Wal-Mart’s annual meeting on Friday was part slick entertainment production, part self-congratulatory pep rally and part mea culpa.
This story first appeared in the June 6, 2011 issue of WWD. Subscribe Today.
Mike Duke, president and chief executive officer of Wal-Mart Stores Inc., gave a shout-out to Sam’s Club for its strong performance, but acknowledged that comparable-store sales growth for Wal-Mart U.S. remains the company’s biggest challenge and priority.
“We’re making progress as we rebuild our assortments and remodel [stores],” said Bill Simon, president and ceo of Wal-Mart U.S. “We’ve made improvements in food and consumables and are working our way across general merchandise. Some things will take a little longer, like apparel. Hopefully, not the same 10 years it’s taken already. I’ll be talking to you about some plans as it gets closer to October.”
Simon said the firm’s apparel assortments would gravitate more towards basics and less towards fashion in the future. Wal-Mart is returning to shelves 8,500 products that were previously removed, mainly in the food section.
During a question-and-answer session for retail analysts after the meeting, Simon was asked whether the growth rate of Supercenters, with 3,800 across the country, is slowing, in light of the attention being placed on small store formats. “Supercenters are and will remain our best growth vehicle,” Simon said. “Their returns are better than anything.”
The 40,000-square-foot Neighborhood Market has been rebranded Wal-Mart Market and contains food with “a reasonable amount of general merchandise,” Simon said. “In last two to three years, it has become a really good vehicle, delivering positive comps in the 4 percent range. We’re going to be accelerating those.”
Wal-Mart Market is the largest component of the small store fleet and the only format in the rollout state. Marketside stores, with 20,000 square feet, have been tested in Phoenix. The first Wal-Mart Express, a new drugstore-size format, was unveiled Friday in Gentry, Ark. Two more Express units will follow in Prairie Oak, Ark., and Ridgefield, N.C. Express is meant for small towns that aren’t large enough to support a full-size Wal-Mart and cities where real estate costs are prohibitive.
The 3,500-square-foot Wal-Mart on campus at the University of Arkansas in Fayetteville, where the annual meeting took place in the Bud Walton Arena, seems to be a one-off.
The company plans to open 140 to 160 stores in the coming year.
But the meeting wasn’t only about bricks and mortar. “We are bringing together everything we are — our brand, our stores, our global footprint — with the power of the Internet, the power of mobile and the power of social networks,” said Eduardo Castro-Wright, president and ceo of e-commerce, noting that Wal-Mart receives 1.5 billion visits online and has more than six million Facebook fans. Wal-Mart’s e-commerce business in China is expected to quadruple to $300 billion by 2016 and its online business in Brazil has grown twice as fast as the market in the past two years, he said.
The firm on Friday authorized a $15 billion share repurchase program, replacing a year-old buyback authorization for the same amount. Of the $15 billion previously set aside, $12.9 billion had been used to repurchase more than 244 million shares. Wal-Mart shares closed Friday at $53.66, up 11 cents, or 0.2 percent.
Duke outlined five priorities for the company, including growth — in terms of sales, new customers, stores and acquisitions — implementing “Every Day Low Price” and being an “Every Day Low Cost” provider, continuing to ramp up global e-commerce, and developing talent. “We will do more for women and minorities in terms of inclusion, and that is a promise,” Duke said, perhaps in a reference to the Dukes vs. Wal-Mart sexual discrimination class action lawsuit now awaiting a Supreme Court decision on whether it will be able to have class-action status. Finally, he said Wal-Mart will continue to take a stand and “make a difference on big issues.”
In terms of proposals, four company proposals passed, while five shareholder propositions failed, including a gender identity nondiscrimination policy, a political contributions report, a requirement for suppliers to publish an annual sustainability report and a climate change risk disclosure.
Performances at the Will Smith-hosted meeting included “American Idol” winner Scotty McCreery, Alicia Keys and the Black Eyed Peas.
Wal-Mart executives cut down on the number of times they said, “We Save You Money So You Can Live Better,” last year’s catch phrase. The new mantra was seen in videos of associates chanting, “We are merchants, we are merchants.”