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New moves likely to emerge over time from Wal-Mart meeting

Wal-Mart expands Chinese business

Wal-Mart, the world's largest retailer, is expanding its presence in China after agreeing to buy a 35% stake in discount store chain Trust-Mart.

BBC/Bvom
02/28/07                      [back to top]

The terms of the deal, giving Wal-Mart an interest in 100 stores in 34 Chinese cities, were not revealed but analysts have said the business is worth $1bn. Should Wal-Mart ultimately buy out the group, it would make it China's largest foreign retailer in terms of stores. Foreign sales currently account for about 20% of the firm's turnover. Based in Taiwan, Trust-Mart was set up in the mid-1990s and has more than 30,000 staff. 'Important step' Along with other leading global retailers like Carrefour and Tesco, Wal-Mart is looking to build its interests in China's fast-growing retail sector. The firm already operates 68 stores there and said last year that it was prepared to hire an extra 150,000 staff in the next five years. Wal-Mart said the latest deal was an "important step" for the business. "Through this investment in Trust-Mart we have the opportunity to expand our presence in China, one of the world's fastest growing markets," said Michael Duke, Wal-Mart's vice-chairman.

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Child Labor Isn't Glamorous

By Jim Hightower,
Pulse of the Twin Cities
February 28th, 2007                                 [back to top]

Darlings! You’ll be ever so pleased to learn that a new, high-fashion super store has opened in America. It’s called Wal-Mart. Yes, the stodgy old downscale store has gone upscale, offering hip new clothing lines like Metro 7!

If you think anything has really changed, however, you might check the labels on these new glam goods to see if any are made in Bangladesh. If so, they might have come from a factory there by the name of Harvest Rich, which produces clothing for Wal-Mart and others.

There’s nothing at all hip about Harvest Rich—it’s a sweatshop that uses child labor. In a new investigative report, the National Labor Committee, a diligent watchdog group, has documented conditions in Harvest Rich that are grotesque, even by sweatshop standards. Approximately 200 children between 11 and 14 years old work in this factory, sewing garments under contract to the Wal-Marts.

The children are forced to work 12 to 14 hours a day, with some shifts going 20 hours. In all of September, these child laborers got just one day off. For the grueling long shifts, they are allowed only about four hours of sleep on the factory floor before being awakened and put back on the machines, sometimes collapsing from exhaustion. Their wages are as low as six cents an hour. They are routinely slapped or beaten if they don’t meet their production goals, make mistakes or even take too long in the bathroom.

Wal-Mart washes its hands of this by asserting that it has a “code of conduct” for its contractors, supposedly enforced by apparel industry monitors. Yet, Harvest Rich, which is certified by this group, shows yet again that corporate self-monitoring is an abysmal failure even at stopping the most disgusting practices.

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NYSE finds no violations at Wal-Mart

Union pension fund sought whether relationships between consultants and the retailer's management broke exchange rules.

Reuters
February 28 2007                          [back to top]

ATLANTA (Reuters) -- The New York Stock Exchange has advised Wal-Mart Stores Inc. that the company is not violating any exchange rules, Wal-Mart said Wednesday.

The statement came amid reports that a union pension fund had asked NYSE regulators to probe whether pay consultants for the world's largest retailer are too cozy with management, possibly violating NYSE listing standards.

TheWall Street Journal reported Wednesday that the secretary-treasurer of the trade union confederation AFL-CIO made the request in a letter to NYSE Regulation Inc. enforcement chief Susan Merrill, citing an NYSE rule that says compensation consultants should answer solely to corporate directors, not to management.

"The New York Stock Exchange has indicated that we are not in violation of its rules," Wal-Mart spokesman John Simley told Reuters.

The AFL-CIO was not immediately available for comment and a spokesman for the NYSE declined to comment.

Wal-Mart said it had asked the U.S. Securities and Exchange Commission for permission to omit a shareholder proposal submitted by the AFL-CIO, which asks for disclosure on how company uses compensation consultants, from the proxy for its upcoming annual meeting. The company said it intends to substantially implement that proposal.

Wal-Mart also said its board is currently evaluating whether to hire an independent compensation consultant to advise it on executive compensation.

Shares of Wal-Mart, a component of the Dow Jones industrial average, rose less than 1 percent in morning trading in New York, while rival Target (up $1.87 to $61.27, Charts) shares rose 3 percent.

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Vietnamese Co to Provide 1 MLN Fashion Products to
Wal-Mart

Asia Pulse
Wednesday February 28                     [back to top]

HANOI, Feb 28  - The Thanh Cong Textile & Garment Joint Stock Company (TCM) has signed a contract to supply 1 million high-quality fashion products to the Wal-Mart Stores, Inc., one of the US's largest distributors of fashion goods.

The products will be delivered in the third quarter this year.

TCM has set a target of earning VND1.36 trillion (US$85 million) in revenues in 2007, a year-on-year increase of 32.8 per cent.

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Concord council mulls Wal-Mart plan

By Tanya Rose
CONTRA COSTA TIMES                       [back to top]

CONCORD - Residents questioned city leaders Tuesday night over a proposed 24-hour Wal-Mart store in North Concord, arguing that the retail giant would cripple the area with traffic jams and increased crime. "Wal-Mart is the number-one spot for police calls in any community," speaker Gregg Davidson told the City Council on Tuesday. "What happens to the rest of the city when officers are busy responding to Wal-Mart?" Opponents of the 28-acre Jones Ranch project fronting Arnold Industrial Way produced a November 2005 memo written by Concord police Lt. Robin Heinemann, where she expressed concern over the plans. "I would strongly discourage that this store operate as a 24-hour operation," Heinemann wrote in her memo. Though the document was mentioned in general terms in a city-sponsored study on the project's impact, Heinemann's critical comments were not. A group called "No More on 4" obtained a copy after filing a records request. Heinemann continued in the memo: "If for some reason 24-hour operation is granted, then I would strongly recommend some kind of ground security during the evening hours. The commercial property owners and/or managers of the property should fund this bill." She said in the memo that the store would be a perfect target for criminals because of its easy access, with Highways 4 and 242 within one block of the site. Heinemann said Tuesday she could not comment on the memo. But recently, she told the Times that city planners and police representatives planned to talk with Wal-Mart officials about a security plan, perhaps similar to a partnership that exists in Union City where there is a 24-hour Wal-Mart. Those talks have simply not happened yet, Heinemann had said. City planner Frank Abejo said the council could limit the store's hours if not happy with the security plans. City leaders said they would not make a decision Tuesday on whether to approve the Wal-Mart and the accompanying In-N-Out Burger and Lowe's home improvement store in light of Mayor Mark Peterson's request that a vote be put off until March. He is out of town, and wanted to be present for the final decision, he had said. The project site is home to a mix of welding shops and other industry -- an area that some in the community have called an eyesore. Many people living in the area have said they support the project, saying there need to be more shopping opportunities in North Concord. "I have the right to choose where to shop," said resident Chris Beard. "If others wish to patronize small businesses exclusively, that is their right. They shouldn't be able to limit my choices due to their self-centered outlook." But others argue a Wal-Mart would put smaller mom and pop stores out of business. "The city keeps stating they want to rebuild the downtown areas, but this project will only force many of the local businesses to close their doors and make us start all over again," said Bill Wygal, who owns two Bill's Ace Hardware stores in Concord, including one in North Concord. The Planning Commission has signed off on the project. The council is expected to take up the issue again March 6 at City Hall.

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Wal-mart grabs 35 percent stake in Chinese BCL

chinaview.cn
2007-02-27                             [back to top]

SHENZHEN, Feb. 27 (Xinhua) -- The world's largest retailer Wal-mart announced on Tuesday in China's southern city of Shenzhen that it has gained the Chinese government's approval of purchasing 35 percent stake in supermarket operator Bounteous Company Ltd (BCL).

BCL, which is based in Taiwan, operates 101 hypermarkets in 34 Chinese cities under the Trust-Mart banner. The Trust-Mart stores will continue to operate under the Trust-Mart name after the acquisition, Wal-Mart said.

"Through this investment in Trust-Mart we have the opportunity to expand our presence in China, one of the fastest-growing retail markets," said Wal-Mart Vice chairman Michael Duke.

"This is an important step in bringing our additional scale to our China retail business", said Duke.

Wal-Mart, which entered the Chinese market in 1996, now operates 73 stores in 36 cities in China and employs more than 37,000 people there.

"This alliance allows Trust-Mart to offer higher levels of customer services to Trust-Mart's loyal customers as we benefit from Wal-Mart's expertise in logistics and operations," said Trust-Mart chairman John Yu.

"It also will give our suppliers new opportunities to expand in China and potentially become part of Wal-Mart's global vendor network," Yu said.

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Wal-Mart Waives Millions in Tax Abatement at New Cleveland Location

By Ralph DiMatteo                               [back to top]

With the announcement that Wal-Mart plans to forgo a 10-year property tax abatement in a new location in Cleveland, estimated at $10 million dollars, the giant retailer hopes that this will help to ease tensions created by its arrival and its affects on area "mom & pop" businesses. Cleveland and its new Steelyard Commons retails complex made the announcement Monday February 19th, with the city represented by Mayor Frank Jackson, and Wal-Mart by Regional General Manager Jerry Spencer. It is hope that after other big box retailers Target and Home Depot will follow suit and waive their right to the abatements as well which would create a much needed financial windfall for the city.

Wal-Mart has met increasing pressure in largely urban markets that it has attempted new openings, due to the impact that they have on smaller businesses withing the surrounding area. These smaller businesses claim that their opposition to Wal-Mart's opening is the fact that they simply cannot match prices or the variety that a Wal-Mart offers consumers. Spencer tried to ease those concerns in Cleveland by saying that Wal-Mart is not interested in destroying rivals, but in helping an area thrive and prosper.

Critic's, such as John Ryan, the executive secretary of the North Shore Federation of Labor, say that this is just another advertising gimmick that "sugarcoats" the devastation Wal-Mart brings to a community.

There was much more detail to the account of these announcements in Tuesday, February 20th's Cleveland Plain Dealer, but I wanted to concentrate on the highlights and then offer an opinion as to how Cleveland may just want to view this situation.

First, doesn't Wal-Mart at least deserve the benefit of the doubt here? From the perspective alone that nearly two thirds of the forfeited abatements will now go the financially strapped Cleveland schools is enough to get my vote. the other third will be used to develop something called the Towpath Trail that will extend into downtown and support smaller businesses along the way, near Steelyard Commons that sits on the old LTV Steel site.

Understand that Wal-Mart was going to open no matter what, and that when recently this story of the fact that these businesses that were opening were entitled to tax abatements broke, the finger pointing began as to who was to blame, Wal-Mart stepped up and did the right thing. Wal-Mart had the legal right, as do the other businesses eligible for abatements, to say, sorry Cleveland, but no cigar. To their credit, they did not and recognized that helping to get Cleveland schools back on their feet and the development of surrounding businesses will ultimately make their location much more valuable to them and the community years down the road.

Wal-Mart has also made a commitment to neighborhood grants for further developments in Cleveland and nine other cities and feels that this is an opportunity to create something for the Cleveland "beyond the four walls of their store" said Spencer.

It should be noted also that as of this writing developer Mitchell Schneider has also waived his right to abatement for the parts of the Steelyard Complex property he still owns, so hopefully the example set by Wal-Mart and Schneider carries over to others within this new and vital piece of the rebound the City of Cleveland and the other businesses will see that an investment in the community in which you do business is the best investment you will ever make, because ultimately it starts at a community's roots, its children and neighborhoods, and works its way up to better jobs, a better way of life and thriving and prosperous residents.

Here is to Wal-Mart, and Mitchell Schneider, no matter what happens with the other abatements, we thank you and hope that you find Cleveland to be worthy of time and investments and that the City doesn't let you down.

2007 © Associated Content, All rights reserved.

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Legislature lets taxpayers pay for workers' health care costs

By Craig Cole,
Seattle Post-Intelligencer
February 27th, 2007                                        [back to top]

For three years, I've asked the Washington Legislature to reconsider the current mindless health care system that encourages employers to be selfish and irresponsible. This session they have another chance with bills being considered that would require large employers to reimburse taxpayers for the cost of providing their employees with state-subsidized health care.

Brown & Cole Stores were founded almost a hundred years ago by my grandfather. Last year, we employed around 1,500 workers, very ably represented by United Food and Commercial Workers and Teamsters. As a 27-store regional supermarket chain based in Bellingham, our stores operated under the trade names of Food Pavillion, Cost Cutter, Food Depot and Save-On-Foods.

I was raised with the American values that good companies take care of their employees. We worked long and hard with our union partners to provide living wages and benefits to our workers and were proud to do so. We made health care payments on 95 percent of our work force, while some of our competitors covered less than half.

In November, Brown & Cole Stores filed for bankruptcy protection. We cited competition from low-paying chains, especially Wal-Mart. We hope to emerge a survivor, but it's difficult for employers who provide family-wage jobs. We're living proof of the very real impact that low-way employers have on the local job base that we all hold so precious.

There is no question that Brown & Cole was undermined by large profitable employers who have abandoned basic American values and pay their employees so badly their workers qualify for public assistance. Using state-funded health care is their profit strategy. They simply dump their health care costs onto taxpayers.

The largest corporation in the planet's history bases its business model on inferior wages and benefits. They're keeping the working poor working -- and poor. Meanwhile, they earn billions by transferring their health care costs onto the rest of us, and they set a very low competitive cost structure that punishes employers trying to conduct business with integrity.

I've brought those concerns to the Legislature for three years now, urging them to make a change. They didn't. Since, I've watched Brown & Cole's hard-working employees struggle with a change that has rattled their lives and the lives of their families. I wish I could tell you of the personal costs, the pain endured. I won't. I will tell you that it's the direct result of a competitive playing field that's not level and getting more lopsided as the months pass. Those irresponsible employers are costing the state a ton of money.

I ask the Legislature: Why are you letting the public pick up the tab? In essence, every state taxpayer puts money into the pockets of large profitable employers setting a new low for corporate social responsibility.

As a society, we have established a framework for commerce and competition that forbids profiteering by pollution, unsafe working conditions and discrimination. Why do we allow a public policy framework that rewards a company for misusing its workers?

Do I blame the companies? Only partially. I blame a public policy framework that encourages them to behave that way. Consumers benefit from slightly lower prices, yes. But workers and all citizens lose.

It's a Faustian bargain: We're giving consumers better deals while we're hammering workers, their families, good businesses and our communities. What kind of deal is that?

The dilemma we face is that there is no real economic incentive to be a good employer, even though company health care coverage keeps people off the state's rolls. Lawmakers need to be pragmatic. If more large profitable employers follow down this path, we'd better provide for the escalating costs of funding an ever-expanding state caseload.

Until universal health care with appropriate cost controls is in place, irresponsible employers shouldn't get off the hook. They'll pay then and they need to pay until then.

The Legislature is considering legislation that will affect only the very largest and stingiest employers who can afford to pay -- but don't. Without it, those companies will continue to degrade the American worker -- and not just their own. They're forcing all employers into a race to the bottom.

Craig Cole is president and CEO of Brown & Cole Stores in Washington state.

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AFL-CIO Asks NYSE to Probe Wal-Mart's Pay Practices

By Kim Chipman,
Bloomberg
February 27th, 2007                            [back to top]

Feb. 27 (Bloomberg) -- The AFL-CIO, the largest U.S. labor group, is asking the New York Stock Exchange to investigate Wal- Mart Stores Inc.'s executive-compensation practices.

The AFL-CIO wants the NYSE to look at whether Wal-Mart is violating one of the company's own corporate-governance rules by allowing management, rather than its outside directors, to hire a compensation consultant who advises on pay for top executives, according to a Feb. 23 letter AFL-CIO Treasurer Rich Trumka sent to the exchange.

The labor group, whose member unions hold more than $400 billion in pension funds, says the NYSE should probe the matter because the Wal-Mart rule in question is the same as an exchange guideline stating that a company's compensation committee should have sole oversight over pay advisers.

``It seems to us that the NYSE's listing standards are made a mockery of if companies say they are adhering to the exchange's aspirational standards, but in fact aren't doing so,'' Damon Silvers, associate general counsel of the AFL-CIO, said in an interview today.

NYSE spokesman Brenda Intindola declined to comment.

The AFL-CIO also is considering taking the Wal-Mart matter up with the Securities and Exchange Commission, Silvers said.

The labor group has filed a shareholder proposal asking Wal-Mart, the world's biggest retailer, to provide more details about its compensation adviser. Wal-Mart has asked the SEC for permission to omit the AFL-CIO's proposal from the company's proxy statement.

Compensation Consultant

The Bentonville, Arkansas-based retailer said today that its compensation practices aren't in violation of any rules. The company's board also is considering the hiring of an additional compensation consultant to advise on executive pay, according to spokesman John Simley.

Wal-Mart will have to reveal more information about its compensation consultant, including the identity, in its proxy voting statement as a result of new Securities and Exchange Commission rules requiring fuller disclosure of pay and the role that consultants play.

The new regulations were prompted in part by investor criticism of executive pay and a stock-options scandal involving almost 200 companies.

In the meantime, the AFL-CIO has been pressing companies for evidence that consultants are giving independent advice on the salaries and bonuses of top officials.

General Electric Co., the world's second-biggest company by market value, said in December that it would go beyond a new federal disclosure rule on executive pay and tell shareholders for the first time the full extent of its compensation consultant's work for the company. The decision followed talks with the AFL-CIO, GE spokesman Peter O'Toole said at the time.

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Wal-mart Briefing, June 06

By mark osborn                                      [back to top]

Facts about Wal-Mart

 Wal-Mart is the world’s largest retailer and largest private employer.
 Sam Walton founded the firm in 1962 as a single store in Arkansas, USA.
 It now has more than 5,700 stores worldwide.
 It employs 1,500,000 workers worldwide.
 Wal-Mart is the largest retailer in the USA, Canada and Mexico and a major competitor in the UK, Germany, Brazil and South Korea.
 The FT Global 500 ranked Wal-Mart as the sixth largest multinational according to the total worth of its shares.
 Wal-Mart’s CEO Lee Scott took home $17.5 million in 2004, which equals $8,434 an hour. An average Wal-Mart worker earns just $9.68 an hour.
 The average pay for a Wal-Mart sales assistant is $14,000 a year - $1,000 below the poverty line for a family of three.

Wal-Mart and union busting

Wal-Mart has over 3,600 stores in the United States and not a single one is union organised. Wal-Mart says it employs “associates” not workers.

Wal-Mart founder Sam Walton was deeply anti-union. In his autobiography he boasted that “we’ve never lost a union organising election” at Wal-Mart. Sam Walton & John Huey, Sam Walton: Made in America, Doubleday, 1992 p.129

The Walton family support the anti-union National Right to Work Foundation. It donated $70,000 from 2000 to 2003. The Foundation works with business to undermine the right of workers to organise. For example it was instrumental in passing “right-to-work” legislation in Oklahoma, a law designed to discourage workers from joining a union or paying any dues.

Manager’s anti-union toolbox

Wal-Mart provides its managers with a handbook titled, “The Manager’s Toolbox to Remaining Union Free” on how to prevent and respond to unions in their stores.

“Wal-Mart is opposed to unionisation of its associates. Any suggestion that the Company is neutral on the subject or that it encourages associates to join labor organisations is not true.” Wal-Mart, “Labor Relations & You at the Wal-Mart Distribution Center #6032.”

Wal-Mart has a systematic method of tracking workers who have grievances that could lead them to form a union. The Union Probability Index (now termed “Unaddressed People Issues”, UPI) is a tactic the company uses to identify any potential hotbed of union activity.

From the results of an annual internal survey of workers’ attitudes about working conditions, the UPI rates stores by their level of employee dissatisfaction. Unfavourable responses to certain questions, according to a company document, “have been shown by research to indicate low morale and potential interest in third-party representation.”

Stores that score unfavourably must take steps to respond to employees’ issues to prevent them from seeking help from a union.

When these preventative measures fail to stop a union drive, Wal-Mart orders managers to call the ‘Union Hotline’. The warning signs include extensive socialising among co-workers, more complaints lodged against managers by employees, and “increased curiosity” in employment policies.

Butchers in Texas

Only five U.S. Wal-Mart stores have held union representation elections since the United Food and Commercial Workers’ (UFCW) national organising effort began in 1998. And of the five elections, only once did workers choose union representation. That successful vote occurred in 2000, in Jacksonville, Texas, where meat department workers voted seven to three to be represented by the UFCW.

Some of these workers had previously worked in other, union-organised grocery stores and appreciated the better wages and benefits they received as union members.

In 1999, the UFCW started a nationwide effort to organise Wal-Mart’s meat department employees. In response, Wal-Mart’s People Division, the department that handles anti-union efforts, jumped from 12 employees to nearly 70.

According to a complaint issued by the US arbitration board, the National Labor Relations Board (NLRB), the company engaged in numerous illegal activities to thwart the Jacksonville union effort, including:
 Interrogating employees about their union activities and sympathies.
 Telling employees that Wal-Mart had gone through their files to determine whether they were for or against the union.
 Purchasing new meat-cutting equipment to address employees’ problems and influence their vote against the union.

Despite heavy-handed pressure from Wal-Mart, workers in Jacksonville voted to form a union on 17 February 2000.

But 11 days later, Wal-Mart announced out of the blue that it was discontinuing all meat-cutting operations nationwide and would instead stock its stores with wrapped meat. The company then refused to recognise and bargain with the UFCW, arguing that the Jacksonville meat department employees were no longer an appropriate unit for organising, separate from the rest of the store. This effectively smashed the unionisation drive.

Two years later, an NLRB judge issued a ruling requiring Wal-Mart to bargain over the effects of the discontinued meat-cutting operations. The judge, however, did not require Wal-Mart to bargain a contract with the UFCW.

Both the UFCW and Wal-Mart appealed the ruling to the Board in Washington, DC, where it still remains pending, more than five years after the workers first voted for a union. Even if the Board rules in their favour, all of the Jacksonville workers who originally voted have now left the store.

Shopworkers in Quebec

Wal-Mart entered the Canadian retail market in 1994 when it purchased the discount chain Woolco, buying all but 22 stores. All 10 of Woolco’s union-represented stores were among the 22 stores Wal-Mart refused to purchase.

Wal-Mart opened its store in Jonquière, Quebec in 2001. Workers approached UFCW representatives to start an organising drive, and after the UFCW collected union authorisation cards from what they thought to be a majority of eligible employees, they applied for recognition with the Quebec Labour Relations Board. Quebec law grants workers union representation after a majority signs cards, rather than forcing them through an election process.

When the Labour Board was determining which employees were eligible for union representation, it found that the UFCW did not have a majority. The Labour Board consequently scheduled a union representation election instead of certifying the union. In April 2004, workers voted against union representation by only nine votes.

Workers witnessed threatening and intimidating behaviour by managers, who tried to stop them from communicating with reps about the union.

Workers would not be cowed, and soon after the election, more and more signed union authorisation cards. On August 2004, when presented with cards signed by well over a majority of the store’s eligible employees, the Labour Board certified the UFCW as the workers’ representative.

Throughout the autumn and early winter, Wal-Mart and the UFCW bargained for a contract. It eventually became clear to the UFCW that Wal-Mart would not agree to any contract. So in February 2005, the union asked the Quebec Ministry of Labour to name an arbitrator to impose a contract through the binding arbitration provision offered in Quebec.

The company responded by announcing it was closing the Jonquière store, claiming poor sales. The move was both abrupt and unusual as Wal-Mart rarely closes a store without subsequently opening a supercentre in the area.

After the store closed, 68 of the former Jonquière workers filed a complaint with the Quebec Labour Relations Board, claiming Wal-Mart closed the store in retaliation for organising a union. In September 2005, the Labour Board agreed with the workers, and ruled that since Wal-Mart did not intend to close the store permanently, the closure was intended as a reprisal against union organising.

The Labour Board has not yet ruled on the remedy, but it could impose fines on Wal-Mart and may even demand the company find jobs for the employees at other stores.

Tire and lube technicians in Colorado

Tire and lube technicians initiated an organising drive in Loveland, Colorado. Workers were frustrated by major understaffing, high workload and having to miss lunches and breaks.

After the first few weeks of union meetings, nine of the 16 workers had signed union authorisation cards. In November 2004, the tire and lube workers filed a petition for a union election with the NLRB. But it took the agency three months before it would schedule an election, more than twice as long as usual.

The delay in the election process demoralised the organising drive. The delay also provided Wal-Mart with more time to pressure employees to vote against the union. The day after talk of the union spread, Wal-Mart flew in about 10 staff. They forced employees to sit through presentations and videos, which suggested that unions hurt peoples’ jobs and take money out of their pay cheques without letting them know. Workers were even shown fictional depictions of union organisers scaring people into signing union authorisation cards.

But nothing Wal-Mart could do to intimidate employees had more of an impact than its announcement of the closure in Quebec. Two weeks after the Jonquière announcement, tire and lube workers voted 17 to one against union representation.

Between 1998-2003, 288 “unfair labour practice” charges were lodged against Wal-Mart, accusing the company of interfering with its employees’ freedom of association. Of these charges, at least 94 resulted in formal complaints brought against Wal-Mart by the NLRB.

Among the NLRB complaints were 41 charges of terminating employees for union activity, 59 charges of surveillance of union activity, 59 charges of interrogation and 47 charges of unlawful promises or benefits to dissuade workers against organising.

The agency’s prosecution of unfair labour practices resulted in at least 11 rulings against the company and 12 settlements.

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Wal-Mart to pay $1B for China retailer

Reuters                                [back to top]

HONG KONG/NEW YORK (Reuters) -- Wal-Mart Stores, the world's biggest retailer, will pay about $1 billion to take over a Chinese chain, challenging Carrefour as the largest operator of super-centres in booming China.

The acquisition of Bounteous Co. by Bentonville, Arkansas-based Wal-Mart, will be done in phases by 2010 and could trigger much-needed consolidation in China's ferociously competitive $1 trillion retail market.

Under terms of the deal, Wal-Mart is buying 35 percent of Taiwan-based Bounteous, which operates 101 hypermarkets in 34 Chinese cities under the Trust-Mart brand, and will acquire ownership control of the chain by 2010 if conditions are met.

Terms were not disclosed, but a source familiar with the situation said Wal-Mart will pay a total of $1 billion for all of Bounteous.

"It's all about tiering and market share -- Wal-Mart has a history of buying local operators, and this could make them No. 1 in China," said an analyst at a European investment bank in Hong Kong.

Wal-Mart already operates 73 stores in China and employs more than 37,000 people there.

France-based Carrefour, the world's No.2 retailer and the largest foreign operator in China, added 20 China stores last year to bring its total in the country to 90 by the year-end.

Other players include Germany's Metro, Britain's Tesco and local operators such as Wumart.

Wal-Mart's China expansion follows exits last year from its operations in Germany and South Korea.

The company is also close to striking a joint venture with Bharti Enterprises to enter India, a fragmented retail market where foreign operators are restricted.

In a statement, Wal-Mart Vice Chairman Michael Duke called the China investment "an important step in bringing our additional scale to our China retail business."

Trust-Mart posted 2005 sales of about 13.2 billion yuan ($1.7 billion) at its Chinese hypermarkets, according to the China Chain Store and Franchise Association, well above Wal-Mart's 9.9 billion yuan in its Chinese stores.

By comparison, Carrefour had 2005 sales of 17.4 billion yuan at its Chinese hypermarkets, while Metro recorded sales of 7.5 billion yuan, the data showed.

International expansion has grown more important for Wal-Mart as U.S. sales growth slows. In its fiscal quarter ending January 31, total sales rose 10.9 percent to $98.09 billion, but international sales rose 29.6 percent to $22.73 billion. U.S. sales at stores open at least one year rose 1.6 percent.

Trust-Mart stores employ more than 31,000 people, and will continue to operate under the Trust-Mart name, Wal-Mart said, with both companies continuing to open new stores.

Credit Suisse advised Wal-Mart on the transaction, and UBS advised Bounteous.

Copyright 2007 Reuters. All rights reserved.

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Wal-Mart's Asda could bid for Sainsbury

Reuters                                [back to top]

LONDON - Asda, the British grocer of Wal-Mart Stores Inc., could counterbid for J. Sainsbury <SBRY.L> should a private equity consortium launch an offer for Britain's number three supermarket owner, Citigroup analysts believe.

In a research note, Citigroup said Britain's second-largest grocer would be in a position to convince competition authorities it was a better match for Sainsbury than the private equity team currently considering a bid for the group.

"We maintain that the market is overly optimistic about a consortium bid, but if one comes, watch out for a higher offer from Asda," Citigroup analysts wrote in the note published after Monday's market close.

Sainsbury has been the subject of bid speculation since private equity firms CVC <CVC.UL>, Kohlberg Kravis Roberts <KKR.UL> and Blackstone Group <BG.UL> said on February 2 they were considering an offer. Texas Pacific Group <TPG.UL> later joined the consortium, according to sources familiar with the matter.

Any bid would be Europe's largest leveraged buyout at more than 10 billion pounds ($20 billion).

Asda Chief Executive Andy Bond last week at a newsconference declined to comment on talk he could be looking at a bid for Sainsbury. He did say he could consider acquiring convenience stores, an area where Sainsbury and Britain's number one retailer Tesco <TSCO.L> dominate.

Bankers have said they expect Wal-Mart <WMT.N> and Asda have looked at Sainsbury because it is the latest realistic chance for it to catch up with Tesco, which is now double Asda's size.

Citigroup said it believed a bid was "still less likely than likely" and Asda would need to let the consortium bid first in order to "strengthen its argument" with regulators.

It could then argue a merger of the two grocers, with respectively about 16 percent of Britain's grocery market, would create up to $1 billion of synergies. The merged group would also create a heavyweight competitor to Tesco <TSCO.L>, with its 31 percent of the grocery market.

"The Competition Commission has stated it is worried that Tesco is so big that no competitor can emerge to challenge it. If the Commission fears a monopoly situation, it may settle for a duopoly," Citigroup wrote.

Sainsbury is trading at nearly 37 times 2007 estimated earnings on the bid speculation, compared with 20 times for Tesco and 18 times for the DJ Stoxx index of European retailers <.SXRP>, Reuters Estimates showed.

Its stock was down 0.7 percent at 522-3/4 pence per share by 1050 GMT, outpeforming a 1.2 percent fall in the DJ Stoxx index of European retailers.

Copyright 2007 Reuters News Service. All rights reserved.

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Wal-Mart buys 35 per cent stake in Chinese discount market operator

Canadian Press
Tuesday, February 27th, 2007                             [back to top]

SHANGHAI, China (AP) - Wal-Mart is buying a 35 per cent stake in a company that operates Trust-Mart, a major Chinese discount chain, as international competitors jostle for position in China's rapidly growing retail market.

Wal-Mart may eventually take managerial control of Taiwan-based Bounteous Co., which operates 101 Trust-Mart stores in 34 major cities in China, the U.S. retail giant said in a statement Tuesday.

Financial details of the deal were not disclosed. Newspapers last year speculated a takeover of Trust-Mart would cost Wal-Mart about US$1 billion.

The acquisition, if expanded as planned, would vault Wal-Mart past its rival, Carrefour SA of France, in the number of hypermarkets - giant stores selling discounted food and household goods - in China.

Foreign retailers are rushing to tap China's fast-growing economy, large population and expanding middle class.

"Through this investment in Trust-Mart we have the opportunity to expand our presence in China, one of the world's fastest growing retail markets," Wal-Mart's vice chairman, Michael Duke, said in the statement.

"This is an important step in bringing additional scale to our China retail business and enabling us to do what we do best - serving our customers with improved service, high quality and innovative products, and lower prices," he said.

The statement said Trust-Mart stores, at least initially, would continue to operate under their own brand name.

Bentonville, Arkansas-based Wal-Mart has been seeking international expansion to make up for slowing growth in the United States, but it has had mixed success overseas. It pulled out of loss-making operations in South Korea and Germany last year but is seeking growth in Central and South America, China and India. It is also eyeing a possible entry into Russia.

The company's total international division accounted for about 20 per cent of its overall net sales of US$312.4 billion in 2005.

Wal-Mart is one of China's biggest and most prominent foreign employers, with a work force of 37,000 and 68 stores. Working with Wal-Mart will allow Trust-Mart's suppliers to further expand sales in China, said Trust-Mart's chairman, John Yu.

Carrefour, an earlier entrant in the market, has 240 stores, including 90 hypermarkets.

In March, Chinese state media reported that Wal-Mart Stores Inc. was among several international retailing giants vying for Trust-Mart. Others named included Britain's Tesco PLC, Carrefour and Shanghai-based Lianhua Supermarkets.

Trust-Mart was founded in the mid-1990s by Taiwan tycoon Winston Wong, a scion of the petrochemical conglomerate Formosa Plastics Group. It has 31,000 employees, according to the Chinese company's website.

With the economy growing more than 10 per cent a year, China's retail market is booming. Retail sales surged 12.9 per cent in 2005 over the year before, to US$847 billion. By 2020, industry forecasts say the market could expand to about US$2.4 trillion.

Foreign retailers have flooded into China following the wider opening of the industry to foreign competition. According to a recent industry report by Jones Lang LaSalle, 1,027 retailers won permission from the Ministry of Commerce to do business in China in 2005, triple the combined total in the previous 12 years.

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Levy on Wal-Mart’s Movie Downloads

The retail behemoth is going to offer a hefty catalog of films you will be able to download.

By Steven Levy
Newsweek
Feb. 26, 2007                          [back to top]

Wal-Mart opened an online video store earlier this month, proudly announcing that it was the first legal movie-downloading site to offer flicks from all of six major studios. While that's a nice milestone, those who have been hoping to see the Internet bloom as a movie-distribution outlet saw the move as a marker of a different sort: there was finally a place that Hollywood could sell its wares online with no concerns about offending Wal-Mart.

Wal-Mart sells 40 percent of all DVDs—Hollywood's biggest revenue source. That's right, 40 percent. So it's no wonder that the studios don't want to ruffle any golden-goose feathers. And it's no surprise that we've read reports that Wal-Mart (and other retailers like Target) have been clear in letting studios know that an irresistible digital movie-buying system would not be appreciated by the bricks-and-mortar companies that sell actual disks. Is Hollywood listening? For whatever reason, legally downloading a movie is a much worse proposal than schlepping to the store to buy the DVD.

But now Wal-Mart is itself offering a hefty catalog of movies online, and guess what? It still makes little sense to buy a movie on the Internet. Particularly not at this point from the Wal-Mart service, which seems to be suffering birth pains in its current beta incarnation. In my case, it took 78 minutes on the phone with a smart customer-service rep before I could successfully begin downloading "The U.S. vs. John Lennon," for which I paid $14.88. (Later in the week Wal-Mart released a new build of the software that fixed my particular problem.)

Those technical difficulties are associated with the ridiculous necessity to play back movies with specialized software, because of digital rights management (DRM) requirements. Though the overall experience is much better in time-tested systems like iTunes, onerous copy-protections rules affect all legal movie downloads. Wal-Mart's rules are especially infuriating: you can watch a movie only on the computer you use to download it. (iTunes allows you five.) An alternative is to buy a version that lets you watch it on certain portable devices, but not iPods. But that means the movie won't look good if you play it on your computer. In contrast, a DVD plays on any computer or television in high quality, and friends and family members can borrow it.

Also, online movies do not include any of the bonus content that routinely comes with DVDs. Burning the file to a DVD is OK for backup, but the disk won't play on a computer or television set.

Then there's the price (from $7.50 to $19.88), which is high considering there's none of the cost in shipping a physical product. While some newer online movies cost a few dollars less than the DVD, there is no digital equivalent to the dozens of flicks that you can often snatch for five bucks or less in discount bins.

In short, even the entrance of Wal-Mart into the marketplace has not changed the fact that you're better off with the old model than the new. Wal-Mart's Kevin Swint lays this directly at the feet of Hollywood. "The studios set the pricing," he says. As for bonus content, "that's the way the studios provide the content." And, of course, it is the studios who set the rules for copy protection.

Eventually, predicts Ashwin Navin, cofounder of BitTorrent (the peer-to-peer technology company that is expected to announce its own legal download service this month), "You'll be able to purchase movies without DRM at a much more reasonable price. And a lot of downloaded movies will be free, supported by ads just like movies on television." This bright future will come if and only if the studios embrace it—and fear of Wal-Mart doesn't stop them.

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TINAPA: WAL-MART CEO arrives Nigeria for exploratory discussions

As prospects brightened for the April inauguration of the Tinapa Business and Leisure resort (TBL), Wal-Mart is arriving Nigeria by end April for exploratory discussions on taking up a shopping space at the complex.

BEN EGUZOZIE
businessdayonline.com
February 25th, 2007                                 [back to top]

BusinessDay last year, Wal-Mart’s technical last November team had its third meeting with the management of Tinapa, with Governor Donald Duke in attendance. The talks had centred on the possibility of the global retail shopper taking up a whole emporium at the complex.

Wal-Mart, world’s largest retail market, features a great selection of high-quality merchandise, friendly service and low prices. It also undertakes the best shopping experience on the Internet.

It was founded in January 2000, by Sam Walton (1918-1992) as a subsidiary of Wal-Mart Neighbourhood Stores, Inc. with headquarters on the San Francisco Peninsula near the Silicon Valley. It has access to the world’s deepest pool of Internet executive and technical talent.

Its management says they think of themselves, first and foremost, as a retailer. The ties to Bentonville, Ark. — where Sam Walton opened the first store that bore the Walton name and where Wal-Mart Stores, Inc., is still based — give us our foundation, the president said on the Wal-Mart website.

The managing director and chief executive of Tinapa, Sam Anani, told BusinessDay recently in an interview that, Wal-Mart’s interest in Tinapa came through an invitation by the eminent Andrew Young, former US ambassador to the UN, to the president of the shopping giant, to move into Africa via Nigeria’s Tinapa company.

He said Young’s intervention was a response from discussions he held with President Olusegun Obasajo on getting US companies to invest in Nigeria’s business sector. The sector, according to him, has been making tremendous improvements in recent years.

With the possible coming of Wal-Mart into Tinapa, it would be the third foreign global retailer into the company. Others are Shop-rite and Nu Metro both of South Africa, and Flemingo International of the United Arab Emirates.

Nu Metro would be running the cinema halls in the complex, while Shop-rite would be operating a variety of consumer goods. Flamingo, which already runs about 60 duty-free retail outlets in India, UAE, Kenya, Tanzania and Ghana, would bring to Nigerian consumers, a wide variety of goods, ranging from cosmetics, jewellery, liquor, among many others.

Meanwhile, Joseph Ushiagiale, chief press secretary to Duke, told journalists in Calabar late last week that President Olusegun Obasanjo had confirmed he would be physically present to officially commission the N45-billion Tinapa project.

Ushigiale said, with the nearing of the commissioning date of Tinapa, the interest by investors in the facility had heightened because of its investment potentials.

He said, so far, three out of the four emporiums had been taken up by prospective investors.

Apart from Wal-Mart, that is expected to occupy a whole emporium, United Arab Emirates-based Flemingo International would be taking up a 2,500-metre space at Tinapa.

BusinessDay spoke with Flemingo’s shopping manager, S.K Sagwarl, who arrived Calabar early last week, to start processes leading up to the opening of their shopping space in April.

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Hiring on, Bharti-Wal-Mart plans to kick off ops by Sept

BODHISATVA GANGULY &
G GANAPATHY SUBRAMANIAM
TIMES NEWS NETWORK
MONDAY, FEBRUARY 26, 2007                     [back to top]

NEW DELHI: Even as the controversy over FDI in retail is flaring up, the Bharti Group has informed the government that its joint venture with Wal-Mart would start operations in August or September this year.

Recruitment, negotiations with potential customers and market surveys are now on for the project, the group’s company secretary Vijaya Sampath has said in a letter to the Department of Industrial Policy & Promotion (DIPP).

The joint venture’s activity will be in compliance with FDI guidelines and clearances would be sought for all activities that require government approval, says the letter which assumes significance in view of the directive from Prime Minister’s Office (PMO) for a study on the impact of retail giants on small retailers.

“When our business & funding plans are finalised, we expect to commence operations in August-September 2007,” says Bharti’s letter to DIPP. The Mittal family-controlled group is expected to work on two ventures with Wal-Mart and the details are to be finalised soon.

The first venture relates to a retail network by Bharti which will be supported by Wal-Mart’s expertise in setting up back-end infrastructure like logistics, cold chain, sourcing and merchandising. The second one is a Wal-Mart venture for wholesale trading which is expected to get strategic support from the Bharti Group.

“We reiterate our commitment to the growth of the Indian economy and confirm that our activities will be in compliance to the FDI guidelines and government policy in this sector and suitable approvals will be sought where required,” says the letter to DIPP.

Interestingly, it was on the basis of a communication from the Bharti Group that the DIPP had informed the PMO that the proposed collaboration with Wal-Mart does not flout FDI rules. Nothing prevents a domestic company like Bharti from setting up a retail venture and foreign companies like Wal-Mart are allowed to invest in wholesale trading ventures.

However, the PMO has sought a detailed study on the impact of giant retail on tiny vendors like those who sell fruits and vegetables. The study is also supposed to cover the impact on various aspects like retail prices and employment generation due to the advent of retail in organised format.

The Bharti Group has emphasised that its joint venture with Wal-Mart will create employment, probably in reaction to apprehensions that it may lead to displacement of jobs. “Another focus area is the recruitment and training of personnel for the various positions and tasks.

We are confident that the sector will create a large number of direct and indirect employment opportunities as well as entrepreneurial growth for the SME segment,” says the letter to DIPP. Officials of the Group have also been emphasising that the JV will become a good source of supply for small retailers.

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Wal-Mart Shifts RFID Plans

Marc L. Songini
Computerworld
February 26, 2007                                 [back to top]

Though Wal-Mart Stores Inc. expects the number of its stores using radio frequency identification systems to reach 1,000 in April, the retailer has come under fire from some analysts and users for failing to meet its plan for installing the technology in its distribution centers.

A spokesman last week acknowledged that the company missed its goal of installing RFID technology in 12 of its 137 distribution centers by the end of 2006. Simon Langford, director of RFID and transportation systems at Wal-Mart, said the missed goal reflects a change in course by the company to instead concentrate on RFID-enabling its retail stores.

Along with the U.S. Department of Defense, Wal-Mart is widely seen as one of the world’s top drivers of RFID technology.

Wal-Mart began its RFID journey early in this decade, when it mandated that its 100 top suppliers start tagging all cases and pallets carrying merchandise by January 2005. Wal-Mart officials said 600 of its suppliers are currently RFID-enabled.

Despite the missed deadline for installing the technology in the distribution centers, Langford insisted that Wal-Mart’s overall RFID effort is on track and has been successful so far. “We’re accelerating [RFID adoption] and at a greater pace than last year,” he said.

Cost vs. Benefits

However, Michael Liard, an analyst at Oyster Bay, N.Y.-based ABI Research, said the shift in strategy could slow Wal-Mart’s effort to boost the visibility of its supply chain.

Having RFID technology in the distribution centers would let the company mark merchandise as it arrives from its suppliers, Liard said.

But when they’re sitting in the non-RFID-enabled distribution centers, the items are invisible, so Wal-Mart wouldn’t get the full benefits of RFID technology in its supply chain, he added. “For me, it presents a problem,” Liard said.

Langford, however, argued that first installing RFID technology in its stores allows the retailer to better collaborate with suppliers that need to monitor the flow of inventory and respond to problems or spikes in demand.

Also, Langford said, store personnel can better use the technology to keep the shelves full of merchandise and reduce the number of products out of stock at each store. Wal-Mart expects to have rolled out RFID to 1,000 stores by the end of April, up from 100 in January 2005.

“We’re focused on the store level,” said Langford. “If we focused internally [at the distribution centers], it would provide no value to our suppliers. When we set out on this journey, we really focused on the collaborative benefits; we wanted what was going to drive sales for our suppliers and to get product on the shelf, where it needs to be for our customers to buy.”

Langford credited the use of RFID technology with cutting the incidence of out-of-stock products by 30% while improving the efficiency of moving products from backrooms to store shelves by 60%.

“RFID in our stores is going to drive the initial value,” he said. “We see distribution centers as coming onstream a bit later.”

Langford wouldn’t estimate when the technology will be installed in all of Wal-Mart’s distribution centers. He noted that the five current implementations have already helped improve the efficiency of the company’s supply chain.

Nevertheless, he said, “we needed to remain focused on the stores and store associates and help them move freight to the shelf.”

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Wal-Mart bets heavily on Chicago

After blanketing rural America, inner-city store is key to new strategy

The Associated Press
Feb 25, 2007                                 [back to top]

CHICAGO - Baggy clothes and Mexican CDs line the aisles. Catfish bait and automobile decorations sit on the shelves. A local restaurant serves up fried chicken near the checkout stands.

After blanketing rural America, Wal-Mart is pushing into big cities with a new strategy: catering to local shoppers — in this case, black and Hispanic customers in a West Side Chicago neighborhood — while making efforts to help other local businesses survive.

There is a lot riding on Wal-Mart's success at this store that opened last September, both for the struggling neighborhood and the company.

Chicago is the biggest city Wal-Mart has entered, but only after a long battle over worker pay and benefits and concerns that it would crush local businesses — the same issues that have dogged it for years and prevented it from cracking New York City and other markets.

The retail giant has long been criticized by union-backed groups that claim the company pays poverty wages, runs small businesses out of town and pushes employees onto tax-funded public health care. Wal-Mart denies those allegations.

"Wal-Mart has to show that it is willing and committed to forming a true relationship with that (Chicago) community that goes beyond a big retailer that sells socks cheaper than anybody else," said Steven Silvers, a corporate reputation management expert with consultancy GBSM Inc. in Denver.

Francisco Soto worries whether such a relationship will happen — or whether so many customers will go to Wal-Mart that he's driven out of business.

Soto, who owns Midwest Audio, less than a block from Wal-Mart, said that during the holiday shopping season, Wal-Mart sold TV-radios for $25 less than he paid for them.

"That's my bread and butter," Soto said. "I don't know what my future here holds."

But Wal-Mart insists it can help both businesses and residents in this community where the unemployment rate is in double digits, noting that 15,000 people applied for 400 jobs there.

To prove it wants to be a good neighbor, the store caters to local residents and says it has a plan to help other businesses.

It carries a wide selection of items such as clothing, music and foods favored by blacks and Hispanics, who account for 90 percent of the customers, manager Ed Smith said.

The aisles are wider than in many other stores because people here often shop in large family groups, said Mia Masten, a Wal-Mart spokeswoman in Chicago. Signs for various sections of the store are in both English and Spanish.

The Uncle Remus Saucy Fried Chicken restaurant is another nod to the neighborhood, Masten said.

"We were the first store to open to have a local restaurant from the neighborhood come into our store," Masten said.

The restaurant was one of the first things Patricia Wright noticed when she walked inside the new Wal-Mart. "The fact you have an Uncle Remus here, you wouldn't find one ... in the suburbs," said Wright, 44, of Chicago.

The store, included in the "Wal-Mart Jobs and Opportunity Zones" initiative announced last April, bought ads in local newspapers for two hardware stores, a bakery and other small businesses, and will produce ads for the same five businesses to be broadcast over the in-store radio feed. Last week, Wal-Mart announced the program would expand to nine more stores in other cities' economically struggling areas.

"We want to work with them in partnership to revitalize their business," Smith said.

Critics say the program is simply a publicity stunt.

"The idea that a giant company is going to teach small companies to compete with it seems ridiculous," said Nu Wexler of Wal-Mart Watch, a union-backed organization.

Others, though, say the program is the kind of thing Wal-Mart needs to do.

"Wal-Mart knows there are enough people who don't go there because if its reputation," said Silvers.

Although Wal-Mart said it would hold seminars for Chicago businesses, Smith said he doesn't know if that has happened yet. And the store has not begun selling products by local vendors, as officials promised before the store opened; they say applications from local vendors are being analyzed.

Author Charles Fishman said Wal-Mart must be careful to deliver on its promises.

"If they don't, rather than helping the community they simply increase cynicism," said Fishman, who wrote the book, "The Wal-Mart Effect: How the World's Most Powerful Company Really Works and How It's Transforming the American Economy."

Just how the new Wal-Mart and its strategy will affect local businesses in Chicago remains to be seen.

A handful of businesses have closed or are in the process of closing, but they are primarily clothing stores that barely were surviving before Wal-Mart opened, said Pete Schmugge, executive director of the North Pulaski-Armitage Chamber of Commerce.

"Wal-Mart was basically the final push," he said.

Top Line Fashion, a tired-looking store a few blocks from Wal-Mart, is about to close.

"The economy (has) not been good the last year," said owner Chung Yoo, adding she knew her store was finished when she walked into Wal-Mart and saw for herself that prices there were lower than in her store.

Even those whose businesses aren't in immediate danger are worried — including some who got free advertising from Wal-Mart.

"It scares me," said Norman Delrahim, who has owned B&S Hardware for 25 years. "But I'm happy to get those ads. Hopefully they're going to help us."

Meanwhile, Emma Mitts, the alderman who successfully pushed for the Wal-Mart to be built in her ward, said there are signs Wal-Mart is encouraging other business to come to the area.

"I can see the retailers and developers want to come in," said Mitts.

Various companies — including Starbucks, which Mitts said will build a coffee shop in the area — say they don't comment on reasons for locating in particular areas. Starbucks did confirm it is looking in the Chicago neighborhood.

But anybody who has been to the store, particularly on the weekends, can't miss the traffic jams out front and packed aisles inside. The fact is, said Silvers, Wal-Mart is a well-established anchor tenant, and smaller companies don't agree to build in an area until such a tenant is in place.

"That was the attraction for them," said Camille Lilly, executive director of the Austin Chamber of Commerce on the city's West Side. "They wanted to have an anchor such as Wal-Mart."

What happens now will be of interest far beyond the city limits, said Fishman. When Wal-Mart wants to "move into urban area where it hasn't been or encounters resistance, city officials will immediately say 'How's that Chicago store doing?'" Fishman said.

For Soto, the question is whether the other retailers will experience the same kind of traffic — and shoppers — that Wal-Mart has now: the kind who pass them by on their way to Wal-Mart.

Shoppers like Josephine Gatling.

"I don't have to be going to all the stores,' said Gatling, who lives five blocks from the store, as she wheeled her cart through Wal-Mart. "Everything I want is here."

Soto isn't waiting to find out whether his store dies or survives.

"I opened up a second location (in neighboring Cicero) because of Wal-Mart," he said. "I can sleep at night now."

© 2007 The Associated Press. All rights reserved.

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Wal-Mart Officials Visit India Amid Protests

By Anjana Pasricha
25 February 2007                              [back to top]

Executives from the U.S. retail giant Wal-Mart visited India last week to discuss a joint venture with a domestic company in the country's booming retail sector. But as Anjana Pasricha reports from New Delhi, Wal-Mart's plans to enter the Indian market are controversial.

A Wal-Mart company statement says its officials came to India to learn about the market firsthand, and explore the wholesale cash-and-carry business. Company officials visited shopping malls in Mumbai, and met government officials in New Delhi.

They maintained a low profile - for good reasons.

A joint venture between Wal-Mart and an Indian company, Bharti Enterprises, has generated strong concern among millions of small family-owned stores that dominate India's retail landscape.

Their fears found expression in several protests organized in Delhi and Mumbai by a group representing trade unions, traders and communist parties.

Reena Desai is the director of India F.D.I. Watch, an activist group aiming to prevent foreign direct investment in Indian retail. She says many small retailers have already suffered due to the entry of a few hypermarkets and supermarkets established by Indian companies investing in the retail sector. She fears Wal-Mart could have a devastating impact.

"This is the largest corporation in the world, so the amount of money, the amount of capital, the amount of power that they have is so much more times than even the Indian players," she said. "They are going to set a set a whole another standard of how they are going to do business in this country."

Wal-Mart cannot directly operate stores, due to government restrictions on foreign retailers. It plans to provide Bharti with the technology to links farmers and suppliers.

However, efforts by foreign retailers to force open the Indian market are also encountering powerful political opposition. The influential head of the governing  Congress Party, Sonia Gandhi, has expressed concern for local shop owners. The government has asked the industry minister to examine the impact of transnational supermarkets on 40 million people who depend on the retail sector.

Countries, such as the United States and Britain, have long been pressuring for more market access for their companies. But on a recent visit to India, U.S. Commerce Secretary Carlos Gutierrez admitted the issue is not easy.

"Obviously these are difficult decisions. There are domestic matters that need to be taken into account. So we recognize it, these are never easy discussions, but there is a lot to be gained," said Gutierrez.

Retail companies say their entry will modernize supply chains and make goods cheaper for Indian customers.

Regardless of large foreign investment plans, those of large Indian companies may also threaten the small Indian retailers. Domestic competition in retail will likely only intensify as the sector grows. Estimated to be worth $30 billion now, the retail sector is predicted to double in size in a decade.

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Bharti sees retail agreement with Wal-Mart within rules

Gulf Times
Saturday, 24 February, 2007                         [back to top]

NEW DELHI: Mobile phone major Bharti Enterprises, which plans to enter India’s retail market with Wal-Mart, said yesterday its agreement with the US-based giant was within the rules set for investments in the sector. “The joint venture on retail has been finalised and legal agreements are being worked out,” Bharti Enterprises chairman Sunil Bharti Mittal told the Press Trust of India (PTI) news agency. “We expect to sign an agreement in the coming weeks,” Mittal said, adding that Bharti’s joint venture accord with Wal-Mart would be for cash-and-carry and back-end linkages. “Wal-Mart is going to apply for a joint venture (permission) only in the area where policy exists,” Mittal said. India does not allow foreign investment in retail except for single-brand stores such as Nokia or Nike, and foreign groups including Wal-Mart have to sign franchise deals with local companies to enter the market. Mittal’s comments came in the wake of protests by India’s Communists, who offer crucial outside support to Congress-led pro-reform Prime Minister Manmohan Singh’s government. Communist activists protested in the Indian capital New Delhi on Thursday as Wal-Mart’s Vice Chairman Michael Duke arrived to meet officials and study the market. Shop owners and state-run supermarkets in India’s financial capital Mumbai protested Duke’s visit there Thursday. During his stay, Duke was to meet a series of top government officials to get a clear picture of policy guidelines in the retail sector. Congress party chief Sonia Gandhi has voiced reservations about allowing foreign retail giants into a country dominated by small “mom-and-pop” stores. But Agriculture Minister Sharad Pawar said farmers would benefit from the Bharti-Wal-Mart venture because they would get a good price for their produce. “From this angle, efforts which Bharti group is making is certainly useful for India’s farming community,” Pawar was quoted as saying by PTI after a meeting with Duke. To counter weakening domestic sales, retailers such as Wal-Mart, France’s Carrefour, Germany’s Metro and Britain’s Tesco have been pushing to enter India. A rapidly-growing affluent middle class estimated to make up as much as a third of India’s 1.1bn population spends an estimated $300bn annually on shopping. That figure is expected to double by 2015, according to consultants PriceWaterhouseCoopers. In a related development Home Retail Corp based in the Uk has said that it has signed an important franchise arrangement to develop its Argos retail format in India. Home Retail and Argos are one of thebiggest Internet retailers in the United kingdom and would like to strengthen its position in the world market. The deal will also help in providing an exciting and cost effective opportunity to leverage their skills and services as well as the sourcing scale and abilities over a period of time. Shares in Home Retail have spun off from its conglomerate businesses.

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Wal-Mart's Whitehouse Sweetheart

By Jim Hightower,
Topeka Capital-Journal
February 23rd, 2007                            [back to top]

Those who say that George W is not a "compassionate conservative," as he pledged to be when he first ran for president, obviously missed a remarkable, truly touching moment of Bush compassion in an action taken by his Labor Department last year. In a spirit of kindness and forgiveness that surely must stem from lessons he learned in Sunday school years ago, Bush & Company stepped in to prevent harsh treatment of someone who had made a mistake, compassionately offering leniency instead.

The someone was Wal-Mart. Its mistake was that it was caught in 85 violations of America's child labor laws. This was hardly Wal-Mart's first case of child labor abuse, and a less-compassionate president might have said: Throw the book at the creeps! But, no, Bush's political operatives in the Labor Department reached a kinder, gentler settlement. Wal-Mart, with $312 billion in yearly revenue, did have to pay a fine of $135,000 — but it was allowed to claim it had done nothing wrong.

Then, showing a passion for compassion, the Bushites agreed that Wal-Mart would be given 15 days notice before any further inspections of its stores! And, if any child labor abuses are found after the notice is given, Wal-Mart can avoid any punishment if it stops the abuses within 10 days.

In fairness, Mr. Bush has to share credit for such a moving display of regulatory restraint. While he had the sensitivity to go along with it, the settlement itself was substantially written by Wal-Mart's helpful lawyers. In fact, the Labor Department's own legal division was left out of the settlement process. And, in a neat touch of teamwork, even the press release about the deal was jointly written by Wal-Mart and Mr. Bush's political appointees.

Did I mention that Wal-Mart has given more than $4 million in campaign funds to Bush and the Republicans in the past seven years? No wonder he's their sweetheart.

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Retail traders protest against Wal-Mart entry

Gulf Times
Friday, 23 February, 2007                    [back to top]

NEW DELHI/MUMBAI: Executives from US retail giant Wal-Mart toured several stores yesterday as they work on a deal that could change the face of the country’s $300bn retail sector and has sparked fears of mass job losses. In New Delhi, over 100 demonstrators waving banners and shouting slogans marched on government buildings to protest against the entry of the world’s largest retailer into India. Some broke through police barricades and burnt an effigy of a dummy with “Wal-Mart Down” scrawled on it. “Go back Wal-Mart,” protesters shouted, waving placards saying: “Save Small Retailers”. But there were no protests as Wal-Mart Stores Inc vice chairman Michael Duke, accompanied by venture partner Rajan Mittal of Bharti Enterprises, visited a mall and a hypermarket in a Mumbai suburb and checked out products on display. Wal-Mart and Bharti plan a joint venture for cash-and-carry in a retail sector that is dominated by small family-run stores. The sector is forecast to more than double by 2015, and has attracted the interest of other top global retailers such as Tesco Plc and Carrefour. Small shopkeepers fear Wal-Mart could put many of an estimated 40mn Indians who depend on retail out of work. “The earnings for our small store keep me, my younger brother and sister and my parents alive,” said Amrit Prakash, 26, one of the protesters, who owns a small grocery store in Delhi. “If Wal-Mart comes, they will sell goods at wholesale prices which will be cheaper and I will have no customers. I simply can’t compete with these big supermarkets ... what will happen to me and my family? I’m worried we’ll end up on the streets.” His fears have strong political resonance. Sonia Gandhi, head of the Congress Party that leads India’s coalition government, raised her concerns about the “Wal-Mart effect” on retailers in a letter to Prime Minister Manmohan Singh that was leaked by Indian media. Duke was expected to hold talks with government and Bharti officials in New Delhi, but no specific business announcement would be made, Wal-Mart said in a statement. Duke was in India “to learn more about the market first-hand and to further explore the wholesale cash-and-carry business,” Wal-Mart said, adding it was a routine trip. “We look forward to partnering (Bharti) to build backward linkages with farmers and suppliers through a robust and efficient supply chain,” the US group added. Wal-Mart, which is also discussing how to provide Bharti with technology support, said it hoped to increase the amount of goods it sources for its international operations from India from $600mn last year. Analysts say investments in the supply chain, which is hamstrung by poor infrastructure, from refrigerated trucks to warehouses, would cut the number of middlemen and help reduce spoilage, estimated at nearly 40% of total output. Bharti Retail Ltd, wholly owned by Bharti Enterprises, said earlier this week it would spend up to $2.5bn by 2015 to build hypermarkets, supermarkets and other stores. “Maybe a few years down the line, when they have a bigger presence, we can see the impact, but right now no single firm has the clout to make or break this market,” said one analyst. Reliance Retail, part of Reliance Industries Ltd, is investing $5.6bn in some 700 stores, while ITC Ltd, the Birla group and Pantaloon Retail Ltd - India’s top retailer — are all ramping up. But small shop owners are concerned at what they call Wal-Mart’s “backdoor entry” into the sector. Foreign multi-brand retailers’ access to India is restricted to cash-and-carry and franchise operations, the route chosen by Metro AG, Shoprite Holdings and Marks & Spencer Plc. “We believe Wal-Mart is going to ruin this country and millions of people will lose their jobs,” said Dharmendra Kumar, campaign organiser in New Delhi for India FDI Watch, a coalition of trade unions, traders, students and communist parties. “Wal-Mart has saturated retail markets in the US and drives out local competition,” Mahesh Kambli, chief executive officer of Apna Bazaar told Business Standard newspaper yesterday. Mumbai is home to a wide range of retail formats, ranging from hypermarkets to tiny family-run convenience stores called “kiranas”. However, Wal-Mart said its entry would not dislodge the neighbourhood shops, but help them. “A cash-and-carry wholesale operation has the potential to provide much needed support to small business owners and retailers by selling quality merchandise at competitive prices,” it said in the statement.

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Wal-Mart, India's Bharti 'Very Close' to Deal

Reuters
2007-02-23                            [back to top]

NEW DELHI (Feb. 23) - Retail giant Wal-Mart Stores and India's Bharti Enterprises are very close to finalizing a deal for a retail joint venture, Bharti's chief said on Friday.

"We are very close," Sunil Mittal told reporters after he and Wal-Mart Vice Chairman Mike Duke had met Planning Commission Deputy Chairman Montek Singh Ahluwalia.

"We can't fix a time-frame, but we hope it will happen in the next few weeks," Mittal said, adding the legal agreement of the proposed cash-and-carry joint venture was being looked into.

Asked if there may be any regulatory hurdles to the venture, which has run into some political opposition, Mittal said: "Zero."

Mittal and Duke are scheduled to meet Agriculture Minister Sharad Pawar and Trade Minister Kamal Nath later in the day.

Wal-Mart said on Thursday it was also in talks to partner Bharti on supply chain logistics and providing technology support, but that no specific business announcement would be made during this trip to India.

Duke's visit has sparked protests from trade unions and small shop owners, who fear job losses if the retail industry is opened up further to foreign companies.

Foreign multi-brand retailers are only allowed to set up cash-and-carry or franchise operations in India, the route chosen by Germany's Metro AG, Shoprite Holdings and Marks & Spencer Plc.

Bharti Retail, a wholly-owned unit of Bharti Enterprises, said earlier this week it would spend $2.5 billion by 2015 in hypermarkets, supermarkets and other stores.

Copyright 2007 Reuters Limited. All rights reserved.

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Wal-Mart's Welcome to India Includes Demonstrations

By Reuters,
February 22nd, 2007                         [back to top]

Demonstrators waving banners and shouting slogans marched on government buildings here Thursday to protest the entry of Wal-Mart, the world’s largest retailer, into India.

Wal-Mart and a venture partner, Bharti Enterprises, are working on a deal that could change the face of the country’s $300 billion retail sector and has aroused fears of mass job losses.

In New Delhi, more than 100 protesters shouted “Go back Wal-Mart” and waved placards saying “Save Small Retailers.” Some broke through police barricades and burned an effigy of a dummy with “Wal-Mart Down” scrawled on it.

But there were no protesters Thursday in a suburb of Mumbai where Michael T. Duke, vice chairman of Wal-Mart Stores, accompanied by Rajan B. Mittal of Bharti Enterprises, visited a mall and a hypermarket.

Wal-Mart and Bharti plan a joint venture in a retail market that is forecast to more than double by 2015. Retailing in India, now dominated by small family-run stores, has also attracted the interest of other top global retailers like Tesco and Carrefour.

But owners of small shops are concerned at what they call Wal-Mart’s “backdoor entry.”

Foreign multibrand retailers in India are restricted to cash-and-carry and franchise operations, the route chosen by Metro of Germany, Shoprite Holdings of South Africa and Marks & Spencer of Britain.

“We believe Wal-Mart is going to ruin this country and millions of people will lose their jobs,” said Dharmendra Kumar, campaign organizer in New Delhi for India FDI Watch, a coalition of trade unions, traders, students and communist parties.

Small shopkeepers fear that Wal-Mart could put out of work many of an estimated 40 million Indians whose livelihoods depend on retailing.

“The earnings for our small store keep me, my younger brother and sister and my parents alive,” said Amrit Prakash, 26, one of the protesters, who owns a small grocery store in Delhi.

“If Wal-Mart comes, they will sell goods at wholesale prices, which will be cheaper, and I will have no customers,” he said. “What will happen to me and my family? I’m worried we’ll end up on the streets.”

His fears have strong political resonance.

Sonia Gandhi, head of the Congress Party that leads India’s coalition government, raised her concerns about the “Wal-Mart effect” on retailers in a letter to the prime minister that was leaked to the Indian news media.

Mr. Duke was expected to hold talks with government and Bharti officials in New Delhi, but no specific business announcement would be made, Wal-Mart said in a statement.

Wal-Mart said that Mr. Duke was in India “to learn more about the market firsthand and to further explore the wholesale cash-and-carry business.”

The company, which is also discussing how to provide Bharti with technology support, said it also hoped to increase the amount of India-made goods it buys for its worldwide operations.

Analysts say investments in the supply chain, which is hamstrung by poor infrastructure, like refrigerated trucks and warehouses, would cut the number of middlemen and help reduce spoilage, estimated at nearly 40 percent of total output.

Bharti Retail, wholly owned by Bharti Enterprises, said earlier this week it would spend up to $2.5 billion by 2015 to build hypermarkets, supermarkets and other stores.

“Maybe a few years down the line, when they have a bigger presence, we can see the impact, but right now no single firm has the clout to make or break this market,” said one analyst.

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Concord Wal-Mart Opponents Concerned About Crime

Simon Perez
CBS 5                             [back to top]

CONCORD Wal-Mart opposition groups say it's not a good idea for Concord to give the green light to the big-box store because the retailer draws criminals like a porch light attracts insects.

Philip Tucker, of the California Healthy Communities Network, researched the number of times police were called to the Wal-Mart store in Antioch, and found that compared to a nearby Kmart, police had a lot more work to do at Wal-Mart. 550% more felony arrests at Wal-Mart than K-mart; 820% more misdemeanor arrests at Wal-Mart.

"We have car theft, we've had purse snatchings, we've had sexual assault, we've had attempted kidnapping."

But Concord Mayor Mark Peterson isn't convinced: "I've looked at some of the information that's been given me by the opposition and frankly the information, the studies that they've cited are pretty well flawed."

The Wal-Mart opposition group didn't compare the number of people shopping at Wal-Mart versus Kmart.

"Let's say the Wal-Mart store is 10 times as big,'' Peterson said. "Well, one would expect then they'd have 10 times the number of crimes reported."

The response from Wal-Mart Spokesman Kevin Loscotoff: "They eliminated a number of different cities, they eliminated rural areas, in general simply just picked certain jurisdictions that would lead to a skewed report."

While crime is theoretically high at the Wal-Mart in Antioch, Fairfield police report to CBS5 the Wal-Mart there is "not a problem area."

In the end, the Wal-Mart opposition worries about who's going to pay to deal with potentially higher crime rates.

A 2004 nationwide study estimated the average cost to taxpayers dealing with crime at a single Wal-Mart was nearly $21,000 a year.

"Obviously some amount of money," says Peterson. "But not a significant amount of money when you're comparing it to what may be brought in which is between $500,000 and $600,000 in sales tax."

The city council will have a public hearing next Tuesday evening at 6:30.

(© MMVII, CBS Broadcasting Inc. All Rights Reserved.)

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Bharti on wholesale

REUTERS
THURSDAY, FEBRUARY 22, 2007                 [back to top]

MUMBAI: Wal-Mart Stores Inc said on Thursday it was still in discussions with India's Bharti Enterprises on business arrangements for cash-and-carry and providing technology support for its supply chain and logistics.

The world's largest retailer has a wholesaling venture with Bharti Enterprises and the two firms said they were in talks for cash-and-carry operations and logistics, areas in which India permits multi-brand foreign retailers to invest. Bharti Retail Ltd., a wholly owned unit of Bharti Enterprises, said earlier this week it would spend up to $2.5 billion by 2015 to build hypermarkets, supermarkets and other stores in the fast-expanding Indian market.

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WakeUpWalMart.com Calls on Wal-Mart to Lessen Risk Posed by Mercury & Adopt a National CFL Recycling Program Like IKEA

Center for Environmental Health Calls on Wal-Mart to Help Protect Children's Health and Adopt National Recycling Program

PRNewswire-USNewswire                            [back to top]

WASHINGTON, Feb. 22 /PRNewswire-USNewswire/ -- Today, as Wal-Mart made another announcement regarding its plan to sell compact fluorescent light bulbs (CFL's), WakeUpWalMart.com and the Center for Environmental Health called on the company to "do the right thing" and adopt a national recycling program to help lessen the mercury threat posed by these bulbs.

In statements released today, both the Center for Environmental Health (CEH) and WakeUpWalMart.com cautioned that Wal-Mart needs to address the risks of mercury exposure from the disposal of CFLs, preferably by insuring that consumers can return used bulbs for recycling. If CFL's are disposed of improperly, mercury exposure can permanently damage the brain, kidneys, and developing fetus, with potential damage to vision, hearing, and memory. In addition, children are especially sensitive to mercury, and women exposed during pregnancy have greater risks of having children with developmental problems, including mental retardation, lack of coordination, and delays in learning to walk and talk.

As background, in January 2007, Wal-Mart announced it had set a goal of selling 100 million compact fluorescent bulbs this year. But, even after two months, Wal-Mart has refused to adopt a national recycling program to deal with the serious environmental threat posed by the mercury content contained in the CFL's.

Without a national recycling program, Wal-Mart's efforts to sell 100 million CFL's could result in the spreading of an estimated 227,273 pounds of mercury into American households.

In addition, Wal-Mart has not publicly committed to selling only low mercury fluorescent light bulbs. In fact, the fluorescent light bulbs available for sale at Wal-Mart have a higher mercury content than similar fluorescent light bulbs available for sale at other retailers.

In contrast, IKEA, before launching its campaign to sell fluorescent bulbs, committed to both sell only low mercury light bulbs and to create a free recycling program that helps lessen the environmental risk.

A fact sheet on the serious environmental risks posed by Wal-Mart's fluorescent light bulb initiative is available by contacting WakeUpWalMart.com.

The following statement is attributable to Chris Kofinis, communications director for WakeUpWalMart.com:

"Without question, all Americans support a cleaner environment and a higher level of energy efficiency. However, without a national recycling program, Wal-Mart's push to sell 100 million fluorescent light bulbs could pose an incredible and needless health risk to our children and our communities.

"As first exemplified by IKEA, Wal-Mart must stop delaying and immediately establish a free-of-charge recycling program. In addition, just like IKEA, we call on Wal-Mart to commit to only selling low mercury fluorescent light bulbs in order to help lessen the serious health risks to children and families posed by mercury exposure.

"If Wal-Mart is truly serious about wanting to be a good steward of the environment, then Wal-Mart will see the light and publicly commit to a national recycling program that will ensure both our environment and the public health is protected from dangerous levels of mercury."

The following statement is attributable to Michael Green, executive director of the Center for Environmental Health:

"We're glad to see Wal-Mart taking an important step toward energy efficiency, but the company needs to put a little more than 18 seconds of thought into its program. Without widely available recycling programs, disposal of these bulbs could mean more mercury near our homes, schools and playgrounds."

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Gang-up against Wal-Mart

Cybernoon 
Thursday, February 22, 2007                          [back to top]

Trade groups, labour and hawkers’ unions come together to oppose the entry of world-renowned supermarket chain A united opposition was voiced yesterday at a press conference of leading trade associations, hawkers unions, cooperative stores and labour unions, against the arrival of Wal-Mart chief executive Michael Duke, who is due to arrive in Delhi today to finalise the Wal-Mart joint venture with Bharti Enterprises. The groups, who have joined together under the banner of the Joint Action Committee (JAC) to oppose Wal-Mart and Bharti, have described it as a back-door attempt to enter the Indian market, since Foreign Direct Investment (FDI) in Retail is banned. The JAC noted that Wal-Mart is the biggest monopoly retailer in the world and is well known for displacing small retailers, violating labour laws, union-busting and exploiting its suppliers. The JAC also opposed Reliance's large-scale venture into retail along with all other corporate retail chains, both domestic and foreign who have of late announced ambitious foray's into the retail sector. Mohan Gurnani, President of the Federation of Associations of Maharashtra, which represents 750 associations across the state said, "Wal-Mart is forcing its entry into the Indian retail market through the backdoor. Local traders are opposed to the entry of Wal-Mart, which they know has driven out thousands of local businesses in the US and other countries. With the highest density of small shops in the world, Indian retailers face an immediate threat, particularly in this city, and will fully resist Wal-Mart's attempts to enter into the retail market." He added, "It is not just Wal-Mart that is of concern but also companies like Reliance and Subiksha, who are opening small format stores, which are in direct competition with kirana stores, and we will oppose that as well." The JAC has also released findings of a study documenting the impact that corporate retail chains like Big Bazaar and ShopRite have had on local retailers and hawkers in Parel and Mulund, respectively. The findings of the study, conducted by Professor Anuradha Kalhan of Jai Hind College, conclude that within a 1km radius of the Phoenix Mills Mall in Parel and Nirmal Lifestyles in Mulund, "71 percent of the businesses have reported a decline in sales. Sales decline most frequently impacted larger shops in the size range of 400-500 sq ft and those less than 100 sq. ft., with grocery kirana stores being hit the hardest. About 63 percent of shopkeepers are reporting they feel threatened by the malls. The study also finds that 72 percent of hawkers experienced a fall in sales and all reported falling profits, which means falling income for them," professor Kalhan explained. Hyder Imam of the Hawker's union in the city voiced his strong opposition to Wal-Mart and the growth of the mall culture. He said, "There are over 3 lakh hawkers in the city whose livelihood is retail trade. We are already facing more evictions because of the malls and if the city and state does not ensure our livelihoods, we will resist the growth of mall culture at every level." Mahesh Kambli, CEO of Apna Bazaar, warned against the monopoly power and the false pricing practices of Wal-Mart, saying, "It is reported that Wal-Mart saturates markets in the US, driving out local competition, and then hikes up prices. Is this what we want for India?" He added that Apna Bazaar and other cooperative stores stand with other traders, retailers and hawkers in opposing Wal-Mart and Reliance. Dr. Vivek Monteiro, State Secretary of the Centre for International Trade Union (CITU), added, "Wal-Mart is known world wide for its egregious labour practices and anti-worker policies and should therefore not be allowed to enter India." He also said that "the UPA Government, while allowing FDI in single brand retail, has not been able to allow the multinational multi-brand retailers to operate in India so far because of strong resistance from the Left Parties, the trade unions, trader's organizations and other sections of the people. Therefore a roundabout way of getting them into India has been devised through this apparent joint venture." Advocate Vinod Shetty of the India FDI Watch campaign, said, "Different sections of society that will be impacted must join together, as the size and strength of corporations like Wal-Mart and Reliance is enormous. He added, "Wal-Mart should learn lessons from Germany and South Korea and think again before entering India. They are facing world-wide opposition wherever they go and India will be their fiercest challenger yet."

© 2007, Cybernoon 

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Group slams Wal-Mart for factory abuses

By Reuters,
February 21st, 2007                       [back to top]

NEW YORK (Reuters) -- A U.S. watchdog group has called on Wal-Mart Stores Inc. to put a stop to what it says is worker abuse at a factory in the Philippines that makes apparel for the retailer.

The Worker Rights Consortium said the Chong Won factory, which primarily makes clothing for Wal-Mart supplier One Step Up, has engaged in labor rights violations including forced overtime and minimum wage violations. The WRC has 167 U.S. college and university affiliates.

It also accused the factory's management of colluding with government agents in violence against striking workers.

The group said it was basing its charges on an on-site investigation from Oct. 28 to Nov. 2, and said it notified Wal-Mart in November.

"Wal-Mart has the power to compel Chong Won to halt the violent assaults on lawfully striking workers, offer reinstatement to those workers who have been unlawfully dismissed, and recognize the union and begin bargaining," the WRC said in a report.

Wal-Mart did not immediately return calls seeking comment.

The WRC said Chong Won has produced casual apparel for a number of brands and retailers, including university licensees. But it said that since mid-2006, all of Chong Won's production has been for Wal-Mart.

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Wal-Mart to Expand in Costa Rica

InsideCostaRica.com                      [back to top]

U.S. retail giant Wal-Mart Stores Inc., the world's largest retailer, will spend us$49 million to open 14 new stores in Costa Rica this year, the company said Tuesday.

The new stores will create 1,500 new jobs, Wal-Mart said.

Wal-Mart announced the investment after its chief executive officer for the Americas, Craig Heckert, met Costa Rican President Oscar Arias. Heckert was in San José for a Wal-Mart Central America board meeting.

Wal-Mart, has been stepping up its presence in Central America since entering the market in 2005. Central America is a largely poor region of around 41 million people that bridges Mexico with South America.

Wal-Mart Central America was formed a year ago when Wal-Mart obtained majority control of the Central American Retail Holding Company (CARHCO), which it first bought into in Sept. 2005.

The group has some 375 supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica and posted sales of about us$2.2 billion in 2005.

Wal-Mart controls some 9,000 jobs in Costa Rica through its Mas X Menos, Pali, Maxibodega supermarkets and the Hipermas mega stores

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Wal-Mart annual earnings flat on sluggish US

AFP
20-02-2007                    [back to top]

Global retailer Wal-Mart Stores Inc. has recorded flat growth in its annual earnings, with overseas acquisitions offsetting a sluggish US performance.

Over its fiscal year ended January 31, the world's biggest store chain said its net earnings crept up 0.4 percent to 11.28 billion dollars. Annual sales were up 11.7 percent to 344.99 billion dollars. For the year's fourth quarter, Wal-Mart said its net profit grew 9.8 percent year-on-year to 3.94 billion dollars. Excluding exceptional items, that came to 95 cents per share, well ahead of Wall Street's forecast of 90 cents. Sales in the three months advanced 10.9 percent to 98.09 billion dollars, less than the figure of 99.59 billion expected on the markets. Wal-Mart's sales on home turf struggled during the past fiscal year, due in part to a slowing US economy but also to a risky strategy of shifting to more expensive retail lines in a bid to woo richer customers. But despite pulling out of Germany and South Korea last year, because of a poor outlook for profit and growth potential there, Wal-Mart's overseas sales have held up. "Even if you take into account the discontinued operations, we still had record results," Wal-Mart chief executive Lee Scott said on a recorded conference call Tuesday. He described the fourth-quarter performance by Wal-Mart's international division as "phenomenal."

The group operates Asda stores in Britain and the struggling Seiyu chain in Japan. It reportedly plans to leapfrog French rival Carrefour by buying a Chinese retailer and become the biggest store chain in China. In November, India's Bharti Group clinched a deal with Wal-Mart to launch the first mega-retail store joint venture in the fast-growing country. However, Wal-Mart faces political opposition in India, where millions of mom-and-pop stores fear foreign competition will drive them out of business. Since the third quarter, Wal-Mart has also upped its stake in Seiyu, and bought out its distribution operations in Brazil and Central America. The company is also seeking a Russian partner. Mike Duke, vice chairman for Wal-Mart International, said sales in Mexico, Canada and South America had been particularly healthy, while Asda in Britain showed "increasing sales momentum." "We are investing in customer and market research and we're developing a foundation for greater long-range business plans that focus on emerging markets, like India and China," he said on the conference call. The international division showed a 32-percent surge in quarterly operating income to 1.513 billion dollars. In the United States, operating income at Wal-Mart Stores was up 11.3 percent on the quarter to 5.248 billion dollars, while the Sam's Club segment's income rose 15.4 percent to 435 million dollars. But total US comparable store sales for the fourth quarter increased only 1.6 percent, and were up a slender 2.1 percent on the fiscal year as a whole. The retail titan, a favorite target for union and environmental campaigners, has also been hit by more bad publicity in recent weeks. In late January, Wal-Mart announced a settlement with the US government after determining that about 87,000 current and former hourly workers had been consistently underpaid overtime during the past five years. And this month, a federal appeals court in San Francisco gave the green light for the largest sex discrimination case in US history to proceed against Wal-Mart. The case is estimated to cover more than 1.5 million women. Scott, however, stressed that Wal-Mart was promoting employment diversity along with driving up healthcare spending for its staff and pushing environmentally friendlier packaging. "The fact is, we are a better Wal-Mart than we were one year ago," he said.

©AFP

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Consumers More Satisfied Than Ever

By Tom Van Riper,
Forbes.com
February 20th, 2007                         [back to top]

Consumers are poised to carry the economy for at least awhile longer, if the historic pattern of the University Michigan's American Customer Satisfaction Index holds again this year.

Only don't expect major retailers like Wal-Mart Stores and Circuit Ciy to share in the riches. Both ranked at the bottom of their respective categories--Wal-Mart under supermarkets, Circuit City under specialty stores--with their scores dipping from last year.

Call it the result of Wal-Mart's crowded aisles and Circuit City's inability to keep up with rival Best Buy's famed "geek squad," the popular customer service group. Their dropoff flies in the face of the University's latest overall survey, which showed that consumers' overall happiness with the goods and services they received during the fourth quarter of 2006 was the highest since the report began in 1994.

American businesses scored a 74.9 on a 100-point scale, an all-time high and up from 74.4 during the previous quarter. And that could indeed be good news for the economy. A historical comparison of the ASCI index to consumer spending on a quarterly lagging basis shows they almost always rise in tandem. The University of Michigan says the fourth-quarter results suggest that consumer spending will grow 3.5% to 4.1% in the first quarter of 2007.

"Although the economy might not soar, it will continue to show solid growth as long as foreign investors remain willing to fund U.S. household consumption, and as long as oil prices, interest rates or inflation don't dramatically change for the worse," says Claes Fornell, who heads the study.

While supermarkets scored a 75 rating as a group, led by an 83 from Publix and impressive jumps by Safeway and Winn-Dixie, Wal-Mart lagged the category with a 69. With no way to compete with Wal-Mart on price, customer service has emerged as a key differentiator for the super market chains.

Circuit City also notched a 69 on the survey, a drop of one point from a year ago, continuing a steady decline that's seen its customer satisfaction rating drop 5.5% since 2003. Best Buy scored a healthy 76, beaten only by Costco and Wal-Mart's Sam's Club unit.

And perhaps not surprisingly, health insurers occupied the most real estate in consumers' dog houses. The overall industry score of 72 was the lowest among all categories, with Wellpoint, United Health Group and Aetna all scoring below 70.

But the general news on the consumer satisfaction front was good, with many e-commerce retailers, banks and life insurers scoring strongly with customers. The online retail space led all industries with a score of 80, thanks to big jumps by Charles Schwab Corp. (up 8.1%) and E*Trade (up 4.2%).

Financial companies with strong showings included MetLife, which gained 9.9% from last year, Wells Fargo, which improved 7.5%, and Geico, up 6.4%.

For those companies and others that scored well, sales and profits figure to improve in 2007. A study by University of Iowa marketing professor Thomas Gruca shows that when consumers are satisfied with a company, they come back for more. For each point a company improves its rating, net cash flow improves by $55 million a year later, he found. And that rate includes auto companies and other sellers of durable goods, which rarely make a follow up sale to the same customer a year later. So for retailers, banks and other companies that sell goods more frequently, that rate is even higher.

"When a business says they want customers satisfied, it means two things. It means it wants them satisfied now, but it also means it wants them to come back," Gruca says.

There will be plenty of satisfied customers going back to spend in 2007 if the latest results are any indication. But it's likely that fewer of them will be headed to Circuit City and Wal-Mart.

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India's Bharti eyes big expansion

Wal-Mart deal Retailer says it will spend $2.5B through 2015 on new stores, hopes to finalize wholesale venture with U.S. firm. this week.

Reuters
February 19 2007                       [back to top]

India's Bharti group aims to spend up to $2.5 billion by 2015 building hypermarkets and supermarkets as rivals vie for a slice of a fast-growing retail market.

Bharti will also meet executives of Wal-Mart Stores Inc. (Charts), the world's biggest retailer, this week to finalize a wholesaling joint venture in Asia's fourth-biggest economy.

"We are in discussions ... they are coming this week, and the team will be led by Mike Duke (Wal-Mart vice chairman and head of international operations)," Rajan Mittal, joint managing director of Bharti Enterprises, told a news conference.

Bharti Retail Pvt. Ltd., wholly-owned by billionaire Sunil Mittal's Bharti Enterprises, will build hypermarkets, supermarkets and other stores to sell mainly locally sourced groceries, electronics, clothing and furniture, Mittal said.

The first stores will open in Indian cities with a population of 1 million in the first quarter of 2008, and Bharti expects revenues of 200 billion rupees ($4.54 billion) by 2015.

Mittal said Bharti was looking at about 10 million sq. ft. of retail space and will hire 60,000 staff.

Bharti, a conglomerate that combines telecoms, commercial farming, insurance and software businesses, controls India's top mobile phone operator, Bharti Airtel Ltd..

Local traders and politicians have opposed opening up India's retail sector, which is estimated at $300 billion and could more than double by 2015, according to Technopak Advisors.

India allows single-brand foreign retailers to take up to 51 percent in a joint venture with a local firm, but bans multiple-brand retailers from investing in front-end retail.

Earlier this month, one of India's most powerful politicians wrote to the prime minister expressing his concerns about "the Wal-Mart effect" on domestic retailers, and the need to study the impact of transnational supermarkets on the "livelihood security" of small store owners.

Organized retail makes up only about 3 percent of India's retail industry, but is forecast to rise to 15-18 percent by 2011-12, attracting global interest from large retailers such as Britain's Tesco Plc. (Charts) and France's Carrefour.

Shoprite Holdings, Marks & Spencer Plc. (Charts) and Germany's Metro AG have wholesale cash-and-carry and franchise operations in India.

Bharti and Wal-Mart will also have to contend with retail operations of local rivals including Reliance Industries Ltd., ITC Ltd., Pantaloon Retail Ltd., the Tata group and the Aditya Birla group.

"We are totally in line ... in sync with the government thought," Mittal said. "We want to co-exist with smaller convenience stores," he said, referring to the thousands of non-organized retailers that control much of the retail sector.

"We are even looking at franchising these stores."

Shares in Bharti Airtel, valued at $34 billion, rose as much as 2.4 percent to a new high of 810.90 rupees in a firmer Mumbai market on Monday.

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Wal-Mart entry made certain

Harish Gupta
Monday February 19, 2007                    [back to top]

The South Block and Udyog Bhavan have found a way to clear Wal-Mart's entry into the Indian retail sector in a tie-up with Sunil Mittal's Bharti Airtel. The government is understood to have assured US officials that all hurdles will be removed and the retail sector will be opened for foreign investment. Bharti will expand its retail business the way Reliance is expanding. Bharti will lead from the front with Wal-Mart as the junior partner in select items to begin with. The deal will have many riders in the wake of the concerns expressed by Congress president Sonia Gandhi.

Initially, the commerce ministry will ensure that Wal-Mart does not venture into fruits, vegetables and other items in which local vendors deal. The business will be expanded in a phased manner. It is being pointed out that the V.P. Singh government gave permission to the entry of Pepsico in 1990 on the condition that 75% of its business would involve promoting Punjab farmers and 25% will be in soft drinks. These terms were of course thrown out later. A high-level delegation comprising US officials and businessmen recently met Kamal Nath. What transpired in the meeting is not known. But the US team came out smiling. In fact, the commerce ministry is on the verge of clearing the application of Starbucks coffee chain among others.

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Wal-Mart names 9 cities for jobs program

By CHUCK BARTELS                         [back to top]

Wal-Mart Stores Inc. announced Monday its plans for nine stores in areas in need of economic revitalization and said it will use those stores to help other businesses in the area develop.

Wal-Mart Vice Chairman John Menzer, who heads the company's U.S. operation, was traveling to Indianapolis and Pittsburgh to announce that the company is moving into neighborhoods in each of those cities where commerce has faltered.

Menzer said Wal-Mart is working with local chambers of commerce, business groups and minority-owned businesses with the goal of guiding new suppliers and helping new or existing shops thrive.

"We're looking at working families that need us the most," Menzer said. "That's where we want to go."

As jobs are created around the new Wal-Mart stores, tax revenue will rise and the neighborhood economy will improve, Menzer said. Two of the stores are already open -- in Chicago and Portsmouth, Va.

In April, Wal-Mart Chief Executive Lee Scott said the company planned to build 50 stores in areas with high crime or high unemployment. At the store on Chicago's west side and at the nine identified Monday, Wal-Mart will offer advertising to the other businesses in local newspapers and through the audio feed in Wal-Mart stores.

At each of the stores, five small businesses will be picked each quarter for the special treatment, the ultimate focus of which will be "how to take advantage of having a Wal-Mart in your market," Menzer said.

Near the Chicago store -- the first in the city limits for the retail giant -- Menzer said a number of new businesses are under development nearby, including a coffee shop, a drug store and a home improvement center.

"It could be any type of small business in the area that would draw on our traffic," Menzer said.

The Lafayette Square site in Indianapolis is to get a Supercenter, which is planned to open next year. A Supercenter combines a Wal-Mart discount store with a grocery store. A Supercenter is also planned for the site near Pittsburgh, at East Hills, Pa. The company said a religious group had urged new businesses to come into a former mall site. The new Wal-Mart there is to open in 2009.

Pennsylvania Gov. Edward G. Rendell was to be on hand at the Pittsburgh announcement and Indiana Gov. Mitch Daniels was scheduled to be at the Indianapolis location.

Other stores announced Monday:

--Cleveland -- a Supercenter is to open in the fall at the site of a former steelyard. Other retailers are to have storefronts in the development.

--Decatur, Ga. -- the community outside of Atlanta is to get a Supercenter in early 2008 at the site of a former mall.

--El Mirage, Ariz. -- a Supercenter is to open during the summer near Luke Air Force Base.

--Landover Hills, Md. -- is to be the site of the first Wal-Mart store to open inside the beltway of Washington, D.C. The store will be in Prince George's County at the former Capital Plaza Shopping Center.

--Portsmouth, Va. -- a Supercenter opened last month in the city's midtown at an area targeted for redevelopment.

--Richmond, Calif. -- a Wal-Mart is to open in the spring at a former department store location in the Bay Area community.

--Sanger, Calif. -- A Supercenter is to open in the spring at a former commercial building in the community near Fresno.

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Wal-Mart's Results Likely To Show Need for Changes

By Gary McWilliams,
Wall Street Journal
February 17th, 2007                       [back to top]

When Wal-Mart Stores Inc. reports fourth-quarter earnings Tuesday, those hoping for the roar of retail's big engine accelerating into the New Year are likely to hear gear-grinding instead.

The Wall Street consensus is that the retailer will post a slender 7.1% rise in quarterly net income, down from a 12.1% gain in the year-earlier period. The Bentonville, Ark., chain's results have been dogged by marketing missteps, lackluster gains and cluttered stores.

Increasingly, Wal-Mart is reliant on opening new stores to boost its top line. To get back into high gear, Wal-Mart needs to reignite sales at existing stores. Sales at stores open at least a year climbed a measly 2% in the past year, the lowest pace in at least a decade. The retailer has tried various tactics to boost sales but none have worked very well. One initiative, a big push to attract upscale shoppers, actually may have backfired and turned off the core Wal-Mart customer.

So, now Wal-Mart is going back to basics. At the company's annual gathering of managers two weeks ago, Wal-Mart gave store managers marching orders to present customers with cleaner stores, faster checkouts and friendlier employees. That the company -- which has some 4,000 U.S. stores and 2,700 internationally -- needs to lure customers back is a sign that it has a lot more work left to do. It continues to overhaul management, appointing a new chief marketing officer and head of U.S. business strategy in recent days.

The year starts with a small hill to climb: The first quarter will be affected by eight fewer days of sales prior to Easter this year. The April 8 holiday and Passover, which ends two days later, have had a big impact on first-quarter results in the past.

In the meantime, Wal-Mart is still working on turning around weak results in its apparel and home-decor businesses, two of its five key product segments. Overhauls last year were blamed, in part, for softer sales in the two areas. Despite offering better-quality apparel and 600-thread-count sheets last year, there was no sign of a payoff.

A bigger mountain is the prospect of a fat settlement in a class-action discrimination suit alleging female employees were denied the same pay and promotion as males. Some Wall Street analysts are starting to factor the risk of a multibillion-dollar settlement into their evaluations. Goldman Sachs Group estimates a decision on class-action status by the full appeals court, known as en banc, could come in as little as seven months. If the court sustains the plaintiffs, chances for a settlement would grow, Goldman estimates.

Wal-Mart says it has no plans to settle the suit and insists there are grounds to overturn the granting of class-action status. But so far two courts have upheld the status, and rehearings may serve to keep the issue grinding in the ears of shoppers as well as investors.

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Loss widens at Wal-Mart's Japan unit

THE MAINICHI NEWSPAPERS
February 16, 2007                            [back to top]

In 2006 due to writedown of fixed assets Seiyu Ltd., the Japanese subsidiary of U.S. retail giant Wal-Mart, said Friday its full-year loss widened more than threefold in 2006 as it wrote down the value of fixed assets.

However, Seiyu -- Japan's fifth-largest retail chain with more than 400 outlets -- said same-store sales rose for the first time in 15 years, a positive sign as the retailer struggles to gain market share in the notoriously difficult Japanese retail market.

Seiyu's net loss totaled 55.79 billion yen (US$468.8 million) in the 12 months through December, compared with a loss of 17.7 billion yen a year earlier, the Tokyo-based company said.

The company's net loss widened as the company booked an extraordinary loss of 49.2 billion yen (US$413.5 million) for impairment losses on its fixed assets, Seiyu said in a statement.

Sales slipped 3.6 percent to 960.86 billion yen (US$8.07 billion), down from 99.71 billion yen a year earlier. But sales at stores that have existed for more than one year rose 0.6 percent, the first rise in 15 years.

"We are going in the right direction and the direction stays the same as 2006," said Seiyu Chief Executive Ed Kolodzieski. "We continue our focus on speedy changes in merchandising and services based on customer needs."

For the current year through Dec. 31, Seiyu said it expects to become profitable again, forecasting a group net profit of 800 million yen (US$6.72 million), the company said. It expects a group operating profit of 10.60 billion yen (US$89.08 million) and group sales of 992.10 billion yen (US$8.34 million).

Seiyu remodeled 73 of its stores last year, striving to meet local needs to create an environment that is easy to shop around, and their sales are showing "steady growth," the company said. In 2005, the company remodeled 15 stores.

The number of round-the-clock rose to 262 stores at the end of last year, said Seiyu, which is 53.34 percent owned by Wal-Mart Stores Inc., the world's biggest retailer.

Wal-Mart has been gradually raising its stake in Seiyu since 2002. It has stuck with the Seiyu brand, familiar to Japanese, instead of using the Wal-Mart name.

Unlike its operations in South Korea and Germany, Wal-Mart has made significant investments in Japan, the world's second largest retail market after the U.S., setting up a distribution facility, introducing its computerized systems, remodeling stores and opening large-scale supermarkets, which had been relatively rare here.

Seiyu shares, which have fallen by half since a year ago, rose 3.75 percent to 166 yen (US$1.39) on the Tokyo Stock Exchange shortly before the earnings were released. (AP)

Copyright 2004-2005 THE MAINICHI NEWSPAPERS. All rights reserved.

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Wal-Mart report should give clues on fiscal year

By Nicole Maestri
Fri Feb 16, 2007                              [back to top]

NEW YORK (Reuters) - Wal-Mart Stores Inc.(WMT.N: Quote, Profile, Research) investors will be focused on the retailer's forecast for its new fiscal year and indications as to when sales at its U.S. store base may finally strengthen when the world's largest retailer reports fourth-quarter results on Tuesday.

Wal-Mart ended its fiscal year on January 31 after posting a string of paltry sales gains at its U.S. stores open at least a year, including a 0.1 percent decline in November.

In the face of store remodeling projects, limited opportunities for U.S. growth, problems with its apparel offerings and a recent drop in temperatures that could pinch shoppers when heating bills roll in, investors are wondering when it U.S. business will get back on track.

"That's the $64,000 question," said Patricia Edwards, a portfolio manager with Wentworth, Hauser and Violich, who tracks retail companies.

ABOUT FACE

The retailer has already forecast tepid gains for February, saying it expects U.S. same-store sales to rise 1 percent to 2 percent. Smaller rival Target Corp. (TGT.N: Quote, Profile, Research) expects February sales at its stores open at least a year to rise 4 percent to 6 percent.

If the forecasts hold, Target's same-store sales gains would have exceeded Wal-Mart's in 42 of the last 43 months, according to ThinkEquity Partners.

"It looks to me like Target is humming on all cylinders," said James Hardesty, president of Hardesty Capital Management, which owns Target shares. "They've found a niche that is above the discount chains, but below the high-end franchise department stores."

Wal-Mart is struggling as it has tried to widen its niche.

Last year, it downplayed its discount roots to try to expand its image beyond that of a low-priced retailer. It stocked more upscale items such as organic food and plasma TVs, hoping wealthier shoppers would spend more in its stores.

But its lower-income customers balked at some of the changes and, in the face of disappointing sales, Wal-Mart vowed its "most aggressive pricing strategy ever" for the holidays.

"Getting back to really every day low prices and making sure we were the price leader," said Charles Holley, Wal-Mart's treasurer, at a Citigroup conference this week. "That was very important to us in the fourth quarter."

In January, Wal-Mart maintained its fourth-quarter earnings forecast of 88 cents to 92 cents per share. Analysts, on average, expect it to earn 90 cents per share, according to Reuters Estimates.

MEETING EXPECTATIONS?

J.P. Morgan analyst Charles Grom, in a note on Friday, said he expects Wal-Mart to report quarterly earnings in line with expectations, helped by better inventory and labor management.

But he said the Wall Street earnings estimate of $3.20 per share for its new fiscal year is "too ambitious" and implies year-over-year operating margin gains in its U.S division.

"Such margin improvement is unlikely," he wrote.

This year, Wal-Mart faces more store remodeling projects, which have disrupted shoppers, and it is trying to get its apparel offering back on track. It is also struggling with trying to grow a U.S. store base that numbered more than 4,000 at the end of January, including its Sam's Club warehouses.

Its low-income shoppers could also feel a squeeze from higher heating bills as a blast of chilly temperatures grips much of the United States.

With business difficult in the United States, Wal-Mart could get some help from its international division.

Its Japanese subsidiary, Seiyu Ltd. (8268.T: Quote, Profile, Research) has forecast a return to profit this year and Wal-Mart de Mexico (WALMEXV.MX: Quote, Profile, Research) plans to open 125 new stores and restaurants this year and boost investment by 19 percent.

"For all the concern we have about eroding productivity in Wal-Mart's core U.S. business -- and that concern remains -- we note that international is contributing disproportionately to the company's revenue and profit growth," wrote Merrill Lynch analyst Virginia Genereux in a note on Friday.

She said international operations contributed roughly 33 percent of Wal-Mart's profit growth in its last fiscal year and could contribute 36 percent of the growth in this fiscal year.

For its fiscal year ending January 31, 2006, Wal-Mart's international unit accounted for roughly 20 percent of its sales.

© Reuters 2006. All rights reserved.

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Wal-Mart spiffs up in bid to broaden appeal

Massive remodel effort aims to get people to buy more than basics

By Allison Linn
Feb 15, 2007                               [back to top]

Wal-Mart is already known for offering some of the biggest discounts around. Now it also wants to be known for showcasing those low-cost goods in a prettier setting.

The Bentonville, Ark.-based retailing giant is in the midst of an ambitious plan to spiff up a whopping 1,800 stores over an 18-month period. The project, which is scheduled to be completed by October, is in addition to another 322 full store remodels — slightly more than the typical 300 — that the company completed last year.

The move comes as the nation's biggest retailer is facing sluggish sales growth and other growing pains, prompting the need for change.

Wal-Mart said U.S. sales for the five weeks ended Feb. 2 grew 2.2 percent on a same-store basis, higher than the company's conservative estimates but still lackluster when compared to previous years.

In the December period, an all-important season for retailers, the company reported a meager 1.6 percent gain, while in November, same-store sales actually dipped slightly. Same-store sales, or sales open at least one year, are considered a crucial measure of chain-store health.

The company also is facing a significant criticism over its treatment of workers and other corporate practices and recently weathered a shakeup in its marketing department.

For much of its history, Wal-Mart thrived on the model of offering budget-conscious shoppers, often in rural areas, a huge selection of products at bargain-basement prices, with little thought to frills such as fancy floors or attractive dressing rooms.

But in recent years the company has expanded further into suburban and even urban markets and targeted more middle-income customers to fuel growth.

Retail consultant Howard Davidowitz said many of those coveted middle-income shoppers have been willing to come to Wal-Mart for bargains on staples like toilet paper or socks. But, turned off by things like cluttered aisles and outdated décor, they are unlikely to cross the aisle and consider buying a fancy jacket, piece of jewelry or set of sheets.

“What Wal-Mart has to do is sell those middle-income customers more,” he said.

Wal-Mart says its remodel strategy is aimed at getting customers to shop in other areas of the store they may have previously ignored.

Still, the retailer also takes great pains to note that its overall strategy is to remain a discounter — albeit one whose stores are tailored to better appeal to their surrounding demographic.

“This is not about moving Wal-Mart to go more upscale,” spokeswoman Melissa O’Brien said of the company’s broader strategy. “It’s about where Wal-Mart’s going to be a better store of the community for each community we serve.”

Davidowitz believes the company is right to undertake an ambitious remodel effort, noting that many of the stores appear rundown in comparison to competitors such as Target. Still, he expects it to be some time before the remodels pay off.

“They’ve got a lot to do,” he said. “I think at the end they’ll be better.”

O’Brien, the Wal-Mart spokeswoman, said it’s too early to say whether the remodels are providing a financial boost, but she said anecdotal evidence shows customers are responding well.

The first thing a visitor notices upon entering a fully remodeled giant Supercenter in Yakima, Wash., is the floor. The entryway carpeting, which can quickly grow dingy amidst heavy foot traffic, has been replaced by faux slate tiles, which match the other earth tones that have supplanted the grays, blues and reds more commonly associated with a Wal-Mart.

The discounter also has scaled back the cluttered, dated signs, instead relying mainly on big, simple posters to direct shoppers to different departments in the store, which is the size of more than four football fields. In many places, displays have been lowered, or walls and barriers removed completely, to allow people to see around the stores more easily and check out things like strollers or furniture.

The company also has widened some aisles to allow shoppers to pass through more easily.

Departments such as apparel and accessories now have faux hardwood floors, to better distinguish them from the parts of the store where people buy things like detergent. The dressing rooms have been given a substantial makeover, and even the shoe area has more seating and mirrors.

In the pharmacy, Wal-Mart has lowered counters and removed walls so people can see and interact with the pharmacist.

The electronics department also has been spiffed up, and now boasts a wall of higher-end televisions as part of the company’s effort to sell more electronic gear.

There are other, smaller changes as well. In stores such as Yakima that sell guns, the display case has been upgraded to a wood finish. Also, many restrooms have been given a touch-up.

Yakima is one of the 322 stores that underwent full remodels. In the 1,800 additional stores receiving a more modest facelift, O’Brien said the company is making similar changes in any or all of four areas: apparel, restrooms, electronics and home.

From the wood and metallic design touches to the occasional greenery, the intent is clear: Wal-Mart wants to be thought of as a pleasant place to shop, not just a massive warehouse for snapping up bargains. The question is whether the changes will be enough.

One big problem facing the company is that the remodels themselves are disturbing store operations and turning off some customers. A full remodel takes 10 to 13 weeks, while a partial upgrade can take two to four weeks.

“The end result is incredible, but the disruption during the process is also incredible,” said Kaye Young, senior vice president with consultant group Retail Forward, which provided customer feedback to Wal-Mart ahead of the remodel plans.

Young has been surprised by the noise level, temperature changes and disturbances that have included birds flying through some stores. Such unpleasantness may turn off a small percentage of shoppers permanently, she said, although most Wal-Mart shoppers stay loyal because of the low pricing.

O’Brien noted that Wal-Mart suspended remodeling efforts during the busy holiday season. She said she thinks customers have been understanding, especially once they see the results.

Young thinks the changes will help Wal-Mart, but she said the company also needs to do more than just improve the stores’ looks.

For example, she said the redesigned electronics department may lure in more people looking for big-ticket items like computers or wide-screen TVs. But those same shoppers may leave empty-handed if the company does not have knowledgeable staffers to help them pick out the right item.

Analyst Edward Weller with ThinkEquity Partners said he welcomes any upgrades that could make it easier to find things in Wal-Mart’s massive stores. Still, he thinks the company continues to fill up areas including the aisles with too much product, potentially putting off customers.

While Wal-Mart has made some effort to tailor its store offerings to meet the demands of higher-income areas, Weller thinks they could do more to differentiate its stores.

He also noted that Wal-Mart must go beyond just providing a more pleasing environment if it wants middle-income customers to purchase more items. The retailer also has to offer them more of the types of things they want to buy.

“It’s not just the remodels,” he said. “I think a lot of it is content.”

© 2007 MSNBC Interactive

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Two doctors voice opposition to Wal-Mart plan

By Leslie Albrecht,
Merced Sun-Star
February 15th, 2007                             [back to top]

Two Central Valley doctors publicly joined the campaign to stop Wal-Mart from building a distribution center in southeast Merced on Wednesday morning.

Dr. John Holmes, a Merced orthopedic surgeon, and Dr. Bob Vizzard, a Stockton emergency room physician, charged that fumes from diesel trucks driving to and from Wal-Mart's warehouse facility would damage Merced's already poor air quality and trigger asthma attacks and premature deaths.

Up to 450 trucks could drive in and out of the 1.2 million- square-foot distribution center daily, which Wal-Mart wants to build on a 275-acre parcel between Childs and Gerard avenues west of Tower Road.

Consultants are studying the project's possible environmental impacts now; it won't go before the City Council for a vote until at least August, said Planning Manager Kim Espinosa.

Proponents of the warehouse facility say it will eventually provide 900 jobs that pay $13 to $14 hourly.

Vizzard said the facility's air quality impacts outweigh economic benefits.

"This is not an area that can sustain damage to the air," said Vizzard at a press event outside Mercy Medical Center Merced on East 13th Street. "It doesn't help to create jobs in a community where people can't live."

Vizzard is a member of Physicians for Social Responsibility, a Washington D.C.-based organization that advocates on issues including nuclear weapons proliferation and gun control.

Wal-Mart spokesman Keith Morris said his company is "absolutely aware" of residents' concerns about how the distribution center would affect Merced's air. He said Wal-Mart agreed to expand the project's environmental review to help better address those concerns.

That extra analysis added $38,695 to the environmental report's $344,655 price and delayed it by a few months.

"It delays the project, but if it gives everybody a comfort level that these things have been thoroughly evaluated, then it's absolutely the right thing to do," Morris said.

Morris said Wal-Mart had recently taken steps to make the company's 7,000 trucks more environmentally friendly, outfitting the vehicles with auxiliary power units that allow drivers to run air conditioning without turning on engines that emit toxic fumes.

Wal-Mart also has a company policy that prohibits drivers from letting trucks idle while they're loaded and unloaded, Morris said.

Those two measures mean the center's trucks won't spew nearly as much pollution as they would have a few years ago, Morris said.

But Holmes said measures to lessen the facility's impacts on air quality weren't sufficient. He accused the San Joaquin Air Pollution Control District of acting irresponsibly by working with Wal-Mart to lessen possible air quality damage.

"How can you allow a polluting project in here when you can't even control or mitigate the pollution that you already have?" said Holmes, who was also a vocal opponent of the Riverside Motorsports Park. "It's obvious this is inappropriate."

Air district spokeswoman Jaime Holt said the agency does not have the power to deny or approve the Wal-Mart project, because that decision rests with the City Council. Instead the air district's role is to suggest ways Wal-Mart could control pollution, she said.

In August 2006, the air district requested that the environmental impact report on the proposed distribution center include what's called a human health risk assessment.

The assessment will analyze whether diesel exhaust from the distribution center's trucks would pose a cancer risk to people who live or attend school nearby.

When the draft of the environmental report is released, the public will have 45 days to submit comments on the document, Espinosa said.

After consultants prepare written responses to each comment, the Planning Commission will vote on whether to recommend certification of the environmental report and on whether to approve the project.

That vote probably won't happen until late summer, Espinosa said.

After the Planning Commission's vote, the City Council will issue the final decision on the project, Espinosa said.

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Wal-Mart Makes Changes in Exec Ranks

The Associated Press                                     [back to top]

BENTONVILLE, Ark. — Wal-Mart Stores Inc. continued making changes in its executive ranks, announcing on Thursday that it will promote the top executive from its online subsidiary to head of domestic business strategy.

In his new role, Carter Cast will be in charge of strategic planning for Wal-Mart. His replacement at Walmart.com will be the subsidiary's chief marketing officer, Raul Vazquez.

Cast was hired by Walmart.com in 2000. Working in several positions, Cast helped the online site grow and become profitable. Two years ago he became chief executive and helped Walmart.com become the No. 3 online seller in the country.

Vazquez joined Walmart.com in 2002. As chief executive he will help develop an expanded product line and integrate more product information with the online site, the company said.

Cast and Vazquez will both report to Eduardo Castro-Wright, president and chief executive of Wal-Mart's U.S division.

"The new appointments of Carter Cast and Raul Vazquez and their extensive expertise in the online retail environment uniquely positions Wal-Mart to build upon our strength and ability to provide a comprehensive, multi-channel experience for our customers," Castro-Wright said in a statement. He praised Cast's ability to lead and said Vazquez will help the online business "further leverage the Wal-Mart brand."

Last month, John Fleming, who had been Wal-Mart's chief marketing officer, was named to a newly created position of chief merchandising officer. In that role, Fleming will oversee changes in the way the discounter picks merchandise for high-growth areas. The reshuffling comes after the discounter stumbled last year in its drive to offer more fashionable apparel and other items.

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US awaiting Indian Govt's decision on Wal-Mart entry

the hindu business line                          [back to top]

New Delhi Feb. 14 The US on Wednesday said it was awaiting the Indian Government's response to the entry of Wal-Mart into the country.

"We will have to see what Government officials decide," said Mr Carlos Gutierrez, US Commerce Secretary, while commenting on the Bharti-Wal-Mart joint venture's foray into the Indian retail sector.

"Since India is a vibrant and energetic democracy, intense debate over Wal-Mart's entry in to the country is happening, in the same way debates occur in any other democracy. We will see what Government officials ultimately decide," Mr Gutierrez said.

Pointing out that Wal-Mart's entry into India would not only benefit millions of farmers but also smaller retailers due to greater efficiency in the supply chain, he said,

"Foreign investment will be prohibited in the front end but there could be some partnership structure in wholesale. It could represent effective outlet for farm products and bring benefit to farmers as well as the agricultural sector."

Mr Gutierrez said, "While the Indo-US trade grew over 20 per cent on year-on-year in 2006 to $32 billion, India's exports to the US grew 16 per cent to $22 billion. Imports by India from the US increased at 26 per cent to $10 billion in the same period." Both countries have set a target to double bilateral trade by 2010, he said.

© Copyright 2000 - 2006 The Hindu Business Line

Wal-Mart Budgets Almost a Billion for Mexico This Year

Agencia EFE S.A.
February 14, 2007                                [back to top]

Retailing giant Wal-Mart plans to invest $981 million in Mexico this year in an expansion drive that envisions 125 new stores and the opening of at least 10 bank branches, the chain's first of their kind in the world.

Eduardo Solorzano, the top executive of Wal-Mart Mexico, told a press conference that the Wal-Mart banking operation will be launched after June and that the program will have between 10 and 12 branches by the end of the year, most of them in and around the capital.

Plans call for up to 60 branch offices at Wal-Mart stores throughout the nation by the end of 2008, though that degree of expansion requires approval of Mexican federal regulators, Solorzano noted.

He said some 80 percent of the Mexican population of just over 100 million does not have a bank account or credit card, and that the company sees huge potential in that statistic.

The executive said the 2007 plan will result in a 12-percent increase in installed capacity in Mexico, where it currently has 893 stores. He estimated the growth will provide employment to some 20,000 new hires.

Wal-Mart is Mexico's top retailer, present in 139 Mexican cities and employing more than 140,000 people.

In 2006 the company notched just over $18 billion in sales, a 16-percent hike over the previous year. Profits came in at $1.129 billion in 2006, up 26 percent from 2005.

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Wal-Mart's Sam's Club warehouse division aims to focus on women shoppers

By ANNE D'INNOCENZIO
AP                                                              [back to top]

NEW YORK (AP) - Wal-Mart 's Sam's Club is reaching out to female shoppers to help drive growth at its warehouse division, which built its business on small business operators.

"We are going to have to broaden our appeal beyond small business owners. We have to be more relevant to the mom," said Greg Spragg, executive vice president of merchandising and replenishment for Sam's Club, in an address to analysts at a Citigroup Inc. retail conference in Orlando, Fla. The conference was broadcast over the Web.

Wal-Mart Stores Inc.'s Sams Clubs have fared better than the company's namesake discounters, but sales gains have been only modest. For the fiscal year ended in January, the overall company posted a 2.1 percent increase in same-store sales, or sales at store stores opened at least a year, according to Thomson Financial. Same-store sales are a key indictor of a retailer's health. At the company's namesake discounter division, same-store sales rose 1.9 percent, while at Sam's Clubs, same-store sales averaged a 3.1 percent gain for the year.

Wal-Mart is expected to report its fourth-quarter and full-year earnings results Tuesday.

Spragg noted that the Sam's Club division has made some progress in fine-tuning and upgrading its offerings in wine, electronics like GPS units and flat-panel TVs, and jewelry. The company plans to broaden its advertising message to appeal to both small business owners and consumers. Spragg also noted that the company is working on new prototypes that will enhance the shopping experience for female shoppers.

Meanwhile, Charles Holley, executive vice president of finance and treasurer at Wal-Mart, who joined Spragg at the conference, said the company will continue to be relentless in offering the lowest prices. Wal-Mart began re-emphasizing its low prices, or what it calls rollback strategy, after months of playing down its discounting strategy in advertising for months, a move that confused shoppers and hurt business.

"We are the price leaders and we will continue to be the price leaders," Holley said. "We will not back off from that."

Holley told analysts that the company is aggressively reworking its apparel business, which was a big disappointment in the fourth quarter primarily because the retailer stocked too many trendy items in the stores. But fixing the business will take time, Holley said.

"We are not going to be able to change apparel overnight," Holley said, adding that consumers will see some changes this spring.

Copyright 2007 The Associated Press.

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Lawsuit against Wal-Mart revived

By Dan Margolies,
Kansas City Star
February 14th, 2007                            [back to top]

A federal appeals court Tuesday reinstated a lawsuit alleging that Wal-Mart Stores violated the Americans with Disabilities Act when it refused to hire a job applicant with cerebral palsy.

The case was filed by the Equal Employment Opportunity Commission in January 2004 on behalf of Steven J. Bradley Jr.

In August 2005, U.S. District Judge Gary Fenner in Kansas City granted Wal-Mart’s motion for summary judgment and threw the suit out. Fenner found that Bradley’s mobility limitations rendered him unsuitable for the positions of greeter and cashier.

In reinstating the suit, the 8th U.S. Circuit Court of Appeals did not rule on the merits of the case. Rather, it concluded that significant facts remained in dispute, making summary judgment inappropriate.

“We’re obviously delighted with the decision,” said Robert Johnson, regional attorney for the EEOC. “We presented substantial evidence that Mr. Bradley was totally qualified to be either a greeter or a cashier, and it’s really up to the jury to decide that question, not the court, as was done here.”

A Wal-Mart spokesman did not return a call seeking comment.

The 8th Circuit’s decision was significant because, for the first time, it ruled that when an employer claims it didn’t hire a disabled applicant because the applicant posed a threat to the safety of himself or others, the burden is on the employer — not the applicant — to prove it.

“It places the emphasis where it’s supposed to be,” Johnson said.

The case was the first EEOC disability-related lawsuit against Wal-Mart since the agency and the retailer signed a $6.8 million consent decree in December 2001. The decree resolved 13 disability-related lawsuits, including one out of Clinton, Mo., that involved Wal-Mart’s failure to hire a man who used a wheelchair.

Bradley originally applied for a greeter/customer assistant position at Wal-Mart in July 2000. He reapplied in early 2001, when Wal-Mart was expanding its Supercenter in Richmond, Mo., and needed additional employees.

Bradley used forearm crutches for short-distance walks and a wheelchair for longer distances. Standing for more than 10 or 15 minutes was difficult for him, but he could climb stairs and get on and off a stool. His hand dexterity was limited, but he could write and hold things and lift heavy objects from his wheelchair.

He was called in for an interview for a position at the Supercenter and arrived in his wheelchair. He was turned down for the job.

In pretrial testimony, Chris Fevurly, a medical expert for Wal-Mart, concluded that Bradley wasn’t qualified to perform the essential functions of either greeter or cashier. But an expert for the EEOC, vocational rehabilitation consultant Kent Jayne, found that he could do either job with reasonable accommodation.

In its decision, a panel of the 8th Circuit ruled that Wal-Mart had offered “no evidence that Bradley cannot perform the essential functions of the greeter and cashier positions with reasonable accommodation; instead, it attacks the credibility of Jayne’s testimony. Such a credibility determination is best reserved for juries.”

The panel also found that the EEOC had mustered sufficient evidence that the reasons Wal-Mart gave for not hiring Bradley — namely his limited availability and his job history — were a pretext.

Finally, the court ruled that an employer asserting a “direct threat” defense bears the burden of proof. Wal-Mart, it said, had failed to explain how Bradley, “using a wheelchair or other similar device, poses any more of a threat than Wal-Mart customers who shop using such devices.”

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Court Allows EEOC Suit Against Wal-Mart

AP                                         [back to top]

KANSAS CITY, Mo. (Feb. 14) - The Equal Employment Opportunity Commission can continue its disability discrimination lawsuit against Wal-Mart Stores Inc., an appeals court has ruled.

The EEOC filed the suit in January 2004 claiming that Bentonville, Ark.-based Wal-Mart violated the Americans with Disabilities Act when it refused to hire a man who has cerebral palsy.

In August 2005, a federal judge in U.S. District Court for the Western District of Missouri granted summary judgment to the world's largest retailer, saying that the EEOC didn't present sufficient evidence in favor of Steven J. Bradley Jr. The EEOC appealed, which led to Tuesday's ruling in the U.S. Court of Appeals for the Eighth Circuit.

Bradley, who uses crutches and a wheelchair, tried to get a job at a Wal-Mart in Richmond, about 40 miles northeast of Kansas City, but was not hired.

Wal-Mart has denied that it discriminated against Bradley based on his disability and cited its anti-discrimination policy. A Wal-Mart spokesman declined to comment Wednesday.

Robert Johnson, regional attorney of the EEOC's St. Louis District, said Wednesday that the commission is looking forward to taking the matter to trial and having a jury determine whether Bradley encountered discrimination.

"The Eighth Circuit decided it's up to the jury to decide those factual issues, including whether Wal-Mart had covered up its discrimination," Johnson said.

No new court dates have been set, he said.

In December 2001, the EEOC and Wal-Mart agreed to a $6.8 million national settlement of a discrimination suit.

The agency had accused Wal-Mart of using a pre-employment questionnaire that violated the Americans with Disabilities Act between Jan. 1, 1994, and Dec. 31, 1998. The suit also covered several disabled employees' dismissals, or the company's failure to accommodate employees with disabilities.

Copyright 2007 The Associated Press.

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Retail Giant Wal-Mart Looks to Enter Russian Market Via Local Partnership

MosNews
12.02.2007                        [back to top]

Wal-Mart is looking to enter the Russian market and its preferred entry route would be via a partnership with a leading local player, executives from the U.S. retail giant were quoted on Monday, Feb. 12, as saying.

Wal-Mart has circled the Russian market for years without striking, but executives visiting Moscow last week suggested it may be closer to making a move now as household incomes are rising thanks to the economic boom of the past eight years.

“Local retailers are experimenting with new formats and are growing rapidly. Consumers are getting richer. All this makes Russia very, very attractive to us,” Russian business daily Vedomosti quoted Wal-Mart Vice-President Mike Bratcher as telling a retail conference in Moscow. “It is highly likely that Russian consumers will get a new freedom of choice,” Bratcher added, according to the Russian translation of his remarks, without being drawn into specifics.

Media speculation has centered on a possible partnership deal between the country’s leading food retailer, London-listed X5, which has ruled out a full-blown foreign takeover but has spoken to Wal-Mart, Tesco and Carrefour.

Also in the frame as possible targets are food retailer Lenta, which is based in St. Petersburg, and Turkish-controlled Ramstore.

Vedomosti also quoted Wal-Mart executives as saying the most successful expansion strategy has proven to be striking a partnership agreement with a local partner that knows the specifics of the market and its consumers, is a market leader and has a wide geographical reach.

No comment was immediately available from Wal-Mart.

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Campaign against Wal-Mart

By Special Corresondent,
The Hindu
February 12th, 2007                              [back to top]

NEW DELHI: Leading trade unions have joined hands with cooperative stores, retail associations and small-scale traders to launch a campaign against retail giant Wal-Mart's backdoor entry into India and the Government's move to open up the retail sector for Foreign Direct Investment (FDI).

Over a score groups have signed a memorandum against Wal-Mart's entry and FDI in retail which will be submitted to Prime Minister Manmohan Singh and United Progressive Alliance chairperson Sonia Gandhi on Tuesday.

The memorandum — an initiative of India FDI Watch — states that Wal-Mart's entry and FDI in retail would result in widespread unemployment and massive displacement of people.

Quoting media reports which suggest that corporate retail chains would invest over 50 per cent into food retail — entering directly into contract farming where the implications on farmers has till date not been studied — the memorandum notes that with agriculture and unorganised retail sectors being the country's largest and second largest source of employment respectively, "there is no place for giant corporates like Wal-Mart and other multi-national retail chains, known for their monopolistic business practices abroad, in India."

Demanding that Wal-Mart, Carrefour and Tesco be denied entry, the signatories have called for a close examination of the impact of corporate retail chains till safeguards are put in place.

Among others, the memorandum has been endorsed by the Centre for Indian Trade Unions, All-India Kisan Sabha, All-India Trade Union Congress, Apna Bazaar, The Confederation of All-Indian Traders, Federation of Associations of Maharashtra, Bangalore Merchants Chamber; National Consumer Cooperative Federation, Khadi and Village Industries Commission, National Hawkers Federation, Hind Mazdoor Sabha, National Alliance of Peoples' Movements, Mumbai Grahak Panchayat, Youth in Unity for Voluntary Action, Swadeshi Jagran Manch, Consumer Cooperative Forum (Maharastra), Maniben Kara Institute, Mumbai Hawkers Union, Super Bazaar and Vikas Adhyayan Kendra.

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Coke bottlers settle Wal-Mart supply dispute

Beverage maker had planned to deliver Powerade directly to stores

The Associated Press
Feb 12, 2007                                           [back to top]

ATLANTA - A rift between The Coca-Cola Co. and some bottlers has been eased as the world’s largest beverage maker announced Monday that several suits over its plan to distribute Powerade to Wal-Mart stores directly through the retailer’s warehouses were being dropped.

Coca-Cola also said it will work with the bottlers “to develop and test new customer service and distribution systems.”

The company and its bottlers will consider shipping products directly to retailers’ warehouses, as well as other ideas, Coca-Cola spokesman Dan Schafer said. In turn, the bottlers will be compensated for products delivered in their regions through forms of distribution other than themselves, Schafer said, adding that details still need to be worked out.

Atlanta-based Coca-Cola said that it hoped that all U.S. bottlers who distribute Coca-Cola products, including Powerade, will participate in the initiative.

Those who have already joined agreed to drop lawsuits now pending in U.S. District Court in Atlanta, and Circuit Court of Jefferson County in Birmingham, Ala., Coca-Cola said in a statement.

It was not immediately clear if all the bottlers that had sued Coca-Cola over breach of contract agreed to drop their claims. Schafer said “substantially all the bottlers in the suit” had dropped their claims.

Last year, several bottlers that handle roughly 10 percent of Coca-Cola’s U.S. volume sued to try to block a new delivery system that the beverage maker’s largest bottler, Coca-Cola Enterprises Inc., wanted to test for its Powerade sports drink.

A major Coca-Cola customer, Bentonville, Ark.-based Wal-Mart Stores Inc., had approached the company and its bottlers, saying it wanted to increase availability of Powerade in its stores and help the brand grow faster by delivering the product to its stores through its own warehouses rather than through the bottler system.

Wal-Mart is the world’s largest retailer.

The test of the proposal was only being conducted in CCE’s territory, but some other of Coke’s bottlers objected, Coke said.

“Our bottling system is our heritage, and it will be the foundation for our future growth. The partnership with our bottlers is what makes the Coca-Cola system powerful and unique, and we will work diligently to ensure that we move forward and succeed together,” said Sandy Douglas, president, Coca-Cola North America. “One of the historic strengths of our system has been its ability to change and adapt as our consumers, customers and competitors have changed.”

Under the agreement, the company will join U.S. Coca-Cola bottlers in testing new systems to bring company products to customers who require special services. At the same time, Schafer said CCE’s Wal-Mart warehouse delivery system will continue.

Analysts said the news was positive for Coca-Cola.

“For Coca-Cola, getting past the disputes with its bottling system is critical to meeting the changing needs of its retail customers and opens the door for a more aggressive and diverse product pipeline over the next few years,” Banc of America Securities analyst Bryan Spillane said in a research note.

Coca-Cola shares rose 16 cents to close at $47.92 in Monday trading on the New York Stock Exchange.

© 2007 The Associated Press. All rights reserved.

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Walmart Locks Out Mac, non-IE Windows Users

by Remy Davison,
Insanely Great Mac
February 12th 2007                          [back to top]

Zeropaid reports that Walmart's video download service does not work with browsers other than Windows IE 6. If you attempt to access Walmart's site with Safari or FireFox, you'll get the following message:

"Our website requires the browser Internet Explorer version 6 or higher. It appears that you are using Firefox, Safari, or another browser that Wal-Mart Video Downloads doesn't currently support. Click here to get Internet Explorer for free from Microsoft."

However, IGM tested the site using the Mac-only browser iCab(version 3.03) setting it to identify itself as 'Internet Explorer, Windows NT', and it worked just fine.

Clearly, Walmart is locking out Mac users (and, more specifically, anybody on Windows using a non-Microsoft browser). We've also confirmed it does not work with Netscape (Mac) or Opera (Mac), which leads us to conclude it doesn't work with Windows versions of these browsers either.

It's a foolish business model; there's no reason why the site shouldn't simply work with a standards-compliant browser. Walmart are simply denying themselves sales

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Wal-Mart eyes Russia expansion

By MARCUS KABEL
The Associated Press
February 12, 2007                        [back to top]

Wal-Mart Stores Inc. is interested in moving into Russia after strong growth in that giant country's retail spending, the world's largest retailer said Monday.

Wal-Mart's international division is smaller but is growing faster than the company's flagship U.S. business. Russia would mark another move into large but underdeveloped markets like Latin America and China, where it is already established, and India, where Wal-Mart plans to open stores with a local partner company.

Angela Hofmann, a spokeswoman for Wal-Mart International, said Wal-Mart has been watching the Russian retail market for several years and likes what it sees.

"We've been watching impressive growth and it has piqued our interest," Hofmann said. "We are definitely interested in the Russian market."

But Hofmann said it was too early for any specific plans on how or where Wal-Mart might move into Russia or what Russian company it might partner with.

In the past, Wal-Mart has moved into new countries by teaming up with a local company, either through an acquisition or some kind of partnership. That way it can build on existing stores and the partner's experience with consumer demand in a new market.

Hofmann confirmed that a Wal-Mart executive in Russia last week was accurately quoted by Russian media as voicing interest in that market.

"So far, we are currently studying the market, but the decision on how to enter it has not yet been made," Wal-Mart vice president Mike Bratcher told a Moscow conference Thursday, the English-language Moscow Times reported.

The Moscow Times said Russia's food retail market accounts for less than 2 percent of gross domestic product but has seen annual growth of more than 25 percent since 2001.

Wal-Mart's international business accounted for about 22 percent of the company's total sales in the first nine months of last year.

That share is growing faster than the large U.S. business. International sales in the first nine months last year rose 30 percent from a year earlier, compared with 8 percent for Wal-Mart U.S. stores.

Wal-Mart pulled out of two wealthy, developed countries last year -- Germany and South Korea -- after racking up losses there. It remains active in Britain and Japan

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Wal-Mart's Bank Gambit, Spurned in U.S., Wins Embrace in Mexico

By Adriana Arai
Bloomberg                                 [back to top]

Feb. 12 (Bloomberg) -- Wal-Mart Stores Inc.'s banking ambitions, snarled in the U.S., are on a fast track in Mexico.

Mexico is eager to increase bank competition and has given the local unit of the world's biggest retailer the go-ahead to provide consumer banking services. Wal-Mart de Mexico SAB will tell analysts tomorrow how it plans to win customers at branches it will set up at its 576 stores starting in July.

Wal-Mart, Mexico's largest retailer by sales, will compete against some of the biggest multinational banks, including Citigroup Inc. and HSBC Holdings Plc, which regulators say lend too little and charge too much in interest and fees. Mexican authorities, including central bank Governor Guillermo Ortiz, say Wal-Mart and three smaller retailers that were granted bank charters can begin to change that.

``These projects will help us have a bigger, deeper banking system,'' says Guillermo Zamarripa, who is responsible for issuing banking licenses at the Mexican Finance Ministry.

Foreign banks in Mexico typically charge interest of about 40 percent on credit cards, according to the consumer protection agency that specializes in financial services. Even in riskier developing nations, these rates are too high, Ortiz and other regulators say.

The banks borrow at about 7 percent, making the difference between the two rates several times more than in the U.S.

The average rate on a standard U.S. credit card is 13.4 percent, according to North Palm Beach, Florida-based Bankrate Inc. U.S. banks can borrow at less than 5 percent.

Adding fees, the cost of running credit card debt in Mexico can be as high as 89 percent annually, according to the consumer agency.

Spurring Competition

``The interest rates that banks charge in Mexico are too high, especially in credit cards,'' says Jose Maria Aramburu, the agency's head of research. ``We hope the newcomers introduce new products and prompt the banks to lower them.''

Wal-Mart hasn't said what its rates and fees will be.

The charges enable banks in Mexico to reap bigger returns than those in the U.S. and Europe. For every 100 euros that Spain's Banco Bilbao Vizcaya Argentaria SA invests in its Mexican affiliate, BBVA Bancomer, it makes 38.8 euros in profit, according to data compiled by Mexico's Banking and Securities Commission. In Spain, the bank earns 25 euros. Citigroup's return on equity in Mexico is 26 percent compared with 19 percent in the U.S., the commission says.

Reaching the `Unbanked'

Mexican authorities say they hope Wal-Mart, in addition to bringing down borrowing costs, will also extend services to the nation's so-called unbanked -- the low-income individuals and small businesses that have been scorned by the banks since the government abandoned support for the peso in 1994. The subsequent plunge in the currency sent interest rates soaring, triggering defaults across the economy.

Just one-fifth of Mexico's 25.8 million households use financial services, according to a 2004 survey by the government's statistics agency.

Wal-Mart sparked protests from community lenders and lawmakers in the U.S. when it applied in 2005 to open an industrial bank in Utah.

Small banks have argued that the move may be a first step toward the retailer's entry in consumer banking in a way that might drive local lenders out of business. The Bentonville, Arkansas-based company said it wants only to process its own credit- and debit-card transactions at the bank.

Bernanke Concerned

Federal Reserve Chairman Ben S. Bernanke last year advocated stricter supervision of industrial banks that would take into account the financial condition of the parent company.

``It's a good idea to try and keep some separation between banking and commerce,'' Bernanke told the House Financial Services Committee.

The Fed has no jurisdiction over Wal-Mart de Mexico, which is incorporated in Mexico and subject to Mexican laws, says Rodrigo Brand, a spokesman for the Mexican Finance Ministry. Wal-Mart de Mexico's bank also is subject to Mexican laws, he says.

The Fed doesn't oversee non-financial companies in the U.S. that own banks.

On Jan. 29, U.S. Representatives Barney Frank, a Massachusetts Democrat, and Paul Gillmor, an Ohio Republican, introduced legislation that would curb the ability of Wal-Mart and similar retailers to open banks. Two days later, the Federal Deposit Insurance Corp. said it would extend for one year a freeze on deposit insurance applications from commercial company-backed industrial banks, including Wal-Mart.

`Level Playing Field'

In Mexico, authorities made it clear from the start that Wal-Mart was welcome in banking. Local bankers say the Mexican market is big enough for them to co-exist with Wal-Mart and other banks run by retailers.

``We just hope there's a level playing field,'' says Juan Carlos Jimenez, director-general of the Mexican Bankers Association, a trade group that represents the nation's 31 lenders.

Wal-Mart de Mexico has named its bank ``Adelante'', or ``Get ahead'' in Spanish. The rollout of the bank, which has initial capital of 316 million pesos ($28.7 million), will be slow, Wal-Mart de Mexico Chief Executive Eduardo Solorzano said in a Nov. 27 recorded message to investors.

Julio Bosco Gomez, former head of Bank One Corp. in Mexico, is running the project, which has its headquarters in Cuajimalpa, a suburb of Mexico City.

`Strong Competitor'

``Wal-Mart will be a strong competitor,'' says Jorge Hierro, executive director for institutional relations at Citigroup's Grupo Financiero Banamex SA in Mexico City. Readying itself for Wal-Mart's banking debut, Banamex introduced in September a credit card for supermarket shoppers that refunds 1.5 percent of purchases.

None of Mexico's other major banks have announced new products in reaction to Wal-Mart's planned startup.

Five foreign companies control 79 percent of Mexican banking assets. BBVA Bancomer is the country's biggest bank by assets. Banamex is No. 2, followed by Grupo Financiero Santander Serfin SA, which is owned by Spain's Santander Central Hispano SA. Britain's HSBC Holdings Plc and Canada's Bank of Nova Scotia run two other big banks. Grupo Financiero Banorte SA is the only Mexican-owned bank among the top six lenders.

Tight-Lipped

So far, Wal-Mart has been tight-lipped about its bank plan. All the company has said is that the bank will initially offer savings accounts and ``simple loans'' at its Supercenters, Bodegas Aurrera and Sam's Club outlets, and probably wouldn't make a profit until the fourth year of operation. It made no mention of checking accounts. Solorzano may provide more details at the annual meeting with analysts tomorrow.

Solorzano and the company's spokesman, Raul Arguelles, declined to be interviewed for this article.

Investors are optimistic. Shares of Wal-Mart de Mexico have surged 45 percent to 47.74 pesos since the company said Aug. 2 that it was applying for a banking license. The stock has quadrupled in the past four years in U.S. dollar terms. The parent's stock was up 2.5 percent over that same period.

Wal-Mart's bank may net about $400 million in five years of operation, adding 7 pesos to the stock's fair value, Merrill Lynch & Co. analyst Robert Ford said in a Jan. 5 report. Ford said there's growth potential for Wal-Mart because so many Mexicans don't have bank accounts, and those that do pay high interest and fees.

The need to make credit available to more Mexicans outweighs concerns raised in the U.S. about letting a retailer such as Wal-Mart run a bank, Zamarripa says.

12% of GDP

``It makes sense in Mexico from a public policy point of view,'' he says.

Though lending to Mexican private companies and individuals has been expanding at annual rates in excess of 25 percent since 2004, it is only equal to about 12 percent of gross domestic product. That's one-third of the percentage in Brazil and one- sixth of the rate in Chile. There were 22 million credit cards in Mexico as of Dec. 31 -- less than one for every two people who work or wish to work.

Ortiz said in a speech last year that many of the unbanked are discouraged from keeping their savings in a bank or taking out a loan because fees and borrowing rates are too high.

BBVA Bancomer charges a 109-peso ($10) annual fee on its flagship savings account and levies an 82-peso penalty if the balance is less than 750 pesos.

Lowering such charges has been Ortiz's top priority since winning a second term in 2004: He has opened the credit-card payments system to competition, introduced disclosure requirements for all bank fees and pressed the banks to cut credit- and debit-card fees by about $200 million annually.

By basing branches in its stores, Wal-Mart's bank will probably have the lowest cost within the country's financial system, Merrill Lynch's Ford said. Opening a bank branch costs about $400,000, says Luis Pena Kegel, chief executive of Banorte, Mexico's fifth-largest lender.

Rapid Expansion

Wal-Mart can expand rapidly. With 576 stores, it has a potential branch network a third the size of BBVA Bancomer SA.

``All of us will be watching them closely,'' Pena Kegel says.

In response to concerns raised by bankers and financial regulators, the Finance Ministry created rules that will require Wal-Mart to separate retail from banking.

The company must provide the National Banking and Securities Commission with an annual report covering the commercial relationship between the store and the bank -- for example, rent the bank pays for being inside the store. Such prices must reflect the going rate to prevent Wal-Mart from transferring profits from one unit to the other, Zamarripa says.

The regulations affect the banking side only; the parent company won't be subject to financial supervision.

Handling Suppliers

One concern expressed by banks in the U.S. is that Wal-Mart could force companies that supply products sold in its stores to do business with its bank, says Mark Tenhundfeld, director of regulatory policy at the Washington-based American Bankers Association.

Should that happen in Mexico, it would be up to the Federal Competition Commission to investigate, Zamarripa says.

Much of Mexico's willingness to allow retailers to run banks stems from the success of Grupo Elektra SA, the country's largest home-appliance retailer, in attracting the unbanked. Since opening a bank in 2002, Elektra has lured $3 billion in deposits and opened 7.5 million credit and savings accounts. Its clients, who earn an average 6,000 pesos monthly, maintain an average balance of 100 pesos in savings accounts.

Myth Shattered

``We shattered the myth that the poor weren't bankable,'' says Luis Nino de Rivera, vice chairman of Elektra's bank, Banco Azteca. The company, which used its own capital to sell on credit, decided to open a bank after an internal survey showed 80 percent of customers didn't have a bank account, he says.

Lending to the Mexican poor isn't easy, says Nino de Rivera. Most customers don't have a credit history. Banco Azteca employs 3,000 people to estimate customers' income by visiting their homes and observing their lifestyles. They also work on collection.

Initially, Wal-Mart may suffer from its lack of banking experience, says Nino de Rivera.

``Wal-Mart has never been in the lending business,'' he says. ``They have to learn the trade.''

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Wal-Mart eyes local partner for Russia-paper

Reuters
Mon Feb 12, 2007                        [back to top]

MOSCOW, Feb 12 (Reuters) - Wal-Mart (WMT.N: Quote, Profile, Research) is looking at the Russian market and its preferred entry route would be via a partnership with a leading local player, executives from the U.S. retail giant were quoted on Monday as saying.

Wal-Mart has circled the Russian market for years without striking, but executives visiting Moscow last week suggested it may be closer to making a move now as household incomes are rising thanks to the economic boom of the past eight years.

"Local retailers are experimenting with new formats and are growing rapidly. Consumers are getting richer. All this makes Russia very, very attractive to us," the Vedomosti daily quoted Wal-Mart Vice-President Mike Bratcher as telling a retail conference in Moscow.

"It is highly likely that Russian consumers will get a new freedom of choice," Bratcher added, according to the Russian translation of his remarks, without being drawn into specifics.

Media speculation has centred on a possible partnership deal between the country's leading food retailer, London-listed X5 (PJPq.L: Quote, Profile, Research), which has ruled out a full-blown foreign takeover but has spoken to Wal-Mart, Tesco (TSCO.L: Quote, Profile, Research) and Carrefour (CARR.PA: Quote, Profile, Research).

Also in the frame as possible targets are food retailer Lenta, which is based in St Petersburg, and Turkish-controlled Ramstore.

Vedomosti also quoted Wal-Mart executives as saying the most successful expansion strategy has proven to be striking a partnership agreement with a local partner that knows the specifics of the market and its consumers, is a market leader and has a wide geographical reach.

No comment was immediately available from Wal-Mart.

(C) Reuters 2007. All rights reserved.

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Anti-Wal-Mart neighbors form a chain around future site

By Isadora Vail,
Austin American-Statesman
February 11th, 2007                                 [back to top]

Most protesters say the planned supercenter would ruin the character of area.

Sofie Cruse and five of her middle school friends, spending their Saturday as neophyte activists, jumped up and down and screamed at drivers waiting at the busy intersection of Anderson Lane and Burnet Road to look at their sign.

"No Wal-Mart SuperCenter — Do it neighborly. Do it right," the sign read.

The girls were among what organizers said was a crowd of about 2,500 at Northcross Mall in North Austin lending their voices to a growing spat between an Austin neighborhood and a worldwide corporation.

"If they put that Wal-Mart here, it's going to ruin the feel of my neighborhood. That's where I skate . . . and I get parts for my bike right there," Sofie, 15, said as she pointed at different parts of Northcross Mall.

Cruse and her red-clad fellow activists formed a human chain along the streets ringing Northcross Mall on Saturday morning in protest of a planned Wal-Mart that would anchor a makeover of the long-struggling mall.

Responsible Growth for Northcross, a coalition opposing the project, organized the protest, which began at about 10 a.m. The single line of demonstrators was about a mile long, organizers said.

The hand-to-hand chain remained linked for about 10 minutes.

But the anti-Wal-Mart protesters stayed for about a half-hour after breaking the chain, yelling and cheering at cars as they passed. Many of the motorists honked their horns in a seeming show of support.

"I had my first kiss at this mall. I don't want to see it go," said Kelly Brenich, who has lived for most of her life in the Allandale area, which lies to the south of the mall. "Now I take my kids ice skating here."

Wal-Mart Stores Inc. and land owner Lincoln Property Co. were not available for comment Saturday.

But supporters of Wal-Mart's plans have pointed out that the mall, surrounded by acres of parking and situated alongside busy Anderson Lane and Burnet Road, was built as an intense retail center originally.

The mall, which opened in 1975, has struggled for the past decade and generated far less traffic than in its early years.

The opposition to having a store at Northcross, they have said, has more to do with Wal-Mart's overall political problems — the mega-chain has been criticized for its labor practices and effect on small, local businesses — than it does to the specifics of the situation.

Nineteen-year-old Kate Branam said she would consider moving back to the area — she grew up near the mall — if the Wal-Mart is completed.

"The prices are hard to beat, and it stays open all night," said Branam, an Austin Community College student.

The city approved the Lincoln Property plan for Wal-Mart in August, but neighbors in the area took immediate action to try to stop construction.

In December, another rally was held outside Austin City Hall to protest the approval.

All construction plans and applications for permits ceased in December for a 60-day period.

Wal-Mart spokesman Keith Morris said last month that company representatives have met with six neighborhood associations since November but haven't received an invitation from Responsible Growth for Northcross.

Responsible Growth is calling for residents of Austin to boycott local Wal-Mart stores beginning today, and state Rep. Elliott Naishtat, D-Austin, said he would take part.

"I hope that Wal-Mart gets the message (today)," said Naishtat, who was strolling around in a red-checked shirt after the human link broke. "Getting nearly 3,000 people to stand tall on an overcast, cold morning in Austin is incredible."

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Wal-Mart explores store format new

Delhi, Feb. 11 : Wal-Mart has been keeping domestic rivals guessing about the format it would adopt in this country.

The buzz now is that the world’s largest retailer may go in for the neighbourhood store format in India keeping in mind the consumer’s preference for this model.

“We expect Wal-Mart and Bharti to explore the neighbourhood market concept because groceries are one of the largest retail categories with the least organised retail competition in India,” a former Wal-Mart adviser and US-based global retail investment firm Growth Ventures Group’s chairman and CEO Love Goel said.

Wal-Mart has tied up with Bharti Enterprises to gain a toe-hold in the country.

While the left parties fear that entry of multinational retail players would slowly kill the estimated 13 million mom and pop stores, congress president sonia gandhi too has joined the chorus of opposition against fdi in retail.

Even though fully opening up retail sector to foreign players still remains an issue, domestic petrol and petrochemical major reliance industries has entered the field and already boasts of over 40 neighbourhood vegetable and grocery stores across five cities.

Wal-mart, which has a revenue of 320 billion dollars, is the largest retailer of groceries in the us. So, it could be anybody's guess what format it would choose for india.

.Newdelhi dcm4

walmart 2

wal-mart has often adapted itself to the local needs, like in brazil where there is a greater emphasis on neighbourhood stores inside cities, goel said.

The company has already become the third largest retailer in brazil by following the right format concept, goel added.

However, the going might not be as easy for the company in india, where a number of retailers like big baazar and vishal megamart are expanding their presence with large-format neighbourhood stores and domestic conglomerate reliance group, which has also purchased land in the vicinity of residential areas in various cities for its retail stores.

Wal-mart and bharti are likely to use one of wal-mart's proven store models that range in size from 40,000 square feet for neighbourhood stores to 20,000 square feet for its super-center stores, goel said.

The us giant might also try out membership schemes to gain the customers' loyalty in wake of intensifying competition in the retail market sector, the experts believe.

”With more than nine groups from birla and tata and ambani investing over one billion dollars in next few years in retail, it will be important for retailers to create loyalty with customers rather than drive profit margins down by competing on price,” goel said.

Membership clubs like sam's club (being operated by wal-mart in us) are a great way for retailers to offer lower prices while creating loyalty among its customers as well, he added.

According to experts, the relationship with bharti could prove to be an asset if wal-mart decided to combine their retail concept with a direct-to-consumer approach by selling through catalogs, internet, mobile phones and television.

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Flowers an important growth area for Wal-Mart

By Cindy Long
02/10/2005                        [back to top]

”Two to three years ago, Wal-Mart executives decided they wanted to grow their cut-flower and bouquet business”, said Jennifer Springer, merchandising manager for Wal-Mart’s national floral program.

The company recognized that the grocery portion of its chain was where the floral was best placed.

Wal-Mart placed its focus on cash-and-carry cut flowers, and set goals to deliver the best value to its customers with the highest-quality flowers at the best-possible price.

Through much dedication within the company and an active involvement with its vendors, Wal-Mart is seeing its goals coming to fruition.

Hired in July 2004 to the department, Ms. Springer brings great depth to the company. With a degree in horticulture, she has been with Wal-Mart for 12 years, most recently in the garden department. She also has experience in its modular-planning department, so she knows how to get customers into her departments and get them to make purchases.

Wal-Mart prefers to keep its floral program within the supermarket concept. The firm started the program in its hypermart formats, and now most Supercenters and all the Neighborhood Markets have a cut-flower program. During the holidays, all the stores carry cut flowers. Wal-Mart has found that having flowers in front of the food section of a store implies self purchase’s In other parts of the store, customers are buying for others. In the food areas, they are buying for themselves, Ms. Springer explained.

Because Wal-Mart feels that this is an important growth area, the firm turned to its suppliers to help increase floral consumption in the stores. Wal-Mart decided that it wanted to offer a quality product at a reasonable price. An intense meeting and brainstorming sessions with suppliers resulted in Wal-Mart looking at all its practices. How could the company get the flowers from Colombia and other parts of the world to its distribution centers located throughout the United States in the most efficient manner?

Today, Wal-Mart has 32 DCs, and is plans to open two additional DCs this year. Each DC services 50 to 60 Wal-Marts, totaling 1,800 stores on a daily basis. The DCs have a challenging and aggressive goal of adding 250 new Supercenters every year.

The DCs do business with major suppliers in the major growing areas like Colombia and Ecuador, and are currently seeking more sources of California-grown flowers. Wal-Mart likes to buy locally if possible.

Wal-Mart has an expression, store of the community in which the company tries to buy exactly for the needs of each community. Ron McCormick, who has been with Wal-Mart for eight years and is vice president of produce and floral, said that this means the customer has exactly what they want and need in their local store. Mr. McCormick said that in addition to floral, Wal-Mart also tries to purchase locally grown produce whenever it is available for the stores, too. Ms. Springer added, when your sales are $280 billion, you have to look at it one store at a time’s

Ms. Springer said that it has worked. Wal-Mart has vastly increased the consumption of flowers, and the firm feels that it gives its customers good quality at a reasonable price.

Wal-Mart suppliers do more than deliver product, they are a primary component to Wal-Mart’s floral success, said Ms. Springer. suppliers are involved in the entire process from operations to marketing to merchandising she said. They are also actively involved in training. モA big part of floral sales is on a holiday. Our mission is to sell floral for home satisfaction. We ask, how can we get people to buy every day ヤ

One of the answers to everyday sales is offering quality flowers that last a long time once in the consumers home, she explained. we have our suppliers do quality tests in control labs. We promote days of guaranteed shelf life said Ms. Springer.

Longer shelf life can result from tight logistics. Ms. Springer said that Wal-Mart asked, how can we make the process simpler The answer the firm came to was that truck time and cooler times need to be short. we deliver seven days a week. We believe in just-in-time delivery rather than having flowers sit in a DC or a cooler she said. the faster they are out of the store, the longer the consumer will enjoy their beauty’s

She added, we feel the industry has a lot of growth potential. Our focus is on continuous quality while driving cost out. We want to make sure that suppliers are profitable so they continue to grow quality and see growth in their companies, too. The end result is always the same: to get the best product to our consumer at the best price’s

One of the keys to extending Wal-Mart’s fresh flowers shelf life is a heavy investment in coolers and display equipment. we decided we needed a better case, while still having the openness. Well have better product in the end because of coolers

The flagship Wal-Mart Supercenter in Bentonville, AR, displayed a new Bergen cooler in the main entrance. Filled with pre-made arrangements and bouquets, the flowers looked fresh and were perfectly located for impulse sales. In addition, another Floratech cooler was located between two busy checkout lanes. This cooler had buckets of fresh bouquets. Situated right in front of customers as they waited to check out their purchases, it would be hard to resist picking up at least one of the bouquets. well have a better product for our customers in the end because of our coolers Ms. Springer said.

consumption is up Ms. Springer said. She feels that the company’s existing floral customers are already buying, but Wal-Mart wants more repeat transactions. Now the company’s challenge is to get the non-buyer to buy. To switch a non-flower buyer to a buyer is to have them think flowers she said. we have to make it affordable for them while giving them excellent quality and shelf life. This is another reason why we’ve moved our flowers to the food entrance. We want to expose great flowers to tons of people. Our customers have responded well she said.

One of the keys to more sales is in the decorating area. people are more involved in their homes she said. its getting to be more about them and less about gift giving’s

Wal-Mart is trying to get the word about flowers out as much as possible to its 95 million customers that visit the stores each week. The firm has in-house television networks within the stores. All TVs are set to the Wal-Mart channel. Consumers are exposed to flowers in these television spots. The company also runs spots on Wal-Mart radio, which is broadcast on a public address system while customers shop. we call it Retail-tainment,ヤ Ms. Springer said. モOur store associates get very creative with it.ヤ

As one of the larger retail grocery companies in the world, many vendors would like to sell to Wal-Mart. But how does a company become one of Wal-Martメs vendors?

Ms. Springer and Mr. McCormick said that the first step is to go to the Wal-Mart web site, www.walmart.com, and fill out a vendor form. Wal-Mart personnel will review the information and determine if the company is financially sound. Wal-Mart will ask itself, モDo we need their product?ヤ If it is determined that it does, Wal-Mart will set up an appointment with the vendor for the first visit in Bentonville at Wal-Martメs world headquarters. If the prospective company is successful, モWe will then go to their facility,ヤ said Ms. Springer. モWe negotiate a vendor agreement,ヤ she said. The company also has a supplier development department that searches for new vendors. モWe also collaborate with the buyers from Samメs Club, Wal-Mart Canada, Wal-Mart Mexico and Wal-Mart USA,ヤ she said. モIf we are in search of a particular vendor, we may find it through one of the buyers. We can find out who is doing a good job with a particular product.ヤ How do buyers work when they are dealing with 1,800 stores nationwide? モWe are an operations-driven company,ヤ Ms. Springer explained. モWe look at the logistics, the costs, make sure the right product goes to the right store and we communicate with the operations through various sources.ヤ

She added, モWe educate and communicate what is going on, whatメs coming and so forth. The company has a live video tool that is linked to the stores called モThe Wireヤ in which information is constantly shared with the associates. All Wal-Mart employees are referred to as associates. Ms. Springer said that Sam and Helen Walton, founders of Wal-Mart, referred to employees as associates since the founding of the company. She quoted the late Mr. Walton as saying: モThose folks that talk to the customers every day are the ones that make the company successful.ヤ

Wal-Mart also has holiday meetings and year-end meetings to communicate with its associates. Each store has a computer with educational information for training. The firm also holds training seminars in regional DCs. Buyers in the field also are responsible for training associates.

The company also has internal teams that consist of buyers, a logistics team, a replenishment team and a marketing team. In both produce and floral, there are 101 associates between Bentonville and the DCs.

The future is bright for Wal-Mart and the floral industry Because Wal-Marts are sometimes located in very small towns, Ms. Springer feels that this is an opportunity to expose flowers to people that previously did not have that opportunity. モWe are the local florist in many towns,ヤ she said. Some customers have never been exposed to fresh flowers, so this is a tremendous opportunity for us and for them.ヤ

When asked what the future holds, she said, モIdentifying stores with the right flowers, the right colors with the right price. This will increase consumption of flowers worldwide.

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Wal-Mart's fish decision hurts aquatic suppliers

By Jessica Wohl
Fri Feb 9, 2007                               [back to top]

CHICAGO, Feb 9 (Reuters) - Wal-Mart Stores Inc. <WMT.N> is letting a small part of its business swim away, leaving suppliers floundering.

The world's largest retailer said it would stop selling live pet fish at some U.S. stores in response to consumer demand.

Central Garden & Pet Co. <CENT.O>, the largest U.S. producer of aquariums, and Spectrum Brands Inc. <SPC.N>, which also sells aquatic supplies, said this week that "a large retailer" would stop selling live fish at some stores.

Neither identified the retailer, but Wal-Mart confirmed its plans to Reuters.

Central Garden lowered its fiscal 2007 outlook on Wednesday and said the retailer's plan was partly to blame.

Spectrum, which sells Tetra and Jungle brand aquariums and related products, said the decision affected 700 stores.

Wal-Mart, which has more than 3,000 U.S. discount stores, declined to say how many stores would stop selling live fish and that it is "certainly" not abandoning the business.

Spectrum President and Chief Executive David Jones said on Thursday that other pet categories would be tested to see what should be sold in the space that was dedicated to fish.

"So we think there's an opportunity there, because it's a jump ball for all of us to convince that retailer that our products, our assortment ... are appropriate for the space that's available," Jones said during a conference call.

FLOATERS

SunTrust analyst Bill Chappell, who rates Central Garden and Spectrum "neutral," said that if Wal-Mart is trying to improve pet product sales, it makes sense to dedicate space to faster growing categories such as items for dogs and cats.

Pet fish got a boost in their popularity after the 2003 hit animated film "Finding Nemo," but the aquatics trend has since faded for some fans.

The leading pet store chains, Petsmart Inc. <PETM.O> and privately held Petco, have large aquatic departments. Chappell said that Wal-Mart does not have the appeal of such chains or independent aquatics stores for fish aficionados.

"You see too many floaters," Chappell said of its displays. "You walk in there and there are a bunch of dead fish."

"It's not that consumers don't want fish, it's just, in my opinion, it's just consumers don't want to buy fish there and it's in large part because they don't look particularly healthy," Chappell said.

According to the American Pet Products Manufacturers Association, 13.9 million U.S. households own freshwater fish as pets as compared to 43.5 million U.S.households with dogs and 37.7 million with cats.

Jones said that the change would present a short-term issue for the fish-related products that Spectrum sells, but that the company has been aware of the plan for some time.

"People will buy fish somewhere, and we do think that other competitors, other retail competitors, will benefit from that decision," Jones said.

Spectrum, formerly known as Rayovac Corp. and well known for its Rayovac batteries, established itself in the aquatics market in 2005 when it bought Germany's Tetra Holding GmbH and a smaller company, Jungle Labs. Now, after those acquisitions and others, Spectrum is looking at selling some assets, especially its home and garden business.

Chappell said that he sees the pet category as Spectrum's healthiest business and one that the company "will work the hardest to hold onto."

Spectrum's other pet-related products include Dingo treats for dogs and Nature's Miracle stain and odor removal kits. Central Garden's other products include Nylabone toys for dogs and Kaytee food for birds.

(Additional reporting by Nicole Maestri in New York)

© Reuters 2007. All rights reserved. 

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Lesson from Wal-Mart

Seema Sharma
1ST TIMES NEWS NETWORK
9 Feb, 2007                                         [back to top]

CHANDIGARH: The sexual discrimination case filed against US retail giant Wal-Mart Stores Inc by its women employees has inspired some city women to speak about problems faced by them at the work place.

Says Manjit Kaur, a lawyer, "No woman advocate has ever been elevated to the post of a judge. The previous chief justice promised to do so and also laid down the parameters for it. But nothing came out of it."

Even women at top posts are not spared, what to talk of others. A woman IAS officer famous for winning a sexual harassment case against a high profile IPS officer says: "Men tend to take women employees lightly or undermine them. At times, I was given the so-called 'not so prestigious and powerful departments' such as education, social welfare, health etc." Situation is similar in the education field as well. "Punjab education department has reserved half the seats for women and included the already reserved categories of scheduled castes in its ambit. This move has reserved half the seats for men and has blocked the chances of women to occupy more posts.," said a women employee in Punjab education department.

As far as retail sector is concerned, less increments and long working hours are some of the common grievances of women employees. Says Sheetal, a customer executive at a store in Sector 17, "I have been working here for the last 10 years. But despite the hard work and experience, I get only Rs 100 as annual increment, much lesser than my male colleagues.

Only time will tell if city women will take a cue from their colleagues in Wall Mart and fight for their rights.

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Wal-Mart under fire again for T-shirts with Nazi logo

By Karoun Demirjian,
Chicago Tribune
February 9th, 2007                                 [back to top]

WASHINGTON -- Rep. Jan Schakowsky went after Wal-Mart on Thursday in an effort to prod the giant retailer to make good on a 3-month-old promise to remove Nazi-themed T-shirts from its stores.

In a letter to Wal-Mart Chief Executive H. Lee Scott Jr., Schakowsky (D-Ill.) asked company officials to tell Congress what steps they are taking to remove the remaining shirts that display the Nazi Totenkopf--the "death head" emblem worn by soldiers in Adolf Hitler's personal guard--from store shelves. Twenty-one other lawmakers from both parties also signed the letter.

"Everyone agreed that these shirts have to go, including Wal-Mart; it's just that they didn't do anything about it," Schakowsky said. "Either at the time they really weren't serious, or their capacity to do that is limited, which makes one wonder about recalls of potentially dangerous products."

Blogger Rick Rottman of BentCorner.com was first to recognize the T-shirt's skull-and-crossbones design as the infamous Nazi emblem, and posted his discovery online in November. At the time, Wal-Mart responded quickly to the public outcry, promising to ban the sale of the shirts and remove them from stores.

Despite the corporate order, it appears the shirts were never removed from at least three dozen of Wal-Mart's 3,300 U.S. stores, according to Consumerist.com, which has been tracking discoveries of the shirts.

Wal-Mart Stores Inc. spokesman David Tovar said the firm was not aware of the sordid origins of the symbol when it first stocked the shirts in the fall. "We never would have placed this T-shirt on our shelves had we known the origin and significance of this emblem," he said.

Wal-Mart said it has removed 99.5 percent of the shirts and deactivated cash register bar codes throughout its retail empire to prevent them from being scanned and sold at the register. "We're working as quickly as we can to get them off," Tovar said. "We expect to reach 100 percent completion of this task in a few days."

Yet as recently as Thursday, bloggers at Consumerist.com were fielding reports from readers who said they had successfully purchased the shirts from Wal-Marts.

"The average blue-vest employee just isn't aware of it," said Consumerist.com editor Ben Popken, who explained that when bar codes failed, readers easily persuaded employees to scan similarly priced items, or did so themselves at self-checkout counters.

Popken says he also blames unconscientious fashion designers, who likely saw the emblem of death as just another in-vogue skull-and-crossbones design, with the added bonus of being a copyright-free image. "The skull-and-crossbones is popular," he said, "but designers need to be aware of the history of the iconography that they're appropriating ad hoc."

In its efforts to remove the remaining shirts, Wal-Mart reiterated a directive to its employees to refuse to sell the shirts, and informed Schakowsky's office of its plans Thursday.

"As a Jew, and as a consumer, and as it happens, a member of Congress, I'm hoping that Wal-Mart resolves this quickly," Schakowsky said. "There's a lot of organizations and constituencies out there that will get on their case if they don't. And we'll give them a little bit of time, but not much."

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Gandhi against allowing Wal-Mart in India

By IndiaPost.com,
February 8th, 2007                                 [back to top]

NEW DELHI: Congress President Sonia Gandhi is understood to have written to Prime Minister Manmohan Singh advising caution on allowing US retail giant Wal-Mart entry into India.

Her letter in this regard comes in the midst of a raging controversy over entry of the American retailer, whose presence political parties, especially the Left, feel can threaten millions of neighborhood stores run by families and small traders in the country.

Gandhi is said to have counseled the government on the need to examine thoroughly, various issues like whether there were any loopholes in the Bharti-Wal-Mart venture and whether it complied with Foreign Direct Investment norms.

The Left parties have strongly opposed the Bharti-Wal-Mart joint venture, saying it was a backdoor entry for the US giant which would stamp out mom and pop stores in India.

The joint venture company proposes to open hundreds of supermarket and hypermarkets in the coming days.

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Wal-Mart, Union Join Forces on Health Care Alliance's Goal Is to Improve Coverage

By Ylan Q. Mui
and Dale Russakoff
Washington Post 
Thursday, February 8, 2007                           [back to top]

Two once-implacable foes in the business world found common ground yesterday, at least for a few minutes, as they publicly pledged to work together for the first time to fix what they called the nation's health-care crisis by 2012.

At a news conference on Capitol Hill, Wal-Mart chief executive H. Lee Scott sat at one end of a table and vowed to put aside differences to "drive this debate forward." On the other end was Andy Stern, president of the Service Employees International Union (SEIU) and frequent Wal-Mart critic, declaring he had made a "tough choice" in the goal to improve coverage.

How this unlikely alliance came about illustrates the deepening concern that businesses, labor groups and lawmakers have over skyrocketing health-care costs. The issue has divided the nation's largest retailer and the SEIU, which founded a group called Wal-Mart Watch that has harshly criticized the company's wages and benefits. But yesterday they said they could come together under the broad umbrella of universal health care. And each realized it could not be achieved without the other's help.

"That's what makes it powerful," Stern said in a phone interview. "It's risky, and it's right."

Wal-Mart used to be noticeable for its absence from business coalitions calling for government help with the health-care crisis. As the rising cost of employee medical care staggered other large companies, Wal-Mart, which did not provide health coverage for the majority of its employees, was silent. But during a national crisis over the growing ranks of uninsured workers, Wal-Mart quickly became a target.

The barrage of criticism over the past two years by the SEIU's Wal-Mart Watch and another group, Wake-Up Wal-Mart, backed by the United Food and Commercial Workers Union, has frequently put the retailer in the hot seat. Maryland's Fair Share Health Care legislation, nicknamed the "Wal-Mart bill," was crafted with input from the unions and required large companies to spend part of their payroll on health coverage or contribute to a state fund for the poor, giving rise to similar initiatives in more than two dozen states even though the law was eventually struck down. The union groups have galvanized political and grass-roots opposition to Wal-Mart through bus tours and nationwide conference calls.

The dispute left Wal-Mart increasingly isolated, particularly as it tried to move into urban areas critical to its growth. Public outrage from Southern California to the East Coast prompted local and state governments to block the company from planting superstores in one metropolitan area after another.

"Wal-Mart has actually been defeated in metropolitan America," said labor historian Nelson Lichtenstein of the University of California at Santa Barbara. "It makes a lot of business sense for them to try to get health care off the table."

Change began in 2005 after Wal-Mart created a health-care plan with premiums of $11 per month. In a speech to the National Governors Association a year ago, Scott announced other major concessions, including reducing the eligibility requirement for part-time employees from two years to one and adding coverage for their children. But he also wanted help from government leaders and other groups to make substantive changes to the country's health policies.

The speech caught Stern's attention. He was also impressed by Wal-Mart's efforts in environmental sustainability, in which it had worked with activist groups such as the Rocky Mountain Institute and TransFair USA. He took it as a sign the retailer was committed to changing not just its reputation but its practices.

"This was a company that was willing to create partnerships with people they might not normally agree with," Stern said. "It's always important to me that people don't just say things, they do things."

In his 2006 book, "A Country That Works," Stern wrote admiringly of how Dennis Rivera, president of the New York City Health Care Workers Union 1199, "taught us a great deal about how to tango" when he sent his members to join hospital operators in persuading the New York state legislature to raise insurance reimbursement rates. While the hospitals' pleas were viewed as self-serving, the workers won over lawmakers. Those billions of dollars of reimbursements found their way into better wages and "the gold standard of benefits for the hospital workers," Stern wrote.

In July, he wrote an opinion article in the Wall Street Journal declaring the death of employer-based health coverage and urging businesses to look for new solutions. Stern followed up with a letter to each head of a Fortune 500 company. Over the next few months, he received responses from many of them. By December, he was in discreet talks with Wal-Mart on ways they could reach a consensus on the problem of health care, if nothing else.

"We've disagreed on many issues in the past, and I'm sure we will disagree on others going forward," Sarah Clark, a spokeswoman for Wal-Mart, said yesterday. "However, resolving America's health-care crisis is so important to this country that we're willing to put aside our differences and work together."

In addition to Wal-Mart and the SEIU, the coalition announced yesterday includes other groups that historically have been at odds: AT&T, Intel, the Communications Workers of America, the Howard H. Baker Jr. Center for the Public Policy and Kelly Services. The coalition issued a statement decrying the state of the nation's health-care system and outlining four principles for an alternative, including ensuring that everyone has quality and affordable coverage.

But not everyone is convinced the coalition will be effective. Gerald M. Shea, the AFL-CIO's head of health policy, said he was concerned about the lack of detail in the coalition's plans.

"Their public positioning campaign is one thing. What they do is another," he said. "They want a solution by 2012 -- that's too far away from our point of view. What are you ready to do now?"

The UFCW had met with a Wal-Mart executive in December to discuss health care but decided the company was not taking enough steps to significantly improve its employee coverage. And it came out swinging again yesterday, with members handing out fliers from Wake-Up Wal-Mart denouncing the company at the news conference.

"Why Wal-Mart would want to look for a partner to cover up its health-care crisis is obvious," said Paul Blank, director of Wake-Up Wal-Mart. "But why anybody would decide to give a disingenuous player that stage is unconscionable."

Stern said the SEIU's Wal-Mart Watch will continue to speak out against the retailer as it sees fit. But now he has his eyes on bigger fish. The coalition spent the afternoon making rounds at Congress, stopping at the offices of House Speaker Nancy Pelosi (D-Calif.) and Rep. James E. Clyburn (D-S.C.), among others.

"We're way past the question, 'Can an employer solve this problem?' " he said. "We're at a point where the country has to solve the problem."

Staff writer Amy Joyce contributed to this report.

© 2007 The Washington Post Company

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Wal-Mart suit shows glass ceiling still an issue

Despite four decades of focus on equal workplace rights, gender discrimination concerns persist.

By Mark Trumbull
The Christian Science Monitor                       [back to top]

A lawsuit against America's largest employer is serving as a reminder that concerns about gender discrimination persist, despite four decades of focus on equal workplace rights.

Wal-Mart hasn't been found guilty of sex discrimination – and it may never be, in part because class-action cases on this issue are often settled out of court.

But the very fact that such a large case against the retailer has made it this far – with a federal appeals court giving the go-ahead Tuesday for a class-action lawsuit involving more than 1.5 million women – puts the issue back in the national spotlight more than at any other time in recent years.

The case revolves around wage issues – equal pay for equal work. But it also alleges that Wal-Mart shortchanged female employees on opportunities for promotion.

It's that issue – the proverbial glass ceiling – that studies find is the most intractable gender inequity in US industries today, despite the gains women have made since the equal-rights era.

"There actually has been tremendous progress.... Women are so much more visible," says Vicky Lovell of the Institute for Women's Policy Research, a nonpartisan research group in Washington. "Yet we do see [discrimination] continuing."

The issue matters not just for women but the whole economy, because the underlying question is whether businesses are making the most productive use of the talent available. Gender discrimination represents a failure involving nearly half the workforce.

Women face a significant gap with men in promotion opportunities, according to research published last year by Cornell University economists Francine Blau and Jed DeVaro.

Their data covered 3,500 employers in four US cities. The study found that 10.6 percent of men had received promotions during a four-year period versus 7.6 percent of women – a gap of 3 percentage points.

Even after sifting out a range of possible explanations, including education, skills, and seniority, that gap narrowed a bit, but the promotion rate remained 2.2 percentage points apart.

Interestingly, this study, which drew on survey data from the 1990s, found no solid evidence that those women who were promoted got smaller pay raises than men.

But some experts say that important pay gaps remain – albeit not as wide as those that existed four decades ago.

"Comparable worth ... remains a very big question," says Ms. Lovell. She says this isn't just getting the same pay for the same job, but equalizing pay scales across different careers that are comparable in skills and other respects.

In the Wal-Mart case, the plaintiffs allege more basic concerns that the company failed to pay the same rate for women as men in the same jobs.

"I was layaway manager, getting $7.50 an hour" in Vacaville, Calif., says Patricia Surgeson, one of the plaintiffs in the lawsuit. When the company moved her to a new post in the cashier's office, her replacement made nearly twice that much, she recalled in an interview this week.

She also says Wal-Mart made it hard for her to find out about opportunities for promotion. "They would never post the [open] management position," she says. Eventually, in 2001, she left the company and worked as a manager in a clothing store.

It remains to be seen whether the details of her experience, and those of other plaintiffs, are borne out in a court of law. The Ninth Circuit Court of Appeals, which ruled 2-1 to allow the suit to go forward, said it had no position on those claims, stressing that the decision only affirmed a US district court's ruling to certify Dukes v. Wal-Mart as a class-action suit. Wal-Mart, which says it did not discriminate against its female employees, has several legal options.

But the case hints at the factors – some of them unconscious assumptions by both men and women – that makes a gender gap persist even after years of consciousness-raising and diversity workshops.

Ms. Surgeson says her bosses often assumed she wasn't interested in jobs that might require her, as a young mother, to relocate. They would say "you have a family, you can't do that," she recalls.

Some experts say the pay gap may involve factors other than overt discrimination. But many say it's in companies' interest to devote more top-level leadership to the issue.

"If we're going to be competitive, we can't afford to lose women's talent" by failing to promote them on their merit, says Sharlene Hesse-Biber, a Boston College sociologist and author of "Working Women in America: Split Dreams."

Wal-Mart says it will challenge Tuesday's ruling by asking the Ninth Circuit to rehear the case. "The panel's decision contradicts numerous decisions from the Supreme Court and the Ninth Circuit itself," attorney Theodore Boutrous Jr., Wal-Mart's lead counsel for the appeal, said in a statement. "The plaintiffs' lawyers persuaded the panel to accept a theory that would force employers to make decisions based on statistics, not merit, and would deny employers their basic due process rights."

Critics of the class-action suit also question, among other things, the unprecedented scale of this workplace gender-rights case.

"It's basically extortionist," Robin Conrad, a vice president with the US Chamber of Commerce, told the Associated Press. If it stands, she said, it likely would force Wal-Mart to settle out of court than risk losing at trial.

Most large discrimination cases are settled out of court. Home Depot settled a sex-discrimination class-action suit in 1997 for $104 million. That same year, Publix Super Markets paid $81.5 million for discriminating against female workers.

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U.S. retail giant Wal-Mart to fight ruling in suit

chinaview.cn
2007-02-08                                 [back to top]

WASHINGTON, Feb. 7 (Xinhua) -- U.S. giant retailer Wal-Mart Stores Inc., following a legal setback in a sex-discrimination suit involving billions of dollars in claims, said it will contest the decision and ask for a larger appeals-court panel to rehear the case, The Wall Street Journal reported on Wednesday.

A three-judge panel of the Ninth Circuit Court of Appeals in San Francisco on Tuesday affirmed class-action status for a suit alleging gender discrimination in pay and promotion.

More than 1.5 million past and present female Wal-Mart employees are included in the suit.

Wal-Mart, the world's largest retailer by revenue, said it would ask a 15-member panel of the Ninth Circuit Court to review the case. The retailer said it would appeal to the U.S. Supreme Court, if needed.

The appeals court rejected Wal-Mart's argument that class-action status shouldn't be allowed because its stores are individually managed and run, saying there was "substantial evidence" of centralized policies.

The suit, filed in 2001 by six female employees, alleges the Bentonville, Ark. retailer systematically paid women with similar qualifications less than men and frequently overlooked women for promotions.

Persuaded by the plaintiffs' statistical data that Wal-Mart paid women workers 5 percent to 15 percent less than men in comparable jobs, a federal district court judge in San Francisco ruled in 2004 that the lawsuit could apply to all women who have worked for Wal-Mart since December 1998.

According to the report, the largest sex-discrimination settlement to date has been a 508 million dollars payment by the federal government to 1,100 women who said they were denies jobs at the Voice of America and the U.S. Information Agency.

A 240 million dollar settlement in 1992 by State Farm Insurance is the biggest corporate gender-bias settlement to date.

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Brad Armstrong to Oversee Wal-Mart Account at Martin

By Sandra O'Loughlin
February 07, 2007                         [back to top]

NEW YORK -- Brad Armstrong has re-joined The Martin Agency as partner, evp and group management supervisor in charge of the agency's newest account—Wal-Mart Stores Division.

The Martin Agency, Richmond, Va., won the $570 million account in January after a second round of agency reviews following the departure of two key Wal-Mart executives, Julie Roehm and Sean Womack, for alleged improprieties, which both have denied.

Armstrong previously served at The Martin Agency as director of account management from 1994-2001 when he was tapped to become president and COO of the Virginia Performing Arts Foundation.

In 2006, he became svp sales and marketing for RetailData, a retail intelligence company.

In addition to Wal-Mart, The Martin Agency's client roster includes Alltel, BF Goodrich, Discover, Geico, Hanes, Nascar, Ping, Seiko, Sirius, The Learning Channel and UPS.

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Wal-Mart CEO and Chief Critic Tout Health Plan

Wal-Mart Proposes Universal Health Care Coverage, but Some Critics Unmoved

By CHARLES HERMAN
Feb. 7, 2007                                               [back to top]

If President Bush and Speaker of the House Nancy Pelosi can make nice, then it should be no surprise that Wal-Mart CEO Lee Scott could join with one of his fiercest critics.

Wal-Mart antagonizer Andy Stern heads the Service Employees International Union that funds the group Wal-Mart Watch, which regularly criticizes the world's largest retailer over its employment and health care practices.

But in Washington Wednesday morning, where unlikely coalitions can often be found working together, Scott and Stern shared the stage with representatives from AT&T, Intel, Kelly Services (a temporary employee staffing company) and political operatives such as Howard Baker and John Podesta to announce a cooperative effort to change America's health care system.

Called Better Health Care Together, the group plans to bring in other corporations and individuals to overhaul the nation's health care system to slow growing costs and provide high quality and accessible care for millions by 2012. One of the group's four goals includes universal health care coverage.

"Working together, we can achieve a high quality, affordable, accessible health care system every American wants," said Scott. "We put aside disagreements to drive this debate forward."

"We need fundamental change," said Stern. "It's time to admit the employer-based health care system is dead."

The group did not, however, make policy suggestions or describe how and when or where actual money should be spent on health care.

And while Wal-Mart can please some of the people some of the time, the retailer could not win over all its critics after today's announcement.

Paul Blank, campaign director of WakeUpWalMart.com, said in a prepared statement, "If Wal-Mart is truly serious about universal health care, we challenge the company to provide universal health care to all of its uninsured employees and their families today."

And despite Stern and Scott coming together and sitting next to each other at the press conference, Stern said that his group, Wal-Mart Watch, will continue to operate and serve as a Wal-Mart watchdog.

Shortly after the press conference, Wal-Mart Watch's Executive Director David Nasser reacted.

"Wal-Mart's unaffordable plan is part of our nation's health care problem, and we're pleased that they want to be part of the solution," he said in a statement. "But Wal-Mart's participation in the discussion does not alleviate its responsibility for providing decent, affordable and accessible coverage to its employees."

The Better Health Care Together group plans to hold a national summit on health care by the end of May.

Copyright © 2007 ABC News Internet Ventures

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Wal-Mart, union push universal health care

World's largest retailer, together with service employees' union, others, calls for universal coverage.

By Parija B. Kavilanz,
CNNMoney.com
February 7 2007                                      [back to top]

NEW YORK (CNNMoney.com) -- In a partnership of unlikely allies, Wal-Mart's CEO, other corporate leaders and the head of the Service Employees International Union (SEIU) called Wednesday for universal health care coverage for all Americans by 2012.

During a news conference in Washington, the group announced the formation of a coalition called "Better Health Care Together" and listed several objectives. They included achieving "quality, affordable health insurance coverage" for every American and "having businesses, governments, and individuals all contribute to managing and financing a new American health care system."

Strange bedfellows? Wal-Mart CEO Lee Scott and Service Employees International Union (SEIU) head Andrew Stern join forces in a bid to reform health care. Quick Vote What do you think of Wal-Mart's call for universal health care? It's just PRIt's a good first stepToo soon to tell or View resultsThe coalition members, which also included former Reagan administration chief of staff Howard Baker and John Podesta, former chief of staff to President Bill Clinton, pledged to convene a national summit by the end of May to recruit other leaders from business, labor, government and nonprofit organizations.

Other companies represented at the news conference were Intel (up $0.20 to $21.51, Charts) and AT&T (down $0.35 to $37.16, Charts).

"Wal-Mart is committed to high quality, affordable and accessible health care. But our current system hurts America's competitiveness and leaves too many people uninsured," Wal-Mart CEO Lee Scott said during the conference.

The event was monitored via webcast in New York.

"Government alone won't and can't solve this crisis," Scott said. "We have to work together - business, labor, government and our communities. We also need to empower people to take more responsibility and more control over their own health care.

"By following this campaign's principles we can slow the growth of health care costs in this country and guarantee the uninsured access to good health coverage," he added.

But Scott was ambivalent when asked whether Wal-Mart plans to increase health care spending as part of its intention to expand coverage to all its workers.

"We're joining this coalition to move health care forward ... to implement changes by 2012. The costs will be what they are," he said.

According to Wal-Mart, the world's largest retailer and the largest nonunion private sector employer in the country currently provides health care coverage for about 47 percent of its 1.3 million U.S. employees.

Unions divided Wal-Mart (Charts) remains a lightning rod for critics, who say that the company provides inadequate healthcare coverage for its workers, thereby forcing taxpayers to pick up the burden of health care costs for those that are uninsured.

"My headline for this healthcare campaign would be 'Wal-Mart jumps on the big government bandwagon,'" said Michael Cannon, director of health policy studies with Cato Institute.

"So much of this is self-congratulatory puffery from Wal-Mart. What Scott is saying is a serious misunderstanding of how the healthcare system operates," he said. "The government and corporations don't bear the cost of healthcare. Only workers and consumers do."

Watchdog group Wakeupwalmart.com, which is funded by the United Food and Commercial Workers Union, continues to be critical of Wal-Mart's labor, pay and health care policies.

In fact, the group's spokesman, Chris Kofinis, told CNNMoney.com ahead of the announcement that he regarded the proposal as another "publicity stunt" by Wal-Mart.

"Lee Scott will say that Wal-Mart supports the goal of universal health care in the future but we don't expect him to say that Wal-Mart is immediately changing its own health care plan to provide coverage to all its employees," said Kofinis.

UFCW spokeswoman Jill Cashen said the union was aware of the discussions between Wal-Mart and the other coalition members but decided not to join the partnership.

Wal-Mart to appeal discrimination suit status A statement from UFCW released after the news conference said the group felt "it is not appropriate to take the stage with a company that refuses to remedy its mistreatment of workers, among other irresponsible practices."

"Wal-Mart is actually decreasing health care coverage to employees and facing the largest gender discrimination case in the history of this country. Wal-Mart is changing its public posture, but it also needs to change its actual corporate practices. And that practice begins with taking responsibility for its own employees," the statement said.

However, SEIU chief Andrew Stern told the gathering that despite his opinions about Wal-Mart's policies, he was supporting the proposal and ready to work with Wal-Mart.

"I am also here for America's, and our children's, future," Stern said. "Health care is no longer just a moral crisis. It has become an economic crisis as well. More people went to work today in retail than in manufacturing. It is time to admit that the employer-based health care system is dead. It is a relic of the industrial economy," he added.

"American business by 2008 will pay more for health care than they will make in profits. That is untenable," Stern said.

Said Cato's Cannon: "I am an irony junkie. The unions attack Wal-Mart because they say its healthcare policy forces a lot of employees on to government health programs. Now it seems Wal-Mart wants even more employees to be on government programs. But all of a sudden, unions love Wal-Mart."

Wal-Mart may have an India problem

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Wal-Mart bias case goes to trial

By BBC News,
February 6th, 2007                           [back to top]

Wal-Mart will face a lawsuit claiming pay discrimination against more than a million female US employees after a court approved the action.

A federal appeals court upheld a 2004 ruling giving the lawsuit class action status, sanctioning claims from up to 1.5 million current and former staff.

Should it lose the case, the world's largest retailer could have to pay damages worth billions of dollars.

Wal-Mart has said it did not have a policy discriminating against women.

The world's largest retailer said it would appeal against the verdict.

'Evidence'

The original lawsuit was filed in 2001 by six women who either worked for Wal-Mart or had done so in the past.

A lawyer representing the women said they had "been waiting years for this decision".

In a split two-to-one verdict, the San Francisco court ruled that the country's largest class action lawsuit against a private employer could proceed.

Factual evidence, statistical evidence and anecdotal evidence present significant proof of a corporate policy of discrimination Judge Martin Jenkins

Judge Martin Jenkins said sufficient evidence existed of discriminatory practices dating back to 1998 to support the case going to trial.

"Factual evidence, statistical evidence and anecdotal evidence present significant proof of a corporate policy of discrimination and support plaintiff's contention that female employees nationwide were subjected to a common pattern and practice of discrimination," he said.

But in his dissenting opinion, Judge Andrew Kleinfeld said the only evidence of discrimination provided was the fact that the number of female managers at Wal-Mart stores was disproportionately lower than the total number of female staff.

"This case poses a considerable risk of enriching undeserving class members and counsel, but depriving thousands of women actually injured by sex discrimination of their just due," he argued.

People shopping in Wal-Mart store in California Wal-Mart employs 1.3 million US workers, about 65% of them female

Whatever the outcome of Wal-Mart's appeal, the case - first heard in 2003 - is unlikely to come to trial for some time.

The lawsuit only applies to women employed by Wal-Mart since 26 December 1998.

At any future trial, the plaintiffs will need to establish that Wal-Mart had a company-wide policy of paying female staff less than men and that workers had no right to argue their individual cases.

'Confident'

Lawyer Brad Seligman, who is representing the women who brought the case, said the merits of the case had now been recognised twice.

"We fully expect Wal-Mart to keep appealing but we are very confident now that two courts have upheld this certification," he said.

Wal-Mart has argued that granting the lawsuit class action status is inappropriate because its 3,400 stores operate as individual businesses and that issues of pay and promotion are decided locally.

It said workers who believed they were victims of discrimination could sue individual stores.

Criticised in the past for poor employment practices, something which it has always denied, Wal-Mart has launched a host of diversity and environmental initiatives in recent years.

But last year the retailer was ordered to pay at least $78m in compensation to workers after a court found it had broken the law by not paying staff for working during breaks.

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Court Says Wal-Mart Must Face Bias Trial

By DAVID KRAVETS, 
Associated Press 
Tuesday, February 6, 2007                         [back to top]

A federal appeals court ruled Tuesday that Wal-Mart Stores Inc., the world's largest private employer, must face a class-action lawsuit alleging as many as 1.5 million former and current female employees were discriminated against in pay and promotions.

The ruling by the 9th U.S. Circuit Court of Appeals upholds a 2004 federal judge's decision to let the nation's largest class-action employment discrimination lawsuit go to trial, possibly exposing the Bentonville, Ark.-based retailing powerhouse to billions of dollars in damages.

"Plaintiff's expert opinions, factual evidence, statistical evidence and anecdotal evidence present significant proof of a corporate policy of discrimination and support plaintiff's contention that female employees nationwide were subjected to a common pattern and practice of discrimination," the court wrote in a 2-1 decision.

Wal-Mart said it would ask the court to rehear the case with the same three-judge panel or with 15 judges, a move likely to idle the case for months. Tuesday's ruling came 18 months after the case was argued.

"This is one step of what is going to be a long process," Wal-Mart attorney Theodore Boutrous Jr. said. "We are very optimistic of obtaining relief from this ruling."

He said Wal-Mart's own review found no significant disparity in pay between men and women at 90 percent of its stores.

Wal-Mart, which currently employs 1.3 million workers, claimed that the conventional rules of class action suits should not apply in the case because its 3,400 stores, including Sam's Club warehouse outlets, operate like independent businesses, and that the company did not have a policy of discriminating against women.

U.S. District Judge Martin Jenkins, the San Francisco trial court judge who said the case could proceed, had ruled that anecdotal evidence warranted a class-action trial. Wal-Mart took the case to the San Francisco-based appeals court.

Jenkins said if companywide gender discrimination is proven at trial, Wal-Mart could be forced to pay billions of dollars to women who earned less than their male counterparts. Jenkins rejected as "impractical" Wal-Mart's suggestion of having individual hearings for each plaintiff and he planned to use a statistical formula to compensate the women if they won.

Wal-Mart said the judge's scenario was an unprecedented denial of its rights and sought to dismiss the case. The company said women who allege discrimination could file lawsuits against individual stores.

The women's lawyers said the idea was ridiculous, and would clog the federal judiciary.

"Although size of this class action is large, mere size does not render a case unmanageable," Judge Harry Pregerson wrote for the majority, which upheld Jenkins' decision in its entirety.

Robin Conrad, a vice president with the U.S. Chamber of Commerce, blasted the decision. If it stands, she said, it likely would force Wal-Mart to settle out of court than risk losing at trial.

"It's basically extortionist," she said. "It's giving the company no option other than to settle a case of this magnitude."

Judge Andrew Kleinfeld wrote in a dissent that women could file individual lawsuits to safeguard Wal-Mart from paying those who don't deserve money, and would also ensure women get the compensation they deserve.

The appellate court's decision, he wrote, "threatens the rights of women injured by sex discrimination. And it threatens Wal-Mart's rights."

The lawsuit covers women who work or worked for the company from 1999 to the present.

Betty Dukes, the lead plaintiff who claims she has suffered gender discrimination in terms of pay and promotion while working at a Wal-Mart in the Bay Area suburb of Pittsburg, said her pay has been boosted from $8.48 an hour to about $14 an hour.

"We are not falsely accusing Wal-Mart," said Dukes, who has worked at Wal-Mart for 13 years.

Brad Seligman, one of the attorneys who represented the women suing Wal-Mart, said the decision would hurt the company's reputation.

"No amount of PR by Wal-Mart is going to allow it to deal with its legacy of discrimination," Seligman said.

David Nassar, executive director of Wal-Mart Watch, a group critical of Wal-Mart policies, said the decision vindicates "victims of the company's illegal and immoral gender discrimination."

The cases are Dukes v. Wal-Mart, 04-16688, 04-16720.

©2007 Associated Press

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Wal-Mart Launches Movie Download Store

By GARY GENTILE
Associated Press
02.06.07                                                  [back to top]

Wal-Mart Stores Inc. has launched its long-awaited online movie download store, entering a market that has yet to catch on with consumers but is expected to grow rapidly.

A "beta" version of the online video store, which debuted Tuesday, sells digital versions of about 3,000 films and television episodes from all the major studios and some TV networks, including Fox Broadcasting. Wal-Mart (nyse: WMT - news - people ) will not initially offer content from ABC, CBS (nyse: CBS - news - people ) or NBC, although the company said it hopes to add shows from those networks.

The nation's largest retailer is using its buying power to beat the prices charged by other download services in many cases, offering films from $12.88 to $19.88 and individual TV episodes for $1.96 - 4 cents less than Apple Inc. (nasdaq: AAPL - news - people )'s iTunes store.

Apple charges less for some films sold on iTunes - $12.99 when pre-ordered and during the first week of sale, or $14.99 afterward. But it only carries films from two studios, The Walt Disney Co. (nyse: DIS - news - people ) and Viacom Inc. (nyse: VIA - news - people )'s Paramount Studios.

Most studios have resisted signing deals with iTunes in part because of Apple's desire to sell movies at one price. Studios prefer variable pricing such as Wal-Mart is offering.

Apple's pricing has also caused scuffles between studios and major retailers, including Wal-Mart and Target Corp. (nyse: TGT - news - people ) The retailers don't want studios to sell digital copies of films cheaper than the wholesale price of physical DVDs.

Wal-Mart's online store will sell older titles starting at $7.50, compared with the $9.99 charged by iTunes.

Wal-Mart also used its significant clout to launch its online store with films from all major studios. The Bentonville, Ark., retailer accounts for about 40 percent of DVD sales, and studios have been careful not to anger their largest customer.

Given Wal-Mart's importance, the studios readily agreed to sell films on the retailer's new site, analysts said.

The biggest impact of Wal-Mart's entry into the digital download business may be that it now frees studios to cut deals with other online services.

"It gets the ball rolling finally," said Tom Adams of Adams Media Research. "Now the studios are free to pursue it as aggressively as they can without worries about what Wal-Mart is going to think."

Amazon Inc. (nasdaq: AMZN - news - people ) launched its "Unbox" video rental and download store last year without films from Disney.

Other online download and rental sites include Movielink, which is owned by five studios, and CinemaNow.

Unlike some offerings, Wal-Mart will not rent films online. The films can be played on a PC or transferred to Microsoft (nasdaq: MSFT - news - people ) Windows Media-compatible portable digital players. The movies will not play on Apple computers or the popular iPod.

Movies bought from the Wal-Mart store also can't be burned onto a DVD, although the company said it hopes to offer the option by the end of the year.

Wal-Mart says it doesn't expect digital sales to cannibalize its retail DVD business for many years.

"Customers have a growing interest in downloading video content, but complementary and supplemental to buying content on DVD," Kevin Swint, Wal-Mart's divisional manager for digital media, told The Associated Press.

"With the health of the DVD business and coming high-definition formats, that business will remain quite strong for quite a long time."

Internet downloading is expected to generate about $4 billion in annual revenue in five years, compared with an estimated $27 billion from DVD rentals and sales, according to Adams Media Research.

Whether Wal-Mart can translate its success on the ground to the digital domain remains to be seen.

Wal-Mart abandoned its efforts to build an online DVD rental service in 2005 to compete with the well-established Netflix Inc. (nasdaq: NFLX - news - people )

The retailer also faces the same challenge that confounds other online video sellers - the fact that films cannot be easily transferred from a computer to a larger TV screen.

"The real problem is people want to watch these movies on their television set," said principal analyst Josh Bernoff of Cambridge, Mass.-based Forrester Research (nasdaq: FORR - news - people ). "There already is an effective way to do that, which is to buy a DVD."

Copyright 2006 Associated Press. All rights reserved.

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Wal-Mart launches movie, TV download service

By Nicole Maestri and Gina Keating                   [back to top]

NEW YORK/LOS ANGELES, Feb 6 (Reuters) - Wal-Mart Stores Inc. <WMT.N> on Tuesday introduced a test version of its new video download service, making it the first major retailer to offer such a service with the backing of all of Hollywood's big studios.

The service, available on Wal-Mart's Web site, lets users download movies or television episodes that they can watch on their computers or portable media players, and pits the No. 1 retailer against other downloading sites, including Apple Inc.'s iTunes.

Wal-Mart said the service includes more than 3,000 titles from movie studios like 20th Century Fox <NWS.N>, Disney <DIS.N>, Lions Gate <LGF.N>, MGM, MTV Networks <VIA.N>, Paramount Pictures, Sony Pictures Entertainment, Universal Studios Home Entertainment <VIV.PA> and Warner Bros. <TWX.N>, and television networks including Comedy Central, Fox, and Nickelodeon.

The Wal-Mart site is being launched with more titles than any other download service started, and the downloads are being priced from $1.96 for episodes of television shows to up to $19.88 for new movies.

"We've been working on this for almost a year now," said Kevin Swint, Wal-Mart's divisional merchandise manager for digital media. "It's been a lengthy process."

In launching its new service, Wal-Mart is entering a crowded market where it has no guarantee of success.

Amazon.com's Unbox already lets users download movies and TV shows from six Hollywood studios, while Apple's iTunes store offers TV shows and full-length films for download.

Since Wal-Mart accounts for about 40 percent of U.S. DVD sales each year, James McQuivey, principal analyst for Forrester Research said Wal-Mart is able to say to the studios: "We are going to do this and you are going to do it with us."

But he said the download market is still "very small" and "There are enough barriers in place that we don't see this being a big phenomenon by the end of the decade."

GOING DIGITAL

Hollywood movie studios have supplied content for several years to movie download services such as CinemaNow and Movielink, although the services have not achieved widespread adoption.

Retailers have been wary of the trend, worried that the downloads might crimp their DVD sales.

An announcement in September by the Walt Disney Co. <DIS.N> that it would sell TV shows and movies on Apple Inc's <AAPL.O> iTunes prompted reports that Wal-Mart was concerned that digital distribution would cut into its DVD sales and had threatened to retaliate against the studios.

Wal-Mart denied the reports.

In launching its new service, Wal-Mart's Swint said the retailer should be able to draw consumers by offering a vast array of titles.

"We have all the major studios present," he said. "We're fairly unique in the marketplace."

While Wal-Mart may be the world's largest retailer, it has stumbled in previous efforts to expand its online offerings. In 2005, it pulled out of the online DVD rental and instead directed its subscribers to Netflix Inc. <NFLX.O> for rental services.

Wal-Mart said in the service being introduced on Tuesday, movie releases will be available for video download the same day the DVD is released.

The retailer said the service is powered by technology from Hewlett-Packard Co. <HPQ.N>

Wal-Mart shares rose 1 cent to $48.53 in afternoon New York Stock Exchange trading.

© Reuters 2007. All rights reserved.

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Wal-Mart Loses Bid to Block Group Suit in Bias Case

By Karen Gullo and Margaret Cronin Fisk
Bloomberg
Feb. 6                                                                    [back to top]

Wal-Mart Stores Inc., the biggest U.S. private employer, lost a bid to prevent 2 million current and former female workers from proceeding as a group with sex bias claims in the largest employment lawsuit in U.S. history.

A federal appeals court in San Francisco today upheld a 2004 lower court ruling granting class-action status to a lawsuit accusing Wal-Mart of paying women less than men and giving them fewer promotions. That ruling expanded the suit, originally filed by six women, to include all women who worked at Wal-Mart stores from December 1998 to the present, excluding upper management and pharmacy workers.

``Expert opinions, factual evidence, statistical evidence and anecdotal evidence present significant proof of a corporate policy of discrimination,'' the appeals court said.

The court's 2-1 decision is a blow to Bentonville, Arkansas- based Wal-Mart, which is facing more than 200 federal lawsuits by employees. While the workers still have to prove their claims at a trial, the ruling provides leverage for a settlement. The workers are seeking billions of dollars in back pay and punitive damages, court-ordered changes in Wal-Mart's practices and independent monitoring of company practices.

Wal-Mart said it will seek a rehearing of the decision by the appellate court. The court ``erred'' by not considering Wal- Mart's evidence, company attorney Ted Boutrous said at a press conference. ``There is no common practice'' at the company that would cause discrimination, Boutrous said.

`Technical Legal Issue'

The decision ``focused on a technical legal issue and not on the merits of the case,'' Boutrous said. Previous appeals court decisions, including those by the U.S. Supreme Court, conflict with the Ninth Circuit's action today, and the judges didn't discuss those conflicts, said the lawyer, of Gibson, Dunn & Crutcher in Los Angeles.

Wal-Mart shares rose 6 cents to $48.58 in New York Stock Exchange composite trading.

The decision shouldn't harm Wal-Mart shares, said David Abella, an analyst at Rochdale Investment Management in New York, with $2.2 billion in assets including Wal-Mart shares.

``It's not something you want surfacing now as you're trying to upgrade your image,'' Abella said. The decision should already be factored into the share price, he said.

``This decision will have no impact on our fiscal year 2007 financial performance and does not require the company to take any action that will increase its cost of operations,'' Tom Schoewe, Wal-Mart executive vice president and chief financial officer, said in a statement.

2 Million Women

The potential number of women covered by the case, originally about 1.5 million, grew to about 1.6 million by the time of the class certification decision in 2004, according to plaintiffs' lawyers. The number of former and current women workers who could be part of the class is now closer to 2 million, said Joseph Sellers, an attorney for the plaintiffs.

Wal-Mart employs 1.3 million people in the U.S., more than 815,000 of them women, and 1.8 million people worldwide.

``The lost wages and benefits alone would be in the billions,'' Sellers said. ``This decision reaffirms that big companies like Wal-Mart are covered by our civil rights laws and there is no large-company exception.''

``This company also has a substantial exposure to a punitive award,'' said Sellers, of Cohen, Milstein, Hausfeld & Toll in Washington.

Long Wait

``We have been waiting for a long time for this day of victory,'' Betty Dukes, lead plaintiff in the case, said at a news conference. `` Our words are true. We are not falsely accusing Wal-Mart.''

Wal-Mart has said there is no pay disparity between men and women at most of its stores and it should be allowed to rebut workers' claims of discrimination individually. Pay and promotion decisions are made locally by store managers, so the experience of workers at one store would differ from those at another, its lawyers said.

Wal-Mart can ask for a larger appeals court panel to rehear the case and can appeal the ruling to the U.S. Supreme Court.

``The case is not over,'' said law professor Carl Tobias of the University of Richmond in Virginia. The appeals court may agree to have a larger panel hear the case because of the 2-1 split, he said.

Supreme Court Outlook

If the decision is upheld, the Supreme Court may agree to hear Wal-Mart's appeal because of the importance of the lawsuit, Tobias said in an interview. ``The Supreme Court has passed up other similar cases, but there seems to be a lot at stake in this case,'' he said.

Attorney Brad Seligman, representing the women, said he expects an appeal.

``In the entire history of the Supreme Court, they have never granted a hearing for a class certification prior to a trial or a settlement,'' Seligman said at the news conference.

The ruling may have ramifications for other companies. The U.S. Chamber of Commerce, siding with Wal-Mart, argued in court papers in 2005 that allowing so many plaintiffs to sue as a group would lead to more class-action lawsuits against employers and force unfair settlements.

``It may signal a return to broad class actions against employers,'' said Los Angeles attorney Anthony Oncidi of the law firm Proskauer Rose, who represents companies other than Wal-Mart in employment litigation.

Dissenting Judge

Class certification ``deprives Wal-Mart of due process of law,'' and may force the company to settle even if it believes the lawsuit to be meritless, dissenting Judge Andrew J. Kleinfeld wrote. ``When the potential loss is stratospheric, a rational defendant will settle even the most unjust claim,'' he wrote.

``Plaintiffs' only evidence of sex discrimination is that around 2/3 of Wal-Mart employees are female, but only about 1/3 of its managers are female,'' Kleinfeld wrote.

Class certification helps plaintiffs because it's cost- effective and provides leverage for a settlement. The company's Boutrous and the plaintiffs' Sellers both declined to comment on whether Wal-Mart and the women have been in settlement talks.

A recovery of more than $1 billion would dwarf the two largest employment discrimination class action settlements in U.S. history, both involving sexual discrimination.

The largest was in 2000 for $565 million, including interest, which ended a suit by 1,100 employees of the U.S. Information Agency and the Voice of America against the agency.

California Case

The second-largest, and the biggest involving a publicly traded company, was in 1992 for $250 million against State Farm General Insurance Co. and involved California workers.

The appeals court upheld a June 2004 ruling by U.S. District Judge Martin Jenkins of San Francisco, who decided that the experiences of the six original plaintiffs may be common to other current and former female workers at Wal-Mart.

Plaintiffs' lawyers, using anecdotal evidence from workers and experts' estimates, claimed Wal-Mart has shown a pattern of discrimination, paying female hourly workers $1,100 less per year than men and female managers $14,500 less than their male counterparts. They said Wal-Mart didn't post job openings and male managers tended to promote men to management positions.

The lawsuit, filed in 2001, has been on hold since September 2004 pending the outcome of Wal-Mart's appeal of Jenkins's ruling.

Wal-Mart has beefed up its public relations and lobbying staff in the past two years, hiring former Democratic adviser Leslie Dach to a new position overseeing both areas.

``We play offense every day,'' Dach told attendees at the company's analyst conference in October. ``We want our opponents to react to what we're doing,'' said Dach, who started in August.

The case is Dukes v. Wal-Mart Stores Inc., 04-16688, Ninth Circuit U.S. Court of Appeals (San Francisco).

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Wal-Mart may have an India problem

Reports say Congress Party leader Sonia Gandhi wants to reassess relaxing rules for foreign investment in retailing.

By Parija B. Kavilanz,
CNNMoney.com
February 6 2007                                         [back to top]

NEW YORK (CNNMoney.com) -- India's widely awaited move to open up its $300 billion consumer market to overseas retailers seems to have hit a speed bump, which regional experts say could bring more scrutiny of Wal-Mart's move into the world's second-most populous country.

Several Indian newspapers, including the Economic Times, reported Tuesday that Sonia Gandhi, president of the Congress Party, which heads India's coalition government, has asked Indian Prime Minister Manmohan Singh to reassess how further relaxing foreign direct investment rules could affect the country's family-owned retail businesses.

The government did relax some rules last year by allowing "single-brand" retailers such as Nike or Gucci to own 51 percent of their business operations in India. But this still precluded market entry to global merchants like Wal-Mart (Charts) that sell a variety of brands.

The debate over how big retailers like Wal-Mart can invest or operate in India boils down to this: Proponents say opening up the retail sector to outside investors is sorely needed to help India create more jobs, boost exports and improve its transportation and other infrastructure.

But opponents, mainly left-leaning parties who support but aren't part of the coalition government, argue it would hurt the economy and destroy jobs since about 97 percent of the Indian retail market is mom-and-pop businesses.

Until recently, the feeling among Indian bureaucrats and market experts had been that the government was moving toward liberalizing foreign direct investment in retailing.

But now, according to the Times report, opponents have stepped up their opposition to Wal-Mart's proposed joint venture with Bharti Enterprises, a diverse business empire led by India's wealthy Mittal family.

The paper said the government so far has successfully resisted pressure to re-evaluate Wal-Mart's deal with Bharti, under which Wal-Mart would provide support for a chain of nationwide stores.

Still, at least one analyst said the request by Gandhi may be nothing more than political posturing meant to try to give a lift to the Congress Party in upcoming state elections.

"This is the absolute paradox of India. On the one hand there's huge buzz about India's growth opportunity. But on the other hand, there are lot of poor people who's situation has not improved. And these people are also the main voting bank of politicians," said Love Goel, CEO of Growth Ventures Group, a global private equity firm that's focused on investment in the Indian retail sector.

A Wal-Mart spokeswoman said the chain is committed to establishing a presence in India quickly.

"It is important to note that whatever the final retail plans are, the front-end will be 100 percent owned and operated by Bharti," Wal-Mart spokeswoman Amy Wyatt said in an e-mail to CNNMoney.com. "These stores will be wholly owned by Bharti who will manage the entire front-end, including aspects such as branding," she said.

In line with what is permitted under existing guidelines, Wyatt said Wal-Mart will focus on the back-end supply chain management, giving Bharti access to "our knowledge in information systems, logistics and supply chain management."

India is already Wal-Mart's fastest growing sourcing market. More significantly, the world's largest retailer has identified India, the second most-populous nation and fourth largest retail market, as a huge growth opportunity, especially as its home market becomes increasingly saturated.

Meanwhile, Bharti spokesman Ashutosh Sharma told CNNMoney.com that the company was aware of media reports regarding a supposed letter from Gandhi to the prime minister. "We really don't have anything firm to say about it," he said.

Wal-Mart inked its venture with Bharti Enterprises last November, with plans to open several hundred stores around the country over the next five years. The stores will be owned by Bharti Enterprises but will be run jointly.

"Indians don't have to worry about foreign competition," said Goel at Growth Ventures.

"Indian entrepreneurs are far smarter than they are given credit for. But at the same time, I think the government does need to be careful with how it proceeds with (investment) reforms. I think the debate is worthwhile since it will affect the entire country and millions of consumers."

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Wal-Mart tries its hand at video downloads

World's largest retailer begins testing new service, says television shows will run $1.96 per episode, new films up to $19.88.

Reuters
February 6 2007                                 [back to top]

CHICAGO (Reuters) -- Wal-Mart Stores Inc. introduced a test version of its new video download service Tuesday, making it the first major retailer to offer such a service with the backing of all of Hollywood's big studios.

The service, which is powered by technology from Hewlett-Packard Co. (Charts), features more than 3,000 movies and television shows from 20th Century Fox, Disney (Charts), Lions Gate (Charts), MGM, MTV Networks, Paramount Pictures, Sony Pictures Entertainment, Universal Studios Home Entertainment and Warner Bros., Wal-Mart said.

The downloads are priced from $1.96 for episodes of television shows to up to $19.88 for new movies.

Wal-Mart (Charts) shares finished nearly 1 percent higher in Monday trade on the New York Stock Exchange.

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Wal-Mart Aims to Dig Out Of Soft Sales Performance

By Kris Hudson,
Wall Street Journal
February 5th, 2007                       [back to top]

Wal-Mart Stores Inc. posted a same-store sales gain of 2.2% for January, beating its own conservative projection, but capping a lackluster fiscal year.

The retailer had predicted a gain of 1% to 2% for the five-week period ended Feb. 2 over the same span a year earlier. The January result is the latest in a string of paltry monthly results, including a 1.6% gain in December, a 0.1% drop in November and a 0.5% gain in October.

Wal-Mart's latest fiscal year, which ended Jan. 31, is shaping up to deliver the lowest annual same-store sales gain in the 27 years the Bentonville, Ark., company has reported such figures. Through December, it was tracking at a 2% gain for the year.

"Overall, while certainly a step in the right direction, particularly in light of the company's management changes a few weeks back and well-documented challenges, Wal-Mart is still not out of the woods, in our view," Charles Grom, an analyst with J.P. Morgan & Chase Co. unit JP Morgan Securities, wrote Saturday in an e-mail. "And [it] will continue to face an uphill battle versus Target and other moderately priced department store chains."

Among Wal-Mart's recent executive shifts in recent weeks was moving Chief Marketing Officer John Fleming into a top merchandising role.

Same-store sales figures chart sales trends at stores open for at least a year, providing insight into a retailer's gains or losses against the relatively fixed costs of operating established stores. They are an important indicator of a retailer's return on the money spent on stores, which in turn reflects on overall profitability. Many U.S. retailers plan to release January sales results Thursday, and Wal-Mart will provide a final, more comprehensive view of its results at that time.

January typically isn't a big month for Wal-Mart, accounting for 6.5% of its total sales over the past five years, according to Mr. Grom. It is a month in which retailers often attempt to clear out leftover holiday merchandise and reap sales from redemptions of gift cards bought in December.

While slight at just 2.2%, Wal-Mart's latest monthly gain still had a high hurdle to clear: In last year's period, the retailer notched a 5% gain.

Wal-Mart's weak results can be traced to several factors, many of which analysts don't expect to abate this year. The retailer has blamed its efforts to remodel sections of 1,800 stores this year and last for disrupting shoppers and driving some away.

At last public notice, Wal-Mart planned to overhaul apparel sections in nearly as many stores this year -- 451 -- as it did last year, when it made the changes at 461 stores. And it plans to overhaul home-décor sections in more stores this year -- 170 -- than last, when it made changes at 54.

Perhaps most significantly, the retailer has opened most of its new stores in recent years in urban and suburban markets, where it faces stronger competition and where shoppers aren't as enamored of its low-price merchandise as are those in its rural strongholds.

As well, Wal-Mart's effort last year to lure more trendy, affluent shoppers by airing commercials with lifestyle themes rather than trumpeting low prices yielded uneven results and has been toned down.

Beginning with its February results, Wal-Mart will switch to reporting on the first Thursday of the following month along with most other retailers.

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Portrait to Close 500 Wal-Mart Studios

Associated Press
02.05.07                                        [back to top]

Portrait Corp. of America has reached a deal with Wal-Mart Stores Inc. to close 500 of its photography-studio locations housed by the mega-retailer.

The 500 portrait studios, which lost $1.7 million in 2006, are a "drain" on the company, PCA said in court papers filed Friday.

PCA is asking the U.S. Bankruptcy Court Court in White Plains, N.Y., to approve a new contract with Wal-Mart (nyse: WMT - news - people ), calling it "the cornerstone of its reorganization." If approved, 1,250 of PCA's 7,500 employees will lose their jobs.

PCA said it expects the closures will save it $8 million in labor and manufacturing costs in 2007. Wal-Mart has said it won't seek damages if the new contract is approved.

The judge overseeing PCA's case is scheduled to rule on the contract at a Tuesday hearing.

According to court papers, the furniture, computers and other equipment from the closed portrait studios will replace older materials used in the locations that will remain in business.

All of PCA's North American portrait studios are located in Wal-Mart stores and operate under the Wal-Mart name, making the photography firm heavily dependent on the relationship with the retail chain, PCA has said in the past.

Portrait Corp. of America and eight affiliates filed for Chapter 11 protection on Aug. 31, 2006, listing assets of $153 million and debts of $372.1 million.

The Matthews, N.C., company, which relies on film processing, blamed its bankruptcy filing on increasing demand for digital photography.

Copyright 2006 Associated Press. All rights reserved

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Sonia raises concern over WalMart deal

Shaili Chopra
India Daily
Monday, February 5, 2007                       [back to top]

WalMart's high profile entry into India along with Bharti has run into a serious political roadblock.

Sonia Gandhi has written a letter to Prime Minister Manmohan Singh, asking for more clarity on how the retail giant's plans will unfold on the ground.

The UPA chief writes: "I have received suggestions from many quarters about the desirability to first study the possible impact of transnational super markets on livelihood security of those engaged in small scale operations. I thought I would convey this to you so that you may consider having the relevant issues properly examined before further decisions are taken."

Although WalMart has entered the wholesale sector, which allows 100 per cent FDI, critics say there are loopholes which could be exploited for the WalMart brand to be used in the retail space as well.

That is precisely why Sonia Gandhi is believed to have asked for the details of the Bharti WalMart contract and wants top ministries to gauge its impact on small-scale retailers.

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2008 opening seen for Wal-Mart near Gretna

A Supercenter is proposed at the I-80 and Nebraska Highway 370 intersection.

John Ferak,
WORLD-HERALD                               [back to top]

Wal-Mart plans to build a 180,000-square-foot Supercenter at Interstate 80 and Nebraska Highway 370 near Gretna, company spokesman Ryan Horn said Friday.

The property, on the southwest corner of the I-80 and Highway 370 intersection, is at Exit 439, about a mile west of the Sapp Brothers truck stop. It's four miles east of Gretna, said Rick Houck, Sarpy County director of planning.

"This area is not quite in Papillion or in Gretna, so we're working with county planning staff," Horn said.

Sarpy County officials have reviewed the store's construction plans and have no major concerns, Houck said. The 25-acre parcel is zoned for general commercial development.

Sarpy County has no restrictions on "big-box store" retail developments, he said.

Wal-Mart must obtain a building permit from the county to start construction. No public hearings are anticipated because the development conforms to current zoning regulations.

"This should be a pretty good match," Houck said. "Sarpy County has almost reached the point of not having enough retail. This store should also pull a lot of traffic off the Interstate."

Horn said the giant retailer did not know when its plans would receive approval from the county. Wal-Mart wants to start construction later this year and open for business in late summer 2008.

Like other Wal-Mart Supercenters, the store would provide shoppers a place to buy general merchandise and groceries and get oil changes for their vehicles. The store is expected to employ 250 to 300 people, Horn said.

He also said the company planned to landscape the property to create a buffer between a wetlands area and a housing development about a half-mile away.

Horn said, "When we were looking at the area, it was striking that a lot of folks who were shopping at our Wal-Marts were from a fair amount away from retail, groceries and general merchandise."

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Nesting bald eagles stall Wal-Mart in upstate NY town

Newsday
February 3, 2007                             [back to top]

GRANBY, N.Y. (AP) _ A pair of bald eagles nesting near the site of a planned Wal-Mart supercenter has led state environmental officials to halt the project until a plan can be devised to protect the birds.

The state Department of Environmental Conservation said it is also concerned about gawkers upsetting the eagles, which are expected to produce eggs this year.

"We're thinking of posting signs telling people the eagles are a protected species and not to get close to them. The worst thing people can do is to go close to the nest," Diane Carlton, the DEC's regional director for public affairs and education, told the Oswego Palladium Times newspaper.

The eagles are nesting about 1,500 feet from the spot where Wal-Mart plans to build a 186,296-square-foot outlet.

A plan to prevent the birds from abandoning their nest because of the noise and other disruption of construction might include some kind of barrier, said Wal-Mart public affairs manager Philip Serghini.

"Even vibrations could affect them," he said. "We don't want to spook them."

Another approach would be staging work to begin as far from the nest as possible to give the eagles time to hatch their young.

Other steps would then be taken to permanently shield the birds, who mate for life and return to the same area each year.

Serghini said a wildlife specialist has been hired to evaluate the situation and work with the DEC, which won't grant a wetland permit for the project until the issue is settled.

Granby is 26 miles northwest of Syracuse.

Copyright 2007 Newsday Inc.

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Boycott Planned Against Wal-Mart For Northcross Plans

WorldNow and KXAN
Feb 1, 2007                                            [back to top]

Hundreds of people united against a Wal-Mart Supercenter proposed for Northcross Mall hope to hit the big-box retailer in the pocketbook.

The 220,000-square foot, two-story store has been under fire for months.

In December, Wal-Mart and Lincoln Properties agreed to suspend activity on the development for 60 days to meet with residents and ease their concerns. But neighbors say those talks haven't happened. Now they're planning a massive boycott.

If there was any doubt before Wednesday night that these neighborhoods won't be backing down, it was certainly squashed by a hall full of people who are now ready to boycott Wal-Mart citywide until the developers agree not to go forward with their plans for Northcross.

That announcement was met by the loudest cheers of the night. There was not an empty seat in the house.

Many of those attending Wednesday night showed up wearing what has become a signature color for those who oppose this plan.

Along with the plan for a boycott to begin February 10, Responsible Growth for Northcross (RG4N) unveiled their proposal for development at Northcross. They call for a sort of village-center, complete with restaurants, retail and loft apartments. And they hope to present this plan to Lincoln Properties.

Aside from these angry and determined neighbors, the audience also heard from an attorney representing RG4N, who says the group is ready to go forward with a lawsuit against Lincoln and the city for adopting what they say is an illegal site plan.

But City Council member Jennifer Kim was on the scene Wednesday night unexpectedly, doing what some might call a little damage control for the city.

"We need to make sure Wal-Mart and Lincoln Properties knows that this is their project," Kim said. "This could be their last project ever in Austin."

"We will show with our power of the purse that Wal-Mart should respect the view of the citizens of Austin and know that this kind of development is not welcome here," said Jason Meeker with RG4N.

The city has admitted an error during the public-notification process, but they have maintained that since this site does not require any zoning changes, there is really nothing more they can do, except to keep up the pressure.

RG4N has many more events planned to show their opposition. If you are interested, click here to visit their Web site.

All content © Copyright 2000 - 2007 WorldNow and KXAN. All Rights Reserved.

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Wal-Mart Cuts Taxes By Paying Rent to Itself

By Jesse Drucker,
Wall Street Journal
February 1st, 2007                            [back to top]

As the world's biggest retailer, Wal-Mart Stores Inc. pays billions of dollars a year in rent for its stores. Luckily for Wal-Mart, in about 25 states it has been paying most of that rent to itself -- and then deducting that amount from its state taxes.

The strategy is complex, but the bottom line is simple: It has saved Wal-Mart from paying several hundred million dollars in taxes, according to court records and a person familiar with the matter. And Wal-Mart is far from alone.

IT'S A DEAL

The arrangement takes advantage of a tax loophole that the federal government plugged decades ago, but which many states have been slower to catch. Here's how it works: One Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99%-owned by another Wal-Mart subsidiary, which receives the REIT's dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company.

Partly thanks to sophisticated financial strategies like these, states' tax collections from companies have been plummeting. On average, Wal-Mart has paid only about half of the statutory state tax rates for the past decade, according to Standard & Poor's Compustat, which collects data from SEC filings. The so-called "captive REIT" strategy alone cut Wal-Mart's state taxes by about 20% over one four-year period. Now several state regulators are trying to crack down on the strategy, used largely by retailers and banks, and some other states have changed their laws to try to end the practice. Yesterday, New York Gov. Eliot Spitzer included elimination of the loophole as part of his proposed budget, a fix he said would bring the state $83 million a year.

RELATED DOCUMENTS

In a June 2002 affidavit, a Wal-Mart executive laid out the relationship between the REIT and its owner, another Wal-Mart subsidiary. H. Lee Scott Jr., now Wal-Mart's CEO, served as the REIT's "managing trustee," according to a property deed from 1996.North Carolina tax authorities are challenging Wal-Mart, saying its REIT strategy was intended to "distort [the company's] true net income," according to its filings in the case in Superior Court in Raleigh, N.C. The state calls captive REITs a "high priority corporate tax sheltering issue" and in 2005 ordered Wal-Mart to pay $33 million for back taxes, interest and penalties stemming from the REIT. The company paid it and last year sued the state for a refund.

The structure Wal-Mart is using features some unusual elements. Because REITs must have at least 100 shareholders to gain tax benefits, roughly 100 Wal-Mart executives were enlisted to own a combined total of around 1% of the REIT's shares, without any voting rights. H. Lee Scott Jr., now Wal-Mart's CEO, was listed as the REIT's "managing trustee" from 1996 to 2004.

A single Wal-Mart real-estate official, Tony Fuller, represented the company both as tenant and landlord in its lease with itself. Ernst & Young LLP, the accounting firm that sold the strategy to Wal-Mart, also is the company's outside auditor. In its internal sales training materials, the accounting firm explicitly labeled the strategy as a method to reduce taxes -- a red flag to tax authorities, who often demand that tax shelters have other business purposes.

Wal-Mart attorneys say in court filings that the strategy is perfectly legal and that North Carolina is exceeding its authority. A spokesman for the Bentonville, Ark., company, John Simley, said Wal-Mart "is comfortable with its current structure and is in compliance with federal and state tax laws." He added that the REIT structure was adopted to "more effectively and efficiently manage the company's real-estate portfolio, including the impact on the company's overall state tax planning."

Regulators in at least a half-dozen states are going after companies that have trimmed their taxes through similar arrangements, including Regions Financial Corp.'s AmSouth Bancorp. unit; AutoZone Inc. of Memphis, Tenn.; and two units of Bank of America Corp. In a Massachusetts case against Bank of America unit Fleet Funding Inc., authorities call Fleet's REIT arrangement a "sham" in court filings. They note that Fleet increased the salaries of the roughly 100 employees whom it made REIT shareholders to compensate them for personal income taxes stemming from ownership. The Multistate Tax Commission, an association of state revenue authorities, says it has started examining the use of captive REITs to avoid taxes, alerting states to the issue and proposing legislative fixes to close the loophole.

States collected more than $44 billion last year in corporate income taxes, out of $607 billion in total state tax receipts, according to the Nelson A. Rockefeller Institute of Government, a nonpartisan think tank associated with the State University of New York. But the average effective corporate state and local tax rate has dropped from 6.7% during the 1980s to about 5% during the first half of this decade, according to a recent report by the Congressional Research Service. This is in part because of the proliferation of state and local tax breaks, as well as tax shelters, according to several academic and government studies.

Some corporate state tax planners say arrangements like these are merely smart business, and that the loopholes exploited by companies should be fixed by state legislatures rather than litigated by state lawyers. Critics of the shelters complain they let companies use public services provided by local governments -- such as police and fire protection or new highways -- without having to shoulder their fair share of the costs. Meanwhile, the portion of state taxes borne by individuals is steadily rising.

Congress created REITs in 1960 as a way to allow smaller investors to put money in a wide portfolio of commercial real estate, spreading their risk. Congress also gave them a tax benefit: REITs aren't subject to corporate income tax on the profits they pay to shareholders as long as they pay out at least 90% of the profits. The shareholders still usually get federally taxed on the dividends, which still count as income for them.

After a boom in REITs in the early 1990s, big accounting firms including Ernst & Young and KPMG LLP figured out that on the state level, they could pair the tax break on REIT dividends with a separate tax rule that allows companies to receive dividends tax-free from their subsidiaries. With the REIT as a subsidiary itself, two rules aimed at avoiding double taxation could be combined to effectively avoid any taxation at all.

The strategy worked especially well if the REIT was owned by a company incorporated, and claiming to do all its business, in a state such as Delaware or Nevada that often wouldn't tax the corporate income anyway. That created an extra hurdle for other states to challenge the practice if they caught onto it.

Ernst & Young early on targeted the banking industry as a possible beneficiary of the captive REIT strategy. Like retailers, banks have branches in many states and often are liable for lots of state-level corporate tax. Ernst & Young targeted at least 30 banks, some of them its audit clients. The SEC generally permits that dual role as long as the firm's fee isn't contingent on the tax savings.

According to documents from a 1995 internal Ernst & Young sales training meeting reviewed by The Wall Street Journal, the accounting firm suggested banks put some of their income-producing assets, such as a portfolio of mortgages, into a REIT subsidiary, then use the double-tax break to "shelter" the income from state taxes. The REIT would issue a tiny number of non-voting shares to bank "officers and directors" to meet the 100-shareholder rule that REIT law requires.

U.S. banks "pay millions of dollars each year in state and local taxes," read the Ernst & Young presentation to its sales force. "The FSI State Tax Financial Product we have developed can significantly reduce or eliminate this heavy tax obligation..." One section of the Ernst & Young sales package featured hypothetical questions from clients about the REIT shelter, and the proposed answers. To pass legal muster, many corporate tax shelters purport to have additional business purposes behind merely saving taxes. Ernst & Young, however, was blunt about the reason for its proposed strategy:

"Q: What's the business purpose?

"A: Reduction in state and local taxes.

"Q: What if the press gets wind of this and portrays us as a 'tax cheat'?

"A: That's a possibility....If you are concerned about possible negative publicity, you can counter it by reinvesting the savings in the community."

An Ernst & Young spokesman declined to comment on its REIT work, saying the firm was "prohibited from commenting on client matters." The spokesman said he could not verify the authenticity of the internal sales training documents based on quotes provided by the Journal. However, he said the "limited language communicated in the internal memo does not reflect the quality and nature of the advice we provide to our clients."

State authorities have had mixed records so far in pursuing back taxes and penalties in captive-REIT cases. AutoZone, the big auto-parts chain, won the right to deduct the dividends from its taxes in Kentucky but lost a preliminary round in Louisiana. The Hawaii Department of Taxation won a case involving a REIT used by Central Pacific Financial Corp., a bank holding company. AmSouth is in litigation with Alabama over tax benefits from its REIT.

Fleet Funding's REIT, on which the company was advised by KPMG, has led Massachusetts to seek more than $42 million in back taxes, interest and penalties. BankBoston Corp. is in similar litigation with Massachusetts. Both banks have been acquired by Bank of America, which declined to comment on the litigation.

Fleet's attorneys have said in court papers that its REITs were legitimate, and the fact that they were partly motivated by tax considerations does not legally undermine their valid business purpose -- to raise capital, they say. A KPMG spokeswoman declined to comment on the Fleet case, but said it had stopped any involvement with "prepackaged tax products" before a 2005 agreement it made with the U.S. Justice Department over improper tax strategies that also led to the indictment of 17 former KPMG officials.

It's unknown how many disputes have been raised over the strategy used by Wal-Mart and others, because such tax disputes are generally not disclosed unless lawsuits are publicly filed or the company reveals them in SEC filings.

Wal-Mart adopted its captive-REIT structure just as it was unwinding a previous strategy to reduce taxes that states had begun to challenge. For the first half of the 1990s, the retailer used a so-called intangible holdings company structure also used by many other corporations. Wal-Mart transferred its trademarks to a subsidiary called WMR Inc. in Delaware, which does not tax many forms of corporate income. Then it paid the subsidiary for the use of the brands. That allowed Wal-Mart to deduct those payments from its local income taxes in some states, while WMR's income wasn't taxed by Delaware.

Several states won challenges to the strategy, used by various retailers. Wal-Mart settled a dispute over its use of WMR in Louisiana -- the details of the settlement are sealed -- and lost on the main points of a case in New Mexico. Wal-Mart merged with WMR in February of 1997 and its use as a state tax avoidance vehicle was apparently discontinued, according to New Mexico court records.

In the meantime, Wal-Mart set up a new vehicle to control its state tax bill: captive REITs. In the summer and fall of 1996, Delaware corporate records show, Wal-Mart created a new hierarchy of subsidiaries: a REIT called the Wal-Mart Real Estate Business Trust; a Delaware-based parent company for the REIT, called the Wal-Mart Property Co.; and Wal-Mart Stores East Inc., parent of the Delaware firm. Wal-Mart Property owned 99% of the REIT's shares, and 100% of the voting shares, according to Wal-Mart court filings in North Carolina and West Virginia. The company also set up a similar arrangement for its Sam's Club stores.

To meet the 100-shareholder threshold required for REITs, Wal-Mart distributed a minimal amount of nonvoting stock, to approximately 114 Wal-Mart employees, according to a person familiar with the arrangement. The dividend payouts were nominal. The structure involved Wal-Mart's top executive tier. The shareholders were generally executive vice presidents and above. David Glass, then Wal-Mart's president and CEO, was listed as president of Wal-Mart Stores East on the lease agreement, and Paul Carter, then a Wal-Mart executive vice president, was listed as the president of the REIT.

Wal-Mart began transferring to the REIT ownership of the properties -- the land and buildings -- for hundreds of its stores in 27 states, real-estate records show. Then Wal-Mart Stores East signed a 10-year lease agreement with its REIT that took effect on Jan. 31, 1997, agreeing to pay a fixed percentage of the stores'"gross sales" as rent, according to a copy of the arrangement filed in the North Carolina case. Mr. Fuller, the Wal-Mart real-estate official, is listed as the contact for both the tenant and the landlord. The original lease was due to be renewed this week.

Wal-Mart could deduct from its state-taxable income the rent paid by Wal-Mart Stores East to the REIT. The REIT paid the majority of its rental earnings to its 99% owner, Wal-Mart Property Co., in the form of dividends. That company's base in Delaware gave it another way to avoid liability for state taxes, since some states do require that dividends a REIT pays to its corporate owner be taxed, as the federal government does.

The Delaware subsidiary then paid the money back to Wal-Mart Stores East, the same subsidiary that made the payments to the REIT to begin with. Those payments to Wal-Mart Stores East weren't taxed either, because dividends paid to a corporation by a subsidiary normally aren't counted as taxable income for the parent company.

The result of the circuitous transaction: Wal-Mart could effectively turn rental payments to itself into state level tax-deductions in most of the states where the payments have been made. Under typical circumstances, rent paid to a third-party landlord also would reduce taxable income. But that would ordinarily be cash out the door, like most other tax-deductible expenses. Here, the majority of the tax-deductible rental payments came straight back to Wal-Mart.

The national tax savings have been significant. Over a four-year period, from 1998 to 2001, Wal-Mart and Sam's Club paid company-controlled REITs a total of $7.27 billion that eventually came back to Wal-Mart in states across the country, according to a North Carolina Department of Revenue auditor's report filed in court by Wal-Mart. Based on an average state corporate income tax rate of 6.5%, three accounting experts consulted by The Wall Street Journal estimated the REIT payments led to a state tax savings for Wal-Mart of roughly $350 million over just those four years. SEC filings show the company paid $1.18 billion in state taxes during that period. The loss of federal deductions that bigger state tax payments would have triggered brought the company's effective tax savings overall down to about $230 million. Wal-Mart declined to comment on the figures.

It is not clear how much Wal-Mart has paid to its own REITs in the most recent five years. The yearly rental payments -- on which the tax savings are based -- are pegged to the "gross sales" of the stores, according to the lease agreement.

Underscoring that the rental payments were cashless Wal-Mart accounting moves, an affidavit filed in North Carolina by the company's former controller, James A. Walker Jr., states that the payments were made by simply debiting the account of one subsidiary and then crediting the account of the other. "Wal-Mart Stores, Inc. served, in effect, as a bank for" both sides, the affidavit stated.

In 2005, after an audit, the North Carolina Department of Revenue issued a notice to Wal-Mart challenging the REIT structure. The state is site of about 140 of the company's roughly 3,900 U.S. stores, including Sam's Clubs. Wal-Mart paid the $33 million the state sought, and in March 2006 sued for a refund.

The company argues that the state does not have the authority to essentially combine the results of the subsidiary that did business in North Carolina with those of the Delaware-based unit and the REIT. The Delaware-based subsidiary, the company says, did no business in North Carolina and therefore was not taxable there. The company says in court filings that the REIT was qualified under federal law, that all the deductions were properly taken and that its North Carolina tax returns reflect its "true income."

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FDIC Extends Moratorium On Wal-Mart Bank Application

By Anita French,
The Morning News 
February 1st, 2007                            [back to top]

Wal-Mart Stores Inc. will have to wait another year, at least, to find out if it can open an industrial bank after the Federal Deposit Insurance Corp. on Wednesday extended for one year a moratorium on considering applications of nonfinancial companies that want to establish or acquire banks.

The decision puts on hold pending applications from Wal-Mart, Home Depot Inc., DaimlerChrysler AG and American Pioneer, and gives Congress time to consider legislation that would prohibit such companies from owning so-called industrial loan corporations, or ILCs.

John Kelly, director of financial services for Wal-Mart in Washington, said the company was disappointed with the FDIC’s decision.

“We’re mainly disappointed for our customers. This effort has always been about cutting unnecessary costs and saving customers money, and that is all this bank application is about,” he said in a phone interview.

Critics say the growth of ILCs risks blurring the line between banking and commerce, concentrating assets in the hands of a few big companies and stifling competition, which hurts consumers. They also have expressed concern that Wal-Mart opening an industrial bank would lead to it starting a commercial bank in the future.

But Kelly said the company has repeatedly said it would not engage in branch banking. *

“We would welcome restrictions put on our application that would prevent that. You will never see a Wal-Mart bank in a Wal-Mart store,” he said. “I think it was clear by the FDIC decision today that this was a broad policy issue, and we will be working closely with Congress on those issues.”

Wal-Mart could save millions of dollars by processing its own financial transactions, the company has said.

A group of House lawmakers on Monday renewed a push for legislation that would block commercial companies from owning these special sorts of banks that have been proliferating in recent years.

The FDIC said it received more than 1,500 letters and comments from individuals opposing Wal-Mart applying to open an industrial loan corporation in Utah, a type of bank that regulators let commercial businesses operate for specific purposes, such as processing payments.

Most of the negative comments stressed the dangers of an unregulated commercial company owning a federally insured bank. Besides banks, others who sent letters of opposition to Wal-Mart’s application include the Consumer Federation of America, the University of California and several unions.

“This (FDIC) decision recognizes that Wal-Mart’s lack of transparency and pattern of disregarding legal accountability are legitimate issues that deserve scrutiny. If Wal-Mart can’t be trusted to abide by wage and discrimination laws, then the FDIC shouldn’t trust it with a bank,” said David Nassar, executive director of Wal-Mart Watch in Washington, in an e-mailed news release.

Wal-Mart Watch is a union-backed group that has an ongoing campaign against Wal-Mart over its employment policies.

The House bill is sponsored by Reps. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and Paul Gillmor, an Ohio Republican. Similar legislation sailed through the House last year, but is stuck in the Senate

The Associated Press contributed to this report. 

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Wal-Mart Using Tax Loopholes To Save Big On State Taxes

MorningNews Beat                                    [back to top]

The Wall Street Journal reports this morning that Wal-Mart, using a complicated arrangement that takes advantage of state tax loopholes, has saved itself hundreds of millions of dollars in taxes by paying rent on many of its locations to itself, and then deducting that amount from its taxes.

The front page story notes that Wal-Mart is not alone in this practice, but that its size and savings make it the most visible practitioner. In addition, Wal-Mart is the entity most under fie for not providing adequate health benefits to some its employees, who then have to rely on public services for some of their health care needs.

The deal goes like this, according to the WSJ:

“One Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99% owned by another Wal-Mart subsidiary, which receives the REIT's dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company.

“Partly thanks to sophisticated financial strategies like these, states' tax collections from companies have been plummeting. On average, Wal-Mart has paid only about half of the statutory state tax rates for the past decade, according to Standard & Poor's Compustat, which collects data from SEC filings. The so-called ‘captive REIT’ strategy alone cut Wal-Mart's state taxes by about 20% over one four-year period. Now several state regulators are trying to crack down on the strategy, used largely by retailers and banks, and some other states have changed their laws to try to end the practice. Yesterday, New York Gov. Eliot Spitzer included elimination of the loophole as part of his proposed budget, a fix he said would bring the state $83 million a year.”

There are some 25 states where Wal-Mart has engaged this strategy. Among them, North Carolina is challenging Wal-Mart, according to the Journal, “saying its REIT strategy was intended to ‘distort [the company's] true net income,’ according to its filings in the case in Superior Court in Raleigh, N.C. The state calls captive REITs a ‘high priority corporate tax sheltering issue’ and in 2005 ordered Wal-Mart to pay $33 million for back taxes, interest and penalties stemming from the REIT. The company paid it and last year sued the state for a refund.”

Wal-Mart maintains that its tax strategies are perfectly legal.

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Wal-Mart Claims It Has Proof of Roehm's Affair

By Sandra O'Loughlin
New York Magazine
February 01, 2007                                 [back to top]

NEW YORK -- In a report posted on New York magazine's Web site, nymag.com, Wal-Mart claims it has "irrefutable and admissible evidence" that its former svp of marketing communications, Julie Roehm, had an affair with Sean Womack, a vp who reported to her.

Roehm is the subject of an upcoming piece in the magazine by Steve Fishman that will appear on Feb. 5. Wal-Mart has remained silent on the matter since it fired Roehm and Womack on Dec. 4.

Wal-Mart rep Mona Williams claims in the article that "Julie didn't tell the truth about the inappropriate relationship with one of her [subordinates]. Despite these denials, Wal-Mart now has irrefutable and admissible evidence of the relationship" between Roehm and Womack. "I would not tell you this if we didn't know it was true," she told Fishman.

A romantic relationship between employees violates Wal-Mart policy. Roehm remains steadfast in denying the affair, telling the magazine that the evidence in question is a personal e-mail exchanged outside of the Wal-Mart system.

Wal-Mart also claims Roehm violated company policy by unfairly favoring DraftFCB in its seven-month search for a new ad agency. According to Williams, Roehm's favoritism included accepting gifts and "raising the issue of potential employment" for Womack at DraftFCB before the selection process was completed. Roehm also denies this claim.

The Martin Agency, Richmond, Va., was awarded the account after a second review.

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New moves likely to emerge over time from Wal-Mart meeting

MARCUS KABEL
Associated Press
Thu, Feb. 01, 2007                                    [back to top]

KANSAS CITY, Mo. - Whatever Wal-Mart Stores Inc. decided behind closed doors at an annual conference of managers and suppliers this week, the results are likely to come out one piece at a time rather than in a single announcement as the retailer adjusts its strategies for rekindling growth.

Analysts said Wal-Mart is not expected to announce any major new approaches after the four-day meeting of about 7,000 store managers and hundreds of suppliers due to end Thursday in Kansas City.

Rather, Wal-Mart is expected to continue fine-tuning an approach launched last year with mixed results, combining trendier merchandise, traditional low prices and an effort to tailor individual stores more closely to the demographics of the surrounding community.

"I don't think we'll see any major announcements or dramatic overhauling," said Richard Hastings, vice president and senior retail sector analyst at Bernard Sands,

"I think they'll stick to the core of the business, try to refine it. They will continue to be more contemporary but at Wal-Mart prices," Hastings said.

The biggest news to emerge from the tightly guarded meeting underscored the sense of continuity. The executive in charge of Wal-Mart's nearly 4,000 U.S. stores, Eduardo Castro-Wright, stood up in the meeting Wednesday to deny a trade publication report that he was being replaced as president and chief executive officer of its U.S. operations.

Castro-Wright took over U.S. stores in 2005 after heading Wal-Mart's Mexican subsidiary. Trade publication AdAge reported Tuesday, citing unidentified sources, that he would be replaced by Doug McMillon, the executive in charge of Wal-Mart's Sam's Club division.

Analysts welcomed the news that Castro-Wright was staying. His departure would have been a major shake up at a time when Wal-Mart is trying to recover its growth momentum after reporting the worst holiday season ever, as measured by sales growth at stores open at least a year.

"We agree that is the best position for him at this time, as improving the core WMT (Wal-Mart) stores operation is critical to WMT's ultimate improvement. In our view, he is the right man for a tough job," Morgan Stanley analyst Gregory Melich wrote in a research note.

Oppenheimer & Co. analyst Bernard Sosnick said a restructuring announced last week in how Wal-Mart buys its merchandise, under the newly created post of a chief merchandising officer, is meant to support Castro-Wright's strategy.

"Eduardo Castro-Wright's goal for 2007, the second year of his three-year roadmap for growth, is to make the store of the community a reality. This means having the right products to serve the demographic composition of each store," Sosnick wrote in a research note.

Castro-Wright is spearheading an effort to rekindle Wal-Mart's sluggish sales growth by tailoring its stores to local communities.

The strategy, called segmentation, aims to offer different selections of merchandise to six target demographic groups, from Hispanics and blacks to those it calls "empty-nesters/boomers."

Wal-Mart, which is headquartered in Bentonville, Ark., keeps the doors of the meetings closed to outsiders including the media, investors and analysts.

Analysts said it is not uncommon for big companies and their suppliers to keep a tight hold on such meetings to avoid tipping off competitors. Especially in retail, pressure on margins has grown so much over the years that every new product or marketing approach needs to be guarded from advance publicity.

"I think it really is about competitive advantage and how hard is to have one," said Patricia Edwards, a portfolio manager and retail analyst at Wentworth, Hauser & Violich in Seattle, which manages $8.2 billion in assets and holds 51,000 Wal-Mart shares.

© 2007 AP Wire and wire service sources. All Rights Reserved.

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