we had a very difficult time in home and apparel at Wal-Mart U.S.," Tom Schoewe, executive vice president and cfo, said during the Bank of America 37th Annual Investment Conference in San Francisco. "We told you we had to reduce inventory, which moderated earnings expectations. We're in very good shape when it comes to inventory for apparel and home. Back-to-school is everything we hoped it would be. In apparel, girls', boys' and juniors are now performing better. Having said that, we're still struggling with negative traffic in these categories and have lots of room for improvement."

In terms of offering fashion at low prices, Schoewe said, "The model of the company is very simple. It's a low-cost model, so price is going to be a very important message consistently. The strategy we employed last year [launching trendy lines such as Metro 7] was not flawed. I would tell you that the execution is where we let ourselves down. We did too much too fast, especially when it came to the trend orientation in apparel.

"When you have 175 million to 200 million people walking through your stores, the opportunity to up-sell is there and we've proven in some areas that this strategy can work,'' Schoewe said. "Look at electronics. It's clear that Wal-Mart is a destination in electronics. What happened in apparel is that we got out a little bit ahead of ourselves. We need to earn the trust of the woman who's buying that fashion. It will always be about price. We'll have an increasing opportunity to up-sell, we just have to execute better."

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