What Wal-Mart is Watching...

Blinders off, the Clintons sell stocks

Daphne Loring,
Maine Fair Trade Campaign                                  [back to top]    

Augusta, ME - Maine has become the first state in the nation to require cities and towns to evaluate the impact of big-box development proposals on jobs, local businesses, and municipal finances, and to approve only those projects that will not adversely affect the local economy.

Similar bills have been introduced in other states, including Oregon, New Jersey, and California. Last year, the California legislature approved a bill (SB 1523) requiring economic impact studies for large retail projects, but it was vetoed by Governor Schwarzenegger.

In Maine, the Informed Growth Act (LD 1810), sponsored by Rep. Chris Barstow, passed the House 86-55 and the Senate 18-17, and has been signed into law by Governor Baldacci.

"This is a tremendous victory for the people of Maine, our communities, workers, and local economies," said Daphne Loring of the Maine Fair Trade Campaign. "It gives communities a real voice in development projects and enables us to hold these national retailers accountable for a business model that often directly hurts workers, communities, and the environment."

"Too often communities must decide whether to approve big-box stores without any objective information about the impact on the local economy," said Stacy Mitchell, senior researcher with the Institute for Local Self-Reliance and author of Big-Box Swindle. "Studies have found that these stores can entail significant costs in terms of job losses and local business closures. Maine is leading the nation by giving towns a tool for weighing those costs before deciding whether to approve these stores."

The bill's passage was the result of the work of a broad coalition of over 180 small businesses, numerous municipal officials, and many labor, environmental, and community organizations. It comes on the heels of several vigorous campaigns by citizens groups to block big-box development in Maine, most notably a successful effort last year to stop a Wal-Mart supercenter in the village of Damariscotta.

Attempts by opponents, including the Maine State Chamber of Commerce, to characterize the bill as "anti-business," largely failed because of the strong support from independent business owners across the state.

Jerry Keay, owner of H.L. Keay and Son, a hardware and lumber store in Albion, lauded the bill's passage, "Small businesses are the backbone of Maine's economy. In sharp contrast to big box stores, we ensure the vitality of downtowns and strengthen our communities by keeping money in the local economy. This bill will bolster our small business sector and strengthen local economies."

The Informed Growth Act stipulates that municipalities conduct an economic impact analysis for proposed big-box retail stores larger than 75,000 square feet. The analysis is performed by an independent consultant chosen jointly by the town and the developer, and paid for by a fee charged to the developer. It evaluates the effects of the proposed store on existing businesses, jobs, wages, vacancy rates, the cost of municipal services, and the volume of "sales revenue retained and reinvested" in the community.

After the analysis is complete, the town must hold a public hearing. It is then up to town officials to evaluate the information, consider the benefits and costs, and make a determination about whether the project would create an undue adverse impact on the local economy and municipal finances. If so, the law gives the town the authority to reject the development.

The act ensures that, even in areas zoned for commercial development, citizens and local officials will always have an opportunity to evaluate big-box development and make informed decisions about whether to approve or reject such projects.

Topsham Select Board member, Michelle Jones sees the Informed Growth Act as a valuable resource, "Towns throughout Maine stand to benefit from the passage of LD 1810. The Informed Growth Act will provide an unbiased process for citizens and local officials to assess the positive and negative aspects of large-scale retail development and make responsible decisions."

 [back to top]    

Pixman to Execute Tactical Marketing Campaign for Orville Redenbacher's in 100 Wal-Mart Stores

Pixman Nomadic Media Inc.
Friday June 29                                        [back to top]    

MONTREAL, QUEBEC--(MARKET WIRE)--Jun 29, 2007 -- Pixman Nomadic Media Inc (CDNX:PMN.V - News) announces the signature of a contract with Armstrong Partnership LP, a Toronto-based marketing and communications agency, leading to the execution of a strategic marketing campaign in 100 Wal-Mart stores across six Canadian provinces in August for ConAgra Foods Canada. Pixman brand ambassadors will be promoting a joint offer from Orville Redenbacher's and Universal Studios Home Entertainment, sampling Orville Redenbacher's popcorn and Sprite Zero and entertaining shoppers with clips from hit TV shows from Universal Studios Home Entertainment. The TV shows previewed on the Pixman monitors, including hot titles like House and Heroes, will be available on three free DVDs inside specially marked boxes of Orville Redenbacher's popcorn throughout the promotion.

"After testing this innovative tactical media last year in 37 Wal-Mart stores, which generated great return for our client, we are very pleased to hire Pixman again this year to increase our client's coverage to 100 stores", said Colleen Spicer, Account Supervisor at Armstrong Partnership LP.

Source: Pixman Nomadic Media Inc.

[back to top]    

Wal-Mart opponents file suit against city of Austin

By Lindsey Mullikin,
The Daily Texan Online
June 29th, 2007                                   [back to top]     

Opponents of a new Wal-Mart planned for north Austin announced Thursday that it will sue the city of Austin for approving a new development plan of a former mall. Responsible Growth for Northcross Inc., a neighborhood activist group against the conversion of the old Northcross Mall into a Wal-Mart Supercenter, announced the lawsuit during a press conference, two days after the city approved a second plan.

The suit claims that the development plan poses significant public safety problems by generating a large amount of traffic that would slow Emergency Medical Services vehicles. It also claims the plan violates zoning, flooding and tree ordinances, said Brad Rockwell, the attorney representing the organization.

"All of the issues that are raised in the lawsuit were raised between the Responsible Growth for Northcross and the city over the past couple of months, and all of these issues have been carefully reviewed by the city staff," said Chris Sileo, the city's attorney.

The city feels the new permit reflects a positive change in the development plan by reducing the size of the Supercenter from 225,000 square feet to 192,000 square feet, Sileo said.

"We really drilled down on this second permit to make sure all the i's were dotted and t's were crossed," Sileo said.

In addition to the suit, Rockwell said the group has also filed a temporary restraining order to freeze construction on the property. He said he hopes the case goes to court fairly quickly.

"We've spent months trying to get the city of Austin to enforce the regulations against Wal-Mart and Lincoln Properties," Rockwell said. "We've failed."

Hope Morrison, president of the organization, said the group's concerns were not strictly tied to Wal-Mart. It is concerned mainly with how the city handles its rapid growth, she said.

Morrison said the group will need financial support from the community as it pursues the lawsuit.

[back to top]    

Wal-Mart Still Retail's Big Kahuna; Sears Slips

By Jennifer Waters ,
DOW JONES NEWSWIRES
June 29th, 2007                                   [back to top]    

Sears Holdings Corp. (SHLD), whose namesakes stores were once the most powerful in the U.S., lost ground this year in the industry's annual tally of the 100 top retail chains.

The parent of Sears Roebuck and Kmart stores fell to No. 6 on the National Retail Federation's Stores magazine list released Friday, losing two places to Costco Wholesale Corp. (COST) and Target Corp. (TGT).

Those discount retailers took the fourth and fifth spots, moving up a notch in the past year in the list. Rankings are determined by total sales.

"Sears is the one to watch," said Stores' Executive Editor Susan Rada. "It didn't fall dramatically, but I don't know what to expect from Sears anymore."

Sears Holdings catapulted to a top-10 spot two years ago when the two retailers were brought under one corporate umbrella. But sales growth has been sluggish, while competitors have seen their top lines expand at a faster clip.

In fiscal 2006, for example, Sears Holdings sales climbed 7.9% to $53.01 billion, while Target's jumped 13.1% to $59.49 billion and Costco's leapt over that with a 13.6% increase to $60.15 billion.

Hefty as those revenues might be, they still paled in comparison to the perennial top-of-the-heap retailer, Wal-Mart Stores Inc. (WMT). The parent of Wal-Mart and Sam's Club stores rang up $348.65 billion in sales last year, eclipsing all other companies in the world, according to Fortune's list of the top 500.

In the retail world, Wal-Mart's revenue is so high that it exceeds that of the next five largest retailers combined. "Aggregate revenues for the companies on the Stores Top 100 list are just over $1.6 trillion," the magazine said. "Wal-Mart accounts for nearly 22% of that total."

Holding on to the No. 2 and No. 3 places - spots they're not likely to lose anytime soon - were Home Depot Inc. (HD), the world's largest home-improvement retailer, and Kroger Co. (KR), the nation's largest grocery-store business.

"The same three at the top of the list is a sign of resiliency in retail," Rada said. "Even though these three get beat up sometimes and have their share of problems ... they still continue to innovate and still continue to address customer needs."

Rounding out the top 10 in order were Walgreen Co. (WAG), Lowe's Cos. (LOW), CVS Caremark Corp. (CVS) and Safeway Inc. (SWY). Best Buy Corp. (BBY) moved up to the 11th position after its sales jumped 16.5% last year to $35.93 billion.

Supervalu Corp. (SVU) took a big leap to 12th after more than doubling its sales, thanks to its acquisition of Albertsons.

Also losing ground this year was Limited Brands Inc. (LTD), which fell to No. 33 from No. 31. It was surpassed by Amazon.com Inc. (AMZN) and its 26.2% pop in sales to $10.71 billion at No. 32 and Jean Coutu Group Inc. (PJC.A.T), the Canadian-based drugstore chain whose revenue more than doubled to $11.14 billion through its Rite Aid acquisitions.

At least some of the movement on the chart came from this year's addition of restaurants to the list. Rada said restaurants such as Mc Donald?'s Corp. (MCD), at No. 16; Yum Brands Inc. (YUM), at No. 35; and Starbucks Corp., (SBUX) at No. 42, among others, were counted in because of their striking importance in the consumer-spending picture.

"Restaurants are taking an increasing portion of the consumer-spending dollar, and that is something we need to consider," Rada said. "Quick-service and casual-restaurant brands are on par with brand names we frequently refer to in retail."

Moreover, the reigning trend in new retail centers is lifestyle centers that mix big-name stores with restaurants and other forms of entertainment on a more manageable scale than most shopping centers and malls.

"Lifestyle retailing is growing at the expense of traditional malls because it's more in sync with the way the customer shops today," she said.

[back to top]    

Husband files 'dead peasant' suit against Wal-Mart for collecting insurance in spouse's death

According to several lawsuits, Wal-Mart has taken life insurance policies out on "rank and file" employees without their consent.

By Emanuella Grinberg
Court TV
June 29, 2007                                  [back to top]    

When Karen Armatrout died of cancer in 1997, her husband, Richard, collected a modest amount in life insurance benefits from her employer, Wal-Mart.

But Armatrout claims that, unbeknownst to him, Wal-Mart also collected on a life insurance policy, one the company took out on Karen Armatrout years before without her knowledge.

This week, Armatrout filed a class-action complaint seeking what his lawyers estimate might be $80,000 in benefits that Wal-Mart supposedly collected "in bad faith" on a corporate-owned life insurance policy.

Armatrout's "dead peasant" suit, filed Wednesday in Tampa, Fla.'s U.S. District Court, accuses Wal-Mart ofmaking money off her death without having a valid claim to her estate.

Typically, such a stake, known as an "insurable interest," is reserved for individuals so closely connected to the person insured that he or she would suffer significant financial damage if the person died.

The complaint also charges that the Arkansas-based corporation misappropriated Karen Armatrout's name and personal information for the purposes of taking out the policy.

"Wal-Mart and the insurers used employees' private information to buy and sell policies," Armatrout's Texas attorney, Mike D. Myers, told CourtTVnews.com. "As matter of public policy, Wal-Mart should not be permitted to keep the policy's benefits because it did not have the necessary insurable interest in the lives of its rank-and-file employees to warrant being a beneficiary."

From 1993 to 1998, Wal-Mart was not alone in reaping the tax benefits associated with corporate-owned life insurance, which came to be known by critics as "dead peasant" insurance, based on a character in Nikolai Gogol's "Dead Souls" who buys up the contracts of recently deceased serfs.

Lawyers for Armatrout, who say that Wal-Mart took out such policies on 350,000 "rank and file" employees like Karen Armatrout during that time, have also participated in lawsuits against Golden Corral, Winn Dixie and Camelot Music.

The attorneys, who have brought three identical lawsuits against Wal-Mart in Texas, Oklahoma and Louisiana, say the company made use of favorable tax regulations in Georgia, which allowed the company to take out corporate-owned life insurance policies without the employees' knowledge.

Wal-Mart settled the suits in Texas and Oklahoma, where the company paid back 100 percent of the benefits, amounting to just over $5 million.

Along with Armatrout's case in Florida, another suit is pending in Louisiana.

In the previous cases, Wal-Mart attempted to argue that Georgia law applied because that was where the policies were purchased and paid out. But the courts found that the proper venue for deciding whether Wal-Mart had an insurable interest was thedeceased's state of residence.

Only six states, Delaware, Georgia, New Jersey, North Carolina, Pennsylvania, Vermont, allow companies to take out life insurance policies on their employees without notifying them. Most states have laws requiring that companies advise their employees and seek their consent before purchasing the policies.

Myers says he is hopeful that the precedents set in the other cases bode well for the Florida case, where he is seeking class-action certification for an estimated 80 plaintiffs in addition to Armatrout.

"I'd rather be where we are now rather than after losing three in a row," Myers said.

Representatives for Wal-Mart did not return calls for comment.

[back to top]    

High Court Eases Ban on Minimum Prices

By CHRISTOPHER S. RUGABER
Associated Press
06.28.07                                                   [back to top]    

Manufacturers will have greater leeway to set minimum prices at the retail level without violating antitrust laws under a Thursday Supreme Court ruling that could hurt consumers and small merchants.

By allowing minimum price agreements, the court's 5-4 decision could lead to higher prices, dissenting justices said, as it becomes more difficult for smaller stores and Internet retailers to offer lower-priced goods.

The court said agreements on minimum prices are legal if they promote competition, meaning accusations of antitrust violations will be evaluated case by case.

In a 1991 decision, the Supreme Court had declared that minimum pricing agreements always violate federal antitrust law. But Justice Anthony Kennedy wrote in the majority opinion that the principle that past decisions should be left alone "does not compel our continued adherence" in this instance.

Minimum price agreements can benefit consumers, Kennedy wrote, by enabling retailers to invest in greater customer service without fear of being undercut by discount rivals. The agreements also could make it easier for new products to compete, he added, because a retailer could recoup the costs of marketing a new good by charging a higher price.

Dissenting from that view, Justice Stephen Breyer wrote: "The only safe predictions to make about today's decision are that it will likely raise the price of goods at retail."

The Consumer Federation of America said in court filings that the ban on minimum price agreements allowed "innovative retailers to continually enter the market, offering new and lower priced alternatives to consumers."

But Roy Englert, an antitrust attorney at Robbins Russell, said the court's decision does have boundaries that will protect entrepreneurs. The ruling only allows minimum price agreements between manufacturers of a single brand of a product and retailers, Englert said, while other brands of the same product can still compete on price.

Moreover, if only one brand is available, retailers and consumers can still sue manufacturers for anticompetitive conduct, Englert said. The courts will now evaluate such suits on the merits, rather than automatically finding them illegal.

Englert helped prepare a brief in support of Leegin.

Some antitrust experts say consumers shopping on the Internet will be hurt by abandoning the 96-year-old rule.

Richard Brunell, director of legal advocacy for the American Antitrust Institute, said price floors pose little risk to large chains such as Wal-Mart Stores Inc. (nyse: WMT - news - people ) because "it is no longer the new kid on the block" and has sufficient clout to get whatever products it wants without any price restrictions.

Today, incumbent retailers like Wal-Mart actually might find price floors to be an effective tool against Internet discounting, Brunell said.

In recent decades, the Supreme Court has chipped away at what many economists traditionally regarded as vital consumer protections against anticompetitive conduct. For example, exclusive dealer territories and setting price ceilings are no longer automatically unlawful.

The current case involves Leegin Creative Leather Products Inc., based in City of Industry, Calif. The company entered agreements with retailers setting minimum prices for the Brighton brand of women's fashion accessories.

Leegin said that by maintaining price consistency among niche retailers it sells to, businesses can offer improved customer service. This enables smaller stores to compete against rival brands sold by discounters, Leegin argues.

Several retailers in Dallas selling Leegin's products lowered prices below the minimum. family operated Kay's Kloset said it followed suit to stay competitive. Phil and Kay Smith say that when they refused to raise prices back up, Leegin cut off their supply.

Kay's Kloset sued and the Smiths won a $3.6 million judgment following a trial that laid out details of the price floor arrangement between Leegin and many of its retailers. The 5th U.S. Circuit Court of Appeals upheld the lower court's finding.

Joining Kennedy in the majority were Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas and Samuel Alito. With Breyer in dissent were Justices John Paul Stevens, David Souter and Ruth Bader Ginsburg.

The case is Leegin v. PSKS, 06-480.

Copyright 2007 Associated Press. All rights reserved.

 [back to top]    

Group Holds Protest Against Wal-Mart In City Park

CBS4denver.com
June 28th, 2007                              [back to top]    

DENVER Wal-Mart's civil rights record was the subject of a protest in Denver's City Park Wednesday.

Dozens of people gathered near the Martin Luther King, Jr. statue early in the afternoon.

Local community leaders and activists say America's largest private employer has a disturbing civil rights record.

"Even though 33 percent of Wal-Mart's employees are minorities, only 23 percent of Wal-Mart's managers are managers," said a protester.

More than a dozen similar events happened across the nation Wednesday.

 [back to top]    

Protesters allege discrimination at Wal-Mart

By Jason Wiest ,
arkansasnews.com
June 28th, 2007                         [back to top]    

LITTLE ROCK - Protesters roamed the parking lot of a west Little Rock Wal-Mart store Wednesday handing out leaflets to shoppers alleging the world's largest retailer discriminates against its employees who are women and minorities.

The effort by about a dozen protesters was part of a national campaign by Wake Up Walmart, a frequent critic of the world's largest retailer's treatment of employees.

Holding up hand-written, neon-colored signs with phrases like "Wal-Mart Discrimnat's," cq members from several separate groups, including Wake Up Wal-Mart and ACORN, handed out cards to approaching shoppers still in vehicles to "get the word out" that Wal-Mart discriminates, according to Karen Hill, a Wake Up Wal-Mart coordinator.

The cards allege that about 200,000 black and Hispanic Wal-Mart employees do not have company-provided health care, that Wal-Mart faces the largest discrimination lawsuit in U.S. history, and that minority workers comprise a third of Wal-Mart's payroll but a smaller percentage of its management team.

"We want changes," said Hill, who is also the local secretary and treasurer of the United Food and Commercial Workers labor union.

The organization called for Wal-Mart to, within the next year, even out the percentages of non-management level employees who are minorities and women, as well as management-level workers who are women and minorities.

The group also called for Wal-Mart to provide "real and affordable" health care to all employees currently without it; increase wages so that no full-time employees live in poverty; and create an independent diversity committee to guide Wal-Mart into becoming a "model employer."

Wal-Mart dismissed the campaign. "These events are nothing more than another in a long line of politically motivated stunts by these union funded critics," Wal-Mart spokesman David Tovar said.

The company offers competitive wages wherever it has operations with an average $10.51 an hour wage for full-time employees, Tovar said.

Diversity is one of the company's top priorities, he said, adding that half of the company's board of directors are either women or minorities.

Additionally, 90 percent of Wal-Mart employees have health care coverage, Tovar said.

"We're focused on serving our customers and meeting the needs of the communities in which we operate and helping people save money so they can live better," Tovar said.

 [back to top]    

Busloads of Protestors Gather at Wal-Mart

By Julie Straw ,
wlbt.com
June 28th, 2007                                [back to top]    

A better working environment, higher wages, and health benefits.

That's what protestors are asking Wal-Mart to start delivering to its employees. They came by the busloads. Men and Women from several states gathered outside the Wal-Mart Supercenter in Clinton, protesting the company's treatment of its employees.

"Everyone asks me if this is a union issue and this isn't a union issue, to us it is a human issue," said Teri Caben.

Teri Craben with the United Food and Commercial Workers joined up with the Mississippi Workers Center for Human Rights and the People's Freedom Caravan with members from several states including Texas and New Mexico.

The groups claim that Wal-Mart does not provide a livable wage for their employees. They also say the health care package the company offers to their employees is just too expensive.

"The wages they make now they are not able to pay for their health care package for themselves let alone members of their families," said Latoya Davis with the Mississippi Workers Center for Human Rights.

State Represenative Erik Fleming joined in the fight. He said when the Wal-Mart employees are not given health benefits, it's the taxpayers who end up paying. "My main issue as a State Legislator is Wal-Mart is the biggest employer in the world and they don't provide health insurance.

That means from a state standpoint, from a taxpayer standpoint, we have to pick up the slack from the medicaid program," said Rep. Fleming.

Craben says the United Food and Commercial Workers have been fighting for Wal-Mart employees for the last two years. They said the protest won't end until every employee is treated fairly.

A spokesperson for Wal-Mart released this statement to WLBT: "Wal-Mart creates thousands of jobs, offers competitive wages to our 1.3 million associates, reduces costs through $4 generic medicines and in-store clinics..."

[back to top]    

Group Appears At City Hall, Asks Wal-Mart To Improve Civil Rights

By Neil Relyea ,
wcpo.com
June 28th, 2007                                   [back to top]     

Union workers gathered outside Cincinnati's city hall Monday to demand Wal-Mart improve its civil rights record.

The group wants the company to adopt four specific civil rights changes to ensure that all minority workers are treated with dignity, fairness and respect.

A union representative says the group is here because city leaders are expected to vote on a zoning change for a proposed Wal-Mart supercenter in Sedamsville this week.

 [back to top]    

Wal-Mart, Sam's Club to access NPD consumer data

by Aarthi Sivaraman
Wed Jun 27, 2007                       [back to top]    

NEW YORK, June 27 (Reuters) - Research firm NPD Group will provide Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) and its Sam's Club unit with consumer tracking data, according to an agreement announced on Wednesday.

Under the agreement, Wal-Mart and Sam's Club will have access to NPD information on consumer purchasing across a wide variety of areas, including consumer technology, entertainment, fashion, food, home improvement and small appliances, the companies said.

Information -- including what was bought, the prices which were paid and where the purchases took place -- will be collected from NPD's panel of over 3.5 million consumers.

Such data is necessary to "successfully grow our business by understanding what today's consumer is looking for and tailoring our business to deliver it," Wal-Mart Vice President Robert Atencio said in the statement.

The agreement comes at a time when the company is working to improve its U.S. same-store sales, which last fiscal year faced their smallest gain since it began reporting such figures in 1980.

Wal-Mart blamed the slowdown on merchandising missteps, like stocking too much trendy clothing that its customers rejected, and store remodeling that disrupted shoppers.

It has also said this year could be a challenging one, as its base of lower-income shoppers feels the pinch from rising gasoline prices.

Wal-Mart will also use NPD's custom search options to address other specific information needs, according to the statement.

(C) Reuters 2007. All rights reserved. 

 [back to top]    

Illinois pension fund chief joins probe of alleged investor spying

Associated Press
via Chicago Tribune
June 27th, 2007                                   [back to top]     

The head of Illinois' state employee pension fund on Tuesday joined New York City's comptroller in saying Wal-Mart Stores Inc. should turn over records dating to 2002 to show whether it spied on shareholders who wanted annual meetings to adopt policies opposed by management.

Wal-Mart has denied allegations by a fired former security operative that it snooped on investors. But New York City Comptroller William Thompson said he has "a credible basis" to believe the company conducted surveillance and investigations of shareholders.

William Atwood, executive director of the Illinois State Board of Investment, said Wal-Mart's denials are not enough to lay the issue to rest.

"This isn't going away," Atwood said. "Let's open up the files and let an external set of eyes look at it."

A Wal-Mart spokesman said the company received a letter from Thompson last week. "We are studying the letter and will respond appropriately," he said.

The Illinois state fund has total assets of $12.6 billion. Thompson oversees five pension funds for New York City worth a total of about $105 billion.

 [back to top]    

ExxonMobil, Halliburton, Wal-Mart Inducted Into Corporate 'Hall of Shame'

Corporate Accountability International:  Thousands Vote for the Most Abusive Corporations

PRNewswire-USNewswire                             [back to top]    

BOSTON, June 27 /PRNewswire-USNewswire/ -- Corporate Accountability International today announced that ExxonMobil, Halliburton and Wal-Mart are the three newly elected inductees to its Corporate Hall of Shame. The membership organization, which wages winning campaigns against irresponsible and dangerous corporate actions, opened online voting in May with five other potential inductees: Coke, Ford, Kimberly-Clark, Merck and Nestle. Corporations were nominated for a variety of factors, including documented abuses that harm people and the environment, political influence and interference, and public deception.

Approximately 8,592 separate voters cast online ballots from around the world May 16 through June 20, with ExxonMobil and Halliburton being selected by half of all voters, and Wal-Mart just narrowly beating out Kimberly-Clark to become the third inductee.

Voters also had the option to write-in their own candidates, and more than 300 people did so, with corporations such as Monsanto, Lockheed Martin and McDonald's named most frequently. To read more about the voting results and to read comments from voters, visit: http://www.StopCorporateAbuse.org.

"The Hall of Shame demonstrates that thousands of people are fed up with irresponsible corporations," said Kelle Louaillier, Executive Director of Corporate Accountability International. "The competition among these corporate abusers was stiff -- because, unfortunately -- each nominee has a shameful track record. Fortunately, the public's demand for corporate accountability is universal, and the voting for Hall of Shame underscores the desire to eradicate shameful business practices."

The three new inductees were selected in part because of the following abuses and threats to society:

ExxonMobil

Even though ExxonMobil is the most profitable corporation in the world, the oil giant is still using its legal clout to avoid paying $4.5 billion in punitive damages from the 1989 Exxon Valdez oil spill. At the same time, ExxonMobil is spending millions to delay action on global warming. As the only oil corporation that still denies the urgency of climate change, ExxonMobil spent nearly $16 million between 1998 and 2005 funding "junk science" from front groups that confuse the issue. Despite record oil-prices and industry profits, ExxonMobil continues to receive billions of dollars from publicly- funded corporate handouts, in the form of tax breaks and royalty relief (for oil taken from public lands).

Halliburton

At Halliburton, war profiteering is big business. Since the Iraq war began, Halliburton has been awarded more than $20 billion in government contracts. Now Congress is investigating $2.7 billion in waste and overcharging by Halliburton -- including bills for three times the meals that U.S. troops actually received in Iraq. With these sky-high prices comes an embarrassingly low level of service, such as water contaminated with feces that Halliburton delivered to troops for bathing, laundry and even making coffee. Now, after charging taxpayers billions of dollars for their government contracts, Halliburton has announced plans to cut and run, moving its corporate headquarters from Houston to Dubai, which will likely make it easier for the company to pay less U.S. taxes. But Halliburton had been violating U.S. laws for years, operating in Iran until April 2007 under the guise of one of their subsidiaries.

Wal-Mart

The world's largest retailer generates nearly a billion dollars per day in sales. In fact, 2.5 cents of every dollar spent in the United States passes through a Wal-Mart cash register. But the employees who run those cash registers, stock the shelves, and clean the floors aren't sharing in the corporate wealth. Most of the retail giant's workers have an annual income close to the poverty line. Fewer than half are covered by the corporation's health plan. And now Wal-Mart is the subject of the largest sex discrimination lawsuit in U.S. history, involving 1.2 million women who are current or former employees. Meanwhile, Congressional investigators estimate that each Wal-Mart store receives nearly half a million dollars a year in government subsidies. (Wal-Mart has padded its bottom line with more than $1.2 billion in tax breaks and other public subsidies, including deals that allow them to use sales taxes paid by some store customers to pay for improvements to the store property.)

Corporate Accountability International, formerly Infact, is a membership organization that protects people by waging and winning campaigns challenging irresponsible and dangerous corporate actions around the world. For 30 years, they have forced corporations -- like Nestle, General Electric and Philip Morris/Altria -- to stop abusive actions. For more information visit: http://www.stopcorporateabuse.org.

 [back to top]    

Wal-Mart's 'shopping bag jobs' not welcome in Leslieville

CBC News
Wednesday, June 27, 2007                      [back to top]    

The City of Toronto has vowed to fight plans to build a big-box outlet near the waterfront in Leslieville that would likely include a Wal-Mart, saying the minimum-wage jobs the giant retailer offers aren't welcome in the east-end neighbourhood.

Coun. Paula Fletcher (Ward 30 Toronto-Danforth), whose ward includes the development site, is leading the fight against the proposal by developers Rose Corp. and SmartCentres Inc. to build a two- or three-storey facility on Eastern Avenue near Carlaw Street.

The site is designated for employment lands and councillors argue that the low-paying jobs synonymous with Wal-Mart don't cut it.

"This whole area has grown up around good jobs, film jobs, creative jobs. They shouldn't be shopping bag jobs at minimum wage, part time," said Fletcher.

Dozens of locals who came to Toronto City Hall Tuesday to oppose the proposal were even more scathing in their criticism. "It is tantamount to shooting this fledgling neighbourhood in the head," said Victoria Dinnick, who lives near the site.

Developers defended plans to build the facility, arguing the building will be different than other big-box stores that have recently sprung up.

"It's a very innovative, skillfully conceived mixed-use development with human scale and a strong pedestrian orientation and an urban design that fits into the community," said Dennis Wood, a lawyer representing SmartCentres.

Wood, however, conceded the plan includes 2,000 parking spots and would total nearly 700,000 square feet in size.

Fletcher sponsored a motion at community council Tuesday to have developers submit a detailed site proposal. The full city council will consider Fletcher's motion next month.

The developers and the city are to go before the Ontario Municipal Board this fall, where the city will argue that it wants a smaller retail component to the development.

[back to top]    

Bharti, Wal-Mart inch closer to seal deal

SUDESHNA SEN
INDIATIMES NEWS NETWORK
WEDNESDAY, JUNE 27, 2007                              [back to top]    

LONDON: Bharti and Wal-mart seem to be inching closer to finally sealing their partnership. The formal agreement is likely to be signed "as early as next month," Sunil Mittal said in London.

"There has been a delay, as there are multiple agreements and legal issues we have to deal with, but I don't see it taking longer than that," he said. "This also has had no impact on the work in progress. We are hiring people, locations are being identified and work is on through Bharti. We are also working on finalising the formal agreements at the same time," Mr Mittal said.

Sunil Mittal, who as president of CII is currently leading a CEO delegation to the UK for talks with industry and government, is being labelled by the local media here as the 'other' Mittal -- the man who's brought Wal-mart into India.

Wal-Mart and Bharti are expected to enter into a joint venture for the cash and carry segment, which will involve selling to wholesale consumers, mostly small shop owners. For selling to retail consumers, Wal-Mart is expected to enter into a technology transfer agreement with the Bharti Group. The two are also expected to collaborate in terms of sharing processes and best practices as well.

Close on the heels of Tesco's recent statement about a "frenzy" being whipped up in India against foreign retailers, and reports of the Indian government re-examining franchisee arrangements, Mr Mittal and his team were often in the firing line about the whole FDI in retail question. Talking to UK newspersons, Mr Mittal came out strongly in favour of allowing large organised retail in FDI – "In this case, I would tend to bat on your side.

The issue is not about foreign and Indian, the debate is about big versus small. If large Indian retailers like us, and Reliance, and the Birlas are allowed, then we would say that more competition is better, and large foreign retailers should also be allowed." The team had to repeatedly clarify that Indian regulations bars FDI only in multi-brand retail, and that too largely in the food and grocery segment.

"This debate (of organised retail versus mom-and-pop shops) is going on even in developed countries, and I believe in India we will have to go through this debate, but we will not take as long as many other countries," he said.

In the UK, Tesco's rising 'size' and 'domination' of the market squeezing out competitors, suppliers and gaining an 'unhealthy' influence is a recurring theme for public discussion; Wal-mart in the US has also had to deal with the same accusations. Mr Mittal clarified that a lot of the public opinion is against large organised retail, and Indian organised players are having to face the same debate – and it's not necessarily directed against any foreign entrant.

Mr Mittal dismissed fears that the Indian government would back-track on the franchisee regulations. Pheroze Vandrevala of TCS, who is co-chair of the Indo-British Partnership initiative and also on the delegation, pointed out that India does not have a track record of rolling back policy changes.

[back to top]    

AMA Calls for Investigation of Retail Clinics

By Jacob Goldstein,
wsj
June 26th, 2007                                 [back to top]    

State and federal officials should investigate potential conflicts of interest in retail clinics, the American Medical Association said yesterday.

The clinics, staffed largely by nurses and physicians’ assistants, are springing up in stores like Wal-Mart, Walgreens and CVS. In a statement, the AMA said the “call for investigations was driven by retailers who have stated that store-based health clinics help drive additional store traffic, which can increase sales of lucrative prescription drugs and other non-health related products.”

The announcement came after members of the AMA’s policy setting body, who are meeting in Chicago this week, voted on the issue. They stopped short of supporting an outright ban on the clinics, which some members had pushed for, the Chicago Tribune reports.

“Our primary focus is patient safety and patient care, and the retail clinics have a different mission of selling products and prescriptions,” the president of the Illinois State Medical Society, told the Tribune. The AMA’s move means the nation’s largest doctor group, and affiliated state medical societies, will push for increased regulation and attempt to slow the growth of the clinics.

Retail clinic operators told the Tribune that the AMA’s action “is more of a protectionist measure to put the interests of physicians ahead of patients.” A Walgreens spokesman said: “If the AMA is going to push this agenda, they may find that legislators and their constituents have been demanding accessible and affordable health care for years. And that is exactly what retailers are delivering as a supplement to the primary care physician.”

[back to top]    

Newark protesters say Wal-Mart is civil rights issue

By Daniel Massey,
nj.com
June 26th, 2007                                 [back to top]    

Chanting "equal pay for equal work," dozens of local activists gathered on the steps of Newark City Hall this afternoon as part of a national effort to cast the fight to improve Wal-Mart wages and benefits as a struggle for civil rights.

"We didn't march in 1963, we didn't sit in in Alabama and Mississippi to still be discriminated against today," said Larry Hamm, chairman of the People's Organization for Progress.

The protesters - spurred by a class action suit alleging Wal-Mart discriminated against women, and another charging African-American truck drivers were denied jobs - said their goal is to get the retail giant to help improve the lives of America's workers.

"They set the trend for what happens in the rest of the country," said Charles Hall Jr., president of RWDSU Local 108, UFCW, which represents 7,000 supermarket, department store and municipal workers in Essex County. "They need to set the standard by doing the right thing. If they do the right thing, it trickles down."

Organizers said the rally was one of 25 that took place across the country as part of a national day of action coordinated by the group Wake Up Wal-Mart.com. Wal-Mart is the nation's largest private employer of African Americans, Hispanics and women, according to the group.

With its majority African-American population, Newark is the perfect place to equate the campaign to improve wages at Wal-Mart with civil rights, protesters said.

"You'd think in the 21st century we'd be beyond these issues," said city Councilman Donald Payne Jr. "But we have to fight the way we used to do in the old days."

[back to top]    

NYC Comptroller Demands Wal-Mart Records

By MARCUS KABEL
Associated Press
06.26.07                                          [back to top]    

New York City's multibillion-dollar public pension fund demanded Tuesday that Wal-Mart turn over records dating back to 2002 to show whether it spied on shareholders who submitted policy proposals during annual meetings.

Wal-Mart (nyse: WMT - news - people ) has denied allegations by a fired former security operative that it snooped on investors. But New York City Comptroller William Thompson said he has "a credible basis" to believe Wal-Mart Stores Inc. conducted surveillance, investigations or "threat assessments" of shareholders.

Thompson, who runs New York public pension funds with more than $360 million in Wal-Mart shares, said in a statement he had sent Wal-Mart a letter demanding the release of corporate documents and records related to any investigation of shareholders.

"Any such attempts by Wal-Mart or its management to discourage shareholders free and uncoerced exercise of their voting franchise would constitute mismanagement, waste and/or illegality," Thompson wrote.

Wal-Mart spokesman John Simley said the company received the comptroller's letter on Friday.

"We are studying the letter and will respond appropriately," Simley said.

In his letter, Thompson cited a January 2007 internal Wal-Mart memo released in April. In that memo, a senior aide to the board of directors sent Wal-Mart's security department a list of shareholder proposals submitted for the annual meeting, many of which were opposed by management.

"Typically, we send this list (of shareholder proposals) so that someone from ARC and other areas can do some preliminary background work on the potential threat assessment for the Annual Shareholder's Meeting," the memo said. ARC stands for Analytical Research Center, a unit set up in 2005 within Wal-Mart's global security department by a former military intelligence officer. Its purpose is to collect and analyze data on threats and security issues.

The memo said some activist shareholders whose proposals were rejected or blocked by management could have a "negative reaction". It did not spell out what threat such a group might pose.

Wal-Mart Chief Executive Lee Scott wrote to shareholders in April to deny the company collected information "improperly or through intrusive means" about shareholders. The company also said the January memo was never acted upon.

Despite Wal-Mart's denial, Thompson in April asked the U.S. Securities and Exchange Commission and the U.S. Justice Department to investigate whether Wal-Mart illegally spied on some of its shareholders.

Tuesday, Thompson said the SEC had referred the matter to its regional office to determine whether an investigation is in order.

Copyright 2007 Associated Press. All rights reserved.

[back to top]   

Wal-Mart Vice Chairman Exercises Options

Associated Press
06.26.07                         [back to top]     

The vice chairman of discount retailer Wal-Mart Stores Inc. exercised options for 79,858 shares of common stock, according to a Securities and Exchange Commission filing.

In a Form 4 filed with the SEC Monday, John B. Menzer reported he exercised the options Friday for $19.97 apiece, and then sold 59,645 Monday for $47.90 to $47.96 apiece. Menzer also surrendered 20,213 shares back to the company for $47.83 apiece.

Insiders can surrender shares as a way to cover either taxes or the cost of exercising options.

Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

Wal-Mart (nyse: WMT - news - people ) is based in Bentonville, Ark.

Copyright 2007 Associated Press. All rights reserved. 

[back to top]   

U.S. Labor Leader Aided China's Wal-Mart Coup

By MEI FONG
and KRIS MAHER,
WSJ
June 22nd, 2007                                [back to top]   

As China imprisoned dozens of dissident labor activists after massive worker demonstrations in 2002, an American labor leader decided it was time to embrace China's government-backed unions.

Andy Stern, head of the second-largest U.S. union, began working behind the scenes with the All-China Federation of Trade Unions, which has long been criticized by labor leaders around the world for being more aligned with Beijing's Communist government than with China's workers. His Service Employees International Union helped the Chinese federation successfully organize Wal-Mart Stores Inc., the world's largest retailer, which unions have failed to do in the U.S.

AFL-CIO director Barbara Shailor calls Mr. Stern's gambit "a leap of faith," because he undertook it "without any strong signs" that the Chinese union is changing its ways. Amicus, one of the United Kingdom's largest trade unions, concluded after a recent visit that official Chinese unions often are used to control workers rather than represent their interests. Mr. Stern acknowledges the fears that his move has helped legitimize a labor organization he calls "part of a power state."

For Mr. Stern and Beijing, the alliance has paid off, though so far advances for workers are harder to discern. Mr. Stern has gained a foothold in China and scored points in his own public battles with Wal-Mart and U.S. labor leaders in the AFL-CIO. And China has raised the profile of its official union, which has begun working aggressively to unionize multinational corporations.

[Union numbers in China chart] Their cooperation is helping spur more hesitant union organizations to increasingly reach out to China as more of the world's work shifts there. AFL-CIO head John Sweeney plans to visit for the first time in his capacity as president of the Trade Union Advisory Committee of the Organization for Economic Cooperation and Development.

Teamsters leader James Hoffa, a Stern ally, last month met with Chinese labor officials for the first time. He hopes they will help organize the China operations of United Parcel Service Inc. and trucking company YRC Worldwide Inc., both Teamsters strongholds in the U.S.

The Union Network International, a Swiss-based federation of service-sector unions in 140 countries, also is exhorting its members to engage the Chinese federation, says its general secretary, Philip Jennings. But he adds, "I realize that this is not a choice that everyone is making. This is not a free and independent trade-union movement."

Pivotal Differences

The recent activity is causing increasing discomfort for multinational companies used to operating in China without union entanglements. The Chinese unions don't use collective bargaining or the right to strike -- pivotal differences from Western groups that make it difficult for them to affect China's low wages. But each company they organize is required to contribute 2% of its local payroll to support the union's activities. A law nearing adoption would require companies to "consult" with their unions on changes in workplace rules. The union presence also guarantees an extension of the ruling Communist Party within a company's work force.

"We are concerned about the labor vs. management tone," Mike Barbalas, president of the American Chamber of Commerce in China, said in an email. The chamber cites reports that the federation enlists local government authorities, such as tax or labor bureaus, to persuade companies to establish trade unions. A federation official confirms these methods have been used since 2004.

Since its Wal-Mart win last summer, the Chinese federation has gotten bolder. In late March, it publicly accused Mc Donald?'s Corp. and Yum Brands Inc.'s KFC of paying workers in southern China 40% less than the hourly minimum wage of 97 cents. Provincial authorities absolved the companies of wrongdoing, but the companies are allowing more union representation. The federation has set a target of unionizing 80% of foreign companies by the end of this year, up from about 63% today.

China's dissident labor activists are unimpressed, arguing that Mr. Stern has helped empower a fundamentally toothless labor organization, which in turn stifles genuine efforts to raise Chinese workers' poor living standards. Some of the Chinese federation's representatives admit they aren't accustomed to agitating, preferring to hang out at union clubhouses outfitted with amenities such as karaoke machines. Some of those trying to be more ambitious feel stymied: Gao Haitao, head of the Wal-Mart union branch at Nanchang Bayi Square, says he has made little headway in trying to talk to Wal-Mart about wages. "I feel helpless," he says.

Han Dongfang, a well-known labor activist who spent two years in jail for his union activities, says that China's most egregious labor conditions aren't at multinational companies, but in construction, coal and manufacturing industries -- areas dominated by large Chinese firms. Mr. Han, now exiled in Hong Kong, calls the setup of the Chinese federation in Wal-Mart "an instant-noodle union" that "gives people false hope."

But even he is using the Wal-Mart example to rally the cause of Chinese workers, saying in radio broadcasts that workers shouldn't be scared of organizing, "since the government tells you it is your right to have a union."

Mr. Stern, 56 years old, is a silver-haired, Ivy League-educated iconoclast who takes pride in unconventional methods. He says he is searching for new ways to keep unions relevant today, when membership is shrinking in most American organizations -- though he notes his own has grown. "I think there's a real difference between doing what's real comfortable, and being successful," he says.

During his first visit to China in 2002, the union leader was struggling with the death of his daughter Cassie, 13, who died of complications from spinal surgery. He was searching for something different to do and the challenge of China appealed to him, he says.

At that time, China was suffering from what one government report described as a "high tide" of worker dissatisfaction as the nation took steps toward becoming a market economy. Thousands of workers staged protests after being laid off from state factories or seeing their benefits disappear thanks to corrupt bosses. Labor activists were imprisoned and official union membership sank.

Mr. Stern began familiarizing himself with the workings of the federation, known as the ACFTU. The organization, founded in 1925, has grown into a giant bureaucracy and is considered similar in standing to a government ministry.

Many top union officials also rank highly in the ruling Communist Party. The ACFTU describes itself as a union "with Chinese characteristics," meaning it mediates to promote harmonious relationships between employers and employees. Many union officials describe it as having operated as a sort of social and welfare club, organizing concerts or facilities for ping pong, and distributing coupons or small cash bonuses during Chinese festivals.

By 2004, Mr. Stern was focused intently on the ACFTU organizing Wal-Mart, which has vigorously fought union attempts to organize. Wal-Mart stores are unionized in a few countries, including Brazil, Mexico, the U.K. and Japan. In most cases the stores were unionized before being acquired by the retailer. Eduardo Castro-Wright, Wal-Mart's CEO of U.S. stores, is a director of Dow Jones & Co., publisher of The Wall Street Journal.

Beth Keck, a Wal-Mart spokeswoman, says the Bentonville, Ark., company respects workers' wishes and the labor practices where it operates: "Our whole approach to labor practices is that they are consistent and respectful of the country we are operating in." By organizing Wal-Mart in China, Mr. Stern could gain information such as labor violations by the company and its 6,000 suppliers in the country. In 2005 Mr. Stern formed Wal-Mart Watch in the U.S. It is a nonprofit largely funded by the SEIU that challenges the company's business practices.

Among other things, Wal-Mart Watch collects information from Wal-Mart employees and vendors and offers it to the media and other interested parties.

Employees of a Wal-Mart outlet in Wuhan cast votes during a union launch in August 2006. Mr. Stern also led a faction that broke away from the AFL-CIO, causing one of the most contentious divisions in recent American labor history. With fellow giants the Teamsters, the United Food and Commercial Workers and several smaller unions, he formed a group dubbed Change to Win, focused on new methods to recruit members -- an area in which the SEIU is one of the few unions to gain ground.

Good Timing

In China, his timing was good. In 2005, a government report said labor and trade union laws weren't respected by foreign companies as concerns about inequality were rising. The Chinese union placed Wal-Mart and several other employers on a public blacklist, hoping to shame the companies into agreeing to unionization.

Wal-Mart, which now has more than 80 stores in China, responded that it was following Chinese laws and its workers hadn't asked to unionize.

"I'd asked myself, 'Are you really going to help? Is it worth the time and energy?'" said Mr. Stern. "But Wal-Mart was the symbolic question. Here was China, explaining to us that the law requires unionization, and here was the largest company, flaunting their role."

The ACFTU was used to Chinese companies acceding to its request to represent workers, but a top-down approach with Wal-Mart's management was going nowhere, said ACFTU officials. "They were challenging us," Wang Ying, a director at the ACFTU, said in an interview last year.

In November 2005, a delegation from the Chinese union flew to the U.S. for a trip hosted by the SEIU that included Thanksgiving dinner at the Washington, D.C., home of a top union official, a Cirque du Soleil performance in Las Vegas and daylong seminars with academics.

During a dinner at a San Francisco Chinese restaurant, 12 people squeezed around a table meant for 10. Taking advantage of the relaxed atmosphere, Josie Mooney, head of an SEIU local in San Francisco, suggested the group play a game where an organizer would identify a problem they were having while the other side would suggest resolutions.

Some members of the Chinese delegation said when they went to Wal-Mart stores to talk to workers, management often shooed them away. Chinese union officials say workers in Nanjing City had made more than 20 fruitless attempts in two years to meet with Wal-Mart's local management.

Ms. Mooney and her team suggested the Chinese union start talking to workers at their homes, catching them at bus stops or restaurants where they lunched. "I think the idea of talking to workers outside of their work hours was something new to them," says Ms. Mooney.

Ke Yunlong, one of the early union organizers in Wal-Mart's China stores.

Wal-Mart spokesman Jonathan Dong said that "the fact that 20 meetings took place in the Nanjing store validates what we've always been saying, that is Wal-Mart respects the law, respects associates' wishes and has maintained an open channel for discussion regarding this issue." Wal-Mart also says it is company policy not to allow union organizing at work sites during business hours.

ACFTU officials say the U.S. meetings were useful. They also say they already had been planning to seek out workers at the retailer. But they still needed an employee willing to force Wal-Mart's hand. Union officials cast around various Wal-Mart outlets looking for college graduates who were native to their region. In early June of 2006, they found their first candidate. Ke Yunlong, now 30 years old, is a worker in the frozen-meats section in southern China's Jinjiang City.

Union officials approached Mr. Ke through Zheng Wenshan, secretary of the local Communist Party branch -- an indication of the party's interest in unionizing Wal-Mart.

Mr. Zheng got Mr. Ke's elderly neighbor to drop by his home, and then the neighbor had him meet the local union boss, Fu Furong. "They said if I did this, I would make history, be famous," recalled the slender, bespectacled Mr. Ke, a graduate in chemistry who held a higher-paying white-collar position before working at Wal-Mart. He said he took the job because he wanted the experience of working for a well-known Western company, "and the most famous is Wal-Mart."

With some trepidation, Mr. Ke persuaded five other co-workers to go to a meeting at the Communist Party secretary's house, where they met Mr. Fu. The local union made them a written promise that if any worker was fired by Wal-Mart because of union membership, the union would get them other similar-paying jobs. Over the next two weeks, the ACFTU sent union organizers to the entrance of the store to catch workers before and after shifts.

On July 29, the Jinjiang workers held the first Wal-Mart China union meeting at 1 a.m., so that workers from the day and night shift could be present. Dressed in his tomato-red company shirt, Mr. Ke affixed his fingerprint to an application for union membership followed by the other workers as they gathered under a banner that read, "Determined to take the road to develop trade unionism with Chinese characteristics."

Days later, several other Wal-Mart unions sprang up within other regional ACFTU branches in a similar manner. On Aug. 16, Wal-Mart signed an agreement allowing the formation of unions at all of its China locations. Joe Hatfield, chief executive of Wal-Mart Asia, said in a written statement at the time, "I fully anticipate working collaboratively with leadership from ACFTU and union organizations at all levels to create a model working relationship."

Mr. Fu and other local organizers met with Mr. Stern and other U.S. union officials in Beijing. The mood was celebratory. "The irony is, to this day we have Wal-Mart unions in China, a Communist country, but not in democratic countries," Mr. Stern says. "But spillover could happen."

Stronger Ties

While there's little evidence of that yet, Mr. Stern has reaped some benefits. Dominique Muller, Hong Kong director for the International Trade Union Confederation, whose members include the AFL-CIO, says the SEIU's involvement in China creates a perception among labor groups: The "SEIU looks more progressive [and] AFL-CIO more hidebound."

Mr. Stern also says that stronger ties with the ACFTU are getting him and his colleagues entrée to some of China's major state-owned companies. The Teamsters' Mr. Hoffa, for instance, met with officials of China Ocean Shipping Co., a major state-owned shipping company. "Without the ACFTU I don't think we would've had that conversation," says Mr. Stern The SEIU has given workshops to some Chinese union officials on collective-bargaining techniques.

The federation says it is beginning to try to do industrywide or companywide contract negotiations. "We're encouraging them," Mr. Stern said. In Jinjiang City, Mr. Ke and his Wal-Mart union colleagues have been a bit at loose ends. The new union clubhouse is plastered with photos of Mr. Ke and equipped with about $40,000 in new exercise, computer and karaoke equipment.

But SEIU training doesn't extend to the local level. "We didn't know what is the job of a trade union," he says, so they have had to consult with Mr. Fu.

A month after the union was formed, one of its original 30 members, Li Wei, was fired for sleeping on the job. Workplace siestas are common at many companies in China, and Mr. Li believes he was unduly singled out for punishment because of his union role. Wal-Mart says it doesn't differentiate between those belonging to the union and those who don't. "Sleeping on the job is not acceptable for any associate," says Mr. Dong.

The newly formed organization didn't protest Mr. Li's dismissal. Instead it gave him a job taking care of the new union facilities, matching his salary. Union leader Mr. Ke said at the time they had to focus on more important issues, such as "protecting workers rights."

--Kersten Zhang in Beijing contributed to this article.

[back to top]   

Wal-Mart rescinds support of LGBT organizations

theadvocate.com
June 25th, 2007                          [back to top]   

Heeding the threat of a boycott by Christian groups and the disapproval of many employees, mega-retailer Wal-Mart has opted to stop supporting LGBT organizations, Fortune magazine's online site reported Friday.

"We are not currently planning corporate-level contributions to GLBT groups," Mona Williams, Wal-Mart's senior vice president of corporate communications, told the magazine. She also cited a Wal-Mart policy penned last year that prohibits "support[ing] or oppos[ing] highly controversial issues."

The decision comes only a year after Wal-Mart joined the National Gay and Lesbian Chamber of Commerce, an organization of 24,000 gay- and lesbian-owned businesses, and cosponsored the Out & Equal workplace rights group.

"I thought the company was moving in the right direction," one Wal-Mart employee wrote in an e-mail to Fortune. "But last week changed everything. Pulling funding from GLBT organizations is a slap in the face to gay employees, and it sends a very clear message. Diversity within Wal-Mart is only partially inclusive."

Williams said that Wal-Mart will be no less supportive of its LGBT personnel. In fact, many sources indicated to Fortune that Wal-Mart is working harder to educate employees about LGBT-related issues.

"We certainly don't feel [the decision] is a retrenchment," Williams also said. Selisse Berry, director of Out & Equal, concurred.

"Wal-Mart continues to engage on the issue of worker equality, and we will support them in that....This is a marathon, not a sprint, and so long as Wal-Mart keeps its doors open, we hope to give them encouragement," she said in the article.

[back to top]   

Wal-Mart postpones its green report

By Jonathan Birchall,
Financial Times Limited
June 24th, 2007                                      [back to top]   

Wal-Mart, the largest US retailer, has had to postpone the publication of an online report on its environmental and social sustainability efforts seen by its critics as a test of its commitment to greater corporate transparency on non-financial issues.

When Wal-Mart announced a push to improve its sustainability record in October 2005, it said it would issue its first report on its progress by spring 2007.

Social activist shareholders have been pressing the company to follow other US corporations such as General Electric and Coca-Cola in producing a report that allows its efforts on issues such as global warming and supply chain conditions to be assessed.

However, a draft presented informally to independent advisers and non-profit groups this year was rejected as inadequate.

Andy Ruben, who heads the company’s sustainability efforts, said the report had been delayed because of the complexities of gathering the range of data required from its global business. However, one person familiar with the discussions said the company had been “surprised by the complexities because they hadn’t thought it through”.

Wal-Mart said no date had yet been set for publication of the report. Separately, the retailer’s efforts to work with some competitors on a new international anti-sweatshop initiative has met opposition from labour activists.

Wal-Mart, Tesco, Carrefour and Metro, along with Switzerland’s Migros, reached agreement last year on a draft code of conduct, but labour rights and anti-sweatshop groups are concerned about their exclusion from the initial discussions, and that the retailers could easily join or endorse a range of existing initiatives.

[back to top]   

Wal-Mart deal is better than check cashers

David Lazarus
SF Chronicle
Sunday, June 24, 2007                           [back to top]   

Wal-Mart's announcement last week that it's expanding its financial services is troubling because, well, because we're talking about Wal-Mart. The world's biggest retailer casts a long shadow over everything it touches.

But there's one aspect of the company's financial ambitions that I find intriguing -- its plan to offer widespread check-cashing and other such services to people without bank accounts at a fraction of the cost of what the rapacious check-cashing and payday-lending industries offer.

"Many of our customers are paying too much, traveling too far and not being well served," Jane Thompson, president of Wal-Mart financial services, said in a statement.

"But they still need to pay their bills, cash their checks and transfer money," she said. "We're offering them a safe place and a card to help them manage their money. We've seen firsthand what a difference that can make. It changes lives."

Wal-Mart said it will open 1,000 in-store MoneyCenters by the end of 2008 to "help meet the needs of the millions of unbanked and underserved customers who visit Wal-Mart each week for their basic money service needs."

This represents a more than quadrupling of the number of MoneyCenters now in Wal-Mart outlets and follows the company's decision earlier this year to abandon its efforts to enter the more diverse banking business.

Critics charged that by entering the banking field, Wal-Mart would have the same effect on community banks that it typically has on mom-and-pop stores -- they'd be forced to close because they couldn't compete with the retail giant's pricing.

At one point, Wal-Mart had also applied for an exemption from a federal law that prohibits financial firms from denying services or credit to people in poorer neighborhoods -- a practice known as redlining.

Wal-Mart later said it would abide by the law amid an outcry from advocacy groups.

John Taylor, president of the National Community Reinvestment Coalition, which promotes the financial interests of low-income areas, acknowledged that by expanding its MoneyCenters, Wal-Mart will almost certainly have an impact on high-cost check cashers and payday lenders.

"If they put some check cashers out of business, that's not a bad thing," he said.

But Taylor said he's worried that Wal-Mart's financial expansion could deter banks from setting up full-service branches in low-income neighborhoods. Banks may not be prepared to make such investments if Wal-Mart is cutting itself in for a share of some of the most profitable services, he said.

"It's a big danger that they could undermine community banks that have full-fledged banks in these neighborhoods," Taylor warned.

Wal-Mart says its MoneyCenters will be priced as much as 50 percent below "other leading money service providers." It says customers using Wal-Mart's financial services saved an average $450 last year, or almost $40 per month.

"The $40 our customers save each month can grow to become the down payment on a house or help pay for a child's college education," Wal-Mart's Thompson said. "That's our goal -- to help our customers prepare and save for the future by giving them access to greater financial opportunities."

Consumer advocates are taking a wait-and-see approach.

"This could be a boon for consumers or the bane of their existence," said Travis Plunkett, legislative director for the Consumer Federation of America.

He's particularly concerned about another financial offering unveiled by Wal-Mart last week, a reloadable Wal-Mart/Visa debit card. "Prepaid debit cards are an expensive way to bank," Plunkett observed.

Most prepaid debit cards come with a variety of fees, which can end up costing people a considerable chunk of change over the long run. Plunkett said the fees for Wal-Mart's card appear to be lower than most others.

The card costs $8.94 to activate and carries a $4.94 monthly fee. The fee will be waived if customers load at least $1,000 on the card each month. A $4.64 reloading fee will be waived if customers add the funds from a check cashed at one of Wal-Mart's MoneyCenters.

Making withdrawals from an automated teller machine will cost $1.95 ($3.50 overseas) and ATM balance inquiries will run 75 cents. Paper statements will cost another $2.

"Low- and moderate-income people could be attracted by the convenience of the card," Plunkett said. "But they could end up not being nickel-and-dimed but dollared-and-two-dollared by all the fees."

My feeling is that consumers should be wary of all plastic, no matter who's offering it, and should always keep in mind the blizzard of fees that can accompany transactions.

That said, the millions of people in this country who don't have bank accounts for one reason or another are easy prey for check cashers and payday lenders. Wal-Mart, because of its size and scope, can change that.

"Any time Wal-Mart enters a market, competitors feel it," Plunkett acknowledged. "And they're entering this market in a big way."

[back to top]   

'Taco Bell High' or 'Wal-mart Public School' coming to Canada?

Wanadoo Jordan
23-06-2007                                        [back to top]   

Canadian students could soon be graduating from "Taco Bell High" or "Wal-Mart Public School" if trustees here go ahead with a scheme to sell school naming rights to corporations to raise extra funds.

The proposal has pitted members of the cash-strapped Ottawa-Carleton District School Board with public education advocacy groups who fear it would jeopardize universal education.

"No one wants to go to Taco Bell High," Ellen Dickson, chair of the Ottawa Carleton Assembly of School Councils, told the daily Ottawa Citizen.

But proponents say it would help eliminate growing budget deficits at many of Canada's school boards, hit by rising enrolment and cuts in provincial funding.

The Ottawa school board, for example, passed a 634.8-million dollar (595-million US) budget last week, but even after deep cuts, was left with a deficit of 6.2 million dollars (5.8 million US).

Ottawa trustee Riley Brockington told the Citizen in support of the plan: "I have no problem with the Loeb Library or the Cognos Centre of Performing Arts," invoking the names of a grocery chain and a software firm, respectively.

But Annie Kidder of the parents group People for Education countered: "The minute you end up with a Wal-Mart Public School ... you are taking away the notion of the importance of public education, which is to provide every child, no matter where they live or the income of their parents, with an equal chance at success."

© AFP

[back to top]   

Wal-Mart rescinds support of LGBT organizations

Advocate.com                           [back to top]   

Heeding the threat of a boycott by Christian groups and the disapproval of many employees, mega-retailer Wal-Mart has opted to stop supporting LGBT organizations, Fortune magazine's online site reported Friday.

"We are not currently planning corporate-level contributions to GLBT groups," Mona Williams, Wal-Mart's senior vice president of corporate communications, told the magazine. She also cited a Wal-Mart policy penned last year that prohibits "support[ing] or oppos[ing] highly controversial issues."

The decision comes only a year after Wal-Mart joined the National Gay and Lesbian Chamber of Commerce, an organization of 24,000 gay- and lesbian-owned businesses, and cosponsored the Out & Equal workplace rights group.

"I thought the company was moving in the right direction," one Wal-Mart employee wrote in an e-mail to Fortune. "But last week changed everything. Pulling funding from GLBT organizations is a slap in the face to gay employees, and it sends a very clear message. Diversity within Wal-Mart is only partially inclusive."

Williams said that Wal-Mart will be no less supportive of its LGBT personnel. In fact, many sources indicated to Fortune that Wal-Mart is working harder to educate employees about LGBT-related issues.

"We certainly don't feel [the decision] is a retrenchment," Williams also said.

Selisse Berry, director of Out & Equal, concurred.

"Wal-Mart continues to engage on the issue of worker equality, and we will support them in that....This is a marathon, not a sprint, and so long as Wal-Mart keeps its doors open, we hope to give them encouragement," she said in the article. (The Advocate)

[back to top]   

The Trouble With Business Ethics

Companies are increasingly emphasizing ethics, but a recent case at Wal-Mart shows how problematic such policies can be for employees

by Pallavi Gogoi
June 22, 2007                            [back to top]   

In the post-Enron, post-WorldCom, post-Tyco era, ethics has become one of the hottest topics in the business world. Business schools have entire courses dedicated to the topic. Companies have instituted more rigorous ethics policies and set up global ethics offices. One of the fastest-growing employment categories is chief ethics officer, as evidenced by the creation of that post at the New York Stock Exchange (NYX), Nortel Networks (NT), Marsh & McLennan (MMC), and Hewlett-Packard (HPQ).

But a recent case at Wal-Mart Stores (WMT) shows how difficult it can be to push "ethics" in the corporate world. A few months after going through a new employee training session with a heavy emphasis on ethics, Chalace Epley Lowry acted on the guidance to report any activity that seemed the least bit suspicious. Lowry told the company's ethics office about what she thought could be a case of insider trading by one of her supervisors, Mona Williams, vice-president of corporate communications.

The company determined that Williams had done nothing wrong. But Lowry's identity was revealed to Williams, leading Lowry to conclude that she could no longer work in the department. Now she's looking for another job, but there's no guarantee she'll get one at Wal-Mart. "I acted in good faith, just pointing out that there might have been some wrongdoing," says Lowry. "But it was really disheartening to see how it was handled." (See BusinessWeek.com, 6/12/07, "Wal-Mart's Latest Ethics Controversy")

The Dangers of Whistleblowing Lowry's case, unfortunately, is representative of exactly how ethics complaints and whistleblowers are handled at many corporations. "Most employees are reluctant to make any complaints for fear that they will either lose their job or get redirected into another position," says Jim Fisher, Shaughnessy fellow at the Emerson Center for Business Ethics at St. Louis University. "People who go into a situation naively thinking that they are taking care of a problem often find that it doesn't turn out that way. In fact, 95% of the time, whistleblowers lose their jobs."

The emphasis on ethics is hard to miss. Many of the companies leading the way are those that have been embroiled in scandals in the past. For instance, CA (CA), the former scandal-tainted Computer Associates, two years ago had hired Patrick Gnazzo, a former chief trial attorney for the U.S. Navy. And former Securities & Exchange Commission Chairman Richard Breeden, who was first hired to be an outside monitor of accounting firm KPMG moved into a similar role at Hollinger International (HLR), where Conrad Black stirred up trouble and ultimately a lawsuit.

Eric Dinallo and Beth Golden, alumni of former New York Attorney General Eliot Spitzer's office, were hired at Morgan Stanley (MS) and Bear Stearns (BSC), respectively (see BusinessWeek.com, 2/13/06, "The New Ethics Enforcers"). Wal-Mart itself set up its global ethics office in 2004 and prides itself on having one of the strictest ethics codes in the industry. Its employees aren't allowed to accept even a drink from their suppliers.

Pressures on Family Life Still, strict ethics codes can be a catch-22 for workers. "Employees who read codes of conduct have an obligation to report misconduct whether big or small," says Mark Schwartz, assistant professor of corporate governance, law & ethics at Atkinson's School of Administrative Studies at York University. "However, if you do report violations there are serious consequences."

The most famous American whistleblower, Jeffrey Wigand, had to fight a smear campaign by the company, and lawsuits after he chose to go on national television to expose how Brown & Williamson Tobacco was hiding research on the highly addictive nature of tobacco. In the days after that, Wigand lost his privacy and the intense scrutiny and pressure wrecked his marriage and family.

That could be the reason why many employees turn a blind eye to violations. A recent survey conducted by LRN, an ethics research and consulting firm, found that 73% of full-time American employees reported encountering ethical lapses on the job. However, the survey also found that of that 73%, only "one in three, or 36%, said that they have reported an incident they believed to be unethical or questionable to management." Most, or 58%, of these respondents said they didn't report it because they were not directly involved in an incident. Fourteen percent said they lacked confidence in how their employer would handle it.

Send a Message to Employees Some employees would rather leave a company than report ethical lapses, points out Lindsay Thompson, assistant professor of leadership ethics at the Carey Business School at Johns Hopkins University. "Students who take the course sometimes find ethical issues that come to consciousness during class, and they change their jobs because they are certain that they will not get support from their employers," says Thompson.

Still in some cases, companies that have failed a government investigation might be required by law to beef up ethics and will transform themselves on paper. "In fact, a vast majority of companies don't take ethics seriously. Shoring up ethics is part of risk management, or an insurance policy," says Schwartz of York University. But there are companies that really care and want to send a strong message to employees and to investors. For instance, after the Dennis Kozlowski excesses at Tyco International (TYC), the company's new CEO, Edward Breen, effectively fired the entire board of directors, replacing them with more independent members.

Boeing (BA) also tightened its ethics rules, after the ouster of CEO Phil Condit for misconduct. The test of how it would apply those rules came less than two years later. A Boeing employee saw possible ethics lapses in new CEO Harry Stonecipher's amorous e-mail exchanges with a female executive. Despite the possibility of being fired, the anonymous employee reported it to the board of directors. Stonecipher lost his job in the days following that, and the board of directors clearly followed the guidelines of its post-Condit code of ethics. "It's not an employee's place to determine the significance of an ethics violation, and in this case, the board really stood up to their principles," says Schwartz.

Protecting Whistleblowers Ethics experts are united in their view that that any company that takes its ethics seriously has the obligation to protect the identity of whistleblowers. "Some companies think they are set up to protect whistleblowers—but then you have to rely on the leadership and character of individual managers and business units to implement them," says Thompson of Johns Hopkins.

In Lowry's case, Wal-Mart says that she received anonymity and confidentiality in the Ethics Office complaint process. The company says in a statement: "It was through the subsequent 'open door' process that Lowry granted permission to her supervisor to tell Williams since Lowry accessed a document in Williams' e-mail." However, Lowry says that she was never told that she had the choice not to grant permission to reveal her identity to Williams.

After she requested a transfer, Lowry moved to a temporary position at Wal-Mart. "All I want is another job," she says. "I've been made to feel like I'd done something wrong. But nothing's been done to those who violated Wal-Mart's confidentiality policy. They're not worried about whether they will have a job, come tomorrow."

Gogoi is a contributing writer for BusinessWeek.com.

Copyright 2000-2007 by The McGraw-Hill Companies Inc. All rights reserved.

[back to top]   

Slave Labor, Poisoned Toys Give Global Capitalism a Black Eye

By Ruth Conniff,
progressive.org
June 21st, 2007                                      [back to top]   

A few years ago the anti-globalization movement seemed, to much of mainstream America, a fringe concern. Capitalism and free trade are, after all, our national religion.

The protesters who disrupted global trade summits in Seattle and Washington, DC, had little sympathy from outlet shoppers jamming big box stores in Middle America. But things have changed.

Wal-Mart stories featuring abusive labor practices shone a spotlight on the down side of low prices. And, more recently, the spate of reports about the poison fruits of free trade with China have hit American consumers in the gut.

"In order to achieve modernization, people will go to any ends to earn money, to advance their interest, leaving behind morality, humanity and even a little bit of compassion, let alone the law or regulations," economic professor Hu Jindou says in an article on Chinese child slavery in the June 21 edition of the New York Times. The article concerns the hundreds of people, including pre-teen children, found to be working as slaves at a brick-making factory in Shanxi Province. Children are routinely pressed into service in China's toy factories. "Work-study" programs ship schoolchildren from poor provinces to factories where they are worked from early morning until late at night without pay.

And then there are the poisonous products--the killer toothpaste containing diethylene glycol found at a Dollar Store in Miami. The questionably "organic" herbs and food products. William Hubbard, the former deputy commissioner of the FDA who now runs an organization called Coalition for a Stronger FDA told NPR about the Chinese food shipments FDA officials turn back at ports after labeling them as "filthy"--that's the term of art for smelly, decomposing, chemical-laden and otherwise obviously unfit food.

On NPR, Hubbard described how an inspector found an herbal tea factory where herbal tea was processed by driving trucks over it: "'To speed up the drying process, they would lay the tea leaves out on a huge warehouse floor and drive trucks over them so that the exhaust would more rapidly dry the leaves out,' Hubbard says.

'And the problem there is that the Chinese use leaded gasoline, so they were essentially spewing the lead over all these leaves.'" And, "That lead-contaminated herbal tea would only be caught by FDA inspectors at the border if they knew to look for it, Hubbard says."

As food imports to our country have exploded, with China leading the way, the FDA's food inspection unit is shrinking. Hubbard estimates that 1 percent of food imports are actually inspected by FDA officials. And funding for food inspection has shrunk from half to one-quarter of the agency's budget since he started his career in the 1970s.

Meanwhile, China is cornering the market on many food products. Lead-contaminated multivitamins from China are part of what NPR terms "the hidden price of cheap goods." And if the FDA is casting a weak net after these poisons, consumers don't have much ability to protect themselves, either.

Food manufacturers are not even required to disclose where they get ingredients.

Our political leaders talk a lot about protecting America from terrorist attacks. Meanwhile, we are increasingly vulnerable to the effects of lax regulation and unfettered free trade. We need protection not just from suicide bombers and jihadists, but from business interests willing to push the products of an abused work force and contaminated facilities.

The more shocking stories we read about our unsafe food supply, the more mainstream these issues become.

[back to top]   

Wal-Mart to expand financial services

By Abigail Goldman,
LA Times
June 21, 2007                           [back to top]   

Wal-Mart Stores Inc. said Wednesday that it would dramatically expand low-cost financial services such as check cashing and money transfers for its millions of customers who don't have bank accounts.

The giant retailer, which this year dropped efforts to formally enter banking amid opposition from Congress and regulators, said it would open 1,000 Wal-Mart MoneyCenters by the end of next year, up from about 225 in stores now.

Fair-lending advocates and others questioned Wal-Mart's intentions, saying the company may be trying to pursue a back door into banking because the front door was blocked.

"Do you really want to concentrate all that economic power if they make that transition into full banking?" asked Stephen Andrews, chief executive of the Bay Area's Bank of Alameda. "The Senate and the House throughout time has said no."

Wal-Mart executives, however, said the company would be providing a much-needed service at a significant savings for its customers.

"It is right at the heart of a need of our customers — we have so many customers who are outside the mainstream banking system," said Jane Thompson, Wal-Mart's president of financial services. "We know we can add value to their lives and also save them money."

In California, check cashing can cost as much as 3% of the amount of a check. That means that a worker whose take-home pay is $25,000 a year could spend $749 annually to cash weekly paychecks — a service that costs nothing for someone with a free checking account.

At Wal-Mart, which charges 1% for check cashing — with a maximum fee of $3 a check — that same worker would pay $249.60 a year.

Money orders typically cost 75 cents to $5 in California, said Alan Fisher, executive director of the California Reinvestment Coalition. At Wal-Mart, a money order costs 46 cents, the company said.

Wal-Mart, which processes more than 2 million financial-service transactions each week, has long sought to expand the business.

Transactions including money transfers, check cashing and bill payment offer a profitable new business for the company that in recent years has suffered from slumping sales and a bruised reputation.

The MoneyCenters are the most profitable part of Wal-Mart's stores, Thompson said.

Just as importantly, the services give cash-strapped consumers — a big part of Wal-Mart's customer base — new reasons to come to its stores.

The centers are open 7 a.m. to 9 p.m. seven days a week, an important benefit for workers who can't take care of personal business during banking hours, Wal-Mart said.

"While we believe these initiatives, given their size, will not materially boost earnings in the near-term, we do see them as a positive long-term driver of customer loyalty," Goldman Sachs analyst Adrianne Shapira wrote Wednesday in a note to clients.

In the face of strong opposition, Wal-Mart this year withdrew its application for what's known as an industrial loan company, the retailer's fourth failed bid to open a bank since 1999.

Although the Bentonville, Ark.-based retailer said it would use the bank to save on credit card processing fees and other back-office transactions, critics including banks, farmers and real estate firms contended that the company was looking to put a toe into retail banking.

Wal-Mart's announcement on Wednesday is a smart sidestep around that issue, said Richard X. Bove, a financial institutions analyst at Punk, Ziegel & Co. in Tampa, Fla.

"Wal-Mart simply made the decision to do the things legally available to it without seeking approval from Congress or any other entity," Bove said. "I think it's brilliant. It makes a lot of sense."

The company also said it would expand a pilot program that offered a Wal-Mart/Visa reloadable debit card, issued by GE Money, to 1,300 stores by the end of June and to all of its more than 3,300 U.S. discount and Supercenter stores by the end of the year.

Wal-Mart's MoneyCard, which costs $8.94, requires no credit check or bank account and can be used immediately after activation.

The card carries a monthly fee of $4.94, which Wal-Mart waives if customers load at least $1,000 on the card in a month. A reloading fee of $4.64 is waived if customers add funds from a check-cashing transaction at Wal-Mart.

Funds on the card are FDIC-insured and money on lost or stolen cards will be refunded, Wal-Mart said.

Still, some community activists aren't cheering for Wal-Mart's financial services programs.

"Wal-Mart will offer cheaper check cashing, but not the full array of services that any neighborhood needs — mortgages, small-business loans, the kinds of things that are going to jump-start the economy in these neighborhoods," said John Taylor, chief executive of the National Community Reinvestment Coalition.

"What needs to happen is that banks need to be putting payday lenders and pawnshops out of business and making these banking services affordable and available to poor people," Taylor added.

[back to top]  

Wal-Mart's New Nonbank Bank

By Pallavi Gogoi ,
Business Week
June 21st, 2007                        [back to top]   

Earlier this year, on Mar. 16, Wal-Mart Stores (WMT) abandoned plans to create its own bank. The retailing giant withdrew its application for a bank charter in the face of tremendous opposition from competitors, as well as from politicians in Washington and state capitals.

But the world's largest retailer certainly hasn't given up hopes of taking on the financial-services industry. On June 20, the Bentonville (Ark.) company came back with an announcement that it will offer a host of financial services to its customers through Wal Mart? Money Centers?, including check cashing, bill payments, and international money transfers. Wal-Mart will open financial-service centers in 450 stores by the end of 2007 and in 1,000 stores by the end of 2008.

As part of its services, the company will issue a Wal-Mart Money Card?, a prepaid Visa card, which will cost $8.95. It can be used like a credit card to shop online, and to pay for gasoline and merchandise at other retailers. The card will be available at most Wal-Mart stores by yearend.

"Many of our customers are paying too much, traveling too far, and not being well served," says Jane Thompson, president of Wal-Mart financial services.

Opposition from Congress

The move could prove to be a boon for consumers. Wal-Mart has brought down the fees for services like check cashing by 50% in certain markets, and it's likely to have a similar effect with its broader financial-services push.

"They are going to put a squeeze on margins and prices for transactional services, money transfers, check cashing, and I think it's good for the industry," says Bruce Temkin, principal analyst at the consulting and research firm Forrester Research (FORR). "The core model of banking hasn't changed in decades."

Likely rivals who will see their profits squeezed—local check-cashing shops, traditional banks, and money-transfer players such as Moneygram International (MGI), First Data (FDC), the United States Postal Service, and Western Union (WU)—may not be so pleased.

Those who see this as Wal-Mart's back-door entry into the banking business immediately denounced the move. "Wal-Mart has said before publicly that they were interested only in processing payments and weren't going to offer financial services," says Rep. Paul Gillmor (R-Ohio).

"It's a matter of credibility when they promise something and do the opposite." Gillmor, along with Rep. Barney Frank (D-Mass.), is co-sponsoring a bill that would prevent nonfinancial commercial institutions from operating a bank. The bill passed the House with 96% of the vote and is now pending in the Senate.

Smaller Rivals Beware?

For Wal-Mart, financial services is a promising new avenue of growth. The company has been struggling in recent years with ways to revive its once-robust sales and profit growth. Its comparable store sales were down 3.5% in April, the largest monthly decline since 1979. A strategy to move upscale with more trendy apparel and fine home goods hasn't panned out.

But financial services may be an easier expansion since it largely involves selling more to the same customer base. "Wal-Mart is a dominant player in retail and has had a lot of problems broadening out its customer base or moving into urban areas, so it has to reach into other lines of business," says Bert Ely, a banking consultant based in Alexandria, Va.

"Consumer financial services is a natural extension of its business."

Ely points out that these services are mostly aimed at Wal-Mart's core shoppers who don't use banking services and won't necessarily broaden the customer base. However, Wall Street analysts applauded the move and say that the company will see gains in the long term.

"Providing a private-label debit-card service under the Wal-Mart banner could increase both brand equity and frequency of visit," says Adrianne Shapira, retail analyst at Goldman Sachs (GS).

"Financial services are higher margin (versus retail), and executive commentary suggests that profitability of Money Center? square footage is among Wal-Mart's highest." (Wal-Mart has piloted these services at various stories in the past year.) Wal-Mart's stock dropped 22 cents on June 20, to close at $48.59.

Of course, as with any new area that Wal-Mart decides to target, experts expect that many Main Street financial-services shops like check-cashing outlets will fold as the services start rolling out.

In the past decade, Wal-Mart has become the largest supermarket, selling more grocery and food items than any other retailer. It's also the largest toy store, and it's on the way to becoming the largest seller of electronics goods.

Meanwhile, rivals have filed for bankruptcy, including supermarkets Winn-Dixie Stores (WINN) in Florida and Penn Traffic in Pennsylvania; toy stores FAO Schwarz and KB Toys; and, earlier this month, electronics-goods chain Tweeter Home Entertainment (TWTR).

Skills for the "Underbanked" But financial-services experts view this as a positive for the industry that might inadvertently clean up some of its usurious practices. Wal-Mart caters to customers with little or no access to banking services, people who are often described as the "unbanked" or "underbanked."

According to AC Nielsen?, 42% of Wal-Mart shoppers have yearly household incomes of less than $40,000. Many of these consumers pay high fees to subprime and payday lenders for cashing checks and receiving credit. Bank consultant Ely says that those money services and transmitters ought to fear Wal-Mart's expansion. "Wal-Mart will bring increased efficiency and bring down prices," says Ely.

Wal-Mart already has brought on a bonanza of savings for consumers. Wal-Mart says it conducts more than 2 million money-services transactions a week. Last year, customers who used Wal-Mart's services saved an average of $450 a year, or nearly $40 per month, the company said. The opening of additional Wal-Mart Money Centers will put more than $320 million back into customers' pockets, according to the retailer. Plus, some consumers are acquiring new financial skills.

"As we piloted the card, we were happy to see how quickly our customers began using it to manage their money," says Thompson. "They immediately understood the value and how to take advantage of benefits, such as direct deposit or loading their paychecks in our stores. The acceptance has been exciting to watch because it means we've met a real need for our customers."

Forrester's Temkin says the retailer's expansion may also contain a generational aspect. Traditional banks have focused on their longstanding customers, what he calls "seniors and boomers."

But younger people may be more open to handling financial transactions with companies that aren't really banks at all.

"There's a whole new generation of consumers who are going to form their opinion of what banking is based on everything that's out there—and they go to Wal-Mart," he says. "Who knows, in a decade Gen Y might think that Wal-Mart is as much of a bank as Bank of America (BAC)."

Gogoi is a contributing writer for Business Week?.com. With Mara Der Hovanesian in New York

[back to top]  

Wal-Mart Plans Prepaid Visa Debit Cards

By MARCUS KABEL
Associated Press
06.20.07                                    [back to top]  

Wal-Mart will start selling prepaid Visa debit cards that don't require a credit check or bank account, the company said Wednesday.

The world's largest retailer has sought to expand into financial services at its U.S. stores to serve the millions of people who don't have bank accounts or credit cards.

Wal-Mart (nyse: WMT - news - people ) will also add hundreds of in-store centers bundling the financial services it already offers, such as payroll check cashing and money transfers. The number of so-called MoneyCenters will rise from about 225 now to 1,000 by the end of 2008.

"The rapid expansion of its low-cost money services and in-store locations will help meet the needs of the millions of unbanked and underserved customers who visit Wal-Mart each week for their basic money service needs," Wal-Mart Stores Inc. said in a statement.

The announcement comes three months after Wal-Mart withdrew a bank license application that had been strongly opposed by banks, unions and other critics, who argued before federal regulators that a Wal-Mart bank would have too much economic power.

The reloadable prepaid Visa card, dubbed the Wal-Mart MoneyCard, will be rolled out nationally in partnership with General Electric (nyse: GE - news - people ) Corp. subsidiary GE Money and with prepaid card company Green Dot. It can be used anywhere that accepts Visa debit cards and can be reloaded at Wal-Mart stores or Green Dot locations, Wal-Mart said.

Prepaid debit cards have been catching on among some other retailers. They are also used by some state governments as a way to provide benefits to clients with no checking or savings accounts.

Wal-Mart said at the time it dropped the bank bid that it would focus instead on expanding a slate of individual financial services for people who live outside of mainstream banking.

The Federal Deposit Insurance Corp. estimates that 10 million American households are "unbanked" or "underbanked", meaning they do not have accounts at financial institutions and often pay excessive fees for basic financial services.

Low income families are significantly less likely to have a checking or savings accounts, the Federal Reserve has said.

Wal-Mart already offers a range of financial services - payroll check cashing, bill payment, money orders, money transfers and Wal-Mart branded credit cards.

Customers for those services now have to stand in the general customer service line with people seeking refunds or making returns. The MoneyCenters will be stand-alone counters at the front of the store that will deal exclusively with financial services and make it easier for those customers to get what they want.

Wal-Mart says that it saved customers about $250 million last year by charging fees that are lower than those at other outlets. Payroll check cashing, for example, costs a fee of 1 percent or a maximum of $3.00.

Shares of Wal-Mart rose 9 cents to $48.90 in premarket trading.

Copyright 2007 Associated Press. All rights reserved.

 [back to top]  

Green Dot(R) Corporation Partners with Wal-Mart and GE Money to Launch Wal-Mart MoneyCard(SM) Program

Reloadable prepaid card for use wherever Visa(R) debit cards are accepted is easy to get and easy to use

PRNewswire                                     [back to top]  

LOS ANGELES, June 20  -- Green Dot Corporation, a leading provider of retail-based financial services for America's underserved community, Wal-Mart and GE Money jointly announced today that they have launched the Wal-Mart MoneyCard prepaid Visa debit card. The Wal-Mart MoneyCard will help to meet the needs of millions of financially underserved consumers in the US. The Wal-Mart MoneyCard is easy to get, easy to use, and is a much safer alternative to cash. Consumers can use the card for all Visa debit transactions: to make online purchases, to obtain cash at ATMs and to access a host of other services, without a credit check or bank account.

"Wal-Mart's commitment to helping customers live better lives extends to the selection of our partners for the Wal-Mart MoneyCard program," said Jane Thompson, President of Wal-Mart Financial Services. "Green Dot and GE Money are as devoted as we are to serving these consumers. Together, we are introducing the Wal-Mart MoneyCard, a convenient, safe, and affordable way for Wal-Mart Customers and Associates to handle their financial needs."

"We're extremely proud to be partnering with Wal-Mart and GE Money on the launch of the Wal-Mart MoneyCard," said Steve Streit, CEO of Green Dot Corporation. "Wal-Mart, GE Money and Green Dot share a strategic vision to offer products and services that fulfill the needs of consumers who have been neglected by traditional financial service companies. With the Wal-Mart MoneyCard, millions of underserved Americans can now enjoy financial access coupled with security and flexibility."

The Wal-Mart MoneyCard program was lauded for being the "Best Unbanked and Underserved Program" at the annual Prepaid Expo Awards Ceremony earlier this year. Recognizing Green Dot Corporation's contribution to the program, Wal-Mart Financial Services presented Green Dot with the 2007 Wal-Mart Innovation Award at their annual Supplier Summit meeting.

 [back to top]  

U.S. Cities Follow Californian Opposition To Wal-Mart United States

by Nate Berg
Plantizen                               [back to top]  

20 June 2007 - 10:00am Many cities are following the lead of various municipalities up and down California that are using any and all possible powers to prevent Wal-Marts from moving in. But despite the growing opposition, business is booming.

"Urged on by unions, supermarkets, and small businesses, other cities and towns across the state are giving Wal-Mart a frostier reception than ever before. The California Supreme Court backed up such a stance earlier this month, saying that cities and counties can place restrictions on what sort of stores can open in their communities."

"Elsewhere in the country, as Wal-Mart continues to move beyond its rural and Southern roots, Wal-Mart has recently faced challenges to its expansion plans in several cities – including Chicago; Tucson, Ariz.; and Spokane, Wash."

"Is it the beginning of the end of Wal-Mart's astonishing growth? Its critics hope so. But even as some cities and towns pull away the welcome mat, Wal-Mart is both surviving and thriving."

Source: Christian Science Monitor, Jun 19, 2007

 [back to top]  

Fired Wal-Mart Pharmacist Awarded $2M

Associated Press
06.20.07                                            [back to top]  

A pharmacist who claimed she was fired by Wal-Mart after asking to be paid the same as her male colleagues has won a nearly $2 million award against the retail giant.

A Berkshire Superior Court jury concluded Wal-Mart (nyse: WMT - news - people ) discriminated against Cynthia Haddad and awarded her nearly $1 million in compensatory damages and $1 million in punitive damages Tuesday.

"It sends a message that you can't treat people poorly because of who they are," said David Belfort, Haddad's attorney.

Wal-Mart's attorneys didn't comment after the verdict.

Haddad was fired in April 2004 after more than 10 years at a Wal-Mart store in Pittsfield. She claimed in court that she was fired because she asked to be paid the same as her male counterparts, including a bonus given to pharmacy managers. The company paid the bonus, then fired her two weeks later.

Lawyers for the retailer said she was fired because she left the pharmacy unattended and allowed a technician to use her computer security code to issue prescriptions during her absence, including a fraudulent prescription for a painkiller.

Haddad's lawyers argued that the prescription was filled 18 months before she was dismissed and without her knowledge, and that more severe infractions by male pharmacists went unpunished.

Copyright 2007 Associated Press. All rights reserved.

 [back to top]  

Jury orders $2M award

By Jack Dew,
Berkshire Eagle Online
June 20th, 2007                                 [back to top]  

PITTSFIELD — A Berkshire Superior Court jury yesterday concluded that Wal-Mart had discriminated against a female pharmacist, paying her less than her male colleagues and firing her when she complained.

The jury awarded Cynthia Haddad almost $2 million as compensation for lost and future wages and to punish Wal-Mart's behavior. The verdict followed roughly eight hours of deliberations that capped a two-week trial.

"It sends a message that you can't treat people poorly because of who they are," said David Belfort, one of Haddad's attorneys. "The verdict makes it clear that the jury felt that not only was there misconduct, but it ought to be punished."

As the verdict was read, Haddad began crying, and her cries became near sobs as she hugged her legal team and family outside the courtroom.

"I can sleep tonight," she was heard to say.

Wal-Mart's attorneys quickly left the courtroom and could not be reached for comment yesterday.

Haddad's lawsuit stemmed from her dismissal in April 2004 from the Wal-Mart pharmacy in Pittsfield, where she had worked for more than 10 years.

Wal-Mart said it fired her because she left the pharmacy Advertisement unattended and allowed a technician to use her computer security code to issue prescriptions during her absence. While Haddad was away, Wal-Mart alleged, a prescription for Plavix, an anti-clotting drug given to cardiac patients, was filled.

Haddad and her legal team said that charge was a trumped-up excuse, and that the fraudulent prescription had been filled 18 months earlier, without Haddad's knowledge. They said Haddad was really fired because she demanded to be paid as well as her male counterparts, including a bonus given to pharmacy managers. The company consented and paid the bonus, but she was fired two weeks later.

The plaintiff's legal team of Belfort and Richard Fradette argued that Wal-Mart had never fired anyone else for the charge of "failure to secure the pharmacy." And they said more severe infractions by male pharmacists went unpunished.

"Wal-Mart took a 10-year employee with 10 years of the highest level of professional reviews available and, in 45 minutes, fired her for no legitimate reason," Fradette said. "At the same time, it tolerated violations of policies by male pharmacists with no punishment."

Wal-Mart argued that Haddad was not really a pharmacy manager and was paid appropriately for her work. While she may have carried the manager's title, Wal-Mart said, she did not perform a manager's duties.

The jury appears to have rejected Wal-Mart's defense completely and found for Haddad on every count.

The jury of eight women and four men ruled that Haddad was owed $1,767 in compensation for lost wages because of unequal pay. And it ordered Wal-Mart to pay $95,000 in damages for improper termination of employment.

For emotional distress, the jury ordered Wal-Mart to pay Haddad $125,000 and $17,700 in financial damages.

The jurors ruled that Haddad was owed $733,000 in wages that she would have earned over the course of her career had she not been fired.

And the biggest penalty was assessed in the form of punitive damages of $1 million, a sum meant to punish Wal-Mart for the discrimination.

"What the jury saw is that, if Wal-Mart will treat a well-educated, professional woman with such reckless disregard, can you imagine how they treat other women in the work force?" Fradette said.

 [back to top]  

Wal-Mart Hits Wall In California Cities

by Randy Dotinga
Christian Science Monitor
June 19, 2007                                       [back to top]  

SAN DIEGO - Drop by just about any big city in the South, and you're likely to come across a Wal-Mart store. Or two. Or 10. But they're harder to find in California, and municipal leaders across the state want to keep it that way.

At particular issue in the Golden State: Wal-Mart's efforts to open "superstores" in cities both big and small.

Here in San Diego — which already has "regular" Wal-Marts — the City Council is expected to ban Wal-Mart "superstores" within city limits, a move that would override last week's mayoral veto. Urged on by unions, supermarkets, and small businesses, other cities and towns across the state are giving Wal-Mart a frostier reception than ever before. The California Supreme Court backed up such a stance earlier this month, saying that cities and counties can place restrictions on what sort of stores can open in their communities.

Wal-Mart "has become some sort of capitalistic symbol," sighs Scott Alevy, an official with the San Diego Regional Chamber of Commerce, which supports the retailer's expansion plans in the city.

Elsewhere in the country, as Wal-Mart continues to move beyond its rural and Southern roots, Wal-Mart has recently faced challenges to its expansion plans in several cities — including Chicago; Tucson, Ariz.; and Spokane, Wash.

Is it the beginning of the end of Wal-Mart's astonishing growth? Its critics hope so. But even as some cities and towns pull away the welcome mat, Wal-Mart is both surviving and thriving.

Indeed, in California alone, Wal-Mart already has 27 "superstores" — many of them in cities, and with two opening just last week. The stores, typically about 185,000 square feet, feature full-size grocery stores.

Still, in some instances, Wal-Mart has clearly felt threatened, and several recent cases in California have shown it's willing to fight community opposition.

In Long Beach, the fifth-largest city in the state, Wal-Mart reportedly spent $270,000 on a successful petition drive to put a measure on the ballot in 2008 that would allow big retailers to sell groceries. City leaders banned such sales last year. The city currently has several "regular" Wal-Marts.

According to the Los Angeles Times, Wal-Mart spent another $300,000 to support two imperiled pro-Wal-Mart council members in the L.A. suburb of Rosemead.

In the northern California town of Turlock, a ban sparked a Wal-Mart appeal to the California Supreme Court, which in 2006 declined to take any action.

In perhaps the most striking brouhaha of all, the tiny Bay Area city of Hercules is wrapped up in a court battle as it tries to take over a plot of land by eminent domain to keep it out of Wal-Mart's hands.

And in San Diego, an expensive fight looms, despite the city's business-friendly reputation.

Wal-Mart is "just so darned convenient, and stuff's so cheap," says Kris Nelson, owner of Bluestocking Books, a small independent bookstore. "There's nothing wrong with that, but the problem is when we pay for our goods to be cheaper and from elsewhere, our local economy doesn't get anything back."

Wal-Mart also comes under fire because of its opposition to unionization efforts and its treatment of employees.

However, not every big retailer is seen as bad news. "There's a reason there's not a Target Watch," says Nu Wexler of the national watchdog group Wal-Mart Watch. In fact, a loophole in the proposed San Diego restrictions allows membership stores like Costco to open huge stores while Wal-Mart cannot.

For its part, Wal-Mart says it's been unfairly vilified. The company touts its pay (which it says is $10.68 an hour on average for full-time workers in the San Diego area) and its health benefits (which it says are better than those at local grocery chains).

And, of course, there are those famous discount prices. According to Milwaukee supermarket consultant David Livingston, Wal-Mart's grocery prices undercut their competition by 15 percent.

Low grocery prices "help people live better lives," says Wal-Mart spokesman Aaron Rios.

If the San Diego City Council overrides Mayor Jerry Sanders's veto, Wal-Mart is expected to challenge the ban by launching a petition drive to put the issue on the ballot. The fight over a ballot measure would be "nasty," predicts Mr. Alevy

Consumers, he says, should be able to choose a store for any reason, whether "it's located close to them, or it carries the brands they want, or they like the way it's set up, or they have good help, or, perish the thought, they have lower prices."

There is one recent indication that Wal-Mart is having struggles. According to reports, the chain announced last week that it will slow down the rollout of U.S. superstores, opening 190 to 200 during the current fiscal year instead of 265 to 270.

However, "what their opponents sometimes fail to realize is that Wal-Mart is still growing at a significant pace every year," Mr. Livingston says. "If they get a little negative press, they could care less."

© 2007 The Christian Science Monitor. All rights reserved.

[back to top]  

Investors Give Housing Data Scant Attention

By wsj.com,
June 19th, 2007                                 [back to top]  

The housing sector has been like the tree falling alone in the proverbial forest -- if it's making noise, investors aren't hearing it.

Today's Commerce Department report on housing construction will probably show home builders pulled back again last month. Economists estimate builders broke ground on new homes at an annual rate of 1.474 million in May. That's down 3.5% from April's 1.528 million rate and down 36% from the peak in January last year, when builders were starting homes at an annual rate of 2.292 million.

A rebound isn't in sight. The National Association of Home Builders says its gauge of builder sentiment fell in June to its lowest level since 1991.

Yet the Dow Jones Industrial Average is back within chipping range of the highs it hit earlier this month. Small wonder. Even though the housing downturn has been more severe than many forecasters expected, its broader effect on the economy has been muted, in part because consumers keep spending.

Some investors might even see soft housing reports as "market friendly," because such reports make it harder for the Federal Reserve to raise short-term interest rates. For stock investors right now, low rates are paramount; cheap debt helps keep alive the corporate buyout boom, which is underpinning stock prices.

Of course, even though the short-term interest rates controlled by the Fed are holding steady, long-term interest rates are rising. That threatens to do even more damage to housing. At some point, that tree in the forest might make some noise that everybody hears.

How Television-Price War Could Trip Up Best Buy In the scrap between retailers Best Buy and Circuit City Stores, Best Buy has been turning the lights out on its electronics rival.

Best Buy, which reports earnings today, is expected to report net income of 50 cents a share, up 6.4% from a year ago, according to Thomson Financial. Circuit City, which reports tomorrow, is forecast to lose 32 cents, versus a three-cent gain last year. But Best Buy might be vulnerable.

Both companies have suffered from a plunge in prices and profit margins on flat-screen TVs. Best Buy has adapted more quickly than its rival, but the price war could intensify.

One behind-the-scenes wild card is a California TV maker named Vizio, which sells low-price TVs. through discounters like Costco Wholesale and Wal-Mart Stores. A 32-inch flat-panel TV made by Samsung costs $897 at Wal-Mart; a similar Vizio TV runs for $597, according to research outfit Current Analysis. Vizio, which sources out of China, has "structurally changed the market," Bank of America analyst David Strasser wrote in a report yesterday.

The analyst noted Vizio has the fourth-largest market share of T Vs? 30 inches wide or more, and is growing rapidly. Its "shelf share" of liquid-crystal display T Vs? jumped to 5.9% in May from 1.8% the previous month, Current Analysis says, due to a deal to sell more TVs at Wal-Mart.

Best Buy, which has focused on higher margin, more expensive T Vs?, doesn't sell Vizio. Circuit City does. High gasoline prices and the weakening housing market could send more consumers looking for deals on flat-screen T Vs? in the months ahead. Right now, they won't find them at Best Buy.

[back to top]  

Two State Appeals Courts OK Certification In Wal-Mart Cases; Trial Court Nixes Class

By BNA,
June 19th, 2007                                       [back to top]  

In opinions issued June 12 in three separate suits alleging that Wal-Mart Inc. forces employees to work off-the-clock and miss meal and rest breaks, two state appeals courts upheld class certification, while a New York trial court rejected class treatment of the claims.

Both the Missouri Court of Appeals and the New Mexico Court of Appeals rejected Wal-Mart's arguments that classes certified by state trial courts failed on typicality, predominance, and superiority grounds. Both courts also found some problems in the definition of subclasses, but made revisions to correct the issues (Hale v. Wal-Mart Stores Inc., Mo. Ct. App., No. WD 66162? 6/12/07; Armijo v. Wal-Mart Stores Inc., N.M. Ct. App., No. 26,122, 6/12/07).

However, the New York Supreme Court in Albany County found that the proposed class was overbroad and therefore failed to meet the numerosity test. It also found problems with typicality, adequacy of representation, predominance, and superiority (Alix v. Wal-Mart Stores Inc., N.Y. Sup. Ct., No. 01-02-071134, 6/12/07).

All three suits were based on allegations that the Bentonville, Ark.-based retailer, despite setting out a policy requiring paid rest breaks and unpaid meal breaks and prohibiting off-the-clock work, deliberately understaffs its stores and sets up incentive programs for managers that lead to employees performing work for which they are not paid. The Missouri case raised claims of breach of contract, quantum meruit, and unjust enrichment; the New Mexico case raised those as well as claims under the state minimum wage act.

Although the New York litigation initially raised a number of claims similar to those in the Missouri and New Mexico cases, those remaining in the suit at class certification were alleged violation of the state labor law for failure to pay earned wages and failure to pay overtime. All three suits involved large numbers of employees. The estimated potential class size--including both current and former workers--was 10,000 people in New Mexico, 200,000 in Missouri, and more than 200,000 in New York.

Missouri, New Mexico: More Alike Than Different The interpretations of the class certification rules by the Missouri and New Mexico courts were quite similar, differing primarily because the New Mexico panel scolded its trial court for being less than clear in addressing the requirements of New Mexico Rule of Civil Procedure 1-023, the state analogue for Federal Rule of Civil Procedure 23. The New Mexico court also addressed more limited claims, since the trial court only certified a subclass for the meal break claims under Rule 1-023 and certified off-the-clock work claims under the state minimum wage law, which has different provisions. The Missouri trial court approved classes addressing all claims under that state's class certification rule, Missouri Rule of Civil Procedure 52.08.

But both courts rejected Wal-Mart's argument that the named plaintiffs could not be typical of the class because the reasons why individuals might miss breaks or work off-the-clock are too individual. The Missouri court concluded: "At its essence, this is a case about an employer's obligation to compensate its employees for all the time worked.

Wal-Mart's alleged understaffing and other corporate schemes is a common course of conduct, even if the uncompensated work performed by the class members may differ." And the New Mexico court found," Although the named Plaintiffs' positions and job duties differ from one another and from other members of the class, we fail to see how these difference make the name Plaintiffs' claims with respect to missing rest breaks and working off the clock 'significantly different from the claims and defense of any class members.' "

Addressing predominance, the Missouri court first noted that no law precludes certification of unjust enrichment claims. In this case, the court said in finding that the trial court did not abuse its discretion in certifying that claim, "the unjust enrichment claim does not go to the named plaintiffs' conduct but rather Wal-Mart's conduct." It rejected Wal-Mart's argument that unjust enrichment claims would "overwhelm" the court because of their individualized nature.

The Missouri court was not impressed by arguments that other courts have rejected certification of unjust enrichment claims, saying "reasonable persons differ" on the subject, making it clear that certification was not an abuse of discretion. It found that the common questions adopted by the trial court would advance the litigation. And even though the court agreed that the individual issue of why an employee missed a break was pertinent to unjust enrichment, it concluded that was a defense, a merits issue not appropriate to address at class certification. Further, it pointed out that such claims can be addressed with expert evidence--which Wal-Mart can challenge--and by use of random sampling.

The New Mexico court likewise found predominance, saying "the question of whether Defendants are contractually obligated to provide rest breaks to its hourly employees--whether through oral or written contract--is a question common to the class and certainly one that will predominate the litigation." It also rejected Wal-Mart's argument that individualized investigations into each class member's situation would be required. Affirmative defenses are not sufficient to defeat class certification, the court said.

Both Courts Find Superiority Met Both appellate courts also found that their trial courts' rulings on superiority were correct. The Missouri court said, "Class actions which aggregate small claims that could not otherwise be brought are exactly the type of claims that satisfy the superiority requirement."

The New Mexico court observed that, having rejected Wal-Mart's argument that individual issues did not predominate, it would not accept their argument that individual issues would defeat superiority. Further, given the size of the class, it "fail[ed] to see how individual issues would be superior to a class action. Nor did it find that an action by the state's labor department would be superior, since the unjust enrichment claims are based in common law, not the Minimum Wage Act.

The New Mexico court also approved the collective action process under the Minimum Wage Act as a separate part of the litigation. Both appeals courts revised subclass definitions. The Missouri court concluded that the subclass of employees who were unable to leave work after they clocked out, because the doors were locked, was overbroad, because it included both those who continued to work at that point and those who simply waited for the doors to be unlocked.

It instructed the trial court to omit "and/or" language in defining that subclass.

It also concluded that the trial court erred in allowing "opt-in" subclasses of class members "whose existence cannot be determined from the face of Wal-Mart's electronic time-record databases"--those who continued to work because they could not leave after clocking out or because they were told to work off-the-clock.

The court said such classes were inappropriate because they would "freeze out" those who might not take such an affirmative step, and instructed the trial court to redefine these subclasses to allow members to opt out.

The New Mexico court likewise redefined subclasses, finding them dependent on the merits of the claims. It instructed the trial court to strike the phrase "because of any action, policy, or practice of Defendants" from three subclasses dealing with rest breaks, night workers who may have been locked in after clocking out, and all workers who continued to work after clocking out. The court also said the rest break subclass should not include the phrase "failed to clock out," but should rather just define the class as those who missed rest breaks.

New York Judge Finds Numerosity Problem

The New York trial court, however, took a completely different approach to a similar case. The judge initially found problems with numerosity, despite the fact that the proposed class was estimated at 200,000. The proposed class "includes numerous individuals who have no colorable claim of having been aggrieved by the conduct alleged," the court said, finding that the class was untenably overbroad.

The judge pointed out that the actual grievances identified by the plaintiffs' expert would result in minuscule damages awards if spread out over the entire proposed class.

The court observed that of nine state appellate courts that had addressed class certification of similar Wal-Mart claims, only two had upheld certification--New Jersey and Washington state. Since the ruling was issued on the same date as the Missouri and New Mexico opinions, those rulings were not included in the court's analysis.

Addressing predominance, the court said "the very nature" of the plaintiffs' allegations "bespeaks a need for individual treatment of the allegations of the class members." There may be general facts in common, the court said, but individual assessment of claims still will be necessary to prove liability as well as damages.

New York Uses Frye

The court rejected plaintiffs' argument that statistical sampling could substitute for individual proof. Such expert testimony might be acceptable in federal courts, it said, but New York courts must follow the what the court considered the "more stringent" Frye rule, which requires a showing that the expert techniques generate results accepted by scientists as reliable.

The court concluded that the named plaintiffs failed the typicality test, because their personal claims were for off-t he-clock work and did not include overtime claims or allegations that meal breaks that were skipped were inserted into their pay records.

It also found problems with adequacy of representation, noting that some managers were included in the class, even though they also would have been among those who participated in Wal-Mart's conduct.

Turning to superiority, the New York court said the New York commissioner's failure to pursue unpaid wage claims does not mean that the employees lack an administrative remedy--they can file such a claim with the commissioner. The court went on to suggest that an administrative proceeding under the Unpaid Wages Prohibition Act would be preferable, since Wal-Mart would appeal any class certification ruling in the court case, extending this litigation by at least a year or more.

"Continuing this litigation as a class action in Supreme Court will entail a far lengthier proceeding and it is less likely to result in adequate compensation being paid to those works who actually may have been deprived of earned wages." The court also noted the availability of penalties in the administrative proceeding.

The Missouri opinion, which was a unanimous decision by all the judges on the western district, was written by Judge Thomas H. Newton. Gerald L. Bader Jr. of Bader & Associates in Denver, George A. Barton of Kansas City, Mo., and Charles F. Speer of Kansas City, Mo., were among the lawyers for the plaintiffs in the Missouri case. Kurt D. Williams of Berkowitz Oliver Williams Shaw & Eisenbrandt in Kansas City, Mo., represented Wal-Mart.

The New Mexico ruling was issued by a unanimous three-judge panel and written by Judge Lynn Pickard. The plaintiffs were represented by Shane Youtz of Youtz & Valdez in Albuquerque, N.M.; Gerald L. Bader Jr. and Renee B. Taylor of Bader & Associates in Denver; and Franklin D. Azar and Rodney Bridgers of Franklin D. Azar & Associates in Denver. Wal-Mart was represented by Charles R. Peifer and Cerianne L. Mullins of Peifer, Hanson & Mullins in Albuquerque.

The New York ruling was issued by Judge Richard M. Platkin. The plaintiffs were represented by Rachel Geman, Jonathan D. Selbin, and Nicholas R. Diamond of Lieff, Cabraser, Heimann & Bernstein in New York; Adam T. Klein, Tarik F. Ajari, Justin M. Swartz, and Carmelyn O. Malalis of Outten & Golden in New York; and Ronald J. Dunn of Gleason, Dunn, Walsh & O'Shea in Albany, N.Y. Wal-Mart was represented by Henry M. Greenberg of Greenberg Traurig in Albany, and by Donald R. Frederico of that firm's Boston office.

[back to top]  

Glen Carbon OKs Wal-Mart expansion plan

JENNIFER KAPIOLANI SAXTON                           [back to top]  

GLEN CARBON -- Before a full house, the Glen Carbon Village Board of Trustees on Tuesday approved 5-1 a redevelopment agreement to expand the existing Wal-Mart into a supercenter after many people addressed the board.

"As a government, we do not get to pick and choose which type of business decides to invest in our village," Mayor Rob Jackstadt said to the more than 100 people who came to hear the board's vote on the expansion plan for Wal-Mart. "Government has a lot of power, but it is controlled. The private sector wants and decides what comes into the village."

Trustees voting in favor of the redevelopment plan for the Wal-Mart Supercenter were John Navin, Ron Slemer, Joe Micheletto, Larry Kacer and Bob Buehler. Trustee Margaret Moggio voted against the plan.

"I feel I was on the side of the residents, and that's what I was ...

[back to top]  

Littleton voters reject Wal-Mart store near park

By Joey Bunch,
Denver Post
June 19th, 2007                                [back to top]  

Littleton - Opponents of a Wal-Mart Supercenter in Littleton turned back the retailer at the polls Tuesday, despite being outspent nearly 3-to-1 in the heated local mail-in campaign.

Opposition to the store drew 7,878 votes. Votes in favor of the proposed Wal-Mart on South Santa Fe Drive totaled 5,128.

"We have said from the beginning that the most important thing has been to give voters a chance to decide whether a big-box retailer should be allowed to build on property adjacent to South Platte Park," Debbie Brinkman, chairwoman of the opposition group "Littleton Pride, You Decide," said in a written statement Tuesday night. "Voters were given that chance and they said yes to preserve our park and our community."

The voters' decision may not be the last word on Wal-Mart in Littleton, company spokesman Josh Phair said.

"We're going to reassess and hopefully come up with a project that works for us and all of Littleton," he said.

Phair said the campaign made it clear that many residents wanted a Wal-Mart in Littleton, but he could not say whether Wal-Mart would consider other options for the same site or look elsewhere in the city. The outcome of the initiative repealed the Littleton City Council's 4-3 vote in January to grant a zoning change for the store.

"The voters have spoken," said city spokeswoman Kelli Narde, "and we respect their decision."

Wal-Mart intended to build a 187,000-square-foot 24-hour Supercenter on a 23.5-acre tract, currently a commercial nursery, north of Aspen Grove mall.

Littleton Pride raised $33,219, according to campaign-disclosure paperwork.

Wal-Mart's Bentonville, Ark., headquarters paid almost all the $91,025 for the supporters' campaign.

The cost of the election to taxpayers was $35,000.

Opponents cited the likelihood of noise, light and loiterers from the 24-hour business.

Opponents' main argument, however, was the effect the store might have on South Platte Park, a recreation area and wildlife refuge west of the site. The city designated an open-space buffer between the proposed store and existing park.

The store had promised at least $1.5 million in tax revenue for the city's general fund, which was $43.2 million last year.Wal-Mart has 76 stores and 24,550 employees in Colorado, according to the company.

[back to top]  

Wal-Mart says to unveil financial services plans

Reuters
Tue Jun 19, 2007                                 [back to top]  

NEW YORK (Reuters) - Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research), the world's largest retailer, said on Tuesday that it will unveil plans for its financial services business on Wednesday.

Wal-Mart already offers a number of financial services in its stores, including check cashing, money orders and money transfers, and has been looking to expand the offerings.

It hit a stumbling block earlier this year in its application to operate a specialty bank known as an industrial loan company (ILC).

Wal-Mart insisted it wanted to use the bank to save money by internalizing credit-card and check transactions, but consumer groups and banks feared the retailer would eventually provide other retail banking services, leading to the demise of community banks.

In the face of opposition from politicians, consumer groups and community banks, it withdrew the application with U.S. bank regulators.

Instead, it said at the time that it would focus on introducing new financial services, and Jane Thompson, president of Wal-Mart Financial Services, said the retailer would have "a lot of things that will be coming out this year."

© Reuters 2006. All rights reserved.

[back to top]  

Wal-Mart seeks appeal in class action

By Jill Dunn ,
etrucker.com
June 18th, 2007                         [back to top]  

Wal-Mart has petitioned to appeal class-action status granted in a lawsuit against the retail giant that claims black applicants were discriminated against for trucking jobs. Judge William Wilson granted the status May 16 in U.S. District Court for the Eastern District of Arkansas. Wal-Mart filed a petition for permission to appeal in the U.S. 8th Circuit Court of Appeals in St. Louis in late May, said company spokesman John Simley. Two plaintiffs are named in the suit, and 35 affidavits were taken, said Chip Welch, representing one of three law firms bringing suit against the retailer. The plaintiffs represent a pattern of being discriminated against in their attempts to get hired as truckers, Welch said. According to court documents, over a five-year period ending in 2005, Wal-Mart hired 4,135 over-the-road truck drivers. During that period, 4 percent to 6 percent of its drivers were black, and its new-hire workforce was more than 7 percent black, according to court documents. At that time, an American Trucking Associations study determined 15 percent of U.S. truckers were black, court documents said. “We believe that the case will be resolved in Wal-Mart's favor once the merits of the case are addressed,?Simley said. “It's important to remember, the only question the district court decided concerned class-action status. This has nothing to do with the merits of the case or whether the allegations are true.? The suit was certified for purposes of class-wide liability, declaratory relief and equitable relief only. That means anyone seeking punitive damages would have to do so in a separate suit after the class action is over. The class involved in the suit includes all black people in the continental United States who applied as over-the-road truckers at Wal-Mart since Sept. 22, 2001, but who were not hired. It also includes all black people in the continental United States during that period who were discouraged from applying as drivers because of Wal-Mart's practices. Wal-Mart has 10,000 full-time truckers and several thousand part-time drivers.

 [back to top]  

Wal-Mart Replaces Blue Vests

By GMA,
ABC News Internet Ventures
June 18th, 2007                                        [back to top]  

As retail giant Wal-Mart is marking its 47th year, the empire is making some surprising changes.

The emperor's getting new clothes: polos and khakis, to be exact. And for the 1.3 million U.S. Wal-Mart employees the new policy is preppy.

"The vest is being retired and replaced with this dress-code look that actually has our customers saying that they can see our associates more prominently in the stores," said Celia Swanson, of Wal-Mart.

Employees at the home store in Rogers, Ark., seemed excited to embrace the latest fashion.

"You feel more professional with it," said one Wal-Mart employee. "Before ,when we didn't have a dress code and you could wear jeans or shorts or whatever, customers didn't always know who the employees were. "

The wardrobe change is part of a larger corporate overhaul for a retailer that's been struggling to increase sales and rejuvenate its stock price.

Last year Wal-Mart's same-store sales increased the smallest amount in more than 20 years. And a recently leaked internal corporate memo expressed concerns about a new initiative to sell high-end goods.

"Shareholders are unhappy," said The Wall Street Journal's Allen Murray. "They need to do something to jump-start sales in their stores. I don't think a change to new uniforms is gonna be the magic key."

The iconic blue vests millions of Americans have come to identify with the low-cost retailer will be recycled into materials to help armed forces overseas. Those materials will include lap blankets for the wounded and land cards that soldiers can use to write to their loved ones, said Swanson.

While some analysts have applauded Wal-Mart's efforts to reinvigorate the brand, others warn eliminating something so closely identified with the store was not the change needed.

 [back to top]  

Roehm Hires Big Gun In Fighting Wal-Mart

By Anita French,
THE MORNING NEWS
June 18th, 2007                             [back to top]  

Julie Roehm, who is waging a legal battle against Wal-Mart Stores Inc. over her firing last year, has hired what some in the media call a "spin wizard" -- the latest salvo in what is becoming an increasingly nasty feud. And it all may come down to who blinks first, says one public relations expert. "What is clearly happening here is a premeditated strategy to make this as painful for Wal-Mart as possible so that they come to the table," said Eric Dezenhall, who heads a crisis management firm in Washington. Roehm, 35, was fired as Wal-Mart's senior vice president of marketing communications in December after being with the company for less than a year, for what Wal-Mart said at the time was a violation of company policy. Also fired was Roehm's assistant, Sean Womack. Roehm later filed a lawsuit against Wal-Mart, claiming breach of employment contract. Her action prompted the company to release e-mails allegedly exchanged between Roehm and Womack that hinted at an improper relationship. The company also accused Roehm of accepting gifts from an advertising firm that had Wal-Mart as a client. Roehm has denied the charges, and fired back last month by alleging in court documents that other Wal-Mart executives, including President and CEO Lee Scott, had also violated company policy without losing their jobs. On Friday, Business Week reported Roehm had upped the ante by hiring Michael Sitrick, who heads a public relations firm in Los Angeles and New York well-known for handling high-profile cases and individuals. The Los Angeles Times has called Sitrick "The Wizard of Spin" and Forbes magazine said he was "The Flack For When You're Under Attack." Even Wal-Mart's own public relations guru was impressed. "That's unbelievable. This is heavy artillery," said Richard Edelman, who runs Wal-Mart's public relations out of its Bentonville headquarters, in Business Week. Wal-Mart spokesman John Simley told The Morning News the company had no comment on Roehm's hiring of Sitrick nor on what Edelman said. "Isn't this story kind of old?" Simley added. Sitrick and Co. has provided advice and counsel to more than 500 companies, including some of the nation's largest corporations, it says at its Web site. The agency has been ranked at the top of the best strategic public relations firms in the United States the last four years by Inside PR Magazine. Dezenhall, who has handled controversial issues for several big companies and wrote a recent book on the subject called "Damage Control," said he hasn't met Sitrick but they know each other by reputation. "There's only a couple of us in this business, and one of them is me and one is him. We certainly are quite aware of each other," Dezenhall said. "I think whenever you have a premeditated strategy of attack -- especially with someone who has been extremely effective -- you have to be concerned," he said about Wal-Mart. "Will it work? I have no idea. But this is not an issue the media are (covering) because of their own spontaneous revelation. This is a story that is being actively pitched by Roehm's side. I think Wal-Mart probably recognized that this was going to be all over the news, whether they wanted it to be or not because of the approach Roehm was taking. They probably figured, let's get out our narrative before she does." Business Week noted that Sitrick had worked on behalf of former Hewlett-Packard Chairman Patricia Dunn, who was forced to resign in connection with the company's spying scandal. Sitrick was instrumental in working closely with Dunn's lawyers to give influential reporters access to Dunn and earning her more sympathy, according to Business Week. Seth Faison, a spokesman for Sitrick and Co. in Los Angeles, said Sitrick would not comment for this article, but he confirmed that the agency was advising Roehm's lawyers in her suit against Wal-Mart. "We prefer not to discuss our strategy while the case is under way," Faison said. Sitrick is quoted as saying the situation between Wal-Mart and Roehm is a "clear David-and-Goliath" one in which Roehm is the "underdog" -- a statement Faison did not dispute. Roehm did not return a phone message left at her home by press time. Dezenhall said it was obvious Roehm's tactics are aimed at getting Wal-Mart to settle, although he also wouldn't rule out "an element of vengeance." "I really believe Wal-Mart intensely dislikes Roehm, and I believe she intensely believes she's been betrayed by them," he said. "The textbook would say settle, but here's the complicating factor: If they believe she is guilty of malfeasance and they settle with her, they could have a shareholder issue on their hands to the tune of, 'Why did you pay this failed former employee all this money?' When I get these type of cases, I usually say writing a check is the best way to make it go away, but if you are a publicly traded company that has spawned an industry of critics, that's not an easy option." Patricia Edwards, fund manager with Wentworth, Hauser and Violich in Seattle and regular commentator on Wal-Mart, said Dezenhall has a point. "They are really in a catch-22 situation," she said about Wal-Mart. "If they settle, then they could have a shareholder issue. If they don't, they have a PR issue, which could also become a shareholder issue. I don't envy Bentonville today, and I don't say that lightly."

[back to top]  

"Combined reporting" movement grows since Wal-Mart court fight

By GARY D. ROBERTSON,
AP
June 18th, 2007                                       [back to top]  

When Wal-Mart sued North Carolina last year to obtain a $33 million tax refund, it cast a spotlight on the complicated strategies some large businesses use to avoid paying taxes.

And it caught the attention of some of the state's top tax officials and lawmakers.

The discount retail giant used a subsidiary in another state and a real estate investment trust to shift around profits generated in North Carolina to reduce or eliminate paying corporate income taxes on those earnings, according to court documents.

Wal-Mart says the strategy is legal and has used it in other states. But by hiring expensive tax experts, Wal-Mart and other big corporations have a large advantage over smaller companies that must pay North Carolina's 6.9 percent tax rate on most or all of their income, said state Revenue Secretary Norris Tolson.

"They're trying to minimize their tax bill by doing some very skillful planning," said Tolson, who calls Wal-Mart's actions improper. "I am not antibusiness. I just think people ought to pay their fair share."

Following the lead of 20 other states, influential North Carolina lawmakers, Gov. Mike Easley and advocacy groups are supporting a change that would force multistate corporations to give a fuller picture of their total income. They say the so-called "combined reporting" would enable the state to tax corporations more accurately on their North Carolina activities.

But the concept is opposed by the North Carolina Chamber, the state's top business lobbying group, which says it could make the state less competitive and less attractive to companies that want to expand here.

None of North Carolina's neighboring states have such a tax requirement.

"If the message of proponents of the bill is that all multistate corporations are paying less taxes than they should, then that is a chilling message to be sent to ... employers in our state and those wanting to come here," said chamber spokeswoman Sherry Melton. North Carolina law requires a corporation to report the profits of each of its subsidiaries independently unless Tolson's office gives it a strong reason to do otherwise.

The method allows corporations that perform work in several states to manage their businesses, but it also can lower their state tax burden. Some strategies are lawful, but others have been deemed improper by the Internal Revenue Service, Tolson said. Under combined reporting, a corporation must report its income and expenses from all of its affiliated companies - no matter where they are located. The state would then calculate what percentage of income came from North Carolina activities and issue a tax bill based on the amount.

Supporters said the change would block all profit-shifting devices, instead of the General Assembly having to address each one when it is discovered.

"You close that loophole, there's nine more waiting," Tolson said. In the Wal-Mart case, which is being tried in Wake County Superior Court, the Arkansas-based company created a captive real estate investment trust, which serves as a landlord to Wal-Mart retail stores.

The stores, operating under a corporation called Wal-Mart Stores East, pay rent to the trust. The rent is tax-deductible for Wal-Mart Stores East.

The rent money is then paid out as earnings, in the form of dividends, to another Wal-Mart subsidiary based in Delaware, providing the company another tax break.

That subsidiary then returns the earnings back to Wal-Mart Stores East. Dividends paid by a subsidiary to a parent corporation aren't counted as taxable income, so Wal-Mart Stores East avoids more North Carolina taxes. Wal-Mart didn't respond to a request from The Associated Press seeking comment on the lawsuit. But the company has said that Tolson's office didn't have the right to combine the subsidiaries' income, which led to about $33 million in additional state taxes. Wal-Mart paid the taxes under protest.

Sen. David Hoyle, D-Gaston, the primary sponsor of a combined reporting bill and the Senate's top business booster, said some of the state's leading businesses oppose the idea because they're worried it will increase their tax bills.

"I am not interested in doing anything that's detrimental to the business climate in North Carolina," Hoyle said, adding that he does not want to eliminate legitimate deductions.

Tax information is confidential and corporations don't usually report state-by-state income tax payments. But there is great suspicion among social justice advocates that many North Carolina-based corporations that do business in many states are paying nowhere near 6.9 percent. The Revenue Department has given companies involved in questionable tax-avoidance strategies two opportunities since late 2004 to avoid penalties or reduce their tax bill, instead of possible legal action.

The department said it collected more than $347 million from 287 corporations.

Hoyle wants a combined reporting law that wouldn't generate additional tax revenue for the state, at least not initially. He estimates that would mean lowering the current 6.9 percent rate to under 6 percent to generate the same amount of revenue.

 [back to top]  

Tomah, Wal-Mart reach property tax agreement on center

By Keith Zukas
Lee Newspapers                              [back to top]  

TOMAH, Wis. — The city of Tomah will repay $316,262 annually in overpaid taxes during the next three years to Wal-Mart in a settlement on the assessed value of its distribution center.

City attorney Rick Radcliffe told the Tomah City Council on Tuesday an agreement was reached with Wal-Mart lawyers setting a $32.5 million property valuation for the center.

City assessor Les Milde of Holmen, Wis., had calculated the facility’s value at $43.6 million, but Wal-Mart contended it was closer to $22.7 million.

The city will pay back a total of $948,786 in annual installments from 2007 to 2009, said City Administrator John Rusch, adding, “This is part of our tax incremental financing district, so it will not affect property taxes.”

Wal-Mart had bypassed the city assessment appeal process and taken the matter to court. At that time, the distribution center was five years old, and the assessed value was increased by $6 million during a citywide reassessment.

The Board of Review had cited a letter from Wal-Mart stating the building’s valuation should reflect construction costs. Wal-Mart based its assessment on a comparable building, Fleming Foods in

La Crosse, which was bought by Commercial Development Co. from Supervalu Inc. in 2004 for $13 million, according to La Crosse County records.

The latest assessed value for the former Fleming Foods building is $15 million, according to the city of

La Crosse Assessor’s office. A real estate listing says the 40-year-old Fleming Foods building is 866,000 square feet; the Wal-Mart center is 880,000 square feet.

Keith Zukas is a reporter for the Tomah Journal/Monitor-Herald. .

[back to top]  

What Wal-Mart is Watching...

By Margaret Brennan,
CNBC Reporter
June 15th, 2007                         [back to top]  

It is almost summer but you wouldn't know it by the weather. Next week, the season officially kicks off and the week is expected to be the second coldest, and driest first week of summer in 15 years! Right now the one refrain apparel/retailer CE Os? seem to universally repeat is the importance of clearing out inventory over the next few months as stores get ready to restock shelves with back to school items. Bon Ton?'s CEO told me that you don't want to see strong sales gains in July because the sales are markdown generated and the importance of the month is to clear out old products. How the weather fares will be a big part of what sells. Bill Kirk at Weather Trends International gave us a glimpse of what he's advising clients like Bon-Ton and Wal-Mart. Weather Trends is advising its retail and manufacturing clients to "really push hot weather items" this week and next as "excess inventory is a concern beyond the holiday weekend!" The summer hasn't even officially begun and retailers are worried about getting rid of the summer clothing! After July 4th, sales of "hot" items will cool off BUT patio furniture, suncare and anti-itch products will be flying off shelves due to drier weather. Why is it important to play weatherperson? Gaming the weather, having just the right product on the shelves at exactly the right market at the opportune time can make a real difference in retail sales results. Wal-Mart watches this VERY carefully and stays in immediate touch via computer with major suppliers by sharing sales data to replenish those popular items that are selling. Right now, the world's largest retailer is maintaining its 0-2% same store sales guidance for June. According to Thomson Financial, the overall discount category is on track to slightly miss the 2.3% sales gain reported in June 2006. For far for the first week of June, overall sales for retailers are coming in at a 2.4% gain, slightly lower than last year's 3.0%. Speaking of Wal-Mart, there is something that I've been pondering ever since I returned from their annual shareholders meeting in Bentonville, Arkansas. Is Wal-Mart capitalism's answer to the welfare state? Wal-Mart is the 800 pound gorilla of retail and as such it is a big and easy target for criticism. As a corporation that employs 1.9 million people worldwide and is the largest private employer of American workers (the U.S. government is the top employer), the benefits and wages it provides its employees could be viewed as a benchmark for corporate responsibility. Instead Wal-Mart is constantly the subject of criticism regarding claims of pay inequity (recent class action regarding female employees), forced labor (claims that it doesn't give employees breaks) etc. What's interesting is that Wal-Mart seems to hold the exact opposite view of itself. "Making things affordable so that people can live better" The adage "Making things affordable so that people can live better" --Wal-Mart founder Sam Walton's quote--was plastered EVERYWHERE at the annual shareholders meeting. That's not just a brilliant marketing position to redefine "value shopping" but it taps the idea that profit motive is secondary to the company's sense of social responsibility. Wal-Mart CEO Lee Scott cited Wal-Mart's $4 prescription drug program as a program that sells drugs to people who otherwise wouldn't be able to get them at all. Here's exactly what he had to say: "Your company changed the face of American health care with your $4 prescription drug program. To date this program has saved our customers $350 million." Scott went on to say, "Our $4 program and our in-store clinics are solutions to the health care challenges facing the U.S. But no single company no single institution can fix our health care system alone. We all have to work together even with people and groups that we have very little in common with." How true is this? Is Wal-Mart the source of social ills and income gaps (as they are often criticized for being) or are they actually profit-motivated social actors? These ideas have got me thinking and I'll be following this story for CNBC over the next few months. My take is that while Wal-Mart is a global retailer with international impact, their roots are still so regional in terms of how the company envisions and presents its message. Can the two continue to coexist? Can Wal-Mart continue to deliver the down home, "we're on your side" message to customers in key rural and poor urban markets while widening its grasp on sales to a global reach....more importantly, can profit motive be the ultimate weapon with which to combat poverty? As the country's largest private employer, has Wal-Mart become capitalism's answer to the welfare state? It is something that I'll be watching over the next few months.

[back to top]  

Blinders off, the Clintons sell stocks

By Patrick Healy,
NY Times News Service/
Boston.com
June 15th, 2007                                      [back to top]  

WASHINGTON -- Concerned that their personal finances might become a political liability once again, Bill and Hillary Clinton in April sold the millions of dollars in stocks held by their blind trust after learning that those investments included oil and pharmaceutical companies, military contractors, and Wal-Mart, among others, aides said yesterday. The Clintons liquidated the trust -- valued in financial disclosure forms at $5 million to $25 million -- and are leaving the proceeds for now in cash in an effort to eliminate any chance of ethical problems or political embarrassment from their holdings as Senator Hillary Clinton runs for the 2008 Democratic presidential nomination, their advisers said. Senator Clinton became aware of her investments after a government directive this spring that she, as a presidential candidate, had to dissolve her blind trust and disclose her assets to the public. The decision to sell their stock carried a financial cost for the Clintons, according to advisers and new personal financial documents released yesterday. They will owe "substantial amounts" in capital gains taxes, an adviser said, and are giving up the potentially higher returns from stocks. According to the financial disclosure documents, the couple's total net worth falls between $10 million and $50 million. Besides investments, Bill Clinton earned about $10 million for speeches last year, continuing a pattern since he left office of earning large sums through speeches and other activities in order to help pay off legal bills and cover the couple's expenses. Hillary Clinton earned $350,025 in royalties for her autobiography, "Living History." The Clintons sold the stock as they prepared to disclose their holdings under government ethics rules for presidential candidates. Until getting ready to release the blind trust, the Clintons did not know what stocks and other financial assets it contained. But the rules did not require the Clintons to sell the stock, according to their advisers. (New York Times News Service)

[back to top]  

Wal-Mart Seeks Dismissal of Roehm Suit

By MARCUS KABEL
Associated Press
06.15.07                                             [back to top]  

Wal-Mart Stores Inc. is asking a state court in Michigan to dismiss a lawsuit by former marketing executive Julie Roehm over her firing, arguing that Roehm should have filed the case in Arkansas, where she lives and where Wal-Mart is headquartered.

Wal-Mart (nyse: WMT - news - people ) spokesman John Simley said Friday that Wal-Mart filed the motion this week after a federal judge in Michigan declined to take over the civil lawsuit and sent it back to a state trial court there.

Roehm is a high-profile advertising executive who was fired last December less than a year after moving to Wal-Mart from Chrysler Group. At the time the Bentonville, Ark.-based company declined to say why, but court filings since then have revealed mutual accusations of ethics breaches.

Roehm sued first, filing a breach of contract and fraud claim against Wal-Mart in January in her former home state of Michigan alleging Wal-Mart owes her severance pay that could total $1.5 million.

In March, Wal-Mart filed a counterclaim accusing Roehm of having an affair with her subordinate Sean Womack and of accepting gifts and otherwise showing favoritism toward an agency that was lobbying for Wal-Mart's account. It also accused them of trying to find a job with the ad agency.

Roehm responded that she was a victim of a "smear" campaign and challenged Wal-Mart's allegations.

In May, Roehm claimed in another court filing that Wal-Mart Chief Executive Lee Scott violated the company's ethics policy by accepting trips and discounts on yachts and jewelry from a wealthy entrepreneur who does business with Wal-Mart, Irwin Jacobs.

Both Wal-Mart and Jacobs denied all of Roehm's claims. Jacobs has since filed his own lawsuit in Benton County Circuit Court, in Wal-Mart's Arkansas hometown of Bentonville, alleging that Roehm defamed him.

In Roehm's suit against Wal-Mart, a federal judge in the U.S. Eastern District of Michigan ruled June 4 against Wal-Mart's bid to move the case to federal court in that state.

Roehm's attorney Sam Morgan argued that Roehm is now a citizen of Arkansas, where she owns a house and has her driver's license, and therefore federal courts have no jurisdiction because both parties are in Arkansas.

Morgan told The Associated Press that handling the lawsuit in Michigan still makes sense because Roehm lived there when she signed her contract with Wal-Mart and because she still owns property, in the form of a house she has been unable to sell since moving.

Wal-Mart's Simley said the company believes the case should be dismissed in Michigan because Roehm herself argued in federal court that she is based in Arkansas now, not Michigan. The lawsuit should be filed in Arkansas, where both parties are legal residents, he said.

(This version CORRECTS that lawsuit is for breach of contract, not wrongful termination.)

Copyright 2007 Associated Press. All rights reserved.

[back to top]  

Wal-Mart rolling out a different debit card

By STEVE PAINTER,
Arkansas Democrat Gazette
June 14th, 2007                                       [back to top]  

Wal-Mart Stores Inc. is rolling out a new prepaid debit card aimed at a market that includes the estimated one in five store customers who has no bank account. The new Wal-Mart Money-Card replaces the existing Wal-Mart Prepaid Visa Card but will also be handled through GE Money. One significant change for cardholders is the ability to add money to their accounts at hundreds of other locations that take part in the Green Dot network, which includes chains such as Walgreens, Dollar General, CVS and Radio Shack?. A Wal-Mart spokesman refused repeated requests this week for more information about the new card. Some details were emerging on the card’s Web site, www. walmartmoneycard. com. Consumer advocates who reviewed the available details said the fees charged for card activities were modest compared with those charged by many check-cashing outlets but still far exceeded those of bank accounts maintained in good standing. “Wal-Mart says they’re the low price leader, and they could bring prices down,” said Gail Hillebrand, senior attorney for the advocacy group Consumers Union. But she added, “It's absolutely going to be better than a check casher, and better than a paydayloan place that has a credit feature.” Bentonville-based Wal-Mart abandoned its effort to establish an industrial bank earlier this year in the face of stiff political opposition. The company said of that effort that it wanted to save money by serving as its own clearinghouse for credit- and debit-card transactions. But Wal-Mart also said it intended to pursue other financialservice offerings. A fee schedule posted on the card Web site indicates a user could get by with nominal fees or could rack up charges quickly. The initial issuance fee is $ 8. 94 and the monthly maintenance fee is $ 4. 94. Adding money to the account costs $ 4. 64, but the fee is waived if the customer is cashing a check at Wal-Mart, a transaction that costs 1 percent of the check’s total. If a user deposits at least $ 1, 000 a month, the monthly fee is waived. For no additional charge, cardholders can make debit purchases by signature or personal identification number, receive cash back with purchases and check their balance through an automated telephone service. Extra charges apply for automated teller machine cash withdrawals ($ 1. 95 ), ATM balance inquiries (75 cents ) or paper account statements ($ 2 ). “It looks like Wal-Mart is moving into the wider range of feebased products that are widely used by consumers who are unbanked or under-banked,” said Jean Ann Fox, director of consumer protection for the Consumer Federation of America. Prepaid debit cards are a rapidly growing product and “a form of banking without some of the protections and conveniences of a real bank account,” she said. The group is urging Congress to extend the same account protections provided for deposits in banks regulated by the Federal Deposit Insurance Corp. GE Money is regulated by the federal Office of Thrift Supervision. The Consumer Federation found in a study last year that Wal-Mart’s capped 1 percent check-cashing fee was well below the average of 2. 44 percent to cash government benefit checks. It also found that Wal-Mart’s 50-cent charge for a $ 100 money order was about half the cost of the other outlets surveyed. Still, the charges can be significant, said Tim Yeager, assistant professor of banking at the University of Arkansas at Fayetteville’s Sam M. Walton College of Business. An example he calculated: Adding the monthly maintenance fee, the reload fee for amounts less than $ 1, 000, a once-a-week ATM cash withdrawal and an average balance of $ 900 results in a monthly fees of $ 17. 38. Annualized on the basis of that average balance, that’s 23. 2 percent, he said. “If you’re paying $ 17. 38 a month to handle $ 900, that’s a lot,” he said.

 [back to top]  

Rising Theft at Wal-Mart

By AP/Marcus Kabel,
June 14th, 2007                                  [back to top]  

Shoppers at Wal-Mart stores across America are loading carts with merchandise -- maybe a flat-screen TV, a few DVDs and a six-pack of beer -- and strolling out without paying. Employees also are helping themselves to goods they haven't paid for.

The world's largest retailer is saying little about these kinds of thefts, but its recent public disclosures that it is experiencing an increase in so-called shrinkage at its U.S. stores suggests that inventory losses due to shoplifting, employee theft, paperwork errors and supplier fraud could be worsening.

The hit is likely to rise to more than $3 billion this year for Wal-Mart Stores Inc., which generated sales of $348.6 billion last year, according to retail consultant Burt Flickinger III.

Flickinger and other analysts say the increase in theft may be tied to Wal-Mart's highly publicized decision last year to no longer prosecute minor cases of shoplifting in order to focus on organized shoplifting rings. Former employees also say staffing levels, including security personnel, have been reduced, making it easier for theft to occur. And a union-backed group critical of the retailer's personnel policies contends general worker discontent is playing a role.

Wal-Mart declined to offer any explanations for the rise in losses, but denied it has cut security staff and said employee morale is rising rather than falling.

Although Wal-Mart declined to reveal any details, analysts suspect Wal-Mart -- which for years had a theft loss rate that was half that of its peers -- is getting closer to the industrywide average. Theft is a big problem for all retailers, costing them $41.6 billion last year, according to a joint study released Tuesday by the National Retail Federation and the University of Florida. The study found that the theft rate as a percentage of sales ticked upward slightly to 1.61 percent of sales in 2006 from 1.60 percent in 2005.

Whatever the cause, such theft -- which late founder Sam Walton once called one of retailers' top profit killers -- adds one more challenge when Wal-Mart is already struggling with sluggish sales at its established stores due to an overall economic slowdown as well as its own stumbles in its home and apparel merchandising strategies.

Eduardo Castro-Wright, president and CEO of Wal-Mart's U.S. store division, briefly acknowledged the theft problem in a mid-May conference call with analysts. He cited shrinkage as well as increased markdowns and higher inventory for dragging down first-quarter profit margins.

''We are concerned about shrinkage and are investigating the cause and are taking steps to correct it,'' Castro-Wright said. Company officials won't comment on those countermeasures.

The company also said in a June 1 filing with federal securities regulators that the gross profit margin for its Wal-Mart Stores segment fell by 0.1 percentage points in the first quarter due in part to ''higher inventory shrinkage.''

John Simley, a Wal-Mart spokesman, declined to elaborate. He would say only that the company's theft losses as a percentage of sales is ''better than our industry peer groups.''

Analysts say it's significant that the company has publicly disclosed that theft is becoming a problem. ''It is getting to the point of being material,'' said Richard Hastings, vice president and senior retail sector analyst at Bernard Sands. Securities regulations require companies to alert shareholders to significant corporate developments that could affect the value of their holdings.

Such pilferage as a percentage of sales has been declining since the mid-1990s as retailers have invested in new technology such as closed circuit TVs, according to Richard Hollinger, professor of criminology at the University of Florida.

About 47 percent of the dollars lost came from employee theft, while shoplifting accounted for about 32 percent, according to the National Retail Federation report. Administrative errors account for 14 percent, while supplier fraud accounts for 4 percent. The remaining 3 percent is unaccounted for.

In one of the more brazen employee thefts, a man wearing dark clothing and a ski mask entered a Port Clinton, Ohio, Wal-Mart store in January at midnight unnoticed by employees and stole $45,000 from the store safe. The store's night manager, Dana Walker, 30, was later arrested for the crime. He became a suspect because he knew the combination to the safe, police said.

The company's vociferous critic WakeUpWalMart.com, funded by the United Food and Commercial Workers which has for years tried to organize the retailer's workers, publicized the company's decision last year to relax its zero-tolerance policy on shoplifting. The new policy seeks prosecutions of first-time offenders only if they are between ages 18 to 65 and steal at least $25 worth of merchandise.

That change may have emboldened some folks to shoplift, said Mark Doyle, president of Jack L. Hayes International, a retail consultancy on loss prevention.

WakeUpWalMart.com and some former employees said Wal-Mart may also have been trying to appease complaints by some police departments that its stores tied up police with too many shoplifting calls. Wal-Mart has denied that.

Wal-Mart also may have been spooked by worries about lawsuits from wrongful death, unlawful imprisonment and other legal issues related to aggressively chasing down shoplifters. In March, Wal-Mart agreed to pay $750,000 to the family of a suspected shoplifter who suffocated to death as loss prevention workers held him down in a parking lot outside a store in Atascocita, Texas. The shoplifter died in August 2005 in a parking lot, according to published reports.

The change in policy came at the same time the company began using more part-time workers -- in part because of a new scheduling system that matches staffing more closely to peak shopping hours -- and shifting security personnel, analysts and critics say. That has left the discount chain without an experienced and loyal staff to monitor what's strolling out its back and front doors, analysts and some former employees supplied by WakeUpWalMart.com said.

''The business is being run by bean counters. I am shocked at the Spartan level of staffing,'' said Flickinger, managing director of Strategic Resources Group. He added, ''There are also morale issues. Workers feel that the company is taking care of itself.''

While Wal-Mart denies that it has cut anti-theft jobs overall, it said it has adjusted staffing to put more personnel in stores in high-crime areas and fewer in stores with less trouble.

However, Dan Meyer, a former district loss prevention supervisor for several Wal-Mart stores in New Jersey, disputes that. Meyer, who said he accepted a buyout last fall after almost 12 years with the company, said Wal-Mart reduced the number of loss prevention staff in each store last year and redesigned their jobs in a way that was less active and more administrative.

''That's why shrinkage is up,'' he said.

Meyer said he averaged 13 apprehensions a month during most of his time at Wal-Mart. That number dropped to three to four a month in the months before he left last October. Meyer said his totals dropped because there were fewer security staff and less support from his managers for aggressively rooting out theft.

WakeUpWalMart.com has linked rising theft to its claims that the company offers skimpy pay and benefits. Wal-Mart also faces a class-action lawsuit alleging female workers were passed over for men in pay and promotions.

''I am not the type to steal, but because we are so mistreated, when I saw things I just didn't do anything,'' said Gina Tuley, a former Wal-Mart bakery worker, who quit her job at the Seagoville, Texas, store in March. A big complaint was that her hours had been cut, reducing her take-home pay.

Wal-Mart defends its pay as competitive and its health care coverage as better than most retailers, and has denied gender discrimination.

Simley said an April survey of employees that showed rising job satisfaction suggests Tuley's attitude does not represent most Wal-Mart associates.

Even so, several former associates said in interviews that their bonuses have declined because of the rise in inventory losses. Wal-Mart's Simley disputes these claims, saying theft reduction was dropped from the bonus formula about a dozen years ago. It was Walton's idea to tie associates' bonuses to their stores' pilferage levels to give them a vested interest in keeping theft in check.

Tuley said her bonus last year was $300, down from $800 the previous year.

Still, she said, ''People would walk out with bags of merchandise ... I heard the alarms go off and people wouldn't even look,'' she added.

----

Business Writer Marcus Kabel contributed reporting for this story from Springfield, Mo.

[back to top]  

Decline in Specialized Birds is Being Called the "Wal-mart-ization" of the Skies

By Seth Borenstein,
AP via 6abc.com
June 14th, 2007                                [back to top]  

The populations of nearly two dozen common American birds are half of what they were 40 years ago. According to a new analysis the fence-sitting meadowlark, the frenetic Rufous hummingbird and the whippoorwill with its haunting call, are decreasing in population. The northern bobwhite and its familiar wake-up whistle once seemed to be everywhere in the East. Last Christmas, volunteer bird counters could find only three of them and only 18 Eastern meadowlarks in Massachusetts.

Twenty different common bird species, those with populations more than half a million and covering a wide range, have seen populations fall at least in half since 1967, according to a study by the National Audubon Society. The bird group compared databases for 550 species from two different bird surveys: its own Christmas bird count and the U.S. Geological Survey's breeding bird survey in June.

Some of the birds, such as the evening grosbeak, used to be so plentiful that people would complain about how they crowded bird-feeders and finished off 50-pound sacks of sunflower seeds in just a couple days. But the colorful and gregarious grosbeak's numbers have plummeted 78 percent in the past 40 years.

"It was an amazing phenomena all through the '70s that's just disappeared. It's just a really dramatic thing because it was in people's back yards and (now) it's not in people's back yards," said study author Greg Butcher, Audubon's bird conservation director. Many of the species in decline depend on open grassy habitats that are disappearing because of suburban sprawl. Climate change and invasive species are to blame, too, he said. "Most of these we don't expect will go extinct," Butcher said. "We think they reflect other things that are happening in the environment that we should be worried about."

Audubon Board Chairman Carol Browner, former U.S. Environmental Protection Agency administrator, called the declines "a warning signal." "We are concerned. Is it an emergency? No, but concerns can quickly become an emergency," Browner said.

Compared to 1967, there are 432 million fewer of these bird species, including the northern pintail, greater scaup, boreal chickadee, common tern, loggerhead shrike, field sparrow, grasshopper sparrow, snow bunting, black-throated sparrow, lark sparrow, common grackle, American bittern, horned lark, little blue heron and ruffed grouse. "Things we all think of as familiar backyard birds ... they appear in books and children's stories and suddenly some of them are way less familiar than they should be," said John Fitzpatrick, director of the Cornell ornithology lab, who was not part of the study. The northern bobwhite had the biggest drop among common birds. In 1967, there were 31 million of the plump ground-loving bird. Now they number closer to 5.5 million.

"If you look in the northeast, it's almost gone from New England and pretty much New York as well...," Butcher said. In some cases, there are still plenty of birds left, despite large surprising drop-offs. The common grackle used to be as plentiful as people in 1967, with both human and grackle populations hovering around 200 million. Now the grackle is down to 73 million and humans are up to 300 million.

But while these common birds are in decline, others are taking their place or even elbowing them aside. The wild turkey, once in deep trouble, is growing at a rate of 14 percent a year. The double-crested cormorant, pushed nearly to extinction by DDT, is growing at a rate of 8 percent a year and populations of the pesky Canada goose increase by 7 percent yearly. Many of the birds that are disappearing are specialists, while the thriving ones are generalists that do well in urban sprawl and all kinds of environments, Butcher said. In a way it's the Wal-Mart-ization of America's skies, he said.

"The robins, the Carolina wrens, the blue jays, the crows, those kinds of birds, are doing just fine, thank you," Butcher said. "They really get along in suburban habitats, most of them even like city parks, so they are not as susceptible to the human changes in environment."

But nothing matches the take-over ability of one invading bird. "Right now the Eurasian collared-dove is conquering America," Butcher said. A dove-like bird that first entered Florida in the 1980s, it now is the most prevalent bird in the Sunshine State and is in more than 30 states. "Soon you'll be seeing Eurasian collared-doves in any city in the world," he said.

[back to top]  

Wal-Mart's Latest Ethics Controversy

An employee who scrupulously followed the company's own ethics guidelines may find herself out of a job

by Pallavi Gogoi
BusinessWeek.com.                                 [back to top]  

The very first day that Chalace Epley Lowry started working at Wal-Mart Stores (WMT) as an administrative assistant in the communications department, on Jan. 2 of this year, she went through a day-long orientation with a heavy emphasis on ethics. "We were told that even if we see something that has the appearance of something unethical we should report it," says Lowry. Now, two weeks after filing a complaint against a more senior executive, the 50-year-old mother of two finds herself looking for another job.

Lowry is the first to admit that she didn't know whether the Wal-Mart executive had done anything wrong. Mona Williams, the vice-president for corporate communications, had asked Lowry to copy some papers she thought were related to stocks. When Lowry found out a few days later that Wal-Mart was planning a $15 billion stock buyback, she worried that Williams might have traded on insider information by exercising her stock options. "In all honesty, Mona's transactions could all have been aboveboard," she says, "but I acted in good faith, just pointing out that there might have been some wrongdoing."

"Next Steps"

Wal-Mart says Lowry is simply confused. The company says she mistook a deferred compensation form for an options exercise request and that Williams did nothing wrong. "The Ethics Office determined the same day the complaint was filed that the document that created Ms. Lowery's [sic] concerns had nothing to do with stock trading and that there was no violation of Wal-Mart's ethics policy," said David Tovar, a Wal-Mart spokesman, in a statement. (Wal-Mart spells the name "Lowery" throughout its communications, although her name, as she told BusinessWeek repeatedly, is in fact spelled Lowry.)

In dispute, however, are the circumstances that led to Lowry's looking for a new job. Soon after Lowry filed the complaint, her identity was disclosed to Williams. Wal-Mart says Lowry agreed to disclosure, but Lowry says she was never given a choice. Lowry said it was impossible to remain in the department since Williams was effectively her boss, so she asked to be transferred. Wal-Mart has said that Lowry now has 60 to 90 days to look for a job within the company, but she may not get one. If she can't find another Wal-Mart job in 90 days, human resources officials have told her that they would have to discuss "next steps."

Tarnished Image

For Wal-Mart's own communications department to be dealing with an issue like this is particularly poignant. Williams and the department have been the key people trying to protect Wal-Mart's reputation over several difficult years. The company has come under scathing attacks for its workplace practices from union-backed groups WakeUpWalmart.com and Wal-Mart Watch, as well as from several politicians including Presidential hopefuls Senator Barack Obama (D-Ill.) and former Senator John Edwards (see BusinessWeek.com, 11/16/06, "Can Barack Wake Up Wal-Mart?"). Wal-Mart has also taken heat from shareholders as its stock price has stagnated (see BusinessWeek.com4/30/07, "Wal-Mart's Midlife Crisis").

Most recently, the issue of ethics at Wal-Mart has been in the spotlight because of the firing of a high-profile marketing executive, Julie Roehm (see BusinessWeek.com, 2/12/07, "My Year at Wal-Mart"). Wal-Mart says that the company dismissed Roehm because she violated the company's code of ethics by accepting gifts from vendors and because she had an affair with a subordinate. In a lawsuit against the company, Roehm has denied those charges and alleged that other top Wal-Mart executives have received gifts from vendors. She says in her suit that Chief Executive H. Lee Scott Jr. accepted trips and discounts on yachts and jewelry from billionaire Irwin Jacobs, who owns a company that buys surplus items from Wal-Mart. Wal-Mart has denied those charges, and Jacobs has filed claims against Roehm for defamation.

Taking Its Toll

All of this has also led to something of a consumer backlash: Some people won't shop at Wal-Mart because they don't want to support a company that they perceive as unfair to workers or bad for the economy. As early as 2004, a confidential report prepared by consulting firm McKinsey & Co. found that 2% to 8% of the company's customers have stopped shopping there "because of negative press they have heard." Another document, prepared in October, 2006, by Wal-Mart's former advertising agency GSD&M Advertising, found that the segment of Americans who say the chain is their No. 1 destination for discount shopping fell from 75% two years ago to 67%. The ad agency suggests that besides competition, Wal-Mart's image could account for this drop-off. The report also says that Wal-Mart's rating as a company that consumers trust and respect has "steadily declined" in the last two years.

This has all been difficult for a company with a long, proud history, dating back to the retailer's founding in Arkansas in 1962. Wal-Mart prides itself on having one of the strictest and most stringent ethics policies in the industry. Buyers are not allowed to accept even a cup of coffee from their suppliers. And its 1.3 million employees are encouraged to report any ethics violations that they might suspect or see.

Name Dropping

But Lowry's story may prove a cautionary tale for workers at Wal-Mart, and beyond. She had been on the job only a few months when she saw the documents that fueled her concerns. With the words from her initiation class still ringing in her ears, she decided to tell her direct supervisor, Sarah Clark, a senior director in the communications department. Clark encouraged her to report the issue to the company's ethics office. So on May 25, Lowry filed a complaint.

Within days, Williams knew that it was Lowry who had raised questions about her ethics. Wal-Mart says that's because Lowry agreed to make her name public. "Ms. Williams was informed after the Global Ethics Office concluded their review and after Ms. Lowery [sic] agreed that it was appropriate to inform and discuss the matter with Ms. Williams," said Tovar in his statement. However, Lowry says her supervisor made it seem like it was required. "It was phrased to me like it was part of the complaint process to tell Mona that I had filed a complaint," she says. "I didn't know I had a choice."

"Disheartened"

Wal-Mart says that Lowry was given the option of staying in her current position. "In spite of the fact that Ms. Lowery was not treated any differently after making her report and was in fact praised for bringing her concerns to her supervisor's attention, Ms. Lowery [sic] indicated that she was uncomfortable continuing in her current position and asked to be transferred," said Tovar in his statement.

Lowry says that a human resources officer she met soon after her identity was disclosed brought up issues related to team dynamics and alleged that she didn't get along with co-workers. Given the timing of the comments, Lowry says she grew even more uncomfortable in the communications department. She says she had an outstanding evaluation in her last job performance review in March, scoring 4.5 out of a possible 5 in the rating scale.

Today, Lowry feels "totally disheartened" by the way the ethics complaint was handled. She was just trying to do what was right. Now she hopes something good comes from the episode. "My experience was not what I perceived the ethics line or open-door policy to be, and I would think twice before going that route again," she says.

Copyright 2000-2007 by The McGraw-Hill Companies Inc. All rights reserved.

[back to top]  

Theft Rising at U.S. Wal-Mart Stores

By ANNE D'INNOCENZIO
and MARCUS KABEL
Associated Press
06.13.07                                                 [back to top]  

Shoppers at Wal-Mart stores across America are loading carts with merchandise - maybe a flat-screen TV, a few DVDs and a six pack of beer - and strolling out without paying. Employees also are helping themselves to goods they haven't paid for.

The world's largest retailer is saying little about these kinds of thefts, but it's recent public disclosures that it is experiencing an increase in so-called shrinkage at its U.S. stores suggests that inventory losses due to shoplifting, employee theft, paperwork errors and supplier fraud could be worsening.

The hit is likely to rise to more than $3 billion this year for Wal-Mart Stores Inc. (nyse: WMT - news - people ), which generated sales of $348.6 billion last year, according to retail consultant Burt Flickinger III.

Flickinger and other analysts say the increase in theft may be tied to Wal-Mart's highly publicized decision last year to no longer prosecute minor cases of shoplifting in order to focus on organized shoplifting rings. Former employees also say staffing levels, including security personnel, have been reduced, making it easier for theft to occur. And a union-backed group critical of the retailer's personnel policies contends general worker discontent is playing a role.

Wal-Mart declined to offer any explanations for the rise in losses, but denied it has cut security staff and said employee morale is rising rather than falling.

Although Wal-Mart declined to reveal its shrinkage rate, analysts suspect Wal-Mart - which for years had a theft loss rate that was half that of its peers - is getting closer to the industrywide average. Theft is a big problem for all retailers, costing them $41.6 billion last year, according to a joint study released Tuesday by the National Retail Federation and the University of Florida.The study found that the shrinkage rate as a percentage of sales ticked upward slightly to 1.61 percent of sales in 2006 from 1.60 percent in 2005.

Whatever the cause, such theft - which late founder Sam Walton once called one of retailers' top profit killers - adds one more challenge when Wal-Mart is already struggling with sluggish sales at its established stores due to an overall economic slowdown as well as its own stumbles in its home and apparel merchandising strategies.

Eduardo Castro-Wright, president and CEO of Wal-Mart's U.S. store division, briefly acknowledged the theft problem in a mid-May conference call with analysts. He cited shrinkage as well as increased markdowns and higher inventory for dragging down first-quarter profit margins.

"We are concerned about shrinkage and are investigating the cause and are taking steps to correct it," Castro-Wright said. Company officials won't comment on those countermeasures.

The company also said in a June 1 filing with federal securities regulators that the gross profit margin for its Wal-Mart Stores segment fell by 0.1 percentage points in the first quarter due in part to "higher inventory shrinkage."

John Simley, a Wal-Mart spokesman, declined to elaborate. He would say only that the company's theft losses as a percentage of sales is "better than our industry peer groups."

Analysts say it's significant that the company has publicly disclosed that theft is becoming a problem. "It is getting to the point of being material," said Richard Hastings, vice president and senior retail sector analyst at Bernard Sands. Securities regulations require companies to alert shareholders to significant corporate developments that could affect the value of their holdings.

The industry's shrinkage rate has been generally declining since the mid-1990s as retailers have been investing in new technology such as closed circuit TVs, according to Richard Hollinger, professor of criminology at the University of Florida.

About 47 percent of the dollars lost came from employee theft, while shoplifting accounted for about 32 percent, according to the National Retail Federation report. Administrative errors account for 14 percent, while supplier fraud accounts for 4 percent. The remaining 3 percent is unaccounted for.

In one of the more brazen employee thefts, a man wearing dark clothing and a ski mask entered a Port Clinton, Ohio, Wal-Mart store last January at midnight unnoticed by employees and stole $45,000 from the store safe. The store's night manager, Dana Walker, 30, was later arrested for the crime. He became a suspect because he knew the combination to the safe, police said.

The company's vociferous critic WakeUpWalMart.com, funded by the United Food and Commercial Workers which have been for years tried to organize the retailer's workers, publicized the company's decision last year to relax its zero-tolerance policy on shoplifting. The new policy seeks prosecutions of first-time offenders only if they are between ages 18 to 65 and steal at least $25 worth of merchandise.

That change may have emboldened some folks to shoplift, said Mark Doyle, president of Jack L. Hayes International, a retail consultancy on loss prevention.

WakeUpWalMart.com and some former employees said Wal-Mart may also have been trying to appease complaints by some police departments that its stores tied up police with too many shoplifting calls. Wal-Mart has denied that.

Wal-Mart also may have been spooked by worries about lawsuits from wrongful death, unlawful imprisonment and other legal issues related to aggressively chasing down shoplifters. In March, Wal-Mart agreed to pay $750,000 to the family of a suspected shoplifter who suffocated to death as loss prevention workers held him down in a parking lot outside a store in Atascocita, Texas. The shoplifter died in August 2005 in a parking lot, according to published reports.

The change in policy came at the same time the company began using more part-time workers - in part because of a new scheduling system that matches staffing more closely to peak shopping hours - and shifting security personnel, analysts and critics say. That has left the discount chain without an experienced and loyal staff to monitor what's strolling out its back and front doors, analysts and some former employees supplied by WakeUpWalMart.com said.

"The business is being run by bean counters. I am shocked at the Spartan level of staffing," said Flickinger, managing director of Strategic Resources Group. He added, "There are also morale issues. Workers feel that the company is taking care of itself."

While Wal-Mart denies that it has cut anti-theft jobs overall, it said it has adjusted staffing to put more personnel in stores in high-crime areas and fewer in stores with less trouble.

However, Dan Meyer, a former district loss prevention supervisor for several Wal-Mart stores in New Jersey disputes that. Meyer, who said he accepted a buyout last fall after almost 12 years with the company, said Wal-Mart reduced the number of loss prevention staff in each store last year and redesigned their jobs in a way that was less active and more administrative.

"That's why shrinkage is up," he said.

Meyer said he averaged 13 apprehensions a month during most of his time at Wal-Mart. That number dropped to three to four a month in the months before he left last October. Meyer said his totals dropped because there were fewer security staff and less support from his managers for aggressively rooting out theft.

WakeUpWalMart.com has linked rising theft to its claims that the company offers skimpy pay and benefits. Wal-Mart also faces a class-action lawsuit alleging female workers were passed over for men in pay and promotions.

"I am not the type to steal, but because we are so mistreated, when I saw things I just didn't do anything," said Gina Tuley, a former Wal-Mart bakery worker, who quit her job at the Seagoville, Texas, store in March. A big complaint was that her hours had been cut, reducing her take-home pay.

Wal-Mart defends its pay as competitive and its health care coverage as better than most retailers, and has denied gender discrimination.

Simley said an April survey of employees that showed rising job satisfaction suggests Tuley's attitude does not represent most Wal-Mart associates.

Even so, several former associates said in interviews that their bonuses have declined because of the rise in inventory losses. Wal-Mart's Simley disputes these claims, saying shrinkage was dropped from the bonus formula about a dozen years ago. It was Walton's idea to tie associates' bonuses to their store's theft levels to give them a vested interest in keeping theft in check.

Tuley said her bonus last year was $300, down from $800 the previous year.

Still, she said, "People would walk out with bags of merchandise ... I heard the alarms go off and people wouldn't even look," she added.

Business Writer Marcus Kabel contributed reporting for this story from Springfield, Mo.

Copyright 2007 Associated Press. All rights reserved. 

 [back to top] 

Controversial Commercial Calls Wal-Mart Un-American

By News4Jax.com,
June 13th, 2007                              [back to top]  

A controversial commercial recently hit airwaves, charging Wal-Mart with being un-American by importing goods from China and thereby weakening the American economy.

The new commercial began airing Wednesday on Channel 4 and other stations, telling viewers it is un-American to shop at Wal-Mart.

The ad states, "Wal-Mart was an American company but something has changed," and "Wal-Mart drives American companies to shut down plants."

The United Food and Commercial Workers International Union is the group responsible for the commercial.

"Unfortunately, Wal-Mart is leading our country in the wrong direction," said Chris Kofinis of the UFCW communications department.

The commercial asks the public to "Tell Wal-Mart it's time to be American again."

Channel 4's Emily Pantelides took the controversial commercial to the people of Jacksonville to get the city's reaction.

Several people said they liked the commercial, calling it appealing and hard hitting.

However, others disagreed, saying Wal-Mart should be "cut some slack."

"I love Wal-Mart," one woman told Channel 4. "I spend every day at Wal-Mart."

She said the commercial would not change her Wal-Mart habits.

Wal-Mart responded to the commercial with the following statement:

"We're not surprised that the UFCW is spending more hard-earned union member dues on another publicity stunt to further their politically motivated agenda ... Today, we are a global company and it is necessary to source globally to ensure we meet the needs and wants of our customers."

The final decision remains in the hands of the people -- is Wal-Mart helping by keeping prices low or turning its back on America?

[back to top] 

Indo Arya to ink warehousing deal with Birla Retail, talks to Wal-Mart

Smita Aggarwal                                        [back to top] 

NEW DELHI, JUNE 13 The latest entrant in the retail race Aditya Birla Retail, which recently opened its first ‘More’ supermarket outlet in Pune on June 1, is in advanced talks with Indo Arya Logistics for exclusive warehousing space. The logistics company will also provide transport and value added packaging services. “We have been working with a few other Aditya Birla group concerns like Hindalco . Right now, talks are on for an exclusive warehouse for its retail operations,” said Indo Arya Logistics director Yogesh Arya. The size of the warehouse will be between 50,000 and 1,00,000 square feet, he said. Initially, the retailer is looking at an exclusive warehousing facility and the number may gradually be increased in accordance with the company’s growth plans. The negotiations will be hammered out in the next few months, Arya said. The logistics company has announced the launch of India’s largest Regional Distribution Center (RDC) at Hassangarh, Haryana, with an area of 5.14 lakh sq.ft. This RDC would take care of its retail clients Pantaloons, ITC, Reliance Retail — offering services from source to destination delivery, assembling and packaging. “Such high technology warehousing provides great strategic competitive advantages and is core to a company’s business. Companies have started strategising growth plans in synergy with the high quality warehousing space available in the country,” said Arya. The company is also in talks on handling of logistical operations for Walmart in India. “But nothing has been finalised yet and the talks are at a primitive stage, where it will be very difficult to comment,” said Arya. The increasing investment in infrastructure, booming manufacturing sector and development of the organised retail sector are providing huge business potential for the logistics services, he said. Looking beyond India, Indo Arya is planning acquisitions in the international freight forwarding business, with operations in Europe, South Asia and South-East Asia by mid 2008. “It is time we leveraged the supply chain network internationally, grow with our clients and go global,” said Arya. By 2010, it plans to bring an IPO to fund its Rs 200 crore expansion plans to open RDCs in cities like Kolkatta, Chennai and Mumbai with a total space of 1 million sq ft. In 3 years, Indo Arya has plans to expand its reach to six other cities in India with a 2 million square feet capacity .

 [back to top] 

Courts Split on Status of Wal-Mart Suits

By Marcus Kabel,
Associated Press
June 12th, 2007                            [back to top] 

SPRINGFIELD, Mo. — Wal-Mart Stores Inc. won one and lost one Tuesday as state courts in Missouri and New York split on whether worker lawsuits over alleged unpaid wages should be granted class-action status.

A Missouri state appeals court rejected Wal-Mart's bid to derail a class-action lawsuit by Missouri workers who claimed they were forced by company policy to work after clocking out and during meal and rest breaks.

In New York, the state supreme court ruled in the opposite way, denying class certification for a similar lawsuit. It said each worker's claim should be handled individually.

Wal-Mart has faced class-action lawsuits alleging unpaid work in several states. Wal-Mart workers in Pennsylvania won a $78.5 million judgment last year for working off the clock and through breaks and a $172 million verdict in a California case. The company is appealing both. Wal-Mart settled a Colorado suit over unpaid wages for $50 million.

Wal-Mart spokesman John Simley said the world's largest retailer is disappointed by the Missouri ruling but that the New York decision follows what he called a growing number of decisions in other states. Simley was not able to provide a number of cases where class-action status was denied.

Wal-Mart's lawyers have argued in cases such as the ones in Missouri and New York that any unpaid work was a matter of individual circumstances that must be tried case-by-case.

Missouri's Western District Court of Appeals rejected that argument and sent the case back with some procedural modifications to the Jackson County Circuit Court.

Five former workers at Wal-Mart and Sam's Club stores in Missouri alleged in the suit, first filed in 2002, that company policy forced them to work without pay after clocking out and during meal and rest breaks. The circuit court granted class-action status in 2005, covering what plaintiff's lawyers estimated are about 200,000 current and former Wal-Mart workers in the state.

Steve Long, a lead attorney for the Missouri plaintiffs, said he was "very pleased."

"The overall story is that the case will proceed now as a class-action," Long told The Associated Press.

Long said he hoped the case can go to trial in summer 2008.

In New York, the supreme court said the lawsuit was too broad in arguing that all Wal-Mart workers in the state since 1996 were potentially harmed and should be part of a class numbering around 200,000. It said claims of unpaid work would need to be examined individually.

Attorneys for the two Wal-Mart workers named in the New York lawsuit did not immediately return phone calls for comment.

 [back to top] 

Two setbacks, one win for Wal-Mart in wage suits

Reuters
June 12, 2007                      [back to top] 

NEW YORK (Reuters) - State appellate courts in Missouri and New Mexico on Tuesday upheld decisions to grant class-action status to lawsuits alleging Wal-Mart Stores Inc. deprived hourly workers of wages, requiring them to work "off the clock" before or after shifts.

But a trial court judge in New York handed the world's largest retailer a victory, denying class certification to plaintiffs in a similar case.

The cases, among many similar actions throughout the country, alleged Wal-Mart understaffed its stores and required employees to work through their breaks or off the clock without compensation. Only five cases so far, including the two appellate court decisions on Tuesday, have been certified as class action, one of the plaintiffs' lawyers said.

Wal-Mart spokesman John Simley said the company was disappointed with the New Mexico and Missouri rulings, but pleased the New York "trial court ruled in Wal-Mart's favor in every element and denied class certification in this case."

Simley said the company was "investigating our options for appeals" in Missouri and New Mexico.

Gerald Bader, a lawyer for the plaintiffs in New Mexico, called the appellate court decisions a "resounding victory" and said he gave those rulings more weight than that of a trial court.

"This device is intended to protect the weak and the powerless against the Wal-Marts of this world," said the lawyer from Bader & Associates, referring to class-action status.

Both appellate courts also asked the lower courts to modify how some classes were defined.

In New Mexico, the judges asked the lower court to change the class definitions, broadening it to everybody who missed rest breaks and worked off the clock, Bader said.

In Missouri, the court asked for the class to be changed so it would automatically cover more people, said Stephen Long, of Shughart Thomson & Kilroy, who represents the Missouri plaintiffs.

"This has taken a long time but is very favorable and we will now give these people their day in court," Long said.

The New York suit sought class-action status on behalf of about 200,000 current and past hourly New York employees.

State of New York Supreme Court Judge Richard Platkin denied class-action status, saying the issues need "individualized inquiry."

Jonathan Selbin, an attorney with Lieff Cabraser Heimann & Bernstein, who worked on behalf of the New York plaintiffs, said the ruling was disappointing.

"There's some 200,000 relatively low-wage earners who were part of this class and effectively this order means none of these people are going to get their chance to prove their claims," he said.

(Additional reporting by Paritosh Bansal)

Copyright 2007 Reuters

[back to top] 

Wal-Mart MoneyCard: Stick 'em up

by Paul McNamara
NetworkWorld.com
Mon, 06/11/2007                              [back to top] 

Yesterday Wal-Mart was to have begun selling Dell PCs off the shelf, a somewhat odd commercial pairing, at least from Dell's perspective, which has built its business on direct sales.

That move by Wal-Mart was on top of its foray into the telecommunications service provider arena through the offering of prepaid Skype calling cards.

Now we learn that Wal-Mart wants to move more boldly out of its comfort zone -- cut-rate retailing on the backs of an abused workforce -- to be a banker of last resort for those who for one reason or another have no traditional bank account.

Meghann Marco at The Consumerist lays out the scheme in all of its sliminess:

Why is Walmart doing this? They're going after the "unbanked" market, the same group of people who get screwed with payday loans, income tax advance refund loans, prepaid debit card fees, auto-title loans and every other awful "service" that this website warns you about.

Check our Walmart's awesomely evil deal: Cashing your check costs $3.00, but if you put the money on a Walmart MoneyCard, they'll waive the $4.64 "loading" fee. Neat! After that it's only $4.94 a month to keep your money on the card.

And that's not the half of it.

It was just the other day that I mentioned to Mrs. Buzzblog that my long-held antipathy toward Wal-Mart had finally and firmly evolved into an inviolable pledge to never again set foot in one.

File this story under yet another reason.

[back to top] 

Bharti, Wal-Mart to start retail venture early next year

newindpress.com
Business & Economy 
Sunday June 10 2007                       [back to top] 

NEW DELHI: Bharti Enterprise is going to kick start its retail venture early next year, opening half-a-dozen stores across India- branding of which is still being worked out with its back-end partner Wal-Mart.

“The process is going on as per the plan and we are looking at a cluster of stores by early 2008... You will see half-a-dozen coming up,” Bharti Group, Chairman and CEO, Sunil Bharti Mittal said during the CII delegation that took place in New Delhi on Saturday.

The two partners have started recruitments and were busy sorting out the legal issues.

“The legal issues like brand agreement, franchise arrangement may take some time... But we are going ahead as per the plan,” said Mittal, who had last year announced an investment of $2.5 billion in its retail venture. While Bharti would manage the front-end, Wal-Mart would provide back-end and logistics support.

The Mittal family-owned, Bharti Enterprises, tied up with the world’s largest retailer, the $316 billion Wal-Mart Stores Inc, for its retail venture in the domestic market last year, lending a dramatic twist to India's $250-billion retail sector. After a lot of hullabaloo the venture finally got announced leading to many low-priced retail ventures like Subhiksha, Reliance Fresh et al opening up their stores in India.

The major problem in the tie-up is that FDI in multi-brand retail is a strict no no in India, which, however, allows 51 percent foreign direct investment in single brand retail and 100 percent in cash and carry wholesale business. The existing policy also allows FDI through the franchisee route. The Bharti-Wal-Mart joint venture is being structured in consonance with the FDI policy.

Meanwhile, Bharti Airtel managed to retain its position as the market leader in the GSM segment having 31.20 percent market share, as per the latest statistics released by Cellular Operators Association of India (COAI). While the all-India GSM subscriber base touched 13.06 crore at the end of May, 2007 compared to 12.55 crore at the end of April 2007, reflecting a growth rate of 4.02 percent, Bharti touched 4.07 crore with additions of 18.51 lakh users, followed by BSNL.

[back to top] 

Business buddies

By Chris Serres,
Minneapolis Star Tribune
June 9th, 2007                                                   [back to top] 

Irwin Jacobs says his friendship with Wal-Mart CEO Lee Scott never crossed the line into unethical behavior, though appearances might suggest otherwise.

When financier Irwin Jacobs struck up a friendship about 10 years ago with Wal-Mart CEO Lee Scott, he had no idea the relationship would draw national scrutiny and potentially damage his business.

Yet there he was, rifling through a pile of papers in his office in Plymouth this week, defending himself in an interview against accusations that he gave favors and gifts to Scott and his family in return for business.

"Look here," he said, pulling out a receipt from Lee Scott's wife, Linda Scott. "This is a $29 receipt ... for some spices we sold them. They don't take nothin' for free."

Jacobs maintains that his friendship with Scott was just that -- a friendship -- and never crossed the line into unethical behavior by giving gifts or favors in return for business. Last week, Jacobs sued former Wal-Mart marketing executive Julie Roehm for defamation after she claimed in a court filing last month that Scott bought yachts and a "large pink diamond" from Jacobs at preferential prices, as well as rides on a private plane.

While the courts are likely to resolve the truth of the matter, the public allegations and war of words underscore the risks that suppliers and retailers take when they become friendly. As Wal-Mart states in its 25-page internal ethics statement, "The appearance of a conflict may be just as damaging to Wal-Mart's reputation as an actual conflict."

Most large retailers have strict rules that govern their relationships with suppliers. But Wal-Mart is among the most stringent. Buyers at the Bentonville, Ark.-based retailer aren't allowed to accept free meals, supplier-paid trips or tickets to sporting events, among other items. To prevent cozy relationships with suppliers, Wal-Mart rotates its buyers frequently among different departments.

One reason is that Wal-Mart is constantly under close scrutiny from labor unions, consumer advocates and even presidential candidates.

Which is why some retail observers are baffled by Scott's close relationship with Jacobs. Nothing unethical may have taken place between the two executives, but in an environment when Wal-Mart employees can't even accept a free cookie from a vendor, some critics question why Scott was so close to a major vendor.

"If you're the CEO of Wal-Mart, you're a target," said Howard Davidowitz, chairman of Davidowitz & Associates, a retail investment banking and consulting firm in New York. "Everyone is after you. So you want to be super-careful not to give your opponents the slightest ammunition."

A 'large pink diamond'

In her court filing, Roehm accused the company of a double standard, detailing alleged instances when top executives received gifts from suppliers while firing her for alleged conflicts of interest. Wal-Mart said it fired Roehm because she had an affair with an employee, Sean Womack, and took gifts from an advertising firm, Draft-FCB, that was vying for a large advertising account with the retailer.

Roehm claimed in the lawsuit that Jacobs offered "a number of yachts" to Scott, as well as a "large pink diamond" to Scott's wife. Both were offered at "preferential prices," the lawsuit said. She also claimed that Scott accepted free trips on "private airplanes provided by Mr. Jacobs," which were used by Scott and his wife to travel to their residences in Longboat Key, Fla., and Las Vegas.

In addition, Roehm charged that Scott's son, Eric Scott, "created the appearance of conflict" by going to work for Jacobs Trading, which is owned by Jacobs and sells unsold Wal-Mart merchandise, among other products.

Wal-Mart declined to make Scott available, and Roehm's attorney, Sam Morgan, declined to comment beyond the lawsuit or allow his client to be interviewed.

Within a day after her lawsuit was filed, Roehm's accusations were printed in the national press and were echoed on television stations across the country. Critics of the giant retailer claimed that Scott had broken the retailer's own ethics rules.

Jacobs, for his part, wasted little time going on the offensive.

Though traveling in Turkey meeting with suppliers at the time the allegations arose, he fielded calls from the Financial Times, CNBC, the Wall Street Journal and others. "I didn't want people to think I was running away from it, because Irwin Jacobs never has," he said.

Jacobs said the accusations made by Roehm are untrue. Jacobs said he doesn't own any private planes, and he didn't know about the diamond ring until Roehm's accusations appeared in the national media.

"My wife called me and said, 'I'm really upset at you,' " he said. "I asked her why and she said, 'Because you gave a diamond ring to Linda [Scott] and not to me.' We thought it was an absurd joke."

The $404,652.24 boat

As for the "yachts," Jacobs said one of his companies actually sold Scott three fishing boats -- all at market prices. Scott purchased a 39-foot Wellcraft boat for $404,652.24, as well as a used, 29-foot coastal fishing boat for $75,000, according to receipts shown by Jacobs.

Both purchases were made at a Sarasota, Fla., factory of one of Jacobs' 14 boat companies, Wellcraft Marine Corp. The factory is about 15 minutes from Lee Scott's residence in Longboat Key. At the time of the purchases, Eric Scott worked at the Wellcraft factory in Sarasota; but Jacobs insists Lee Scott didn't call him about the boat purchases or take advantage of a discount that could be available through his son.

Jacobs said the accusations of preferential deals could affect his business. Jacobs said he was made aware of one instance in which a competitor of his company, Jacobs Trading, was urging his clients to switch business. The competitor, which Jacobs declined to identify, suggested that the only reason Jacobs was successful was that he offered favors in return for business, he said.

Even if he had offered Scott a gift, the executive never would have accepted it, he said. Jacobs said that once, Scott insisted on paying $12 for a promotional hat offered to him by an employee at one of his boat companies. "Scott told me, 'Thanks, but I don't intend to get fired over a $12 hat.' "

[back to top] 

Grocers Take Bite Out of Wal-Mart

By Gary McWilliams,
Indystar.com
June 9th, 2007                                      [back to top] 

After years of decline brought on by fighting Wal-Mart Stores on price, the nation's grocery chains are on the mend.

They're winning back shoppers by sharpening their differences with Wal-Mart's price- obsessed supercenters, stressing less hectic stores with exotic or difficult-to-match products and greater convenience.

Last year, sales at supermarkets open at least a year rose 4 percent, the biggest increase in five years, according to retail consultants TNS Retail Forward. While the gains are still modest, the supermarkets got more good news last week when Wal-Mart announced it would cut back on new supercenter openings for several years.

Earlier this decade, the hidebound supermarket business was expected to fall before Wal-Mart's aggressive supercenter rollout and the rise of membership clubs like Costco Wholesale Corp. and high-end specialty chains like Whole Foods Market.

Many chains did collapse -- 26 filed for bankruptcy this decade, unable to match the falling prices of their better-run rivals -- and a wave of consolidation swept the business.

But the survivors rallied by redesigning stores, introducing a more relaxed shopping experience and marrying low-priced staples with higher-margin breads, meats and wine. Now, the stronger chains like Kroger Co. and SuperValu are taking market share from weaker, often regional, grocers.

Supermarkets have begun to attract new investment from those sensing a sustainable edge. Hedge fund Cerberus Capital Management recently joined two retailers in acquiring Albertson's, a Boise, Idaho, chain, and Britain's Tesco is expected to begin rolling out 100 U.S. stores in the Southwest later this year.

Great Atlantic & Pacific Tea Co., once a symbol of the big chains' decline, recently acquired rival Pathmark Stores for $700 million. Last year, buyout fund Sun Capital Partners bought Indianapolis-based Marsh Supermarkets.

Many of the chains still are learning to sidestep Wal-Mart. They are cutting back on drugs and health and beauty products, which are Wal-Mart strengths, to stress fresh produce, higher-quality meat and easy-to-prepare foods. Subdued lighting and high-end selections also help distinguish them.

Supermarkets now understand "they can't put cookie-cutter stores out there anymore," says Sandra J. Skrovan, a senior vice president at TNS Retail Forward.

Scott Frondorf, a Green Township, Ohio, software executive, and his wife now do more of their food shopping at a local Kroger store that offers expanded produce and "boutique-like" seafood, cheese and wine. The couple still shops occasionally at a huge warehouse market, but "momentum is definitely in the Kroger direction," he said.

David B. Dillon, Kroger's chief executive, estimates that the Cincinnati-based chain gained share last year in 26 of the 32 areas where it competes directly against Wal-Mart supercenters.

[back to top] 

Tyson recalls ground beef sold at Texas Wal-Marts

Associated Press
June 9, 2007                      [back to top] 

SPRINGDALE, Ark. — Tyson Fresh Meats Inc. on Friday recalled more than 40,000 pounds of ground beef shipped to Wal-Mart stores in 12 states after samples tested at a Sherman, Texas, plant showed signs of E. coli contamination.

No illnesses had been reported. Springdale-based Tyson Foods Inc. said the recall is not related to contaminated ground beef distributed by California-based United Food Group LLC.

The recalled products were sent to Wal-Mart stores in Alabama, Arkansas, Colorado, Kansas, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Tennessee and Texas, Tyson said.

Wal-Mart has removed the products from its meat cases and is destroying the recalled ground beef still in its possession, officials said.

Tyson recalled 40,440 pounds of ground beef, all of which had sell-by dates of June 13. The ground beef was sold in prepackaged trays that were placed directly into the meat case.

The recalled products include:

—1 1/2 -pound trays of Angus steak burger all natural, 85/15, six quarter-pound patties;

—1.33-pound trays of Angus steak burger all natural, 85/15, extra thick, 4 1/3-pound patties;

—2 1/4 -pound trays of 73/27 all-natural ground beef; and

—5 1/2 -pound trays of 73/27 all-natural ground beef.

 [back to top] 

Courts Split on Status of Wal-Mart Suits

By MARCUS KABEL
Associated Press
06.12.07                                           [back to top] 

Wal-Mart Stores Inc. won one and lost one Tuesday as state courts in Missouri and New York split on whether worker lawsuits over alleged unpaid wages should be granted class-action status.

A Missouri state appeals court rejected Wal-Mart (nyse: WMT - news - people )'s bid to derail a class-action lawsuit by Missouri workers who claimed they were forced by company policy to work after clocking out and during meal and rest breaks.

In New York, the state supreme court ruled in the opposite way, denying class certification for a similar lawsuit. It said each worker's claim should be handled individually.

Wal-Mart has faced class-action lawsuits alleging unpaid work in several states. Wal-Mart workers in Pennsylvania won a $78.5 million judgment last year for working off the clock and through breaks and a $172 million verdict in a California case. The company is appealing both. Wal-Mart settled a Colorado suit over unpaid wages for $50 million.

Wal-Mart spokesman John Simley said the world's largest retailer is disappointed by the Missouri ruling but that the New York decision follows what he called a growing number of decisions in other states. Simley was not able to provide a number of cases where class-action status was denied.

Wal-Mart's lawyers have argued in cases such as the ones in Missouri and New York that any unpaid work was a matter of individual circumstances that must be tried case-by-case.

Missouri's Western District Court of Appeals rejected that argument and sent the case back with some procedural modifications to the Jackson County Circuit Court.

Five former workers at Wal-Mart and Sam's Club stores in Missouri alleged in the suit, first filed in 2002, that company policy forced them to work without pay after clocking out and during meal and rest breaks. The circuit court granted class-action status in 2005, covering what plaintiff's lawyers estimated are about 200,000 current and former Wal-Mart workers in the state.

Steve Long, a lead attorney for the Missouri plaintiffs, said he was "very pleased."

"The overall story is that the case will proceed now as a class-action," Long told The Associated Press.

Long said he hoped the case can go to trial in summer 2008.

In New York, the supreme court said the lawsuit was too broad in arguing that all Wal-Mart workers in the state since 1996 were potentially harmed and should be part of a class numbering around 200,000. It said claims of unpaid work would need to be examined individually.

Attorneys for the two Wal-Mart workers named in the New York lawsuit did not immediately return phone calls for comment.

The Missouri case is: Celia L. Hale and Gary McDowell, et al., Respondents, v. Wal-Mart Stores, Inc., et al., Appellants.: WD66162

Copyright 2007 Associated Press. All rights reserved.

 [back to top] 

Wal-Mart May Same-Store Sales Rise

Associated Press
06.07.07                                            [back to top] 

Wal-Mart Stores Inc., the world's largest retailer, said Thursday same-store sales rose 1.1 percent in May, as higher Sam's Club same-store sales offset a nearly flat month at Wal-Mart.

Wal-Mart (nyse: WMT - news - people ) said it expects June same-store sales will be between flat and 2 percent higher.

Same-store sales, or sales at stores open at least a year, is a key measure of retailer performance, because it measures growth at existing stores rather than from newly opened ones.

Analysts polled by Thomson Financial expected a rise of 1.4 percent.

In the four-week period ending June 1, Sam's Club same-store sales rose 5.4 percent, while Wal-Mart stores edged up 0.3 percent.

Including fuel, same-store sales rose 1.3 percent, including a 6.4 percent rise at Sam's Club and an 0.3 percent rise at Wal-Mart.

Net sales for the four weeks ended June 1 grew 7.7 percent to $28.26 billion, from $26.23 billion last year. Wal-Mart Stores sales grew 6 percent to $18.07 billion, Sam's Club sales grew 8.1 percent to $3.55 billion and International sales grew 14.2 percent to $6.64 billion.

At Wal-Mart, grocery sales were stronger than general merchandise. Apparel and home sales were weak, the company said.

At Sam's Club, results were helped by sales to small-business owners. Perishable food sales did well.

For the 17-week period ending June 1, same-store sales grew 0.8 percent, with a 4.9 percent rise at Sam's Club and an 0.1 percent rise at Wal-Mart.

Net sales grew 8 percent to $115.88 billion, from $107.31 billion last year.

Copyright 2007 Associated Press. All rights reserved.

 [back to top] 

Wal-Mart spawns a modern company town Bentonville, Ark., lures executives, then high-end restaurants and housing

By Allison Linn
June 7, 2007                                          [back to top]  

BENTONVILLE, Ark. - The sign at the small airport near here welcomes travelers to Northwest Arkansas, but it might as well say, “Welcome to Wal-Mart country.”

Elsewhere at the small but growing airport that serves Wal-Mart’s Arkansas headquarters, the evidence is more pronounced. A glass case features memorabilia about the world’s largest retailer and its folksy beginnings. Even the map from an airport car rental service is peppered with Wal-Mart’s signature smiley-face logo to indicate where the many nearby stores and corporate offices are located.

Perhaps most telling, while you still take a two-lane road past sleepy-looking farms to get to Wal-Mart’s Bentonville hub, along the way you’ll pass sprawling mini-mansions perched on those rolling hills. The upscale housing is the first of many signs that this pocket of Arkansas, which boasts about 420,000 residents, is not your ordinary rural outpost.

Call it the modern company town. As Wal-Mart Stores Inc. has grown from its small-town roots to become the world’s largest retailer, more than 1,000 companies that do business with it have flocked to the area, opening offices intended just to serve one of their most powerful customers. Because Wal-Mart is such an important client, the branch offices often are populated with the type of senior executives who demand amenities that commonplace in larger metropolitan areas.

“The people who came here as suppliers, and who continue to come here as suppliers, are compensated extremely well for having that kind of responsibility,” said Rich Davis, vice president of economic development for the Bentonville/Bella Vista Chamber of Commerce.

Wal-Mart, too, has recruited workers from New York and other major cities in recent years, and these transplants welcome the upper-end amenities, locals say. Wal-Mart declined to comment for this story.

While the barebones discounter may be known for its no-frills offices and penny-pinching corporate culture, Wal-Mart’s suppliers, and perhaps the company's employees themselves, don’t necessarily extend such thrifty ways into their private lives.

Mini-mansions and ritzy malls Real estate listings abound for sprawling homes featuring lavish pools and grounds, exercise rooms and gourmet kitchens.

Rogers, the small town next to Bentonville that was the site of Wal-Mart founder Sam Walton’s first discount store, is now home to a ritzy mall featuring higher-end retailers such as Coach and Nine West.

Other mainstays of nicer suburbs also have come here over the last few years. It’s easy to find a Starbucks in northwest Arkansas, and neighbors cheered the arrival of upscale chain eateries such as P.F. Chang’s China Bistro and Bonefish Grill.

Gary Dunn, a former Wal-Mart executive who now runs a consulting firm for suppliers, jokes that a few years ago, consumer products didn’t make it to Bentonville until two years after they could be found elsewhere in the country. Now, he can peruse high-tech gadgets at Sharper Image and enjoy fresh fish at a nice restaurant whenever he likes.

“Early on it was a challenge to get people to come to Bentonville,” he said, but now people are a lot more interested in locating there.

The four-county metropolitan area's population increased by about 20 percent between 2000 and 2006, to around 420,000 residents. Bentonville alone has seen its population swell by nearly 50 percent, from 19,730 in 2000 to 29,538 as of 2005.

Mark Kreymborg, who moved here eight years ago and is director of operations for American Greetings Corp.’s Wal-Mart team, said the region’s increasing traffic can sometimes be a drag. But overall, he feels lucky to live in “a small town with some big-town amenities to it.”

“A week rarely goes by without a new restaurant or a new hotel, and all that’s good,” he said.

Kreymborg laughs a bit at the increased cost of housing and the number of Starbucks he now sees in the once-rural landscape. But, he says, it’s a classic case of supply and demand.

“Any time you make money, the tendency is to want to spend it on nice things, whether you’re a Wal-Mart person or a vendor who moved down there,” Kreymborg said.

Northwest Arkansas also is getting other more sophisticated amenities. An elaborate art museum is in the works for Bentonville, and there are plans to bring minor-league baseball to nearby Springdale. A new, mostly privately funded library was recently completed. Golf is plentiful.

Northwest Arkansas Regional Airport, which opened about a decade ago at the urging of the Walton family and others, is expanding quickly to keep up with growing demand. Although there have been no official studies done, airport director Kelly Johnson said she could “very safely say” that at least 50 percent of travelers who pass through the airport are in some way affiliated with Wal-Mart and its vendors.

“It’s hard to imagine us having an interstate highway and an airport of that magnitude without a Wal-Mart. Those things just don’t make sense,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville, about 25 miles from Bentonville.

There are certainly plenty of other cities that are closely connected to a corporation, such as Rochester, N.Y. (Eastman Kodak Co.) and Cincinnati (Procter & Gamble). But the Bentonville area is unusual in that it is so rural and so largely dependent on one company. (Although there are two other major corporations headquartered in the region, Tyson Foods Inc. and J.B. Hunt Transport Services Inc., Wal-Mart’s presence is most broadly felt.)

“What makes Bentonville or the northwest Arkansas (area) so unique is to find the largest (retailer) in the world in a city of this size. The other companies are in much bigger cities,” Deck said.

Area not immune to real estate woes Although growth has been going on for some time now, construction sites still dot many roads, promising new banks, hotels and commercial space.

But the Bentonville area, like many parts of the country, has not been immune to the real estate downturn. Hampered by overbuilding, there’s a hefty vacancy rate for commercial space, and the residential market is sagging. That means it’s a buyer’s market for the next executive who comes to Bentonville looking for a McMansion. A typical listing of $400,000 to $500,000 features a four-bedroom, four-bathroom house, ranging from 3,000 to 4,000 square feet and including amenities such as a pool, sauna or state-of-the-art kitchen.

The region’s job growth also is down from a peak of adding a whopping 600 jobs a month, although Deck said 350 to 400 jobs are still created monthly. Population growth also remains intense, with the area’s population expected to grow larger than the county that includes Little Rock within two decades.

Deck thinks some speculators overestimated demand for high-end housing in the region, but she doesn’t attribute the real-estate slump to Wal-Mart’s stagnant stock price or other woes. Wal-Mart recently said it would cut back on new store openings as part of a push to improve business at its existing stores.

“Certainly this region is incredibly dependent upon Wal-Mart, but I don’t think that we’re dependent upon Wal-Mart’s quarter-to-quarter financial success,” she said.

Some expect the next wave of growth to come from Wal-Mart’s international suppliers _ the manufacturers in China, India and elsewhere who are also increasingly seeing the benefit of being closer to Wal-Mart’s home office.

Dunn, who is focusing on that business through his firm, Global Supplier Development, said he’s already seeing more restaurants and stores featuring items geared toward international transplants. In another sign of the times, a local church congregation recently asked him if they should consider adding a Chinese minister to the staff.

© 2007 MSNBC

 [back to top] 

Wal-Mart sales hurt by apparel, home

No. 1 retailer's customer pinched by gas prices

By Angela Moore
and Jennifer Waters,
MarketWatch
June 7th, 2007                                            [back to top] 

NEW YORK (MarketWatch) -- Wal-Mart Stores Inc. on Thursday posted a modest gain in May same-store sales, narrowly missing Wall Street estimates, battered by weakness in its apparel and home merchandise.

The world's largest retailer has been struggling over several months with anemic sales at stores open longer than a year, the industry's growth measure known as same-store sales.

The company also said rising gas prices have hurt its core shopper since the beginning of the year. Including gas, same-store sales rose 1.3%, and excluding gas sales, Wal-Mart's May same-store sales rose 1.1%.

Analysts, on average, had expected same-store sales to rise 1.4%, according to Thomson Financial.

Shares were down nearly 1% at $50.28 in morning trading.

Total U.S. sales for the four weeks ended June 1 rose 7.7% to $28.26 billion. The company expects same-store sales for the June five-week reporting period to be between flat and 2%.

The Bentonville, Ark.-based retailer said its apparel and home sales continue to be soft, but it expects to see U.S. improvement in these categories beginning in the third quarter, but more significant progress is anticipated during the fourth quarter.

For the May four-week period, sales at the Wal-Mart Stores segment were stronger in grocery than general merchandise, the company said. Perishables had a solid performance for the period, driven by strong same-store sales in bread and dairy.

Sales of live plants and lawn and garden items were above plan, Wal-Mart said, as customers focused on outdoor planting and landscaping.

In April, Wal-Mart's sales got slammed by cold weather, a shift of the Easter holiday into March from April, and a slow down in customer traffic as its core shoppers juggled higher costs on energy and commodities.

The results in April were far worse than expected, marking the lowest in 28 years, sending the price of the stock on a downward curve for most of the month.

Wal-Mart executives said last week that they would slow down the rate of new-store growth and were launching a $15 billion stock buyback program.

The top managers believe fewer new stores will help sales at existing stores, thereby improving same-store sales results.

"Wal-Mart U.S. continues to focus on its plan to improve comparable store sales," said Tom Schoewe, Wal-Mart's chief financial officer. "We are pleased with how strong sales were at Sam's Club during the four-week May reporting period."

By division, Wal-Mart Stores same-store sales rose 0.3%, and sales at its warehouse club unit Sam's Club rose 5.4%.

Sam's Club results were helped by sales to small businesses. Food related categories, particularly in the perishable area, performed well. Outdoor furniture and grill sales were softer than expected.

Beginning in mid-June, Wal-Mart and Sam's Club will sell Dell Inc. desktop computers in its stores and clubs across the U.S., Puerto Rico and Canada. Sam's Clubs will carry a notebook computer as well.

Internationally, the company saw strength in Argentina, Brazil, China, and the United Kingdom.

[back to top] 

Wal-Mart to Pay Fendi Over Fake Bags

By Christina Passariello
and Kris Hudson,
Wall Street Journal
June 7th, 2007                                            [back to top] 

Wal-Mart Stores Inc. has acknowledged in a legal settlement that it sold fake Fendi handbags for as much as $525 each.

The settlement, made public in a statement yesterday, highlights how widespread the sale of fake luxury goods has become, as fashion brands expand world-wide and counterfeiters become global players as well.

Wal-Mart settled after Fendi, a high-end Italian fashion brand belonging to French luxury-goods titan LVMH Moët Hennessy Louis Vuitton SA, alleged in a lawsuit last June that Wal-Mart's Sam's Club warehouse-club division sold millions of dollars worth of bogus bags and other merchandise under Fendi's label. Wal-Mart, based in Bentonville, Ark., is the world's largest retailer in terms of sales.

According to a statement released by Fendi and Sam's Club, the Wal-Mart unit pledged in the settlement to provide refunds for any customers who bought fake merchandise. Sam's Club is also paying Fendi a confidential amount as part of the settlement. Sam's Club removed Fendi-labeled products from its stores last year amid the dispute.

"We have programs in place to protect the intellectual property rights of others," Sam's Club Chief Executive Doug Mc Millon? said. "However, during this litigation, Fendi provided us with information that the 12 types of bags and wallets specifically listed in its complaint were not genuine. We accept this information."

Fendi CEO Michael Burke said in an interview that Wal-Mart was cooperative in addressing the problem of counterfeits being sold in its stores. "I'm very happy that we came to this result," he said.

Sam's Club spokeswoman Susan Koehler declined to divulge details of Sam's Club's investigation into the matter. She said Sam's Club is "no longer doing business with the companies that provided us the goods."

The squabble is among the latest of many between producers of exclusive fashion merchandise and the mass-merchant retailers striving to offer their customers such products. Last year, Coach Inc. withdrew a lawsuit alleging that Target Corp. sold counterfeit Coach purses. Target said it purchased the purses at a liquidation sale of a major department-store chain.

Fendi filed the suit against Wal-Mart last June in U.S. District Court in Manhattan. According to the complaint, which was seen by The Wall Street Journal, a Sam's Club in Torrance, Calif., was selling a black handbag for $525, compared with $900 for the genuine Fendi product.

 [back to top] 

Tepid Wal-Mart Sales Underscore

By Kris Hudson,
Wall Street Journal
June 7th, 2007                                      [back to top] 

DALLAS -- Wal-Mart Stores Inc.'s paltry 1.1% gain in sales at established stores in May underscores the long-term challenges the retailer faces in reigniting its sales results, including revamping its merchandise and improving customers' experiences in its stores.

Wal-Mart's 1.1% gain for May, which excludes fuel sales, included a 0.3% increase at its U.S. stores division -- which includes its roughly 3,400 supercenters, discount stores and Neighborhood Markets -- and a lofty 5.4% gain from its 580 Sam's Clubs in the U.S.

Wal-Mart's May result handily outpaced the 3.5% decline it posted for April. Most retailers flopped in April due to factors largely out of their control, including bad weather, high gas prices and an early Easter. At Wal-Mart, May ties with August and October as the sixth-largest month of the year for sales, each accounting for 7.5% of the retailer's annual tally, according to JP Morgan Securities. Wal-Mart had forecast a gain of 1% to 2% for May.

Same-store sales measure gains or losses at stores open for at least a year. They are a key indicator of the returns a retailer reaps on the capital it spends, and thus an influence on its profitability. Most publicly traded U.S. retailers are reported their May results this morning.

Including both new and established stores, Wal-Mart posted revenue for May of $28.3 billion, up 7.7% fro m May 2006. The retailer predicts same-store sales for June will end up "flat" with a year ago to up 2%.

Same-store sales have been a sore spot for Wal-Mart for much of the past year. The Bentonville, Ark.-based retailer's results have deteriorated for years -- steadily slipping from a 9% gain in 1998, the 10-year high -- but only in the past year has it twice posted rare monthly losses. Among the short-term factors exacerbating the swoon: Wal-Mart flubbed an aggressive bet on women's fashion last year, leaving piles of merchandise to liquidate.

Among Wal-Mart's deeper troubles sapping its sales gains: Wal-Mart is contending with more competition as it advances from the rural markets it dominates into denser, urban markets. As well, Wal-Mart has opened new stores in some markets so close to established stores that the new stores siphon sales away from their older counterparts.

Wal-Mart's long-awaited answer to the dilemma came last week, when executives announced the retailer would curtail its spending on U.S. expansion to instead plow more money into share buybacks and more time and effort into bolstering its existing stores. Since the announcement, Wal-Mart's stock has risen 6.6% to close at $50.75 yesterday.

Yet the list of challenges Wal-Mart must tackle in bolstering its existing stores is long.

"We also know that we need to make some other changes in our business, especially where we are underperforming in our U.S. stores," Chief Executive Officer Lee Scott said during Wal-Mart's shareholder meeting on Friday. "In the U.S., we have to improve in our merchandising areas… And we have to get better at consistently executing store standards and customer service, especially around the checkout."

Morgan Stanley analyst Greg Melich was one of the few that came away from Wal-Mart's announcement on Friday with a gripe. Mr. Melich had advocated for Wal-Mart to divert some of its spending on expansion not only to share buybacks but also to bolstering its personnel in its stores. That could include more hiring and higher pay to boost morale and subsequently improve customer service and reclaim sales from rivals, he said. However, Wal-Mart executives indicated such a move is unlikely.

Rather, Wal-Mart has focused on honing its store operations by finely tuning the work shifts in its stores to align with busy shopping periods. So far, Wal-Mart has applied its new work-scheduling system to 900 of its stores, and sales at those stores are increasing at twice the rate of the rest of its stores, according to Eduardo Castro-Wright, CEO of Wal-Mart's U.S. stores. But such results aren't evident everywhere.

At 7 p.m. last Sunday, during a busy period at a Wal-Mart supercenter off Interstate 20 in the Dallas suburb of Grand Prairie, Texas, only the self-service checkouts and 13 of the store's 30 registers were open. Lines were at least seven carts deep.

Trent Johnsey, a software specialist in Carmel, Ind., visited Target rather than Wal-Mart last month for shampoo, clothes and household goods. He did, however, visit a Sam's Club last week for other supplies. "We choose Target because of the ease of getting around the store and the speed of checkout," Mr. Johnsey says. "The local Wal-Mart has such tight aisles that it's a pain to even move around. And checkout time is a minimum of 10 minutes, whereas Target normally has empty or nearly empty checkout lines."

 [back to top] 

Scandal on Aisle 5

By CHARLES HERMAN
and SCOTT MAYEROWITZ ,
ABC News
June 7th, 2007                                             [back to top] 

Pink Diamonds, Discounted Boats and a Looming Lawsuit Plague Wal-Mart

Did Wal-Mart's CEO, Lee Scott, receive a pink diamond and boats at discount price?

Was the hiring of Scott's son by a Minnesota businessman a violation of the retailer's stringent ethics code?

Did a fired Wal-Mart executive who has made these claims carry on an illicit affair with a subordinate while feasting on fine food and drink at a swanky New York restaurant hosted by a company seeking business with Wal-Mart?

These are all questions being posed in a series of lawsuits and countersuits in what is quickly turning into a distracting sideshow for the world's largest retailer.

So far, there are two suits and counting.

The latest legal shot came last week when Irwin Jacobs, the Minnesota businessman alleged to have arranged discounts on the diamond and the boats for Scott, sued those who had made the allegations, saying that he had been defamed.

Jacobs told ABC News that those who had made the allegations "are going to pay the price for it."

"The fact that I even have to answer [questions] is an embarrassment and outrageous to me," Jacobs said.

The Drama Begins What can now be described as a soap opera started in December when Wal-Mart suddenly fired Julie Roehm who had been the senior vice president for marketing/communications. Roehm had been hired to shake up and revitalize the company's advertising and during her short, 10-month tenure oversaw the selection of a new advertising agency, the firm Draft FCB.

At the time of her firing, the company also terminated her colleague Sean Womack, canceled the contract with Draft FCB and awarded the reportedly $580 million account to the Martin Agency, based in Richmond, Va.

Wal-Mart gave no official explanation for the firings at the time, but reports surfaced that Roehm was having an affair with Womack, a subordinate, in addition to accepting free meals and drinks from Draft FCB.

Roehm sued Wal-Mart in January for wrongful termination and breach of contract.

Wal-Mart quickly fired back. The retailer alleged that Roehm and Womack, both of whom are married, were romantically involved. To support its claim, Wal-Mart presented an e-mail it had obtained from Womack's wife.

Read more about the e-mail.

In the e-mail, purportedly from Roehm to Womack, Roehm wrote, "I think about us together all the time. Little moments like watching your face when you kiss me."

Roehm fired back in May, accusing Scott, the company's CEO, of receiving discounts on jewelry and yachts. Additionally, she accused other executives at the world's largest retailer of accepting free gifts like tickets to an Eagles concert valued at $300. Her legal grenade landed just in time for Wal-Mart's annual shareholder's meeting in Bentonville, Ark.

Roehm also used the filing to deny the affair and said the racy e-mail was taken out of context. She also denied violating any gift policy as she believed the advertising agency was going to bill Wal-Mart for her share of the "small, White Castle-sized burgers" she accepted at the dinner.

Undernegotiating and Overpaying Wal-Mart has vehemently denied the most recent accusations from Roehm.

Talking to reporters at the meeting last week, Thomas D. Hyde, Wal-Mart's corporate secretary, said, "Mr. Scott did not and has not committed ethical violations."

"Wal-Mart's ethical standards are equal to or more stringent than those of more retailers," Hyde said, noting that in his view Scott "undernegotiates and overpays and leaves too much on the table when he buys things. He knows he lives in a fishbowl."

As for the employment of Scott's son at a company owned by Jacobs, the businessman said that the boards of both companies had approved the hiring, as long as Eric Scott did not conduct any business with his father's company.

"Here you've got a person that is no doubt desperate and doing desperate things," Jacobs told ABC News. "What she claims is totally outrageous. It's sinful."

Now Jacobs, the billionaire businessman whom Roehm accused of supplying the pink diamond for Scott's wife, of hiring Scott's son and of providing Scott with a reduced-price boat, has filed a lawsuit against Roehm and her lawyers.

"All I was asking for was a retraction," he said. "Somebody screwed up. Fix it."

The lawsuit seeks damages and lawyer fees.

Jacobs said that he had done nothing wrong and denied every accusation Roehm had made.

Are There Other Players? Jacobs suggested that the case went beyond Roehm and that parties opposed to Wal-Mart -- he didn't say who -- were using her.

"I don't think it's about Wal-Mart. I think somebody else is driving Julie Roehm with thoughts and ideas about what they can do to hurt Wal-Mart. There's something more here. It's just my instincts," he said.

Roehm did not return a call to her cell phone.

One of Roehm's lawyers named in the suit, B. Andrew Rifkin, said he couldn't comment on the specific details of the case.

But he said that "if courts [started] allowing definition suits to occur for everything lawyers said in pleadings, then no one would ever be able to plead a case."

"It's not surprising that in this type of case somebody would attempt to pursue something like this," Rifkin said. "Frankly, you see these a lot when the big guys try to beat up on the little guys."

At last year's annual shareholder meeting, Roehm oversaw the creation of a 1½-hour-long musical celebrating the retailer, which culminated in a ballad entitled "My Life Began the Day That I Met Sam," a reference to company founder Sam Walton.

The drama this year will now be played out in court.

[back to top] 

Public input sought on new Wal-Mart reports

BY JAMES GELUSO,
Bakersfield Californian,
Thursday, June 7, 2007                                  [back to top]  

The battle over Wal-Mart is back on. New environmental studies of two Wal-Mart supercenters that have been stalled for years are now out and the Bakersfield Planning Commission is poised to take public comment on them tonight.

An appeals court threw out environmental impact reports the city approved for the projects in 2003, agreeing with a citizens group that argued the documents were inadequate.

Development of the two Wal-Marts -- a 246,000-square-foot store near Panama Lane and Highway 99, and a 232,000-square-foot at Gosford and Pacheco roads -- was stopped and new environmental reports ordered. Both would be supercenters that put grocery stores alongside goods found at regular Wal-Marts.

Construction on the building at Panama and 99 had already begun when the court ruled and the building has sat unfinished. In both cases, surrounding stores were allowed to open.

"I hope they get it done," said Jamie Cox, a 37-year-old construction company owner. "Wal-Mart is cheap and they don't give you a hassle when you return stuff."

Matthew Gonzales would rather not see a Wal-Mart in southwest Bakersfield.

"There is enough of the stores here," said Gonzales, a 28-year-old business consultant. "I would go for a Target."

Despite the new environmental reports about the stores, members of the Bakersfield Citizens for Local Control are still opposing the supercenters. The citizen group sued the city after the Bakersfield City Council approved construction of the stores.

"The traffic on Panama in the past years has gotten worse," said Jared Foster, a member of the group. Putting two supercenters so close together "will only make traffic horrible."

*The new reports*

In the new EIRs, consultants answered concerns raised by the Bakersfield Citizens for Local Control and seconded by the 5th District Court of Appeal.

They include:

Urban decay -- The court ruled the city didn't consider whether the stores could cause a "downward spiral of retail closures and consequent long-term vacancies that ultimately result in urban decay."

To answer that concern, the city's consultant hired a real estate firm that concluded Bakersfield's retail market is strong enough to survive the two Wal-Marts. Even vacant retail spaces do not exhibit signs of urban decay and they tend to fill quickly, according to the report.

Cumulative impacts -- The first EIRs didn't consider enough how the two stores' impacts would add to the impacts of other development, both existing and future, according to the court.

The new EIRs include what the consultant calls the most comprehensive cumulative impact analysis conducted in a Bakersfield EIR, considering everything that is likely to be built by 2030.

Health impacts -- The court ruled the old EIR didn't address the health impacts resulting from the stores' effects on air quality.

The new EIRs conclude the pollution would not have a significant impact on health.

Kit fox -- The old EIR for the Panama Lane Wal-Mart didn't show adequate consultation with the U.S. Fish and Wildlife Service about the San Joaquin kit fox, the court ruled.

The new EIR spells out how developers must deal with kit foxes and their dens, such as only hand tools can be used when dens are being destroyed.

Air quality -- The old EIR for the Gosford Wal-Mart showed the project would have significant air quality impacts, but wouldn't interfere with implementation of the San Joaquin Valley Air Pollution Control District's air quality plan. The court ruled those two conclusions didn't match up.

The new EIR points to agreements between the developers of both stores and the air pollution district that say developers will use programs elsewhere to make up for the pollution that the stores produce.

Railroad spur -- The court ruled the old EIR didn't address the potential impacts from a railroad spur that could be built. The new EIR says the old EIR was wrong to even refer to a railroad spur, as there's no legal ability to build it.

The city hired a consulting firm to create the new EIRs, and that firm in turn hired consultants to help with specific parts of the report. The EIRs were paid for by the developers.

The Bakersfield Planning Commission is scheduled to take public comment on the documents at its meeting at 5:30 p.m. tonight. The commission is not expected to vote on the projects themselves until September or December.

People who can't attend tonight's meeting have until July 2 to send comments by mail or e-mail to the city planning department.

Other items on the Planning Commission’s agenda tonight include:

*Sports village*

The commission will take public comment on the EIR for the planned Bakersfield Sports Village. A proposed 222-acre complex of fields and retail space north of the city’s Wastewater Treatment Plant 3. The report focuses on impacts to noise, air quality and traffic.

The site was used as a spreading ground for treated wastewater until 2002.

*Airport zone*

The commission will look at a change that would allow residential development near the Bakersfield Municipal Airport, along Panama Lane just west of Cottonwood Road.

The city is proposing shortening the airport’s “approach zone” from 10,000 feet to 7,000 feet. The 3,000-foot difference would mean homes could be built in the area no longer under the approach zone.

The state’s handbook on airport planning now recommends that for an airport this size, restrictions are only needed out to 7,000 feet, said Jim Movius, the city’s planning director.

Some homes already exist inside the 7,000-foot zone. Those were built before the airport plan was adopted in 1994, Movius said.

The commission will take public comment on the move today before voting on whether to approve the change.

*Zone changes*

Also on the agenda is a 3-acre change from estate zoning to commercial zoning on the southwest corner of Brimhall Road and Renfro Road.

And there’s a proposed 5-acre change from neighborhood commercial to regional commercial zoning on the southeast corner of Calloway Drive and Brimhall Road. There are already restaurants under construction in a retail area there, Movius said, but the proposed zone would allow alcohol to be served.

*How to participate*

Tonight’s meeting starts at 5:30 p.m. in City Hall council chambers, 1501 Truxtun Ave. You can also watch proceedings live on KGOV, the local government TV station. KGOV also broadcasts meetings live on the Internet.

 [back to top] 

Retailing Rebounds From Rough April

Andrew Farrell,
Forbes
06.07.07                                        [back to top] 

May same-store sales figures released by retailers showed that sales were up from a dismal April, with particular strength among ultra-discount retailers.

Brian Sozzi, a retail analyst at Wall Street Strategies, said overall May sales looked strong. There had been questions about how the ultra-discount sector would be affected by elevated gas prices.

Dollar General reported that May same-store sales increased 6.0% from a year ago. Family Dollar reported May sales that increased 5.9%. Shares of Dollar General gained 18 cents, or 0.8%, to $21.73, and shares of Family Dollar edged higher by 9 cents, or 0.3%, to $33.10.

Last month, most retailers missed estimates for April comparable-store sales after being hit by unusually cold weather, an early Easter that pushed business to March and rising gas prices that curtailed spending. (See: "U.S. Retailers Suffer Dry Spell In April")

On Thursday, Wal-Mart Stores reported that same-store sales rose 1.1% in May. That missed analyst expectations of 1.4%. The company also said it expects June same-store sales to be between flat and 2% growth.

Shares of Wal-Mart dropped 67 cents, or 1.3%, to $50.08. Sales growth has been sluggish for some time at the company, but it recently announced plans to shift money from opening new stores to returning more money to shareholders. Last week, Wal-Mart said it will cut back on the number of new supercenters it opens in the United States this year and up a previously existing buyback plan to $11.7 billion. (See: "Wal-Mart Wins With Buyback")

Another big-box discount retailer fared better. Costco Wholesale had a same-store sales increase of 7.0%, topping analysts expectations of 5.6% increase. Shares of Costco Wholesale jumped 10 cents, or 0.2%, to $55.92.

The department store operator Nordstrom said May same-store sales grew 6.3%. Analysts polled by Thomson Financial had expected same-store sales to grow 2.6%. Shares of Nordstrom dropped 84 cents, or 1.6%, to $52.19.

Target announced a 5.8% increase, slightly missing expectations of 5.9%. Shares of Target dropped 87 cents, or 1.4%, to $63.23. Edward Weller, an analyst at ThinkEquity Partners, said the growth wasn't strong enough to change his evaluation of the company. He said in a note to clients that the second quarter will be burdened by higher costs from a spike in store openings.

[back to top] 

Not Copying Wal-Mart Pays Off for Grocers

Catering to Customer Tastes, Stressing Less Hectic Stores Help Supermarkets Recover

By GARY MCWILLIAMS
Wall Street Journal
June 6, 2007                               [back to top] 

After years of decline brought on by fighting Wal-Mart Stores Inc. on price, the nation's grocery chains are on the mend.

The supermarkets are winning back shoppers by sharpening their differences with Wal-Mart's price-obsessed supercenters, stressing less-hectic stores with exotic or difficult-to-match products and greater convenience. Last year, sales at supermarkets open at least a year rose 4%, the biggest increase in five years, according to retail consultants TNS Retail Forward. While the gains are still modest, the supermarkets got more good news last week when Wal-Mart announced it would cut back on new supercenter openings for the next several years.

Earlier this decade, the hidebound supermarket business was expected to fall before Wal-Mart's aggressive supercenter rollout and the rise of membership clubs like Costco Wholesale Corp. and high-end specialty chains like Whole Foods Market Inc. Many chains did collapse -- 26 filed for bankruptcy earlier this decade, unable to match the falling prices of their better-run rivals -- and a wave of consolidation swept the business. But the survivors rallied by redesigning stores, introducing a more relaxed shopping experience and marrying low-priced staples with higher-margin breads, meats and wine. Now, the stronger chains like Kroger Co. and SuperValu Inc. are taking market share from weaker, often regional, grocers.

Supermarkets have begun to attract new investment from those sensing a sustainable edge. Hedge fund Cerberus Capital Management LP recently joined two retailers in acquiring Albertson's Inc., a Boise, Idaho, chain, and Britain's Tesco PLC is expected to begin rolling out 100 U.S. stores in the Southwest later this year. Great Atlantic & Pacific Tea Co., once a symbol of the big chains' decline, recently acquired rival Pathmark Stores Inc. for $700 million.

Scott Frondorf, a 44-year-old Green Township, Ohio, software executive, and his wife now do more of their food shopping at a local Kroger store that offers expanded produce and "boutique-like" seafood, cheese and wine. The couple still shops occasionally at a huge warehouse market, but "momentum is definitely in the Kroger direction," says Mr. Frondorf.

Many of the chains are still learning to sidestep Wal-Mart. They are cutting back on drugs and health and beauty products, which are Wal-Mart strengths, to stress fresh produce, higher-quality meat and easy-to-prepare foods. Subdued lighting and high-end selections buttress the nonsupercenter experience. Instead of the rows of aisles with commonplace brands, the supermarkets are adding tables providing ingredients for planned meals, luring the kind of customer who shops for dinner instead of stocking up on groceries once a week, says Paul Weitzel, managing partner at grocery consultants Willard Bishop LLC. Mr. Frondorf says he was pleasantly surprised recently to find Kroger carried the walnut oil he needed for a gourmet recipe.

Safeway Inc. has converted about half of its 1,755 stores into "Lifestyle" markets with wood floors, on-site bakeries and high-end private-label brands. The third largest food retailer after Wal-Mart and Kroger, it expects to convert all its stores by 2009.

Safeway has also invested in precise temperature controls for its produce and other perishable foods as they move from suppliers to stores. And it strives to find food its competitors don't offer, says Steven A. Burd, Safeway's chairman. For instance, it worked with growers to get individual-sized watermelons two years before others. It also works with a single meat supplier to offer its own brand of tenderness-tested beef. The business picked up, says Mr. Burd, when "we started behaving more like a consumer packaged-goods company."

Supermarkets "have come to the understanding they can't put cookie-cutter stores out there anymore," says Sandra J. Skrovan, a senior vice president at TNS Retail Forward.

Safeway offers prepared foods. Kroger has an outlet for every consumer: urban no-frills stores that stock a limited set of groceries at ultra-low prices; conventional supermarkets and larger stores with housewares; and stores aimed at upper-crust shoppers that offer more produce and prepared foods.

David B. Dillon, Kroger's chief executive, estimates the Cincinnati-based chain gained share last year in 26 of the 32 areas where it competes against Wal-Mart supercenters. "They continue to grow, continue to build, continue to have impact in the market. But in the face of that, so do we," Mr. Dillon told analysts recently.

Becoming more competitive on price has meant skimpier margins. Kroger's gross margin, or profit after product costs, slumped to 24.5% at the end of last year from 27.7% at the end of fiscal 2001. Safeway's gross margin was 28.8% last year, down from 31.1% in 2002.

Wal-Mart hasn't lost its zeal for the food business. It opened 276 supercenters in the U.S. last year, helping boost its share of the U.S. grocery business by one percentage point, to 15.3% (19% including its Sam's Club wholesale unit), according to a JP Morgan estimate.

Wal-Mart plans to build about 200 new supercenters this year. Neil Currie, a retail analyst at UBS Securities LLC, says the new stores will add significantly to the square footage Wal-Mart devotes to food. "The Wal-Mart issue isn't going away," he says.

But Wal-Mart is no longer viewed as invincible. The company doesn't provide details of comparable-store food sales other than to say that such sales rose "in the mid-single digits" in the first quarter. Overall, same-store sales were up just 0.7% for the fiscal first quarter ended April 30.

Several years ago, Wal-Mart began experimenting with a smaller format store to penetrate urban markets. But these Neighborhood Market stores have struggled with tepid returns, according to analysts. Wal-Mart opened just 12 last year, down from 21 in 2005. "We're very satisfied with the performance of Neighborhood Markets," Eduardo Castro-Wright, head of Wal-Mart's U.S. stores division, said after the annual meeting last week. (Mr. Castro-Wright is a board member of Dow Jones & Co., publisher of The Wall Street Journal.)

Burt P. Flickinger III, a retail consultant, says Wal-Mart's price advantage has narrowed in the past few years as supermarkets have cut their prices and shoppers have discovered they can save money by cherry-picking supermarkets' weekly specials and lower-priced staples. At the same time, a corporate decision to reduce inventories means Wal-Mart has more trouble keeping shelves stocked, he says. A Wal-Mart spokeswoman responds that she is "not aware of any particular out-of-stock issues" in the company's grocery stores.

In Houston, Dave Baldwin says that too often the Wal-Mart supercenter near his house is out of favorite brands like Scope mouthwash and Lever body wash. "Try to find a light blue-cheese salad dressing; it isn't there. Go to Kroger, and it's all over the place," says Mr. Baldwin. He adds that the frustration of finding out-of-stock shelves has him buying more at Kroger and Walgreen's.

-- David Kesmodel contributed to this article.

[back to top] 

Wal-Mart Pushes Financial-Services Menu

NYSSCPA.org News 
6/6/07                                                 [back to top] 

ARKANSAS – Acknowledging that it won't gain a bank charter anytime soon, Wal-Mart Stores Inc. is pushing ahead with plans to carve out store space for its existing financial services, such as check cashing and money transfers, reported The Wall Street Journal.

The world's largest retailer by sales now operates MoneyCenters in 170 of its 4,000 U.S. stores, and it plans to increase the number. The shift takes those services from behind customer-service desks and offers them from a separate MoneyCenter counter, reported The Journal.

According to the paper, the focus on check cashing, bill payment and other nonbanking services is key for the Bentonville, Ark., retailer as it attempts to find ways to bolster its sales expansion amid a pullback in its construction of new U.S. stores. State-and-federal regulators have stymied Wal-Mart's attempts to get into banking. In March, Wal-Mart dropped its pursuit of a charter to operate an industrial-loan company, a form of bank, due to intense opposition and a federal moratorium on reviewing such applications.

Wal-Mart caters heavily to customers with little or no access to banking services, often described as the "unbanked" or "underbanked,” reported The Journal.

According to The Journal, Wal-Mart is among many U.S. companies serving the low-income and immigrant populations as big portions of their customer bases.

[back to top] 

‘9/11 in a box’?

Pol, unions blast Wal-Mart over container security

By michael rundle,
Metro (NYC)
June 6th, 2007                                    [back to top] 

LOWER MANHATTAN. Terrorists could hide a nuclear weapon inside a shipping container bound for New York at any time, U.S. Rep. Jerrold Nadler said yesterday, and large importers such as Wal-Mart are partly to blame for opposing greater scanning checks.

“Wal-Mart, America’s largest importer, has actively worked to oppose the scanning of all cargo containers coming into our ports,” Nadler said at a press conference on the Hudson River waterfront, where he was surrounded by anti-Wal-Mart banners and union representatives.

He then called on Wal-Mart to support new laws that would, in five years, require all containers to be scanned on entry.

“Currently, the government only inspects about 6 percent of the port containers coming into the country,” Nadler said. “The experts agree that our ports are vulnerable to nuclear attack and the Bush administration has failed to take that seriously.”

One in 25 of containers entering the United States in 2005 was bound for a Wal-Mart store, Nadler said, the equivalent of 695,000 20-foot containers a year — more than Target, Home Depot and Costco combined. He argued companies such as Wal-Mart have a duty to scan for nuclear and chemical materials — but that they are currently failing in that responsibility by lobbying against new security legislation.

“Wal-Mart executives are worried that anything that slows down their importation of foreign products, even if for a moment, it would cost them money,” said Stuart Applebaum, president of the Retail, Wholesale and Department Store union. “The bottom line is that any one of the containers Wal-Mart is bringing into this country could prove to be 9/11 in a box.”

Improving security by providing scanning equipment and tamper-proof locks would be a “commonsense policy” that would cost $15 per container, Nadler argued. He argued this cost would be negligible compared to the impact of a nuclear disaster in the metropolitan area.

A spokesman for Wal-Mart said the company was proud of its efforts to increase security — and had supported port-scanning legislation in the past — but until a reliable solution for 100 percent scanning was found, it could not be implemented.

“We conceptually support the idea of 100 percent scanning,” said David Tovar, a Wal-Mart spokesperson. “But our understanding is that the technology is not ready. That was a determination made by Homeland Security and not Wal-Mart.”

[back to top] 

Business fights for Colombia deal, labor pushes back

By Ian Swanson,
The Hill
June 6th, 2007                                      [back to top] 

Business is gearing up for a huge fight over the Colombia free-trade agreement (FTA) as Colombian President Alvaro Uribe heads to Washington for the second consecutive month to lobby for the controversial pact.

Caterpillar, Citigroup and Wal-Mart have teamed up to lead business lobbying on the deal. Despite opposition from labor groups and many House Democrats, business executives insist they are confident of success.

“The bottom-line economics of this deal are such that I think people will realize it’s important to move this year,” Citigroup’s Laura Lane said of the Colombia deal.

Bill Lane, a lobbyist for Caterpillar, said the recent trade agreement between House Democrats, Republicans and the administration has changed the dynamics on trade and increased the possibility of moving the Colombia deal. The heavy mining and construction equipment exporter is one firm that could emerge as a big winner under a free-trade pact.

But for now, Congress has only cleared the way for votes later this year on smaller trade deals with Peru and Panama. Ways and Means Committee Chairman Charles Rangel (D-N.Y.) says more work needed to be done for the Colombia deal to be considered.

The Colombia deal’s prospects have also been hampered by allegations that Colombian government officials are connected to right-wing paramilitary groups that have terrorized the South American nation. After Uribe visited House Speaker Nancy Pelosi (D-Calif.) last month, Pelosi issued a statement calling on Colombia to investigate and prosecute any officials connected to illegal paramilitary forces.

This week, Uribe will lobby members of the Congressional Black Caucus, the Congressional Hispanic Caucus and the Democratic Blue Dog Coalition. He will also meet with Rangel, Ways and Means trade subcommittee Chairman Sandy Levin (D-Mich.), Senate Judiciary Chairman Patrick Leahy (D-Vt.) and GOP Whip Roy Blunt (Mo.), an embassy source said.

Unions oppose a deal with Colombia because of that country’s history of killings of union organizers. They also argue that no changes in the text of the deal can satisfy them.

“We’re looking for a period of time where union leaders aren’t being murdered,” said Thea Lee, a top trade official at the AFL-CIO.

She said Colombia and supporters of the FTA face a “pretty high hurdle” in assuring labor that the situation in Colombia is improving and that deal deserves labor’s support. Such change certainly cannot be provided in the short term, Lee said.

But business-group representatives and Colombian government officials argue the situation in Colombia is improving, and they note a drop in labor murders last year. They also say these killings reflect wider violence in Colombia that is directed at public employees, not just labor, and they argue that rejecting the trade deal will only make matters worse.

Some business-group representatives charge that the AFL-CIO will never waver on the Colombia FTA, and that as a result supporters must simply work to defeat them.

Sara Thorn, a lobbyist for Wal-Mart, notes that labor groups have a history of picking their battles on trade. While labor put up only mild opposition to deals with Chile and Australia, both of which passed with relatively wide margins in Congress, it picked a major fight over the Central American Free Trade Agreement and is now picking its fight with Colombia.

Congressional opponents are also drawing a distinction. Noting the fact that the Peru and Panama trade deals involve relatively small economies, Rep. Brad Sherman (D-Calif.) said his caucus could survive a split on those votes - but the Colombia deal would be different.

Similarly, Rep. Mike Michaud (D-Maine) said Democrats would risk a serious rupture if members attempt to bring the Colombia deal to the floor. “It will be a rude awakening for the Democratic Party,” he said.

The Citigroup, Wal-Mart and Caterpillar officials say they will emphasize the importance to foreign policy of approving the Colombia deal. They note that Colombia has been a strong U.S. ally in Latin America and warn that rejecting the deal could give Venezuelan President Hugo Chavez a victory.

The three companies chair the Latin American Trade Coalition, which will brief House staff Thursday on all three Latin American trade deals. The U.S. Chamber of Commerce is also preparing a campaign to push all three deals forward.

Christopher Wenk, a trade lobbyist at the Chamber, said his group is asking lawmakers who are planning hearings on Peru also to hold a hearing on Colombia in the hope of moving the deal forward. But Wenk acknowledged that so far he could not say whether the request has been well received.

[back to top] 

Wal-Mart, Circuit City, and Safeway Join LERPnet

PROGRESSIVE GROCER
JUNE 05, 2007                                             [back to top] 

WASHINGTON - Big retailers Wal-Mart, Safeway, and Circuit City are among the latest to join the Law Enforcement Retail Partnership Network (LERPnet) -- the only national database designed to bring local, state, and federal law enforcement agencies and retailers together.

Two months after the official launch, the program now boasts a total of 45 member companies, including five of the nation's top 10 retailers.

"The deployment and rapid adoption of LERPnet is the end result of a long and successful campaign to understand the growing problem of organized and retail crime," said National Retail Federation v.p. of loss prevention Joseph LaRocca in a statement.

The National Retail Federation's 2007 Organized Retail Crime Survey, released last week, found that 71 percent of retailers have noticed an increase in criminal activity in the past 12 months, compared to 48 percent in 2006. This increased awareness, coupled with the acceptance of the LERPnet database, will dramatically increase the ability of retailers and law enforcement to collaborate on tackling organized retail crime, NRF said.

NRA said that LERPnet's newest subscribers include Albertson's, AutoZone, Circuit City, JCPenney, Macy's, Safeway, Sears Holdings Corp., Walgreen Co., and Wal-Mart.

NRF and the Retail Industry Leaders Association, in collaboration with the Federal Bureau of Investigation, launched LERPnet on April 9. Retailers of any size and in any sector can join LERPnet for $1,200 a year.

© 2007 VNU eMedia Inc. All rights reserved.

[back to top] 

Militants Vow To Export Products That Can Be Sold At Wal-Mart

A Tale of Career Advice For Terrorists New York, NY

Tom Attea
Newslaugh.Com
6/5/2007                                           [back to top] 

In its new issue, NewsLaugh.com, The Sanely Funny Humor Magazine, presents a helpful tale of career advice for militants, headlined, “Militants Vow To Export Products That Can Be Sold At Wal-Mart.”

Here’s a brief excerpt:

Islamic Militants, on the run even in Iraq for their explosive means of persuasion, are just now realizing that their dream of a Pan-Islamic world may well hinge on, not their ability to export terrorists, but to create products that can be sold at Wal-Mart.

The realization came to none other than Osama Bin Laden when, disguised as an overweight female shopper from Nebraska, he entered a Wal-Mart to buy some badly needed deodorant, along with perfume for his four wives.

It was in selecting fragrances for his wives that the insight dawned on him. In surveying the various offerings, he noted that there were not only American perfumes but French ones. Feeling he might be onto something, he put his choices in his cart and then went browsing.

In the electronics department, he noted the Japanese entries. Next, he examined the food shelves and saw Greek olives. And in the toy section, he noticed a myriad of plastic figures that were made in China.

Then the principal behind his discoveries came to him: the more successful a nation is, the more likely it is to have products for sale at Wal-Mart. Reconsidering his vision of a Pan-Islamic world, he realized the hopelessness of such a grand scheme as long as the entire Islamic world did not have even one product for sale at the telltale chain.

The phrase came to him, “All power comes out of the pockets of consumers at Wal-Mart.”

Other sanely funny fictions in this month’s free issue include:

* Make That An Ounce Of Gas – Our Featured Humorous Fiction

* Chavez Closes Radio Station: Music Too Latin For Communism

* Obama Budget May Include Money For Americans

* G8 Protestors Insist Nations Have The Right To Remain Poor

* Democrats Suspect Wind-Up Replica Of Bush In White House

* Fritos Now Heart Healthy; People Who Eat Them May Stop Getting Heart Attacks

* Male Frogs Becoming Female; Female Frogs Object readers may also subscribe to NewLaugh's free newsletter for exclusive laughs and offers.

NewsLaugh.com presents humorous articles under such headings as Sanely Funny Cover Story, Dreadline of the Month, Shreditorial, Washington Spin Din, Clever Monkey of the Month, and a Spoof of the Month.

About Tom Attea, humorist and creator of NewsLaugh.com:

Mr. Attea has had six shows produced Off-Broadway. Critics have called his comedy writing, "delightfully funny," "witty," with "great humor and ebullience" and "good, genuine laughs."

He was awarded a grant as a playwright by New York’s Theater For The New City and co-wrote the first feature film Showtime produced.

He has extensive experience in news media. He wrote the recent campaign for The New York Sun, New York’s new broadsheet newspaper, "Illuminate Your World," the classic campaign for Time Magazine, "There’s never been a greater need for understanding," and the long-running theme for The Village Voice, "In this city, you need a Voice." In broadcast media, he wrote the advertising that successfully introduced Lifetime television, "There’s nothing like a woman’s Lifetime," and oversaw all the advertising for WABC TV and radio in New York.

The complete issue is available at www.newslaugh.com

[back to top] 

Wal-Mart urged to help Homeland Security

By Lauren Coleman-Lochner,
Bloomberg News
June 5th, 2007                                          [back to top] 

Wal-Mart Stores Inc., the largest U.S. importer, should drop its resistance to more stringent scanning of containers entering U.S. ports that's necessary to reduce the risk of terrorism, a New York City congressman said.

"Wal-Mart is the leading lobbyist who's opposed us," Rep. Jerrold Nadler, a Democrat who wants all containers scanned for bombs and other dangerous materials, said today. "The real issue is, they don't want to spend the money."

Wal-Mart, which has no stores in New York City, and other retailers have balked at the complexity of the proposed program, which could require an additional 2,000 inspectors at each high-volume port and delay transit times, the Arlington, Virginia-based Retail Industry Leaders Association has said.

"While we conceptually support the idea of 100 percent scanning with radiation and imaging equipment, it is our understanding that the technology is not yet ready for worldwide deployment," Wal-Mart spokesman David Tovar said today via e-mail. "This is the determination made by the Department of Homeland Security, not Wal-Mart."

Nadler last year sponsored a bill that would bar all cargo not scanned and sealed from entering the U.S. The measure was later incorporated into a bill with other security recommendations that passed the House of Representatives in January.

Nadler, who spoke at a press conference along a Hudson River esplanade in Lower Manhattan, said under current procedures only about 6 percent of all cargo containers entering U.S. ports are scanned, leaving plenty of potential security holes.

The cost of each additional contained scanned would be about $15, he said, and the technology is being successfully deployed in Hong Kong. It's not clear who would pay for the program.

Largest Importer

Wal-Mart, the world's biggest retailer, is the largest importer in the U.S., according to the Journal of Commerce, bringing 715,000 shipping-container units into the U.S.

Wake-Up Wal-Mart, a group funded by the United Food and Commercial Workers union that has pressed the retailer to boost wages and benefits, recently sponsored a television advertising campaign attacking the retailer for not supporting screening of all U.S. containers with the slogan, "Wal-Mart First, America's Security Second."

Presidential candidates and senators Hillary Clinton and Barack Obama have also called for Wal-Mart to support scanning of all containers entering the U.S.

Fifteen Minutes

Scanning all the additional cargo would add up to 15 minutes transit time for each container, said Al Thompson, vice president of global supply chain policy at the RILA trade group.

"It's got to be evaluated in the real world fully before you can mandate it in the global supply chain," he said today.

A yearlong pilot program is in place to scan and analyze data from all cargo in three lower-volume ports in Pakistan, Honduras and the U.K., Thompson said. Later this year, it will roll out to three more, in Singapore, South Korea and Oman, to determine whether it is possible to scan all containers at busier locations, he said.

Wal-Mart is participating in the program, Tovar said.

Shares of Wal-Mart fell 69 cents, or 1.4 percent, to $50.52 at 4:29 p.m. in composite trading on the New York Stock Exchange.

[back to top] 

San Diego council approves ban on big-box superstores

Associated Press
June 5th, 2007                                         [back to top] 

The City Council passed a measure banning construction of some new "big-box" superstores within city limits.

The ban, passed 5-3, applies to all retail developments exceeding 90,000 square feet that use 10 percent of space to sell groceries and other merchandise exempt from sales tax.

The council initially passed a version of the ordinance on first reading last November.

Mayor Jerry Sanders has pledged to veto the ban. He has 10 days to do so once he receives the ordinance from the City Attorney's office.

The council can then override the mayoral veto, if at least five members vote to do so.

If the law is enacted, Wal-Mart and other retailers affected by the measure could take the issue to voters through a ballot petition.

The ban on jumbo commerce centers excludes membership stores, such as Costco, that sell items in bulk.

The new ordinance was modeled on a law in Turlock, southeast of San Francisco, which has prohibited big-box stores over 100,000 square feet that devote at least 5 percent of their space to groceries.

[back to top] 

Sector Snap: Wal-Mart Food Suppliers

Associated Press
06.05.07                                                        [back to top] 

Food suppliers for Wal-Mart Stores Inc. may see slower growth in upcoming years as the world's biggest retailer scales back its expansion plans, according to an analyst.

Wal-Mart (nyse: WMT - news - people ) said Friday it would slow the pace of its supercenter store openings by nearly 25 percent in its current 2008 fiscal year.

For food companies, the Wal-Mart decision could have some negative implications. Companies like Fresh Del Monte Produce Inc. (nyse: FDP - news - people ) and Kellogg Co. (nyse: K - news - people ) have increasingly depended on Wal-Mart's large customer base to boost profits and sales.

Credit Suisse analyst Robert Moskow estimated that Wal-Mart generally makes up 10 percent to 18 percent of U.S. packaged food companies' sales.

Moskow said in a note to investors Friday "if I were on the Wal-Mart sales team of a packaged foods company, my first reaction to today's news would be to temper my growth plans for 2008."

Although he said Wal-Mart's slowdown could increase sales to grocery stores, "the bottom line is that fewer new stores means fewer new places to ship inventory regardless of consumption, and that is not a good thing."

Moskow said between 2003 to 2006, Wal-Mart constituted about 32 percent of Kellogg's growth rate, 61 percent of General Mills Inc. (nyse: GIS - news - people )'s growth and 38 percent of Kraft Foods Inc. (nyse: KFT - news - people )'s.

Del Monte's Wal-Mart business, meanwhile, rose 7 percent while the overall Del Monte business was flat, he noted.

The slower pace is a boon to supermarkets like Safeway Inc. (nyse: SWY - news - people ) and Kroger Co. (nyse: KR - news - people ) who have been forced to compete with Wal-Mart's supercenters, which combine the chain's standard offerings with grocery products.

On Tuesday, Kellogg shares fell $1.04 cents to $53 by midday while Kraft Foods shares dipped 25 cents to $34.26.

Fresh Del Monte shares dropped 48 cents to $25.18 by midday.

A Bear Stearns (nyse: BSC - news - people ) analyst downgrade sent General Mills shares falling $2.16, or 3.5 percent, to $59.31.

Copyright 2007 Associated Press. All rights reserved.

[back to top]

Solons To Pressure Wal-Mart on Port Security

New York Sun
June 5th, 2007                                     [back to top]

Rep. Jerrold Nadler will lead a push today to convince retail giant Wal-Mart to abandon its opposition to scanning 100% of port container that enter the country.

Mr. Nadler, who his scheduled to appear in Lower Manhattan today with union leaders and representatives from the anti- Wal-Mart group WakeUpWalMart, is one of 30 members of Congress supporting the initiative.

In March, the coalition, which included Senators Clinton, Obama, and Schumer, called on the CEO of Wal-Mart, H. Lee Scott, to help shore up "what is one of our most glaring national homeland security weaknesses."

The effort is part of a national grassroots campaign spearheaded by WakeUpWalmart to convince the company, which is among the top container importers, to stop lobbying against 100% scanning. A representative from Wal-Mart could not be reached last night.

[back to top]

Wal-Mart Continues to Benefit from Economic Development Subsidies; More Than $200 Million Documented Over Past 3 Years

www.walmartsubsidywatch.org                   [back to top]

Washington, DC, June 5, 2007--Wal-Mart Stores Inc., which is often accused of growing at the expense of smaller retailers, continues to benefit enormously from state and local government economic development subsidies, including 39 deals worth more than $200 million in just the past three years. This according to Good Jobs First, a non-profit research group which today issued an update of its landmark 2004 report Shopping for Subsidies, which found more than $1 billion in subsidies for Wal-Mart facilities.

Details of the 39 new deals, combined with more than 240 deals from the 2004 report, are available on a new searchable website called Wal-Mart Subsidy Watch (www.walmartsubsidywatch.org). The original 2004 Shopping for Subsidies report and other Good Jobs First material can be found at www.goodjobsfirst.org.

The new website also contains a summary of disclosures made by about two dozen states on the number of Wal-Mart workers (or their dependents) who have enrolled in taxpayer-funded healthcare programs such as Medicaid and the State Children’s Health Insurance Program.

“What we said in 2004 still holds true today: Wal-Mart presents itself as an entrepreneurial success story, yet it routinely gets big tax breaks, free land, cash grants and other forms of taxpayer assistance,” said Philip Mattera, research director of Good Jobs First.

“That a company with a predatory business model and a poverty-wage labor policy can even qualify for job subsidies suggests many public officials still don’t get it,” said Greg LeRoy, executive director of Good Jobs First. “When they sit down at the table with Wal-Mart, the prize at stake is not a new Wal-Mart; the prize is access to more market share.”

Citing the comprehensive case against big-box retailing made by Stacy Mitchell in her recent book Big-Box Swindle, LeRoy said: “Wal-Mart and its ilk are anathema to real community economic development.”

The new subsidy deals benefit 30 stores and 9 distribution centers in 15 states. The stores (all but one of which are Supercenters combining groceries and general merchandise) accounted for about $190 million of the $220 million total, an average of about $6 million per store. The distribution centers accounted for about $30 million, an average of about $3 million per facility. The distribution center amount is understated, because several warehouses will enjoy enterprise zone benefits, the value of which cannot be estimated before the centers open and begin hiring.

The state with the most new deals was Illinois with 9. It was followed by Florida and Missouri with 4 each; Arizona, California and Kansas with 3 each; and Colorado, Indiana, Louisiana and Ohio with 2 each. Alabama, Maryland, Minnesota, Texas and Wyoming each had one recent deal. See the end of this release for a list of all 39 recent deals.

Illinois also accounts for the most deals in the entire Wal-Mart Subsidy Watch database with 38. Following it are Texas (29), Missouri (23), Louisiana (20) and California (18).

The most common type of subsidy found by Good Jobs First among the new deals was infrastructure assistance, which occurred in 21 facilities and accounted for $124 million of the total subsidies (with the money usually raised through tax increment financing, or TIF). The second most significant type, by value, was sales tax rebates, which went to 10 stores and totaled $55 million.

These rebates occur when a locality allows Wal-Mart to keep a significant portion of the sales taxes it collects from customers that would normally go to local government. “We saw few such rebates in our previous work,” Mattera noted. “This new trend suggests that Wal-Mart seeks increasingly to be subsidized directly by its customers, even though it often brags about how much money it saves them.”

“As with our findings in 2004,” Mattera said, “the updated totals have to be regarded as incomplete, given that the quality of disclosure of development subsidies is poor in most states. In most cases, we learned of deals first through articles in local newspapers. We then interviewed local officials and obtained documents to confirm the facts and get additional details.” Although it was not practical to contact local officials in each of the hundreds of communities in which Wal-Mart opened new stores each year, Good Jobs First did contact officials in all the communities in which new distribution centers have been announced over the past three years. Subsidies were found for 9 of the 10 (the exception being Storey County, Nev.).

While all of the distribution center subsidies directly benefited Wal-Mart or its affiliates and subsidiaries, some of the deals for retail projects went through the developers of shopping centers in which Wal-Mart stores serve as anchors. Good Jobs First regards these as, in effect, subsidies to Wal-Mart, since they help make possible the company’s expansion. Moreover, by reducing land acquisition and site preparation costs for developers, the subsidies presumably lead to lower rents for Wal-Mart. If there was more than one anchor store in a given shopping center, the value of the subsidy was divided among them equally.

The walmartsubsidywatch.org website can display state summaries as well as details of individual subsidy deals. It also has extensive rankings of both older and recent subsidy deals, including a list of the largest nationwide, the largest in each state and the largest in each category. It also has rankings of the states by the number of deals and value of deals.

[back to top]

Wal-Mart lets public foot the bill

By Phil Fairbanks,
The Buffalo News
June 4th, 2007                                [back to top]

Not covering health care allows retailer to profit at taxpayers’ expense

Next time