By DAVID RYAN,
Napa Valley Register

By MICHAEL BARBARO
New York Times
October 31, 2007                         [back to top]    

In what is shaping up to be the earliest holiday shopping season ever, Wal-Mart Stores says it will offer door-buster discounts this Friday, three weeks before they are traditionally unveiled on the day after Thanksgiving.

The giant discount chain is expected to announce a plan today to sell five major products — like a $350 laptop — beginning at 8 a.m. on Friday in a bold effort to jump-start holiday shopping two days after Halloween.

The move is likely to put growing pressure on Wal-Mart’s competitors, like Best Buy and Toys “R” Us, to begin marking down merchandise well ahead of Nov. 23, known as Black Friday because it was historically the day stores turned a profit, or went into the black.

The pre-Thanksgiving price-cutting underscores how worried the retail industry is about consumer spending this season. With the housing market in a slump and energy prices high, industry analysts expect retail sales in November and December to grow at the slowest rate in five years.

In the phenomenon of “creeping Christmas,” stores like CompUSA and Gap have begun opening their doors at midnight on Thanksgiving to drum up business, delighting some bargainhunting consumers and irritating some others who bemoan the earlier-than-ever start to the season.

But no retailer has ever tried to single-handedly move Black Friday, considered the biggest shopping day of the year.

Linda Blakley, a spokeswoman for Wal-Mart, said that consumers “are feeling all kinds of pressure, but because part of our DNA is to provide great prices on the gifts people buy, we are starting to do that early.”

Four of the five products will remain secret until Thursday morning, when they can be found — but not bought — on the walmart.com Web site. Shoppers can begin buying them in stores at 8 a.m. on Friday, where the company expects the kind of long, early-morning lines that are common on Black Friday.

By keeping the products secret until the last minute, Wal-Mart will avoid the risk of newspaper circulars leaking out onto the Internet weeks before the sale, as Black Friday ads now regularly do, much to retailers’ chagrin.

Ms. Blakley said Wal-Mart would still offer Black Friday deals on Nov. 23. “This,” she said, “is an early Christmas gift to our customers.”

Copyright 2007 The New York Times Company

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UPDATE 1-Wal-Mart starting big holiday deals this week

Reuters
Wed Oct 31, 2007                             [back to top]  

NEW YORK, Oct 31 - Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) said on Wednesday it will begin offering this week the type of holiday discounts it typically reserves for "Black Friday" -- the day after Thanksgiving that typically marks the start of the ultra-competitive holiday shopping season.

The world's largest retailer said that on Thursday it will list special deals on its Web site, like an Acer Aspire laptop with a 14-inch LCD screen for $348.

Customers will then be able to buy the products in its stores starting on Friday.

Wal-Mart has said it intends to be aggressive this holiday season to boost sales at its U.S. stores.

It is trying to reassert itself as a low-price retailer and appeal to shoppers who are being squeezed by high energy and food costs, the unstable real estate market and a credit crunch. Last year the company downplayed its discount roots in an effort to attract more business from higher-income shoppers.

Wal-Mart began reducing prices on popular toys in September, and earlier this month said it cut prices on 15,000 items, 20 percent more than at the same point a year before.

At its analyst meeting last week, Wal-Mart said it was doing "very, very well" selling Halloween merchandise and candy, and was confident in its Christmas plans.

"When it comes to Christmas, you're going to see (a very different look) from Wal-Mart because you're going to see an increased effort behind presentation," Eduardo Castro-Wright, head of its U.S. operations, said at the meeting.

The retailer is opening Christmas shops in its stores that will sell holiday decor and gifts, and offer product demonstrations. (Reporting by Nicole Maestri)

© Reuters 2006. All rights reserved.

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No to another Wal-Mart in Ceres

By LIONEL BARRAGAN,
The Modesto Bee
October 30th, 2007                             [back to top]  

I work in Ceres and I would like to respond to "Ceres certainly needs more retail, but not more Wal-Marts" (Oct. 17, Page B-7). For me, Wal-Mart isn't the holy grail of shopping. Wal-Mart almost sells all of what Ceres businesses had to offer before Wal-Mart came to town. Ceres certainly doesn't need more of the same.

Especially distasteful to me is the notion of Wal-Mart's new slogan "Save money, live better." Is saving money the key to happiness? And who is living better — really? Certainly not Wal-Mart employees.

The perception of the "live better" slogan lies in grave contrast to the daily reports about how the Wal-Mart corporation abuses its authority and excuses itself from responsibility. As Americans, we never found it beneficial to allow corporations or any city to suppress its people.

I applaud all Wal-mart employees, vendors, and business partners, worldwide who have been courageous coming forward with their stories. Their accounts of Wal-Mart's lack of concern for people and the environment, interfere with my support of the corporation. Nevertheless, I believe that many fine people shop and work at Wal-mart.

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David versus Goliath: Austin residents take-on Wal-Mart

By Justin Finney
OpEdNews
October 30, 2007                    [back to top]  

In November 2006, residents in Austin, Texas who lived near a dying shopping mall called Northcross received some big news in their morning paper: Wal-Mart was coming to town—literally. This wasn’t going to be your typical super-center situated off of an interstate, but a 219,000 sq. ft. Wal-Mart (the largest in Austin) near a four-way intersection flanked by neighborhoods. The biggest surprise to residents though was that the site-plan had already been approved by city-council. Concerned about the impact of a large 24 hr. Wal-Mart in their backyard, and frustrated that their input hadn’t been sought, the residents formed RG4N (Responsible Growth for Northcross) and the fight was on.

Early on in the fight, RG4N discovered that Wal-Mart had fine-tuned its site application process from lessons it’d learned during previous battles against other cities—over 280 cities have stopped Wal-Mart, according to the San Luis Obispo New Times. In most cases, Wal-Mart purchases land that its stores will occupy; this time it would only lease. Usually, residents get wind of a new super-center because Wal-Mart “is purchasing property or has got to change zoning,” said Lisa Waddell, vice-president of RG4N. “We think that they were really sneaky here. They really kept it under wraps.”

As a mere tenant, Wal-Mart escaped the direct line of fire, leaving RG4N to deal with the city and the Dallas based developer Lincoln Properties. Residents’ frustration over Wal-Mart’s hushed move-in was compounded by the city’s atypical approval process of Wal-Mart’s site plan. By granting the developer an “administrative” site permit instead of a “conditional use” permit—which RG4N says is required by city law because of Wal-Mart’s outdoor garden center—the city-council wasn’t required to hold a public hearing. Undeterred, residents showed up in large numbers to voice their concerns in front of city council. In response, the city-council claimed “because it’s not an official public hearing, its hands were tied,” said Waddell.

In a surprising development during conversations between city-council and RG4N, some council members revealed that they’d be warned by city attorneys that they’d be financially responsible for their own defense should any lawsuits ensue from interference with Wal-Mart’s site plan—a claim that RG4N’s attorneys say has no legal precedence. In addition to this revelation, it was also revealed in the Austin Chronicle that the city manager, Toby Futrell, had a husband who worked for Wal-Mart as a HVAC service manager. Shortly after the conflict of interest was revealed, the city manager recused herself from future dealings in the matter, but only after the site-plan was a virtual done-deal.

Determined to fight on in light of these depressing revelations, RG4N took up a number of tactics: from drawing up a vertical mixed-use site plan with civil engineers as an alternative to a Wal-Mart, weekly protests at the mall’s street intersection (one protest brought out over 3500 people who formed a human chain around the mall,) reaching out to the developer Lincoln Properties, and the eventual lawsuit filed after Lincoln’s second site-plan application was submitted.

The second site-plan, offered ostensibly as a compromise from Wal-Mart, called for an extra turn-lane, the reduction of the building in size from 219,000 sq. ft. to 192,000 sq. ft. (made possible by narrowing the aisles,) and a store opened for 22 hours a day instead of 24—except on holidays.

If Wal-Mart thought its compromise offer had been generous, RG4N made it clear they thought otherwise with the filing of a lawsuit against the city and Lincoln Properties in June 2007. If successful, the lawsuit will invalidate the site-plan. In its lawsuit, RG4N alleges that the city broke four laws in granting the site permit by using the wrong approval process, failing to enforce a plat note that limits runoff (which would negatively impact a nearby creek,) failure to enforce a protective tree ordinance, and failing to enforce traffic and public-safety provisions.

RG4N’s own projections on traffic impact indicated a discrepancy between what the developer presented to the city and the city’s own traffic research. “The big numbers aggregate from our estimates and the city’s study of the other super-centers is 25,000 cars a day. Lincoln’s estimate was 15,000 cars,” said Waddell. In addition to these numbers, the city had already rated the nearby intersection at near capacity. “The city rates streets on a scale from A to E, with E being the point of failure and requiring some kind of mitigation to the street because of its impact to public safety,” said Waddell. “The intersection on Burnet and Anderson (intersection near development) is already at a D minus with current traffic.” Such traffic, besides causing pollution and turning once quiet neighborhood streets into mini thoroughfares, also slows down emergency vehicles and endangers the many residents who run, walk, and bike in the area.

Regarding the runoff from the Wal-Mart, another allegation in the lawsuit and important concern of residents, Waddell said that the nearby creek couldn’t handle the extra inflow. “Shoal creek is a watershed area and a designated flood zone.” In addition to the runoff’s flood hazard, there’s the usual pollutants of oil and fertilizers resultant from the thousands of cars and outdoor garden-center that will negatively impact the environment. “Runoff from cement parking lots is different. If it’s not absorbing into the ground than it’s in streams and puddles. It’s running down into rivers and overflows.”

But residents' concerns over a Wal-Mart super-center moving into their neighborhood aren’t confined to the allegations listed in the lawsuit. Literature on the group’s website cites a litany of reasons why Wal-Mart isn’t healthy for communities: a national study of over 500 Wal-Marts reported a 400-1000 higher percentage rate of police incidents compared to the nearest Target super-centers, another report on three Iowa communities showed property values are lowered when local businesses go under, and then there’s the noise and light pollution that’s inevitable with a super center—some of the homes in one Austin neighborhood are only 600 feet from the proposed Wal-Mart.

In a show of support for RG4N, a number of local businesses have stepped forward and donated money, in addition to donations received from sympathetic Austin residents. However, in spite of all the public resistance, Lincoln Properties has boldly moved ahead and started partial demolition on the mall, accepting the risk of losing in court, and in turn, it’s own construction profits.

In one immediate victory though, RG4N has convinced the developer to halt the decimation of 26 mature trees on the site. This small victory in the uphill battle against the world’s largest private employer and sales chart-topper of the Fortune 500 was a partial anodyne to the irony of Austin’s recent passage of the “big-box ordinance,” shortly after the city’s approval of the Wal-Mart site plan. Passage of the ordinance requires stores over 100,000 sq. ft. to be processed with “conditional use” permits. The same kind of permit RG4N says should have been used and would have allowed a public hearing. In addition, a city ordinance creating incentive for “vertical-mixed-use” developments, a type of building design that offers an alternative to big-box super-centers, was also passed too late to have any effect on the outcome of the Wal-Mart in RG4N’s neighborhood.

The final decision that will secure or scuttle a victory for RG4N residents lies in the hands of a judge who will hear arguments on the case on November 13. Should the residents be successful in nullifying the site-plan, Lincoln Properties will have to go back to the drawing board and be subject to all the new requirements mandated by the big-box ordinance. It’s an outcome Lisa Waddell is hopeful for, pointing out that other Wal-Marts that have already begun construction were forced to be demolished after a judge’s order. But she tempers her hope with the sobering reality of the situation. “City-council authorized the city to pay them 250,000 dollars to fight this case,” she said. “The city hired an attorney to fight the citizens…but what else can we do but fight?”

Anyone interested in helping RG4N in its fight against Wal-Mart can visit their website and contribute donations: www.rg4n.org

Authors Bio: Justin Finney is a writer and activist living in Austin Texas. When not mulling over the serious political and ecological conumdrums of the day, he practices French, jogs, and meditates—but not nearly often enough.

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Wal-Mart toy recall lacked some consumer information

Associated Press
October 30th, 2007                       [back to top]  

The federal consumer product watchdog agency said Tuesday that a unilateral recall of lead-tainted toy animals by Wal-Mart Stores Inc. lacked some information that consumers need, including how many toys were sold, when they were sold and at what other retailers.

U.S. Consumer Product Safety Commission spokeswoman Julie Vallese said the agency prefers that companies work with it to produce comprehensive recall announcements that give consumers all the information they need to react.

The largest U.S. toy seller announced Oct. 19 that it was pulling sets of plastic toy animals made in China and offering a refund to shoppers. It said its own safety testing, stepped up after this year's string of toy recalls, found excessive lead levels in the material the toys are made of.

Wal-Mart said Tuesday it always works with the CPSC and did so in this case by notifying the agency of the test results and decision to pull the product.

"Our testing revealed excessive levels of lead in these toy sets. We informed the supplier and the CPSC and we felt we had to let our customers know what we'd found," company spokeswoman Linda Blakely said.

Wal-Mart's Oct. 19 recall announcement did not say how many of the sets were sold, when they had been stocked in Wal-Mart stores or name the manufacturer.

The retailer has declined to provide those details when asked by The Associated Press. A spokeswoman said she believed the toys were sold by other retailers but declined to provide their names.

The CPSC's Vallese said she was not criticizing Wal-Mart and said the agency has a good working relationship with the retailer.

But the agency wants recall announcement to contain all the information consumers need to respond, including how many of a product were sold, when and where.

"All of this information is necessary for consumers to respond to announced recalls," Vallese said.

"We are not big fans of when companies handle recall announcements independently of the agency. It can cause confusion and doesn't always provide consumers with the information they need," Vallese said.

The CPSC's recall notices also specify whether a product poses an imminent health hazard, like choking, or because it violates a law, such as those against excessive lead levels.

"Wal-Mart took an action independent of the agency, knowing that we prefer when the announcement (of a recall) includes all the information that makes it more comprehensive and less confusing," Vallese said.

She said Wal-Mart's information prompted the agency to open an investigation of the toys, which were sold in bagged sets of farm animals, jungle animals and dinosaurs without a brand name.

The investigation includes testing by the agency's own labs. Vallese could not say when those results would be done but added that "to say a matter of months would be too long".

While the investigation is active, Vallese said the agency is barred by law from disclosing details including the number of toys sold or at which retailers.

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Wal-Mart announces opening of 36 stores in October

M2 COMMUNICATIONS LTD
10/30/2007                                  [back to top]  

Oct 30, 2007 (M2 EQUITYBITES via COMTEX News Network) -- Wal-Mart Stores Inc (NYSE: WMT), the operator of Wal-Mart Stores, Supercenters, Neighborhood Markets, and Sam's Club, announced on Monday (29 October) that the company will complete the opening of 36 new stores and clubs across the US during the month of October 2007. The new stores will reportedly be providing jobs for 10,800 associates. Over 4,300 associates have been hired to fill new positions at new, expanded and relocated stores. The company said that it is opening stores in 22 states in October 2007 that will serve diverse communities from cities to rural and suburban communities. The final two October stores will open on 30 October 2007, including a new Supercenter in Wasilla, Alaska. Since February Wal-Mart has reportedly opened 205 stores and clubs across the US, including 163 supercenters, 19 Sam's Clubs, 16 Neighborhood Markets and 7 discount stores. 32,000 associates were hired to fill new positions, Wal-Mart said.

(C)2007 M2 COMMUNICATIONS LTD

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Market Selling Expired Wal-Mart Food In Beijing

China Retail News
October 30, 2007                   [back to top]  

According to Sina.com, a supermarket in Xiba Village of Beijing's Chaoyang District is selling expired food with Wal-Mart tags.

A staff representative from the Chinese market says in the report that it has been selling expired food, including yogurt, meat and vegetables, for more than two years. Since the price is cheaper than at Wal-Mart, it has reportedly done good business.

Chinese media reports that the expired food that the supermarket sells come from Wal-Mart Zhichun Road Store, but Huang Li, a representative from Wal-Mart's public relations department in China, says that Wal-Mart's store at Zhichun Road has signed with and consigned a company called Beijing Chunqiu Storage and Transportation Company to destroy its expired food. Therefore they say they have never hear of their expired goods being sold by other supermarkets.

Huang says that as a global company, Wal-Mart has attached great importance to the disposal of its expired food and they have never allowed their expired food to flow into other markets. Huang says if it proves to be the cooperating company that has given the goods to the illegal supermarket, they will severely punish the company, and they will set up a special team to investigate

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Wal-Mart opposes Movie Gallery auction

The Associated Press
October 29, 2007                                    [back to top]  

Wal-Mart Stores Inc. has joined a group of landlords protesting Movie Gallery Inc.'s plan to close more than 500 of its stores during its Chapter 11 bankruptcy case.

In papers filed Saturday with the U.S. Bankruptcy Court in Richmond, Va., Wal-Mart joined landlords requesting that the court rescind its approval of rules governing the auction of leases on most of the 520 stores that Movie Gallery intends to shut down.

The major discount retailer leases space to Movie Gallery in several locations, including stores in Kentucky, Tennessee, Florida and California. Most of the leased space is located inside Wal-Mart stores.

Wal-Mart has signed on to the objection of the Inland Real Estate Group of Companies Inc., which states that the rules governing the lease auction "are deficient and not reasonable" and that landlords were not given sufficient time to object to the rules before the court gave its approval.

In court documents, Inland said the bankruptcy court's quick approval of the auction procedures "without any prior, meaningful notice to Inland or to the other landlords" threatens to deny the landlords' due-process rights.

As for the auction rules, Inland said they were deficient because they effectively give landlords only five days to evaluate their prospective new tenants. Inland has asked for seven business days.

Last week, two groups of landlords, including Inland, filed objections to how Movie Gallery plans to conduct going-out-of-business sales at the stores.

At issue is Movie Gallery's ability to conduct business during whatever hours it deems appropriate, the lack of a deadline for the completion of the sales and the display of going-out-of-business signs. They fear the disruption of other businesses at the shopping centers in which Movie Gallery rents space.

Movie Gallery, based in Dothan, Ala., filed for Chapter 11 protection on Oct. 16, listing $1.4 billion in liabilities and $892 million in assets. The company aims to save about $70 million in rent by closing the stores.

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New Wal-Mart Larger Than Life

By Kevin Cowherd,
Baltimore Sun
October 29th, 2007                                  [back to top]  

Let's face it: We like big things in this country.

We like big cars, big houses, big burgers we can stuff in our big mouths and Big Gulps to wash 'em down.

We like big TVs, big malls and big sales. Who gets excited about a regular sale anymore? Now it has to be "THE BIGGEST LABOR DAY SALE EVER! DON'T MISS THIS SPECTACULAR EVENT!"

Sometimes, even big won't do. Sometimes we need bigger than big.

Super-sized, that's what we need. Like a pizza the size of a manhole cover, with 27 toppings and 10 pounds of cheese injected via cooking syringe into the crust, the biggest, thickest, gooiest pizza in the whole world.

Anyway, if you're into all this bigness, you need to drive up to Cockeysville and see the new Wal-Mart Supercenter, which is the size of, I don't know, Montana.

Oh, this baby is huge.

It's a gleaming 240,000- square-foot temple of rampant consumerism, aisle after aisle after aisle crammed with every conceivable product you could ever want, all of it shimmering under dazzling white lighting.

It has a Subway restaurant, a bank, a place to get your nails done and a 200-bed surgical center where you can have your gall bladder removed or a torn meniscus repaired between trips to the bakery and photo center.

The store is so big, I had to take a shuttle bus to get from electronics to pet supplies.

OK, that's not true.

Neither is that stuff about the surgical center.

But the store does have a drive-through lane in the garden center, where apparently you'll be able to shop for garden supplies without getting out of your car.

(Because God forbid you actually burn any calories before doing your yard work. I bet they hand out free doughnuts at the garden center drive-through, too.)

Anyway, the new Wal-Mart is absolutely cavernous, if you like that sort of thing. And apparently many people do.

On the day I visited, first-time shoppers seemed dazzled as they pushed around their carts. I saw quite a few of them whip out cell phones and intone to the other person: "Oh ... my ... God. You gotta see this place!"

Well, I did see the place.

In fact, I walked from one end to the other on the faux-marble flooring until my fat feet hurt.

I marveled at the 200 - or whatever the number was - LCD TVs on display, at the health and beauty section that is bigger than most public libraries, at the hot-chicken counter where you could stuff yourself with fried chicken, barbecued chicken, Szechuan chicken, rotisserie chicken, sweet-and-sour chicken and thermonuclear hot wings that looked as if they would melt off your lips.

I took in the immense sporting goods section and all the clothing aisles, and the lamp aisles, and then I stopped to roll a few frames at the 150-lane bowling alley and do some bungee jumping off the atrium skywalk.

OK, I kid about the bowling and bungee jumping, too.

But as I walked and marveled and pounded all that shoe leather, I was struck by this thought: When does big become too big?

When does a huge store become so sprawling, with so many products - food and automotive, books and boomboxes, furniture and bedding, and 27 aisles of pet supplies - that it becomes overwhelming?

What if you don't want to go on a quarter-mile hike to find a jar of pickles, as I did the other day?

What if you don't want to walk up and down 10 aisles looking for a pack of athletic socks?

Yet the fact is that in a few years, Wal-Mart will probably decide that a Supercenter isn't big enough for all its customers.

Then they'll open a Megacenter, 110 acres with a lake stocked with bass in the middle of the store, waterfalls cascading around the pharmacy and vision center, a food court and the aisles crammed with 18 million products for sale.

But after a few years, that'll start to feel small, too.

So then you'll be hearing about the grand opening of the new Wal-Mart Enormocenter, shaped around 246 environmentally sensitive wooded acres, with an overhead monorail system to take you from one end of the complex to the other, a 400-room Marriott on the premises, a 12-screen multiplex cinema, 2,000 checkout counters and every single product ever manufactured on the shelves.

I hope I can find the pickles.

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Wal-Mart rolls out SAP in 14 countries

Rebecca Thomson
ComputerWeekly.com
29 Oct 2007                                     [back to top]  

Wal-Mart, the world's biggest retailer, is to replace its in-house accounting systems with SAP's enterprise resource planning Financials package in 7,100 stores in 14 countries. The first phase is due to finish in 2010.

A Wal-Mart spokesman said the retailer, which is engaged in a £3bn international expansion programme, will replace in-house accounting systems that are "too unwieldy for the global, complex world the company is moving into".

He said, "The timing is right because there are limits to what we can do in 14 countries with the legacy systems. The SAP system is a superior tool for the future."

The accounting package will have to work with existing systems in Wal-Mart, such as logistics and store management.

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Meredith signs licensing deal with Wal-Mart

By Lauren Bell
October 26th, 2007                          [back to top]  

Meredith Corp. has signed a multiyear licensing agreement with Wal-Mart Stores Inc.

Products sold at Wal-Mart under the agreement will be based on Meredith flagship magazine Better Homes and Gardens. The exclusive line of home goods will be in Wal-Mart stores by fall 2008.

“We believe Wal-Mart is an ideal partner for the Better Homes and Gardens brand,” said Art Slusark, VP of corporate communications and government relations for Meredith. “ Independent consumer research revealed that Better Homes and Gardens readers are frequent Wal-Mart shoppers. Additionally, the Better Homes and Gardens brand was associated with ‘high quality’ by 74% of survey respondents — higher than any other brand in the space, including Martha Stewart.

Meredith currently has a 15-year licensing agreement with Wal-Mart for Better Homes and Gardens outdoor and garden products.

Slusark said that products will be available first in North America. Expansion beyond North America is expected, but the company does not have a timetable.

Products will be marketed across Meredith’s media platforms, which include magazines and television. However, no editorial content will be used to sell the Wal-Mart products.

The products will include bedding, bath accessories, dinnerware and throw pillows, making this deal the largest Better Homes and Gardens product extension in the brand’s history. The creative team at the magazine will assist in product design.

Slusark said he didn’t see the licensing agreement affecting print advertisers directly, but, he pointed out, it will raise brand name visibility with a large number of American consumers.

The company has been steadily expanding its brand footprint this year, signing deals with Universal Furniture for Better Homes and Gardens-branded furniture and real estate franchiser Realogy. The Realogy agreement formed the basis for the Better Homes and Gardens real estate network, slated to launch in July 2008.

Better Homes and Gardens has a circulation of 7.6 million. Its Web site reports 5 million unique monthly visitors.

Meredith, headquartered in Des Moines, IA, publishes 25 subscription magazines, including Better Homes and Gardens, Parents and Family Circle. It also publishes special interest publications and books. The company owns 13 television stations and recently launched the broadband channels Better.tv and Parents.tv. Additionally, Meredith owns more than 40 Web sites.

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Wal-Mart Courts State Politicos

BusinessWeek Online                                [back to top]   

Wal-Mart Stores (WMT) has been sharply increasing political contributions in states where it is trying to cut its corporate tax bill. That's according to data just released from the National Institute on Money in State Politics, a nonpartisan, nonprofit group based in Helena, Mont.

Over the past four election cycles, the retailing giant has ratcheted up contributions in nine states that are key to its operations: Arizona, California, Florida, Illinois, Indiana, Michigan, North Carolina, Pennsylvania, and Texas. Its political contributions in those states rose from $139,822 in the 2000 election cycle to $879,441 in the 2006 election cycle, according to the institute. Wal-Mart's efforts to reduce its corporate taxes in those states have come to light as a result of a lawsuit that the attorney general of North Carolina filed against the company to challenge its tax-cutting strategies.

Local Officials' Expanded Role "As Wal-Mart looks for ways to improve its bottom line, the public should be aware that their tax bill may increase as Wal-Mart's goes down," says Edwin Bender, executive director for the National Institute on Money in State Politics. Wal-Mart did not comment for this story.

Across the past four election cycles, Wal-Mart made a total of almost $2.5 million in state political contributions in the nine key states. That accounts for 65% of the company's campaign contributions at the state level, which totaled $3.8 million in 43 states.

As BusinessWeek first noted last year [BusinessWeek.com, 9/28/06], the giant retailer has been steadily boosting contributions to state and local politicians, just as such politicians have been taking on more important roles in deciding key issues concerning the company's operations. In recent years, state and local officials have been weighing in on everything from the local minimum wage and required health-care benefits to zoning for big-box retailers. Meanwhile, Wal-Mart has made contributions to everyone from California Governor Arnold Schwarzenegger and New York Governor Eliot Spitzer to former Maryland Governor Robert Ehrlich Jr. and Illinois state Senate President Emil Jones Jr.

Wal-Mart's Tax Bill Wal-Mart has been working hard to reduce its taxes at the state level. As The Wall Street Journal reported on Oct. 23, Wal-Mart sent a letter in 2001 to accounting firms that began: "Wal-Mart is requesting your proposal[s] for professional tax advice and related implementation services in connection with minimization of state income taxes in the following states: Arizona, California, Florida, Illinois, Indiana, Michigan, Minnesota, and Pennsylvania." The company ultimately hired Ernst & Young to help it develop a series of complex strategies to reduce its state taxes. The newspaper reported that while state income tax rates for corporations average 6.9%, Wal-Mart has paid taxes equal to about half the statutory rate over the past decade.

One group of researchers tried to crunch the numbers on Wal-Mart's tax payments. Citizens for Tax Justice, a Washington-based nonpartisan group, and Change to Win, a labor coalition that represents 6 million workers, put out a research report that suggested its efforts helped cut payments to state governments almost in half between 1999 and 2005. Over those seven years, Wal-Mart reported $77.4 billion in pretax U.S. profits. But it reported a total state income tax bill of only $2.4 billion, or 3.16% of those profits. The researchers' report said that if Wal-Mart paid taxes at the statutory state corporate tax rates for the same period, it would have paid $4.7 billion in state income taxes.

Boosting Contributions to Cut Taxes Wal-Mart has been increasingly generous with its political contributions. Of the $2.5 million that it gave in the nine key states, state-level candidates and party committees in those states received $2.2 million of that between the years of 2000 and 2006. In California, with a tax code that the Institute calls one of the "most stringent in the country," political party committees collected more than half of the total contributions.

The institute also noted that Wal-Mart gave an additional $205,622 in Texas, where Ernst & Young set up a limited partnership for Wal-Mart that allowed much of the company's earnings to be transferred out of state. This practice was used by enough companies that the Texas legislature has since changed the law.

In North Carolina, where the attorney general is challenging Wal-Mart's use of real estate investment trusts to cut taxes, candidates and party committees received $27,750.

Copyright © 2007 BusinessWeek Online. All rights reserved.

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Wal-Mart analyst meeting leaves Wall Street divided

By Nicole Maestri,
Reuters
October 25th, 2007                                 [back to top]  

Wal-Mart Stores Inc's (WMT.N: Quote, Profile, Research) annual analyst meeting has come and gone, and the catalyst that Wall Street was hoping for never materialized.

Instead, Wal-Mart's stock fell more than 1 percent on Thursday and the two-day event, which began October 23, left analysts at odds over prospects for the world's No. 1 retailer as it heads into the key holiday shopping season.

In fact, at least one analyst has downgraded the stock since the meeting ended. Some said they remained skeptical of its ability to turn around the business, while others said the meeting gave them the sense that Wal-Mart is on the road to recovery.

Wal-Mart's shares lost 50 cents, or 1.1 percent, to $43.36 in afternoon New York Stock Exchange trading on Thursday. On Monday, the stock closed at $45.25.

TRYING TO GET WALL STREET ON BOARD

Wal-Mart's analyst meeting took place as the retailer was trying to revive lagging sales in its U.S. division, which accounts for the majority of its sales.

Sales at its U.S. stores open at least a year, known as same-store sales, rose at their slowest pace on record the last fiscal year, and have failed to show substantial improvement this fiscal year, which began in February.

But its stock got a boost twice in the past year after delighting Wall Street by saying it would rein in U.S. expansion

On Tuesday, however, its shares fell 3 percent after it said it would slow spending on new U.S. stores -- but plow investment into international markets.

Wal-Mart then spent much of the meeting explaining that investing in its international businesses, even its struggling Japanese operations, would lead to better returns down the line, and it would either "win" in its international markets or exit them.

It also tried to convince analysts it had a strategy in place for improving U.S. results -- including expanding its $4 generic prescription drug program, adding two new home decor brands and continuing to renovate stores.

The meeting ended with Chief Executive Lee Scott saying that the second quarter marked a low point for the retailer, and he was "optimistic" about the upcoming holiday season.

"Overall, we walked away from the meeting feeling optimistic about the near-term and longer-term future of Wal-Mart," Lehman Bros. analyst Robert Drbul wrote in a note.

"In what continues to unfold as an increasingly difficult retailing environment, Wal-Mart appears well positioned, with what seems to be very lean and healthy inventory levels and renewed focus on its (every-day low price) proposition, especially if the economic environment further deteriorates."

He has an "overweight" rating on the stock and a $50 price target.

MIXED REVIEWS

But not everyone was convinced.

Jaison Blair, an analyst with Rochdale Research, downgraded Wal-Mart shares to "hold" from "buy."

"We had expected the analyst meeting ... to provide a positive catalyst as management aggressively curtailed U.S. stores growth and International expansion," he wrote. "While U.S. growth was slowed, management disappointed by doubling down in Japan."

He said that without a catalyst, Wal-Mart is "simply a bet against energy prices."

"While an energy sell-off may lead to a rally in the consumer sector, there are other names we would rather own at this time," he wrote.

Charles Grom, an analyst with JP Morgan, said in a research note that he left the meeting with "many of the same operational concerns and even more skepticism regarding management's capital allocation strategy."

He said: "We'd continue to avoid the stock and would rather be long overweight-rated Target (TGT.N: Quote, Profile, Research) and Costco (COST.O: Quote, Profile, Research) instead."

Sarah Henry, an analyst with MFC Global Investment Management, said Wal-Mart is now a "show-me" story and needs to prove it can turn its words into actions.

"The big challenge here is to try to get those ... U.S. stores going," she said

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New Shipping Law Makes Big Waves In Foreign Ports

By John Miller,
Wall Street Journal
October 25th, 2007                           [back to top]  

A U.S. law that will require foreign ports to scan every container they ship stateside looks set to create big winners and losers and force consolidation at ports around the world.

Designed to ensure freight containers aren’t used by terrorists to smuggle weapons or bomb materials into the U.S., the Law on Maritime Cargo Scanning Requirements is shaping up to have a dramatic impact on the global shipping industry, port officials and operators in Europe and Asia say.

Companies that make the giant $5 million X-ray or gamma-ray machines needed to scan shipping containers are anticipating a boom in orders as roughly 700 ports around the world gear up for the U.S. rules, which were signed into law in August but take effect in 2012. Industry analysts say each will have to buy one to 10 of the scanners or stop exporting to the world’s richest market.

Large modern ports, mostly in Asia, also expect to win new business as smaller and older ports struggle to meet the U.S. requirements. The European Union estimates the average start-up cost for a port to buy and support the scanners will be around $100 million, too much to make business sense for some minor ports to go on shipping to the U.S.

Big, older river ports like Antwerp in Belgium are also at a disadvantage. Antwerp would need to build new roads and bridges to get all containers to scanners from its scattered docks and may not be ready in time. “We’re looking at billions [of euros] in extra spending,” says Lieven Muylaert, a Belgian customs official.

The EU has led opposition from around the world to the new U.S. requirements, worrying the relative lack of flexibility at many European ports will add to cost advantages Asian exporters already hold over European companies. Asia’s newer ports tend to be bigger, but more compact, than their European counterparts. They will have less trouble meeting the requirements, port operators and analysts say. The EU has threatened to impose reciprocal constraints on all containers landing in the EU from the U.S.

Since the attacks of Sept. 11, 2001, the U.S. has toughened rules that aim to stop terrorists from smuggling weapons into the country in containers, the 20- or 40-foot steel boxes that carry everything from bananas to toys to lawn mowers around the globe. The U.S. imported 12 million containers of goods last year, and that number is expected to rise, according to the U.S.

Security experts say the container-scanning law may reduce, but won’t eliminate, the risk of terrorists smuggling weapons aboard ships. That is partly due to the poor resolution of X-rays able to scan something as big as a container, according to Jim Cowling, managing director for Maritime Security Solutions Ltd., a London-based consultancy. It is also because ships remain vulnerable to tampering after leaving port. “It could be possible to hijack or bribe a ship and put a container on it in the middle of the ocean,” says Mr. Cowling. [Ports chart]

The new U.S. scheme will replace the current risk-based system, under which only selected containers get scanned. Under the new system, giant X-ray devices would scan every container for suspicious shapes at a rate of about three containers per minute. It now takes several minutes to scan a container.

The three main international suppliers of container scanners are Nuctech Co., a Chinese state-owned company that dominates in Asia; U.S. defense contractor Science Applications International Corp., which sells mainly in the U.S.; and Smiths Heinmann GmbH, part of Smiths Group PLC, a pan-European firm. All three compete in Europe and Latin America. A fourth company, Rapiscan Systems, a division of OSI Systems Inc., also makes scanners but is behind the others in orders, say analysts.

Michel Lequy, who sells Nuctech scanners in Europe, says orders already grew to dozens per year from low single digits before U.S. lawmakers started talking about the scanning law in 2003. He expects a further increase after governments and ports start budgeting for the actual law next year. “We can cash in on a boom,” he said.

Though Europe’s governments are likely to pick up much of the extra cost for major ports like Antwerp to meet the rules, construction can take years in the face of tough EU environmental laws, putting them at a significant disadvantage.

Antwerp’s troubles, could mean more business for the nearby Dutch port of Rotterdam, which is more compact than Antwerp and expects to be able to install the scanning equipment quickly and at comparatively low cost. “Security is a good business opportunity,” says Peter Struijs, chief operating officer at Rotterdam.

Without significant change to the rules, smaller ports such as Seville in Spain, Dunkirk in France and Naples, Italy, could have to stop shipping to the U.S. altogether. “The law will force us to stop shipping to the U.S., unless we can attract a lot more customers, which would justify investment in the equipment,” says Philippe Revel, manager for the shipping terminal at Dunkirk.

The Bush administration has said it wants to cut the number of ports that ship containers to the U.S. to around 100 world-wide, from 700 today because that would make it easier to monitor security. Consolidation would also force more trucks onto Europe’s already congested roads, however, as they move U.S.-bound goods to bigger, but more distant, ports for shipping.

Port operators say the biggest long-term cost of the U.S. rules may be the extra “dwell time”—the number of days that containers packed with goods spend sitting on docks, clogging terminals and delaying shipments, before they head out to sea. Operators estimate average dwell time will increase to seven days from around five after 2012.

Port officials say the impact of the new law could be softened if the U.S. agrees to let companies such as Wal-Mart Stores Inc., which fill their own containers, to scan containers themselves. Wal-Mart campaigned against the law.

“We shouldn’t have to put those containers through an X-ray machine,” says Andreas Mai, harbor master at Bremerhaven, a German port that ships over a thousand containers a day to the U.S., carrying everything from Mercedes car parts to Red Bull soft drinks.

Mr. Mai has been lobbying U.S. officials to implement the new law so that ports would have to scan only containers packed by individuals or small businesses. One U.S. Customs official said Washington would listen to such concerns. “We know this is a work in progress,” the official said.

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Ahead of the Bell: Wal-Mart

Associated Press
10.25.07                               [back to top]  

NEW YORK - A Rochdale Research analyst downgraded Wal-Mart Stores Inc., saying the world's largest retailer failed to deliver a solid reason for shares to rise at its two-day analyst meeting.

Jaison T. Blair, in a Wednesday client note, cut his rating on Wal-Mart (nyse: WMT - news - people ) to "Hold" from "Buy" and reduced his target price to $46 from $55. The analyst and investor meeting occurred on Tuesday and Wednesday.

Blair said investors are better off spending their money elsewhere, as Wal-Mart shares wait for a boost from a recovery in the consumer sector.

Consumer spending has slowed lately, amid falling housing values, tight credit markets and high gas and food costs. Retailers have been hit by the downturn.

Banc of America Securities analyst David Strasser expressed concern with Wal-Mart's international expansion plans.

Amid slowing U.S. sales, the company said it is cutting back on growth at home. But Wal-Mart said it plans to pour about $1 billion more into building new stores outside the country, mainly China, Mexico and Canada. The company on Monday said it will spend $875 million to take full ownership of its money-losing Japanese subsidiary, Seiyu Ltd.

Strasser said the company's "global empire-building" will likely weigh on shares, until the company turns its focus on driving returns and the stock price.

Copyright 2007 Associated Press. All rights reserved.

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Serious Head Injuries Prompt Recall of Bumbo Baby Sitter Seats - New Warnings and Instructions to Be Provided To Consumers

cpsc.gov
October 25th, 2007                               [back to top]  

WASHINGTON, D.C. - The U.S. Consumer Product Safety Commission, in cooperation with the firm named below, today announced a voluntary recall of the following consumer product. Consumers should stop using recalled products immediately unless otherwise instructed.

Name of Product: Bumbo “Baby Sitter” Seats

Units: About 1 million

Manufacturer: Bumbo International, of South Africa

Hazard: If the seat is placed on a table, countertop, chair, or other elevated surface, young children can arch their backs, flip out of the Bumbo seat, and fall onto the floor, posing a risk of serious head injuries.

Incidents/Injuries: CPSC has received 28 reports of young children falling out of the Bumbo Baby Sitter seat, including three skull fractures, which occurred when children fell out of chairs that had been placed on tables.

Description: The bottom of the children’s seat is round and flat with a diameter of about 15 inches. It is constructed of a single piece of molded foam and comes in yellow, blue, purple, pink, aqua, and lime green. The seat has leg holes and seat back that wraps completely around the child. On the front of the seat in raised lettering is the word “Bumbo” with the image of an elephant on top. The bottom of the seat has the following words: “Manufactured by Bumbo."

South Africa Material: Polyurethane World Patent No. PCT: ZA/1999/00030.” The back of the seat contains the following “WARNING” – “Never use on a raised surface. Never use as a car seat or bath seat. Designed for floor level use only. Never leave your baby unattended as the seat is not designed to be totally restrictive and may not prevent release of your baby in the event of vigorous movement.” Sold by: Target, Wal-Mart, Sears, Toys R Us, Babies R Us, USA Babies and various other toy and children’s stores nationwide, and various online sellers, from August 2003 through October 2007 for about $40.

Manufactured in: South Africa Remedy: Consumers should never use the infant seat on a table, countertop, chair, or other elevated surface. Consumers can contact Bumbo to obtain new warning label stickers and instructions, free of charge. The new warning label will state: “WARNING – Prevent Falls; Never use on any elevated surface.” Consumers should use the Bumbo seat at ground level, but should never leave a child unattended.

Consumer Contact: Contact Bumbo International at (877) 932-8626 between 8 a.m. and 5 p.m. ET Monday through Friday or visit the firm’s Web site at www.bumbosafety.com

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Wal-Mart Defends Decision to Buy Rest of Seiyu

Reuters
25/10/2007                       [back to top]  

New York, Oct. 24 - Wal-Mart Stores Inc on Wednesday defended its decision to acquire the remaining shares of its Japanese supermarket subsidiary, Seiyu Ltd, saying Japan is of major strategic importance to the world's largest retailer.  "We are convinced that full ownership by Wal-Mart is the best way to enable Seiyu and Wal-Mart to deliver long-term benefits to all stakeholders," Wan Ling Martello, chief financial officer of Wal-Mart's international business, said at the retailer's analyst meeting, which was broadcast on the Internet.

Earlier this week, Wal-Mart said it would spend up to $878 million to buy out minority shareholders in Seiyu to try to turn around the money-losing chain.

But U.S. investors were not necessarily pleased by the move, questioning why Wal-Mart would put more money into Seiyu. Since 2002, Wal-Mart has invested more than $1 billion in Seiyu but has yet to see anything more than temporary upswings in sales amid tough competition.

Wal-Mart's shares fell 3 percent in New York Stock Exchange trading on Tuesday, the first day of its analyst meeting, after saying it would scale back capital spending and U.S. supercenter store opening plans but increase spending on new international stores.

Many investors were hoping Wal-Mart would use excess cash to pay a higher dividend or boost its stock buyback program.

Wal-Mart Vice Chairman Mike Duke said that by acquiring the rest of Seiyu, Wal-Mart would be able to move faster to improve its operations and supply chain.

"We believe the steps we've taken this week free us up as a company to move faster to capture what is the second largest (retail) market in the world," he said.

Speaking at the meeting later, Wal-Mart Chief Executive Lee Scott said the company's international plans were "more controversial" than he expected, but the international segment will represent a larger part of its business going forward.

"We believe that we are in the right markets," he said.

While Japan has challenges, "we believe that we can and we will succeed in Japan," he said.

EYEING ENTRY TO RUSSIA

Scott said Wal-Mart hopes to be in Russia "at some point in the future."

"Russia is a growing consumer nation," Scott said. "People there are spending as they gain affluence."

Unlike other developing countries where consumers tend to save, Russian consumers have shown a propensity to spend, he said.

"I think it is a wonderful opportunity, and that we have to explore that, and we have to be able to position ourselves to operate," he said.

Duke said the retailer is committed to being in international markets where it can "win" or else it will exit those markets.

To measure if it is winning in a market, he said Wal-Mart must be on a path to being a significant player in the country's retail sector, must have a distinctive position in the marketplace that it can use to sustain its leadership, and the business must generate material shareholder value.

Duke said that next year, 80 percent of Wal-Mart's new store square footage growth internationally will come from Canada, Mexico and China.

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Hey, We Cut Wal-Mart In Half!

By Al Norman,
Huffington Post
October 25th, 2007                      [back to top]  

It turns out that Wal-Mart is its own worst enemy. The retailer has been eating itself for years--- and now has to protect itself---from itself.

In a dramatic sign that Wal-Mart is finally feeling the financial impact from years of cannibalizing its own sales, the world's most voracious retailer told Wall Street analysts on Tuesday that the company is slamming the brakes on new store construction. In 2005, Wal-Mart CEO Lee Scott told reporters that America had room for 4,000 more Wal-Marts---almost double their current store count. Instead of the 280 new superstores a year promised in 2005, Wal-Mart is now rolling back to 170 stores.

Founder Sam Walton often bragged of his company's saturation strategy. "We became our own competition," Walton wrote. But over time, Wal-Mart got to be too good at competing with itself, and now is paying the price. By jamming huge superstores less than four miles from each other, the company has weakened its own same stores sales growth--a key economic indicator in retailing.

In 1987, Wal-Mart's "comparative store" sales increase---from stores open at least a year---was 13%. Ten years later, it had plummeted to 4%. Last June, at its annual shareholder's meeting, Wal-Mart abruptly announced that during its 2008 fiscal year, it would open between 190 and 200 new stores in the United States. Any of the 18,000 stockholders present---if they happened to open the company's 2007 Annual Report in their lap---would have read that Wal-Mart's future expansion plans called for "265 to 270 new supercenters." In just a matter of weeks, Wal-Mart executives had backed off the "Management's Discussion" in their Annual Report, and instead sliced back expansion plans by 26%.

For several years, Wall Street's reaction to the retailer's overly-aggressive U.S. construction forecast has been less than encouraging. In 2005, Bernstein Research Call issued a 13-page report warning stockholders of the downside of Wal-Mart's superstore plans. The analysts noted that Wal-Mart's growth "is under siege in several regions of the country from growing opposition by local communities...Local opposition has successfully squashed numerous plans among big box players in different parts of the country. Bernstein noted that "heightened resistance could negatively impact these retailers by slowing their square footage growth rates." Even modestly slower long-term square footage growth could have both an earnings per share and valuation impact, researchers said. Because of opposition groups, "it is clear that (discount retailers) will need to pursue a substantially larger number of permits going forward to hit their internal square footage targets given the likelihood of many opportunities failing."

Citizen groups' successes grew at a 21% annual rate in 2004 and 2005. My records indicate that 46 Wal-Mart projects alone were defeated or withdrawn in 2006. Not only has Wal-Mart suddenly slammed the brakes for 2008, but the company told shareholders last June that it would open about 170 superstores per year for the next three years. As proof that citizen opposition has thrown Wal-Mart off its production game, the company also admitted that as many as 80 of its supercenters which were expected to have ribbon-cuttings in 2008, have been deferred into 2009. Roughly 30% of its planned stores are not coming in on time, and many of these may never, in fact, open. Hence, the narrowing of the production pipeline for 2008 and out years. But this week, Wal-Mart dropped production levels even further, tamping down U. S. store growth by 2010 to about half the new retail space it added in its fiscal year 2007. Wal-Mart's executive vice president, Tom Shoewe, said on Tuesday that slowing down new store construction would reduce the company's tendency to steal sales from itself. "Obviously, what we're trying to do going forward is to reduce the impact we have on ourselves," he said.

Wal-Mart has been phasing out its "smaller" discount stores since 1995, and this coming year will produce no more discount formats---completing the shift to supercenters. But even the average size of supercenters will shrink as well. 220,000 square foot supercenters are harder to get past local town officials than a 145,000 square foot store. The financial analysts generally don't recognize "citizen opposition" as a factor in projections of capital expenditures, but the fact is, in the words of the Associated Press, "Wal-Mart is finding fewer places to build new stores." The company is not just running out of land---it's running out of local support. When they do locate a site, they are more likely today to face stiff opposition than they did in 1986. The permitting window for a new Wal-Mart supercenter has stretched from three months to---in many cases---three years or longer.

These days, all it takes is the shadow of a Wal-Mart proposal to spur a citizen's group into action. Wal-Mart and the analysts will continue to blame tough economic times, gas prices, or hot weather for the retailer's lagging sales----but the bottom line is that citizen battles have affected the company's bottom line.

Wal-Mart will be building fewer supercenters in the years ahead, and annual square footage growth will free fall from nearly 9% last year, to around 6% this year, remaining at that reduced level for the next two years. Wal-Mart is reeling from a self-inflicted wound. It would not listen to local officials, it turned a deaf ear to the rising level of community opposition, and it kept building superstores within spitting distance of each other.

"Tough times are actually a good time for Wal-Mart," Shoewe told Wall Street analysts. But people on Main Street are the ones having a good time---celebrating Wal-Mart's tough times.

Al Norman is the founder of Sprawl-Busters, and the author of Slam Dunking Wal-Mart: How You Can Stop Superstore Sprawl In Your Hometown.

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Wal-Mart Sees China, Canada, Mexico Focus Of Overseas Expansion

Dow Jones
October 24, 2007                      [back to top]  

NEW YORK (Dow Jones) -- Wal-Mart Stores Inc., which sees overseas growth continue to outpace that of the domestic market, said China, Canada and Mexico will be its key markets of international expansion next year.

The three countries will account for 80% of Wal-Mart's overseas new square footage growth next year, said Mike Duke, Wal-Mart's international chief at a presentation to investors and analysts. Other countries from what Wal-Mart identified as mature markets such as the U.K. and Japan to emerging regions including Brazil and India will also be among areas of the company's international focus, he said.

Wal-Mart (WMT) is increasing capital spending by about two thirds through fiscal 2010 overseas at the same time when it plans to trim spending and cut the number of store expansion in the U.S., where growth has slowed. It plans to open a bank in Mexico this year and has added Chinese characters in store signage in Canada to cater to the country's dominant minority population. It also has bought Trust-Mart in China to double its store count in the world's fastest growing major economy as it seeks to become major players in each market.

"We'll either be winning in each individual market and have specific plans to win or exit the market," Duke said at the presentation. "We have to be obsessed with serving the local customer. A great deal of Wal-Mart's success in future is emerging markets."

Sales outside of the U.S. have grown to about 30% of Wal-Mart's total sales from 4.8% in 1996 and have increased at an about four times rate of the U.S. market, UBS Securities analyst Neil Currie said in a recent note. Wal-Mart abandoned German and South Korean markets after failing to generate desired returns in both countries.

Capital spending outside of the U.S. will increase to as much as $5.8 billion in fiscal year 2010 from $3.5 billion last year as Wal-Mart plans to increase square footage by up to76%, the company said Tuesday. The U.S. capital spending during the same time will decline by as much as 25% as Wal-Mart plans to trim the number of its U.S. supercenter growth.

Wal-Mart has over 4,000 stores, including Sam's Club and Neighborhood Markets, in the U.S. and more than 2,800 more overseas.

Local messages

The company plans to build stores with different formats outside of the U.S., from supercenters and membership clubs similar to those in the U.S. to bodegas, apparel stores and restaurants, Duke said. In Mexico alone, Wal-Mart operates stores in six different formats.

"The growth of the units is balanced toward small and medium sized stores," he said. "It's not just a big box story. Many of our small stores are producing good sales."

To target local markets, part of Wal-Mart's initiative is to develop local talent, management said. In China, for instance, all of the company's store managers are Chinese.

Wal-Mart, which entered in Canada in late 1994, also has Asian ready made food and store staff wearing buttons saying they can speak Cantonese to cater to some of the Asian population, the largest minority group in the country, executives said.

Both Canada and Mexico, which Wal-Mart entered in 1991 through a joint venture and became a majority owner in 1997, generate returns well north of Wal-Mart's company average, management said. Duke said he plans to double Wal-Mart's return on investments in China the next five years.

Contrary to many analysts' expectations, Wal-Mart this week also offered to pay $862 million for the rest of Japanese supermarket operator Seiyu Ltd. it doesn't already own. Wal-Mart said it remains committed to tapping into the world's second largest economy after the U.S. It also said taking full ownership of Seiyu will give it "increased flexibility to invest in merchandising, store renovation, distribution and logistics."

"The Japanese retail market is of major importance to Wal-Mart," said Wan Ling Martello, the international division's finance chief. "We are convinced that full ownership is the best way to deliver long term benefits."

Wal-Mart has been remodeling stores and has introduced its every day low price strategy in baby and pet products areas, she said.

In the U.K., Wal-Mart, which owns the Asda chain, extended its George line of products to home lines and will carry those products in Canada as well. The company also introduced Asda Direct to take Web and phone grocery orders and ship products directly to consumers' homes.

"Our strategy is working in the U.K.," she said. "Growth has outpaced the market through 2007."

Bear Stearns analyst Christine Augustine has said Wal-Mart should sell Asda, its largest international division, as the U.K.-based unit has limited growth opportunities in a mature retailing environment, Augustine said. Asda's $28.9 billion in 2006 sales represented 37% of Wal-Mart's international sales or 8.4% of total company sales, the analyst said.

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Wal-Mart drops prices in advance of meeting with Flaherty

Drew Hasselback,
Financial Post
Wednesday, October 24, 2007                  [back to top]  

Wal-Mart said yesterday it has dropped the price on 5,000 items as the battle over the loonie gap continues. Wal-Mart's announcement comes in advance of the planned meeting yesterday between Jim Flaherty, the Finance Minister, and representatives of Canadian retailers. Canadian consumers are angry that many items cost more in Canada than in the United States, even though the loonie is now worth more than the U.S. currency. Zellers announced a round of price cuts last Friday. Wal-Mart's statement, meanwhile, follows through on a promise of loonie-related price cuts announced in August. Wal-Mart said it aims to announce more cuts before Christmas. "With the strength of the loonie and customer expectations climbing, there is a new standard for price leadership," said Mario Pilozzi, Wal-Mart Canada chief executive.

© National Post 2007

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Wal-Mart, gazing overseas for growth, plans spending US$1B more on stores abroad

Marcus Kabel,
The Associated Press
Wed Oct 24                                         [back to top]  

Wal-Mart Stores Inc. is increasing its spending on new stores outside the United States by about US$1 billion this year even as it cuts back on growth at home amid slowing U.S. sales, the world's largest retailer said Wednesday.

Mike Duke, the head of Wal-Mart's fast-growing international business, said 80 per cent of new stores abroad next year will be opened in just three of the 13 countries where it operates: Canada, Mexico and China.

On Tuesday, Wal-Mart unveiled plans to cut growth of U.S. stores to about 140 annually by 2009 from 195 this year and a past track record of about 280 a year. That will allow it to cut capital spending in the face of slowing U.S. sales.

Duke said spending on international expansion will increase from US$3.5 billion last year to around $4.5 billion this fiscal year, which runs through January.

That spending will be between $4.8 billion to $5.3 billion next year and $5.3 billion to $5.8 billion the following year, he said.

"The rate of growth of store units is now even more balanced toward smaller and medium sized stores," Duke said. Wal-Mart International runs Super centers that can be 200,000 square feet, but it also has stores as small as 1,000 square feet in places like Central America.

It is also trimming the size of new Super centers in the U.S. to closer to 180,000 square feet as part of its reduced spending plan and to fit stores in areas where the full Super center may have been too big.

Duke said international growth will increasingly come from developing countries. Wal-Mart's business includes developed countries such as Britain and Canada but most of its 13 countries are developing markets, including Mexico, Central America, Brazil, Argentina and China. It is starting a joint venture in India.

"We believe the future of Wal-Mart's success, a great deal of it, will come from the emerging markets of the world," Duke said.

Wal-Mart's stores abroad are growing faster than its home business. Wal-Mart does not release figures for individual countries. International sales overall rose 30 per cent last year, however, compared with 11 per cent at Wal-Mart's U.S. stores to account for 22 per cent of the company's total sales of $345 billion.

Growth has been helped by aggressive expansion in the past two years as Wal-Mart bought companies or expanded its stake in partners in China, Brazil and Central America.

Duke also defended Wal-Mart's decision this week to spend $875 million to take full ownership of its money-losing Japanese subsidiary, Seiyu Ltd., despite failing to turn a profit there since Wal-Mart first bought a minority stake in 2002.

"We believe the steps we're taking this week will free us up as a company to move faster to capture what is the second largest (retail) market in the world," Duke told an annual conference of Wal-Mart investors and analysts in Rogers, Ark., near its Bentonville headquarters.

Duke challenged comparisons that some analysts have made between Japan and Germany, where Wal-Mart last year sold its loss-making stores. Duke said differences included a more fragmented retail market in Japan and that Wal-Mart has better locations in Japan than in Germany.

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Wal-Mart's Strategy Spurs a Selloff

By GARY MCWILLIAMS
and JAMES COVERT ,
Wall Street Journal
October 24th, 2007                           [back to top]   

Wal-Mart Stores Inc. disclosed further cutbacks in its U.S. supercenter-expansion plans, but its shares fell 3% after the retailer conceded the savings would be plowed into overseas expansion rather than into larger stock buybacks.

The Bentonville, Ark., retailer also forecast that revenue excluding acquisitions would rise between 5% and 8% a year through 2010, below its historic rate and lower than many Wall Street projections. The world's largest retailer by revenue has grappled with lackluster U.S. growth and promised to focus more on increasing shareholder returns and improving U.S. operations.

The news, at an investors' meeting in Rogers, Ark., triggered an angry reaction from those attending the meeting and sparked a selloff in the stock despite gains for the market overall. In 4 p.m. New York Stock Exchange composite trading, Wal-Mart shares were down $1.32, or 2.9%, at $43.93.

Wal-Mart executives said the company expects capital spending, forecast to be about $15 billion this year, would remain at between $14 billion and $15 billion annually through 2010.

Some investors challenged the company's plan to spend about $860 million to acquire the remaining shares of its Seiyu Ltd. subsidiary and its decision to continue hefty capital expenditures through the next several years. Seiyu, a Japanese retail chain, has produced losses since Wal-Mart acquired its original stake in 2002.

"There are a lot more pressing issues than the consolidating of Japan," said William Dreher Jr., a retail analyst at Deutsche Bank Securities Inc. Mr. Dreher said Wal-Mart needs to do more to improve the performance of its U.S. stores. He projected that the unusually warm weather in much of the country this month is producing weaker-than-expected October same-store sales.

Despite criticism that the company was pouring new money into a weak business, Thomas Schoewe, Wal-Mart's chief financial officer, defended the Seiyu tender offer, saying "Japan is a great long-term opportunity." He also said Wal-Mart would increase its investments in faster-growing markets, such as Brazil. Wal-Mart's plan calls for international store expansion to outstrip expansion in the U.S. in two years.

Mr. Schoewe and other executives said investments to improve U.S. operating results were paying off in the grocery, pharmacy and electronics businesses. The company has struggled with lower same-store sales in apparel and home decor, two of the highest-margin areas.

Craig Johnson, of Customer Growth Partners LLC, a New Canaan, Conn., retail consultant, said Wal-Mart needs to quickly revitalize higher-margin businesses. This month, the company forecast October sales at U.S. stores open at least a year would be unchanged or rise 2%, compared with last year. In September, Wal-Mart's U.S. same-store sales rose 1.4%, missing Wall Street's forecast for 1.9% growth.

Patricia Edwards, an analyst at financial-services firm Wentworth, Hauser & Violich, says she would have preferred to see capital spending cut to as little as $12 billion this year.

Wal-Mart shares are likely to languish in the low-$40 range at least through the end of the year, said Charles Grom, an analyst at J.P. Morgan Securities Inc. Wal-Mart executives declined to respond to questions about the recent progress of sales, and Mr. Grom expects that Wal-Mart, like other retailers, has been hit this fall by unusually warm weather, as well as a stumbling housing market and high energy prices that have weakened the company's lower-income consumers.

"I just don't see enough positive catalysts to drive it higher," Mr. Grom said. "They're trying to fix this business with a heavy wind in their face, and that's going to be very challenging to do."

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Inside Wal-Mart's Bid To Slash State Taxes

By JESSE DRUCKER,
Wall Street Journal
October 23rd, 2007                               [back to top]  

In May 2001, Wal-Mart Stores Inc. issued an appeal to big accounting firms: Find us creative new ways to cut our state tax bills. Ernst & Young LLP swung into action. Senior tax experts at the big accounting firm swapped ideas via email and in a series of meetings. At least one gathering, according to an internal Ernst & Young calendar, took place in Wal-Mart's headquarters in the "Tax Shelter Room."

Wal-Mart decided to hire Ernst & Young to help devise complex tax strategies to use in at least four big states. The accounting firm, for example, helped Wal-Mart take tax deductions in California for dividends it never actually paid. And in Texas, Ernst & Young advised, the giant retailer could exploit a wrinkle in the tax law involving limited partners from out-of-state -- a maneuver subsequently shut down by the state's legislature.

Big companies hardly ever discuss how outside accountants, lawyers and investment bankers help them cut their tax bills. But Ernst & Young's contributions to Wal-Mart's state-tax minimization project are outlined in a raft of documents filed in recent months in North Carolina state court, where the state's attorney general is challenging a Wal-Mart tax-cutting structure involving real-estate investment trusts. The material, which includes company emails and memos, provides a rare window into accountants' role in generating tax-reduction ideas at one major company.

Companies often assert that tax savings are simply happy byproducts of transactions pursued for other business reasons. But documents from the North Carolina case indicate that Wal-Mart, from the outset, had one primary purpose: cutting its state income taxes. Ernst & Young worked to fulfill that goal. In 2002, for example, the accounting firm delivered a 37-page proposal laying out a smorgasbord of 27 potential tax strategies, most tailored to a particular state's tax code. It described one of them as "a very aggressive strategy with considerable risk."

Lawmakers and law-enforcement officials have taken a keen interest in tax advice provided by the Big Four accounting firms and other consultants. In August, U.S. Senate investigators sent letters to at least 30 companies asking for details of potentially aggressive tax arrangements, including the names of tax professionals and law firms that advised on the deals. In May, four current and former Ernst & Young partners were indicted for their tax-shelter work. Two years ago, KPMG LLP agreed to pay $456 million to settle government charges that it promoted abusive shelters to individual taxpayers. Publicly traded companies reduced their federal income taxes by about $12 billion in 2004 through potentially abusive tax transactions, according to Internal Revenue Service data. Some experts say companies save far more than that each year through elaborate tax-cutting maneuvers.

A Wal-Mart spokesman, citing ongoing litigation, declined to comment on any of the tax work by Ernst & Young, which also set up the tax maneuver that North Carolina has challenged. In court papers, Bentonville, Ark.-based Wal-Mart has said that some transactions implemented by Ernst & Young were intended to cut taxes, but also to more efficiently manage its real estate and potentially help raise capital. A spokesman for Ernst & Young says the tax deals for Wal-Mart "occurred years ago when such tax structures were not uncommon."

Tax-enforcement authorities often regard complex corporate transactions that serve no business purpose other than to reduce taxes to be improper tax shelters. In recent years, authorities have cracked down on cookie-cutter tax shelters mass marketed by accounting and law firms. But these days, it is common for advisers to help large companies such as Wal-Mart to develop individually tailored tax-cutting strategies, according to people who work on such deals.

Wal-Mart's 2001 letter to accounting firms got right to the point. It began: "Wal-Mart is requesting your proposal(s) for professional tax advice and related implementation services in connection with minimization of state income taxes in the following states: Arizona, California, Florida, Illinois, Indiana, Michigan, Minnesota, and Pennsylvania."

State income-tax rates for corporations average about 6.9%, and come on top of a federal statutory rate of 35%. Tax rates vary from state to state, and some states have no corporate tax at all on certain income. That provides ample opportunity for so-called tax arbitrage, in which companies allocate expenses and revenues between states in order to minimize taxes owed. That practice has been going on for decades. Some such strategies are perfectly legal. The government considers others to be abusive. States often try to crack down, but the tax-enforcement staffs of many states are smaller than the tax departments of some big companies.

Wal-Mart set aside about $526 million for state and local income taxes last year, not including its substantial property-tax bills, according to the company's financial reports. But its various state tax-cutting strategies seem to have had an impact. On average, Wal-Mart has paid taxes at a rate equal to about half of the average statutory state rate over the past decade, according to an analysis of the company's regulatory filings by Standard & Poor's Compustat.

Wal-Mart has switched state income-tax strategies several times over the past 15 years, coming up with new approaches as states attack existing ones, court records show. In the early 1990s, it employed an "intangibles holding company," a unit operating in tax-friendly Delaware into which it transferred ownership of its brand names such as Sam's Club. It then made payments to that unit for use of those brands, deducting them as expenses from its taxable income in other states, according to court records. That strategy fell out of favor after several states successfully challenged Wal-Mart and other companies in court over the maneuver.

About a decade ago, Wal-Mart adopted another approach, following advice from Ernst & Young. Wal-Mart transferred ownership of its stores to various in-house real-estate investment trusts. REITs pay no corporate income tax as long as they pay out at least 90% of their income to shareholders as dividends, which are usually taxed. Wal-Mart paid tax-deductible rent to those REITs. For one four-year period, the setup saved the retailer an estimated $230 million on its tax bill, even though the rent payments never left the company.

That strategy was the focus of a Wall Street Journal article in February4. Since then, at least six states, including New York, Illinois, Maryland and Rhode Island, have passed laws attempting to prohibit the maneuver, which also has been used by banks and other retailers such as AutoZone Inc. The practice is being challenged by tax authorities in at least four other states, court records show.

After Wal-Mart hired the firm in 1996 to implement the REIT strategy, an Ernst & Young tax executive urged his team to be discreet, according to a staff memo included in North Carolina court records. "We don't think there is much the state taxing authorities can do to mitigate these savings to Wal-Mart, however some states might attempt something if they had advance notification," he wrote. "We think the best course of action is to keep the project relatively quiet....there just seems to be too many opportunities for it to get out to the press or financial community and we all know they are difficult to control, particularly when we are dealing with a client as well-known as Wal-Mart."

David Bullington, Wal-Mart's vice president for tax policy, said in a deposition that he began feeling pressure to lower the company's effective tax rate after the current chief financial officer, Thomas Schoewe, was hired in 2000. Mr. Schoewe was familiar with "some very sophisticated and aggressive tax planning," Mr. Bullington said, according to a transcript of the deposition, taken by the North Carolina attorney general's office in July. "And he ride herds [sic] on us all the time that we have the world's highest tax rate of any major company."

Compared with many other large multinational companies, Wal-Mart has a small presence in foreign countries with low tax rates, reducing opportunities to shift income overseas for tax purposes.

The May 2001 invitation to provide advice came from Wal-Mart's then senior director for income tax, Wyman Atwell. Most of the states he named in the letter had provisions in their tax codes that prevented the REIT strategy from easily providing tax benefits, according to several people familiar with the matter.

In addition to advising Wal-Mart on tax issues, Ernst & Young served as its outside auditor, which meant that its accountants had to pass judgment on advice rendered by colleagues who did the tax work. That's permissible for accounting firms, so long as tax-consulting fees aren't contingent on a client's tax savings. Rules instituted in 2005 prohibit accounting firms from pitching certain types of "aggressive" tax structures to audit clients. An Ernst & Young spokesman said the work for Wal-Mart "complied fully with the independence rules at the time regarding tax advice provided to audit clients."

As Ernst & Young worked on its proposals, one high-ranking tax partner sent an email to a colleague addressing a concern often faced by companies: how to describe a tax-driven transaction in a way that won't create problems later on with tax authorities. "You asked if we have a document that details how the tax savings will work, how much they will save....We really don't have anything like that except for the sales document, partly because we have avoided calling this a 'tax' project, to show that we did not have a tax savings motivation, rather it is a 'domestic restructuring' project," he wrote.

That November, Ernst & Young sent Wal-Mart an "engagement letter" to confirm the scope of its work to cut the company's state tax burden. The letter said the accounting firm's fees would be at least $2.5 million, with potential additional fees to be determined later.

California was a key state for Ernst & Young's project. Its tax system is among the most stringent in the country. Many states only tax income from operations within their own borders -- called the separate-reporting method -- which makes it easier for companies to shift taxable income out of reach of tax authorities in those states. But "combined reporting" states such as California total up all profits of a company's domestic or world-wide operations, regardless of what state they're in, then allocate a portion of those profits to their states. Ernst & Young dreamed up a novel way to sidestep combined-reporting requirements in California. It used an unusual type of dividend to transfer income from one subsidiary to another in such a way that the second unit wouldn't be taxed.

Here's how it worked: When REITs pay dividends to their shareholders, they can deduct those payments from their taxable income. The federal government permits REITs to take deductions for dividends before they're actually paid -- a provision intended to give them extra time to make payments. Such dividends are called "consent dividends" because the recipients must consent to record the unpaid dividends as taxable income.

Ernst & Young argued that California law permitted REITs to deduct such consent dividends, but that the state law didn't also require recipients of the consent dividends to count them as taxable income, according to one person who worked on the transactions.

The accounting firm proposed a strategy in which the Wal-Mart REIT would claim a tax deduction for paying consent dividends to its parent, but the unit receiving the dividends wouldn't record them as income for tax purposes. The bottom line: Wal-Mart could reduce its taxable income in California by an amount equal to the total consent dividend payments it recorded, thereby cutting its tax bill.

Two years later, California's Franchise Tax Board, the state's income-tax agency, put the strategy on its list of "Abusive Tax Shelters." Wal-Mart's Mr. Bullington said in his deposition that California tax authorities have protested various tax benefits taken by the retailer since 1998. California also is in litigation with a big bank, City National Corp., over a similar strategy.

In Texas, Ernst & Young helped Wal-Mart set up a somewhat more common tax-cutting vehicle. Under Texas law at the time, a limited partner from out of state was exempt from Texas's corporate franchise tax. As a result, scores of companies, including Wal-Mart, reorganized their Texas operations into limited partnerships. The general partner, which was subject to state taxation, was typically a subsidiary based in Texas. But the limited partner, often owning as much as 99.9% of the entity, would be based in Delaware or another tax-friendly state. The result: up to 99.9% of the profits of the Texas operation would flow to that out-of-state limited partner, making that income tax-free.

Texas's state legislature eliminated that exemption when it revamped its tax laws earlier this year.

Wal-Mart also agreed to buy other complex tax shelters from Ernst & Young to cut taxes in Arizona and Michigan, the court documents show. One Ernst & Young document said Wal-Mart would cut its state income taxes by about $18 million, although that document didn't make clear the time period or the states included in that figure.

In August 2002, Ernst & Young proffered the new list of 27 additional tax-cutting approaches. It isn't clear if Wal-Mart adopted any of them. One of the proposals was accompanied by the following warning: "Note that in a 'post-Enron' environment and amidst the focus on 'tax haven' operations, this strategy is expected to get more scrutiny by the IRS, as well as some states." As for Wal-Mart's "Tax Shelter Room," North Carolina officials asked Mr. Bullington about the odd name. In his deposition, the Wal-Mart vice president said the moniker was "a bit of a pun," stemming from the conference room's use by tax-department employees to conduct safety drills for natural disasters such as tornadoes.

Wal-Mart, he said, no longer has a room by that name.

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Wrong labels force Wal-Mart to pay fine

By DAVID RYAN,
Napa Valley Register
October 23rd, 2007                      [back to top]  

Wal-Mart is in the midst of settling a false advertising lawsuit brought by Napa prosecutors, offering to pay hundreds of thousands of dollars to settle claims that stores sold an allergy medication without properly listing the strength of the product.

In a civil lawsuit filed in Napa Superior Court late Friday, the Napa County District Attorney's office, joined by prosecutors' offices in six other California counties, charged that a year and a half ago, Wal-Mart sold an allergy medication, Equate, in two different strengths -- but both had the same quantity of active ingredients.

A Register shopping trip to Wal-Mart Monday revealed that the two medications now list different amounts of active ingredients, with the stronger medication having twice as much antihistamine as the regular version.

Napa County Deputy District Attorney Daryl Roberts said the shift took place as soon as prosecutors contacted Wal-Mart in 2006. Wal-Mart officials did not return phone calls by press time. "Once we brought the violation to their attention they pulled this product from the shelves," he said, adding a San Diego deputy city attorney triggered the lawsuit when he was shopping for allergy drugs at Wal-Mart and checked the label for the difference between the two types of Equate.

"We all shopped at our various Wal-Marts and discovered the same thing all over," Roberts said.

The lawsuit targets Wal-Mart and LNK International, the manufacturer of Equate. A settlement signed by prosecutors, Wal-Mart and LNK International is awaiting a Napa judge's signature. Both defendants must pay $150,000 in costs, damages and restitution to be spread equally among the six jurisdictions. The district attorney offices of Napa, Solano, Sonoma, Santa Clara, Shasta, Monterey and the city of San Diego will each be reimbursed $14,300 for costs.

"We're kind of a working group that continues to take these cases and work them together," Roberts said.

Both defendants agreed to pay $50,000 to the Consumer Protection Prosecution Trust Fund, which prosecutors use to pursue fraud cases. Roberts said the payments to a trust fund are necessary because the prosecutors have no way of proving who in their jurisdictions bought the falsely advertised products.

If Wal-Mart and LNK fail to make the designated payments on time, they will both be liable for another $200,000, plus interest. In the meantime, LNK also is tasked with coordinating a seminar on following California consumer protection laws.

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Rally against proposed Wal-Mart in Tumwater, Washington

By Rolf Boone ,
The Olympian
October 23rd, 2007                    [back to top]  

TUMWATER — The economic effect of a proposed Wal-Mart store in Tumwater was the focus of a public hearing Monday, the first of possibly four days of testimony this week on the development. Click here to find out more!

The public hearings at Tumwater City Hall come as the result of a environmental report on the Wal-Mart store. Two groups appealed the results of the environmental report to the Tumwater hearing examiner.

The groups are Tumwater Livable Communities and the South Sound chapter of the United Food and Commercial Workers, Local 367, of Tacoma.

The groups were represented at the hearing Monday by Seattle attorney Claudia Newman; Wal-Mart countered with Seattle attorney Jack McCullough.

San Francisco State University economics professor Philip King, who testified on behalf of the appellants at the four-hour hearing, said the final environmental report did not address how retail sales, jobs and stores in the city could be affected by Wal-Mart.

Wal-Mart has proposed building an 187,000-square-foot store on a 21-acre site at 5900 Littlerock Road S.W. The company first submitted store plans to the city in December 2004, Tumwater Senior Planner Chris Carlson said.

A typical Wal-Mart store generates about $100 million in annual sales, King said, but those retail sales could come at the expense of other stores in Tumwater, such as Costco, Fred Meyer, Albertsons and Mega Foods, he said.

“You need to take into account the fact that you’re going to have displaced sales,” King said.

King testified before an audience of about 20 people, including members of Tumwater Livable Communities, some of whom wore stickers that had a slash through the name “Wal-Mart.”

With retail sales being taken from other stores, it could result in job losses and store closures, King said. He added that if a Wal-Mart store is built, Albertsons and Mega Foods were “at risk” of closing.

Wal-Mart attorney McCullough challenged King’s conclusions on the loss of retail sales and jobs in Tumwater.

McCullough: “Did you conduct yourself an independent study (on retail sales) to support this conclusion?”

King: “No.”

McCullough: “Did you yourself conduct a study on jobs and wages?

King: “No.”

Carlson said the city has planned for four days of testimony on Monday, today, Wednesday and Friday, if needed.

While the focus of Monday’s meeting was on economics, the remaining hearings will address traffic, trees that need to be removed from the site and an increase in parking stalls.

“The plan is to have it concluded this week,” he said.

After the conclusion of testimony, the hearing examiner has 10 business days to issue a written decision, Carlson said, followed by a 14-day appeal period. If the hearing examiner’s decision is appealed, that appeal would be heard before Tumwater’s City Council, he said.

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Wal-Mart's woeful sales tale

Executives tell analysts that a further decline is expected over the next three years; store investment to shift overseas from U.S.

By Parija B. Kavilanz,
CNNMoney.com 
October 23 2007                      [back to top]  

NEW YORK (CNNMoney.com) -- With its U.S. sales growth expected to slow further over the next three years, Wal-Mart executives told analysts Tuesday that the retailer will open fewer stores at home and instead boost its expansion overseas.

Wal-Mart's chief financial officer Tom Schoewe said the world's largest retailer expects overall sales to grow about 9 percent this year, slower than last year's increase of 11.7 percent.

Wal-Mart CEO Lee Scott.

More important, Schoewe said Wal-Mart's sales growth will further slow, to between 5 and 8 percent growth over the next two years.

"These are pretty trying times for us in an unusual macroeconomic environment," Schoewe said on the first day of Wal-Mart's two-day annual analyst and investor meeting. CNNMoney monitored the meeting in Rogers, Ark., via Webcast in New York.

Wal-Mart chops prices again Investors weren't happy with the sales guidance, pushing Wal-Mart's (Charts, Fortune 500) stock down almost 3 percent in afternoon trading.

Wal-Mart warned last month that its core low-to-middle-income customers "remain concerned about their finances, especially the cost of living," in light of the housing slowdown and a tighter credit market.

'Sure we care about the Federal Reserve's policy, but what's most important to us is what's on the minds of our customers, especially when they are living paycheck to paycheck," Schoewe said.

But Wall Street has also long complained that the discounter overexpanded in the United States, and that each new store it opened was eating into sales at existing stores.

To that end, Schoewe said Wal-Mart will slow U.S. square footage growth to 6 percent this year from an 8.8 percent increase last year, and will further reduce that pace to 5 to 6 percent growth over the next two years.

Additionally, Schoewe said Wal-Mart was cutting its U.S. capital expenditures for its current fiscal year to between $14.7 billion and $15.4 billion, from its earlier forecast of $15 billion to $17 billion.

For 2009 and 2010, the company has budgeted between $13.5 billion and $15.2 billion in U.S. capital expenditures.

In terms of new stores, he said Wal-Mart would open between 190 to 200 new U.S. supercenters this year, down from its typical expansion rate of about 280 a year.

The company is cutting new U.S. store investment significantly to between $4.9 billion and $5 billion over the next two years from its current level of between $6.7 and $7 billion.

But Schoewe talked up Wal-Mart's international plans.

"We have an opportunity to make good investments overseas, and we're planning to offset [slowing square footage growth] in the U.S. with [a square footage] increase in our international markets," he said.

Wal-Mart's international operations currently account for 23 percent of its total annual sales of $348 billion, but analysts expect overseas markets to help fuel Wal-Mart's growth in the future.

Schoewe said Wal-Mart would invest between $3 billion and $3.6 billion in opening new stores overseas over the next two years.

Challenges, opportunities at home Eduardo Castro-Wright, CEO of Wal-Mart Stores U.S.A. echoed Schoewe's concerns about Wal-Mart's consumers feeling tapped out.

"Late last year, people were already facing rising costs of living, higher healthcare costs and higher energy and gas prices," Castro-Wright said. 'So people were living on easy access to credit."

"But with the mortgage crisis and housing slump, everyone feels poorer," he said. "We feel this burden on shoppers earlier than other retailers because we serve every working family."

However, as the spending crunch travels up the income ladder from low-income households to impact mid-income shoppers, Castro-Wright said Wal-Mart expects to see benefits from those shoppers "trading down" to value retailers like Wal-Mart.

In terms of merchandising opportunities, Castro-Wright said health & wellness (including pharmacy), groceries and electronics are Wal-Mart best bets, while the retailer is struggling with poor home furnishing and apparel sales.

Wal-Mart said its $4 generic prescription drug program has significantly boosted its pharmacy sales. Year-to-date, the company said prescription drug unit volume is up 30 percent at Wal-Mart, versus a 4 percent increase in unit volume increase for the industry.

Going forward, executives said they plan to introduce more generic prescriptions drugs faster to Wal-Mart's customers as branded drugs come off patent over the next 5 years.

Electronics is another hot area for Wal-Mart. After years of carrying no-name electronics that were ignored by its shoppers, Wal-Mart has recently made a concerted push into offering name-brand electronics like Toshiba, Dell, Nintendo, Apple (Charts, Fortune 500) and Sony.

Citing a three-month same-store sales comparison, Castro-Wright said electronics sales at Wal-Mart are up 4.6 percent this year, compared to a 1.7 percent increase for Best Buy (Charts, Fortune 500) and a 8 percent sales decline for Circuit City (Charts, Fortune 500).

"We think we are winning here," he said.

Castro-Wright conceded that Wal-Mart still has a lot of work to do to make its clothing more appealing to shoppers. In home furnishings, the retailer announced it would introduce a new private label brand called "Canopy" next spring, and is adding the "Better Homes and Gardens" home collection in fall 2008.

Executives in the hot seat Wal-Mart CEO Lee Scott can expect some tart questioning at the meeting.

"Since Lee Scott took over as Wal-Mart CEO in January 2000, the stock [is down] 5 percent versus a 104 percent gain in Target," J.P. Morgan analyst Charles Grom wrote in a note to clients Monday.

Indeed, Wal-Mart's stock price has been stuck between $45 and $60 for the past seven years. Since January, Wal-Mart shares are down 2 percent, while rival Target's (Charts, Fortune 500) stock has risen 8 percent.

Wal-Mart: Stop leaking Black Friday deals "While it's hard to put all the blame on Mr. Scott, ultimately someone needs to be held accountable," he said.

Scott gets his chance to respond when he addresses the gathering Wednesday.

As Wal-Mart saturates its home market, its same-store sales have slowed considerably, to an average increase of 1 to 3 percent from around 6.5 percent in 2001.

For October, the retailer expects same-store sales will be flat to up by 2 percent.

More importantly, analysts are worried that slowing sales trends don't bode well for November and December, which can account for as much as 50 percent of retailers' annual profits and sales.

Goldman Sachs analyst Adrienne Shapira wants to know if Wal-Mart will be even more aggressive this year with holiday promotions in light of a tougher macroeconomic backdrop.

Wal-Mart already chopped prices on toys on Oct. 1, and announced a second round of price cuts last week.

"We've always struggled with Wal-Mart's [pricing] rollback strategy, given that most U.S. consumers already see the retailer as the low-cost leader," wrote J.P. Morgan's Grom. Wal-Mart in recent years has gained only a "lackluster comparable sales lift" when it resorted to heavy discounting.

"With 15,000 rollbacks in stores today, which is likely to go higher as we get closer to Black Friday, we want to know what sales gain Wal-Mart has internally budgeted to break even on this initiative," Grom said.

Black Friday, Nov. 23, the day after Thanksgiving, is the traditional kickoff of the holiday shopping season.

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Wal-Mart's U.S. chief sees smaller stores

Reuters                               [back to top]  

NEW YORK  - Eduardo Castro-Wright, head of Wal-Mart's U.S. operations, said the retailer is looking to improve its returns by building fewer stores and stores that are smaller.

He made the comments at the retailers analyst meeting, which was broadcast over the Internet.

In June, Wal-Mart said it expected to open 190 to 200 supercenters this fiscal year, down from its previous plan of 265 to 270. Next fiscal year, the company said at the time that it would open 170 supercenters.

But Castro-Wright said that 170 figure will likely be "less than that in the future years."

"We're also looking at improving returns by building less stores and smaller stores," he said.

Copyright 2007 Reuters News Service. All rights reserved.

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Wal-Mart cuts back supercenter opening plans

Reuters
Tue Oct 23, 2007                  [back to top]  

NEW YORK  - Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) cut back on the number of U.S. supercenters it plans to open.

The world's largest retailer said on Tuesday it expects to open 195 supercenters in the United States this year, down 30 percent from the 281 opened during last fiscal year.

For the next fiscal year that begins February 1, it plans to open 170 supercenters, but then it plans to open only 140 supercenters in the fiscal year after that.

In June, the company said that starting next fiscal year, it would open 170 supercenters annually for the next three years.

Supercenters combine Wal-Mart's discount store format with grocery stores.

© Reuters 2006. All rights reserved.

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Wal-Mart: Sales growth will slow for next 3 years; will spend less on new stores

The Associated Press
Tue Oct 23                                        [back to top]  

Wal-Mart Stores Inc. said Tuesday it expects slower sales growth over the next three years and it also plans to spend less on new stores and to lower other costs.

Chief financial officer Tom Schoewe told investors and analysts at a conference that sales growth will slow this fiscal year to nine per cent from nearly 12 per cent the year before and then be between five and eight per cent the next two years. Wal-Mart's fiscal year runs through January.

Schoewe said Wal-Mart is focused on using the tremendous cash flow generated by its U.S. and international stores more efficiently, including building fewer giant Super center stores and managing corporate costs better.

Wal-Mart's annual square footage growth will decline from 8.8 per cent last year to around six per cent this year and between five and six per cent in the next two years, Schoewe said.

In terms of Super centers, the flagship of Wal-Mart's U.S. business, Schoewe said the retailer will build around 190 to 200 this year and about 170 a year in the future, compared with a past standard of around 280 a year. Recent Business Stories GST cut popular, but amounts to $13 a month for most buyers: economist - Canadian Press (Tue, Oct 30 - 2:02pm EST)

© 2007 Canadian Press

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No Retreat for Wal-Mart in Japan

Alyce Lomax
The Motley Fool
October 23, 2007                            [back to top]  

Wal-Mart (NYSE: WMT) may have decided a good run is better than a bad stand in South Korea and Germany, but apparently it has decided the fight's worth it in Japan. It is going to buy up Seiyu (OTC BB: SYLTF.PK), a Japanese supermarket and department store chain in which Wal-Mart already has a 50%-plus stake.

Wal-Mart has offered to pay about $870 million for the rest of Seiyu, having already invested $1 billion in the company since 2002. However, even with Wal-Mart's growing influence, Seiyu hasn't been able to turn things around, despite some heartening signs last year.

In August, Seiyu really disappointed by forecasting its sixth straight year of losses, saying it expected an annual loss of $50.5 million instead of the $6.8 million profit it previously expected. Ouch. And that's after Wal-Mart took a larger stake to be more closely involved in operations.

It sounds as though Wal-Mart may have its work cut out for it in Japan. A Forbes article suggested Wal-Mart has an obstacle related to the strategy the discount giant holds dear: Low prices don't do it for the Japanese consumer like the promise of quality does. That makes sense, considering Japan's affinity for American luxury brands like Coach (NYSE: COH) or Tiffany (NYSE: TIF).

Meanwhile, in a country where stable population numbers leave little choice for retail competitors but to boost their market share, there's a lot of competition, like Aeon and Ito Yokado, and the U.K.'s Tesco. There's been a lot of buzz about Tesco entering the U.S. market to challenge everyone from Wal-Mart to Whole Foods Market (Nasdaq: WFMI), and everything I've heard about Tesco implies it's formidable.

The specter of slowing growth -- and an evolving consumer -- has dragged on Wal-Mart here in the U.S. Seiyu may represent only a small portion of Wal-Mart's total retail empire, but still, turning it into a profitable enterprise would be a significant victory (although continued troubles may give investors a headache when it comes to return on investment). If Wal-Mart can crack a market as tough as Japan, it may signal its ability to evolve to suit conditions that don't necessarily fit its traditional strategies, and that could bode well. It's definitely worth keeping an eye on.

For related Foolishness, see:

In August, it looked like Wal-Mart was eyeing potential acquisitive strategies. Tesco's expanding in Japan. In August 2006, Seiyu showed signs of improvement: A year later, it stumbled again.

Legal Information. ©1995-2006 The Motley Fool. All rights reserved.

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Stocks turn down as Wal-Mart weighs

Reuters                          [back to top]  

NEW YORK - The Dow industrials and S&P 500 index pared early gains to edge lower on Tuesday after Wal-Mart Stores Inc. announced cuts in capital expenditures, offsetting optimism about earnings.

The Nasdaq rose, helped by Apple Inc. earnings.

The Dow Jones industrial average <.DJI> was down 14 points, at 13,550. The Standard & Poor's 500 Index <.SPX> was down 2 points at 1,504. The Nasdaq Composite Index <.IXIC> was up 7 points at 2,761.

Copyright 2007 Reuters News Service. All rights reserved

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Wal-Mart fires man with diabetes, sparks fight over disabilities act

By Joseph Shapiro ,
National Public Radio
October 22nd, 2007                            [back to top]   

Stephen Orr has a small insulin pump attached to his belt. It's in a leather case, about the size of a cell phone. The pump sends insulin through a plastic tube that's thinner than a piece of spaghetti and threaded under his skin.

With insulin and devices like this, Orr has been able to control his diabetes and keep working at the job he loves — as a pharmacist. Until, that is, he got a new boss at the Wal-Mart in tiny Chadron, Neb.

Orr used to close his pharmacy for 30 minutes every day at noon, and eat lunch. That helped him control his diabetes. The new boss ordered him to instead stay in the pharmacy and eat between helping customers. Orr tried, but his blood glucose levels fell. He got tired easily.

"When he came in and fired me," Orr says, "I asked him why I was being fired and he told me straight out: Because you're diabetic."

Protected by the Americans with Disabilities Act?

When Orr was fired, he sued under the Americans with Disabilities Act. But a judge threw out his case, agreeing with Wal-Mart that Orr should not be considered disabled under the ADA. The reason: With his insulin, he could control his diabetes. A spokeswoman for Wal-Mart notes that the company follows the ADA and all employment laws.

When the ADA became law in 1990, it opened the world for people with disabilities. The law banned discrimination on the basis of disability in the workplace and in public places. It made things like wheelchair ramps and lifts on buses common. But courts have struggled to make sense of who should be counted as disabled under the law.

Defining 'Disability'

The ADA defines a disability as something that limits a major life activity. The Supreme Court in 1999 said people who could control their conditions — with medications and devices like insulin pumps — might not be considered disabled. Earlier this year, a court in Alabama ruled that a man with mental retardation did not count as disabled.

That has frustrated the disability civil rights groups that won passage of the ADA. They want a new ADA, even though Congress is not so sympathetic to passing civil rights laws anymore, and rewriting the law runs the risk of giving opponents a chance to further water it down.

"We are prepared to take those risks," says House Majority Leader Steny Hoyer. "Certainly I don't think we're going to do anything more to undermine the ADA than the courts have done, which we're trying to correct."

Hoyer says Congress always intended the ADA to cover conditions such as diabetes, epilepsy and mental retardation. The Maryland congressman was a key proponent of the original bill in 1990, and he is an author of the rewrite.

Business Concerns

But business groups worry that any rewrite is likely to broaden who is called disabled — way beyond what was intended by the original ADA.

"The law was passed to cover people who truly had problems pursuing major life activities," says Randy Johnson, vice president of the U.S. Chamber of Commerce for labor, immigration and employee benefits issues. Johnson says the courts got it right when they tried to make sense of the ADA's broad definition of who is disabled.

"It wasn't intended to cover people who had minor problems that could be correctable through minor fixes, such as glasses or drugs," he says.

Johnson says big companies are generally satisfied with the way the ADA works now. Groups representing small employers have been more likely to say the law creates burdens for their businesses. But if the ADA Restoration Act moves forward, business groups, big and small, will seek other changes. One might be to force someone who loses a discrimination lawsuit to then pay the attorneys' fees of the business sued. Or to give businesses extra time to fix problems before they get sued.

And that's the risk for disability civil rights groups. Compared with when the ADA became law in 1990, there's much less interest in Washington in passing such sweeping civil rights law. There has never again been such bipartisan consensus on civil rights since Congress passed and President George H.W. Bush then signed the ADA in a joyous celebration before hundreds of activists on the White House lawn.

One place where there is support for the new ADA Restoration Act is in the House of Representatives. More than half the members support the bill, including key Democrats and Republicans. But there is not the same support now in the Senate or from the White House.

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Wal-Mart thinks smaller in California

Financial Times
October 22, 2007                            [back to top]  

Wal-Mart, the largest US retailer, is launching its smaller format Neighborhood Market grocery stores in southern California, marking a new tactic in the largest US retailer's drive to expand its presence in the state.

Wal-Mart is developing two of the 42,000 sq ft grocery stores in the Coachella Valley, a fast-growing irrigated desert valley about 100 miles east of Los Angeles that includes the city of Palm Springs.

The first store, in the small city of Coachella, is expected to open sometime next year, followed by a second location in La Quinta.

Wal-Mart has previously focused its development efforts in California on its 180,000 sq ft Supercenters, which combine groceries and general merchandise. But intense opposition from local labour and environmental activists has slowed and in some cases blocked its plans. California currently has only 31 of Wal-Mart's national network of 2,300 Supercenters, compared with 151 in Florida.

The retailer first launched its first Neighborhood Market in1998 has used the format to fill in between existing more profitable Supercenters in major markets such as Las Vegas, Phoenix and Orlando.

"This is their convenience market near the Supercenter, serving someone who doesn't want to go into a 200,000 sq ft building just to buy groceries," says Hank Gordon of Laurich Properties, the developer of the first two California store sites.

Both stores are within just a few miles of two of the three Wal-Mart Supercenters in the Coachella Valley, which has a rapidly expanding population of about half-a-million year-round residents.

The plans also highlight the intensely competitive environment facing Tesco, the UK grocer, as it prepares to open its first US stores in Southern California next month. Tesco is planning to open at least seven of its new 10,000 sq ft Fresh & Easy local markets in the Coachella Valley, including two in La Quinta and one in the city of Coachella.

For Wal-Mart, the smaller Neighborhood Market format could also help sidestep the blocking tactics of its union-led opponents in California, since the stores do not require the same level of environmental and planning permissions.

Local critics of the retailer tried unsucessfully to block an initial planning procedure related to the Coachella store last November, but only delayed its approval by one month.

Wal-Mart's top executives are expected to lay out their store development plans for 2008 at a two-day analysts meeting that begins on Tuesday, following a decision earilier this year to moderate the pace of Supercenter expansion.

Wal-Mart is also currently exploring additional new formats, reportedly including a smaller local convenience market. It has also recently registered new trademarks including "City Thyme" and "Field and Vine" to cover unspecified "retail grocery store services".

"To continue their growth they're going to have to target urban areas, and it will be incumbent on them to develop smaller formats," said Curtis Barlow, of commercial real estate brokers Lyle & Associates, who is based in the Coachella Valley.

Copyright 2007 Financial Times

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Joe Torre And Wal-Mart's Lee Scott: Parallel Lines?

By Margaret Brennan
cnbc.com
22 Oct 2007                                    [back to top]  

The world's largest retailer has spawned this blog's biggest response ever! The anti-Wal-Mart emails (some 655, almost all I would say from Wal-Martwatch.com readers) keep pouring into the Retail Detail inbox. We'll continue to post your thoughts and responses so keep them coming. I've yet to hear from any on the pro Wal-Mart side.

In the meantime, be prepared for news out of Wal-Mart this week as well as movement in their stock price. The discounter hosts its annual investors meeting on Tuesday and Wednesday down in Wal-Mart Country, Bentonville, Arkansas. Expect the stock to get at least a mini-boost as these analyst meetings and investor conferences typically do create at least a momentary sense of euphoria around any company.

Investors tend to get more skeptical about the financials when they're crunching their numbers behind a desk and not roaming the very impressive spanse of Wal-Mart Country.

Anyhow, in a note today analyst Charles Grom at JP Morgan made an interesting parallel between now former Yankees Manager Joe Torre and current Wal-Mart CEO Lee Scott. Torre was just de facto shown the door after an impressive run in the managers seat of one of the most storied teams in baseball.

While the Yankees were the top team in the MLB for years, Torre was booted for "not getting beyond the first round the last three years with the richest managerial contract ($19.2 M) in baseball history" (per Murray Chass of the New York Times.) Grom points out that since Lee Scott became CEO in 2000, Wal-Mart's stock has compressed around 5% vs. a 104% gain in target and a 14% rise in the S&P 500.

With compensation at $10.46 million this year ($40.47M over 5 years), Scott is highly compensated and scrutinized for his performance at the helm of Wal-Mart. Investors have been making noise for awhile about Wal-Mart's stagnant stock price and slowing U.S. growth. (Of course, it is fair to ask just how much bigger the behemoth can grow.) Analyst Grom summarizes, "sooner or later, the board (ala Yankee owner George Steinbrenner) will need to act accordingly, in our view, if sales continue to stay sluggish."

The media and analysts will be listening closely to the developments at Wal-Mart over the next few days. Any hint of discontent with management will surely make headlines.

© 2007 CNBC, Inc. All Rights Reserved

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Wal-Mart to Take Full Ownership of Seiyu

Associated Press
10.22.07                                    [back to top]  

TOKYO - U.S. retailer Wal-Mart Stores Inc. will take full ownership of its Japan unit Seiyu Ltd., Wal-Mart announced Monday.

Seiyu Ltd., now 50.9 percent owned by Wal-Mart (nyse: WMT - news - people ), the world's largest retailer, has posted losses for five straight years and is expected to see more red ink this year.

Japanese media reported earlier that the move was aimed at speeding up management changes and reversing the company's lagging business here.

Since entering the Japan market in 2002, Wal-Mart has been gradually raising its stake in Seiyu, which has some 400 stores nationwide. Wal-Mart has stuck with the Seiyu brand, familiar to Japanese, instead of using the Wal-Mart name.

The offer is being made with the endorsement of the Seiyu board of directors, which passed a resolution of support Monday, Wal-Mart said in a release.

The tender offer price is 140 yen (US$1.23; euro0.86) per common share, the company said, and represents an additional investment by Wal-Mart of up to 100 billion yen (US$875 million; euro612.4 million).

"Today's announcement is a reaffirmation of our commitment to Japan, the second largest economy in the world," Wal-Mart Vice Chairman Mike Duke said. "The Japanese retail market is of major strategic importance to Wal-Mart, and our goal is to achieve long-term success and growth in Japan."

The tender offer will commence Oct. 23 and remain open 30 business days, closing on Dec. 4. Wal-Mart's minimum objective through the tender offer is to achieve ownership of at least two thirds of Seiyu's common shares, it said.

Following a successful tender offer, Wal-Mart intends to take additional steps to acquire all the remaining shares, which would result in the delisting of Seiyu from the Tokyo bourse, it said.

Wal-Mart's earnings for this year have faltered because of slowing consumer spending in the U.S. and abroad, but third quarter profits are expected to be better, because of better cost controls at its U.S. stores.

Aside from Seiyu, Wal-Mart has also made significant investments in Japan, the world's second-largest retail market after the U.S., setting up a distribution facility, introducing its computerized systems, remodeling stores and opening large-scale supermarkets, which had been relatively rare in the past.

But Seiyu has continued to struggle amid intense competition from smaller retail chains, as well as from major local companies that are introducing Wal-Mart-style large-scale stores and price-cutting into Japanese retail.

Trade in Seiyu shares on the TSE was suspended early Monday following news reports of the impending deal.

Copyright 2007 Associated Press. All rights reserved.

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Hawaii: 'Big Box' Still a Big Issue

By KARIN STANTON
Associated Press
10.22.07                               [back to top]  

KAILUA-KONA, Hawaii - Despite killing a proposal that tried to stop plans for a Wal-Mart Supercenter in Hilo, the Hawaii County Council looks ready to take another run at banning retail "superstores."

The issue has been the subject of much debate for most of the year, dividing opinions on the Big Island. The final bill was shot down unanimously Wednesday.

Council Chairman Pete Hoffmann of Kohala announced plans Friday to introduce a revised version of the bill that would ban all "big box" stores across the island.

Hoffmann said he doesn't have a timetable for the new bill, but will seek to close loopholes and address concerns revealed during the first round.

Seven existing retailers would be grandfathered in, including two Wal-Marts, two Home Depots, Lowe's (nyse: LOW - news - people ), Kmart and Costco (nasdaq: COST - news - people ).

While much of the discussion centered on the Department of Hawaiian Home Lands' plans to allow the new Wal-Mart (nyse: WMT - news - people ) Supercenter, the bill did not target only that company.

"Unfortunately, they're the whipping boy," Hoffmann said.

The original bill would have prohibited superstores larger than 90,000-square-feet that have more than 20,000 square feet for groceries and more than 25,000 items.

Several council members contended those parameters easily could be circumvented and the bill essentially would be unenforceable.

Hilo Councilman Stacy Higa said his intention was to protect Big Island farmers, as well as smaller chain and independent grocery stores. But even Higa, a candidate for mayor, was eventually swayed by public testimony that favored customer choice.

Most residents favored superstores because they typically offer lower costs.

Hamakua Councilman Dominic Yagong said he did not believe the council should dictate to consumers.

"I don't think government should tell you where to spend that disposable income," he said.

Others wanted to preserve the island's rural lifestyle and were concerned smaller retailers would be forced out of business.

Some Native Hawaiians were adamant that no Department of Hawaiian Home Lands property should be used for commercial purposes, and instead should be used to directly benefit native Hawaiians.

Kona Councilman Angel Pilago, also a candidate for mayor, amended the bill to prohibit superstores only on DHHL land. He said he wanted to send a strong message to DHHL to take care of Native Hawaiians.

Wal-Mart is currently in negotiations to build the superstore on DHHL land behind the Hilo Wal-Mart - a lease that is reported to be $500,000 annually. Native Hawaiians protested the store when it was being built more than 20 years ago, resulting in some two dozen arrests.

Department of Hawaiian Home Lands Director Micah Kane is slated to address the governor's East Hawaii Community Advisory Council in Hilo on Thursday.

Kane's presentation is expected to include an overview of short- and long-term development plans for Hawaiian Home Lands in the area.

In the two weeks between meetings, Hawaii County Corporation Counsel Lincoln Ashida issued a 15-page opinion on whether county commercial and industrial zoning regulations apply to DHHL.

"The candid and honest answer is, 'Nobody presently knows for sure,'" Ashida concluded, although the county and DHHL do have a Memorandum of Agreement that guides the working relationship between the two.

Generally, DHHL complies with county regulations within each particular zoning classification, and more specific rules have been settled for residential and agricultural uses.

No state appellate court has ruled on commercial and industrial uses, Ashida said, which is "the only legal authority that would truly matter."

The bill, Ashida said, "although well intended, runs afoul of equal protection of law concerns, and would likely be vulnerable to legal challenge."

Planning Director Chris Yuen had said he did not believe such a law could be enforced, although he also pointed to "gray areas."

Copyright 2007 Associated Press. All rights reserved.

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Wal-Mart to Use Plug Power Fuel Cells

Associated Press
10.22.07                                 [back to top]  

NEW YORK - Plug Power Inc. said Monday Wal-Mart Stores Inc. has ordered its fuel cells to power lift trucks at one of its distribution centers, the companies said Monday.

The companies did not disclose financial terms of the agreement, but Plug Power said it represents the largest order to date for its GenDrive products.

Following the announcement of the purchase order from America's largest retailer, Plug Power shares spiked 70 cents, or 23.6 percent, to $3.67. The stock earlier traded as high as $4.75, eclipsing a previous 52-week high of $4.38.

The fuel cells will replace the lead-acid batteries normally used on pallet trucks at Wal-Mart (nyse: WMT - news - people )'s food distribution center in Washington Court House, Ohio. The order follows a beta trial at two Wal-Mart distribution centers in late 2006.

Wal-Mart shares fell 15 cents to $44.83.

Copyright 2007 Associated Press. All rights reserved.

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Wal-Mart to Raise Japan Stake

By HIROKO TABUCHI
Associated Press
10.22.07                                     [back to top]  

TOKYO - Wal-Mart Stores Inc. said Monday it will take full ownership of its money-losing Japanese subsidiary, Seiyu Ltd., as the U.S. retailer struggles to speed up management changes and reverse slumping performance in the world's second largest economy.

Wal-Mart (nyse: WMT - news - people ), which owns a 50.9 percent stake in Seiyu, will pay $1.23 (140 yen) for each share of the Japanese supermarket chain operator it does not yet own, the company said in a statement.

The move represents an additional investment by the world's largest retailer, of up to $875 million in Japan.

Seiyu's board voted Monday to support Wal-Mart's 100 billion yen tender offer, according to the statement. The Japanese retailer will be delisted from the Tokyo Stock Exchange if the tender offer, set to run from Oct. 23 to Dec. 4., is successful, it said.

"Today's announcement is a reaffirmation of our commitment to Japan, the second largest economy in the world," Wal-Mart Vice Chairman Mike Duke said in the statement.

"The Japanese retail market is of major strategic importance to Wal-Mart, and our goal is to achieve long-term success and growth in Japan," Duke said.

Trade in Seiyu shares on the TSE was suspended early Monday following news reports of the impending deal.

A faster takeover of the Japanese unit could help Wal-Mart implement management changes and what has been a poor performance.

It would also quell speculation that the company might quit Japan altogether. The U.S. retailer got out of Germany and South Korea last year after years of losses.

Since entering the Japan market in 2002, Wal-Mart has been gradually raising its stake in the Japanese retailer, which has some 400 stores nationwide.

Wal-Mart has stuck with the Seiyu brand, familiar to Japanese, instead of using the Wal-Mart name.

But Seiyu has struggled amid intense competition from smaller retail chains, as well as from major local companies that are introducing large Wal-Mart-style stores and price-cutting.

The Japanese retailer said in fresh earnings results announced Monday that it expects to book its sixth straight year of losses this year, with a 10.40 billion yen ($90.90 million) loss amid poor sales and ballooning restructuring costs.

Its net loss in the nine months to Sept. 30 narrowed to 11.42 billion yen ($99.81 million) from 59.55 billion yen a year earlier, due to large asset write-down costs it booked last year, Seiyu said in a statement.

Group sales in the nine-month period slipped 0.7 percent to 700.93 billion yen ($6.13 billion), while same-store sales fell 1.0 percent, Seiyu said.

Meanwhile, earnings at Wal-Mart have faltered this year on slower consumer spending in the U.S. and abroad, but third quarter profits are expected to be better due to cost controls at U.S. stores.

Wal-Mart is also expanding aggressively in emerging markets like China and India.

Aside from Seiyu, Wal-Mart has also made significant investments in Japan, the world's second-largest retail market after the U.S., setting up a distribution facility, introducing its computerized systems, remodeling stores and opening large-scale supermarkets, which had been relatively rare in the past.

Copyright 2007 Associated Press. All rights reserved.

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Wal-Mart sales lagging in US, looks to smaller stores

Dow Jones Newswires
October 21st, 2007                      [back to top]  

SPRINGFIELD, Missouri--Wal-Mart Stores Inc. (WMT) may talk about ideas for new, smaller stores as a way to bolster its flagging U.S. growth when it holds an annual two-day conference for investors and financial analysts starting Tuesday at its headquarters in Bentonville, Arkansas.

Analysts said the issue may come up after the world's largest retailer, which in June announced plans to open fewer big new stores each year, said this summer it is considering new store sizes and types in the U.S.

Until now, Wal-Mart has mainly run large discount stores and Sam's Club membership warehouses in the U.S. But sales growth at Wal-Mart stores opened at least a year, a key retail measure, slowed to 0.8% through September this year, from 1.9% for the last full fiscal year and 3% in 2005.

Analysts say smaller stores could help by being easier to place in the urban markets where Wal-Mart is trying to expand from its rural base. They could also draw more consumers by being easier to navigate than giant Supercenters, which combine groceries and general merchandise in stores as large as 200,000 square feet (18,580 square meters).

New store types, or formats, may also be necessary to adapt to competitive pressure from large rivals such as Tesco of Britain, which is entering the U.S. this year with much smaller, convenience-oriented grocery stores of about 10,000 square feet (929 square meters) in Southern California, Arizona and Nevada. "The new trend in retail that I keep hearing about everywhere is specialization and smaller stores," said Patricia Edwards, managing director and retail analyst at Wentworth, Hauser and Violich in Seattle, which manages about $12 billion in assets and holds about 35,700 Wal-Mart shares.

Wal-Mart did launch a full-size grocery store called Neighborhood Market in 1998. But that chain has remained fairly small, accounting for 125 of Wal-Mart's more than 4,100 U.S. stores as of September. Edwards said Wal-Mart may need to go smaller or more specialized with new stores. She said Wal-Mart could look to the model of its Mexico subsidiary, which has Suburbia clothing stores and smaller Bodega shops as well as Supercenters and Sam's Clubs. Retail analyst Charlie Georgas at Jackson Securities said Wal-Mart has been right to focus on its traditional strength of low prices after a brief foray last year into more fashion.

"In a slowing economy, all income groups have a tendency to step down in terms of their purchases and that can drive traffic to some of the discount retailers," Georgas said.

Wal-Mart's announcement this week that it is cutting prices on 15,000 holiday items, after similar announcement on toys and back-to-school supplies, helps bring more shoppers into its stores, Georgas said.

Georgas also said its important to remember that Wal-Mart has a growing international operation, with stores in 13 countries including Central and South America and China and a joint venture in India. That provides a connection to rising income levels in developing nations.

"There's definitely still growth opportunities for them," Georgas said.

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A critical hurdle looms for Wal-Mart

By Stephen Curran,
SanLuisObispo.com
October 21st, 2007                                     [back to top]  

As the Atascadero City Council prepares for its first official vote on a proposed Wal-Mart Supercenter, supporters and opponents continue their high-stakes battle to shape the community’s future.

Tuesday’s expected decision on whether to accept Wal-Mart’s and developer The Rottman Group’s applications for a 195,000-square-foot department store and shopping center at Del Rio Road and El Camino Real will mark the council’s first vote on the controversial project.

For opponents of the Arkansas-based retail giant, allowing the project to proceed to a mandatory environmental review would be a striking setback to a vocal effort to stop a development they say would devastate the local economy.

Two councilmen, Tom O’Malley and Jerry Clay, have said the review could answer vital questions about the project. The remaining members, Mayor George Luna, Mayor Pro Tem Mike Brennler and Councilwoman Ellen Beraud, have publicly criticized Wal-Mart but have stopped short of saying whether they would accept the application.

That vote, regardless of its outcome, will likely prolong a fight that has divided a community struggling to boost a sales tax base that has not kept pace with its growing population.

A decision by the council not to process the application, Wal-Mart and Rottman executives say, means the companies would have to decide whether to put their multi-million- dollar investments in voters’ hands. Should the issue go to a ballot initiative, officials are banking on a sophisticated public relations campaign that the companies say has brought them thousands of placard-waving residents vowing to support the project.

The leaders of Oppose Wal- Mart, a loose-knit Atascadero group created strictly to defeat the El Camino Real/Del Rio Road plan, have been regular fixtures at council meetings. They share economic data and case studies they say bolster their claims that a store would depress area wages and force independently owned shops out of business.

“It’s critical,” organization co-founder Tom Comar said of the upcoming vote. “Wal-Mart has been inflexible in working with our City Council. If the (environmental impact report) goes forward, it’s the same as a done deal.”

The Atascadero decision comes as efforts to stop Wal- Mart in other parts of the state have had mixed success. In Clovis, Wal-Mart and developer David Paynter faced more than a decade of legal challenges before receiving the final go-ahead Oct. 15. That project, a Wal-Mart official says, is still more than a year away from breaking ground.

Behind the scenes

Grassroots groups such as Oppose Wal-Mart are just one piece of a complex network that includes national outfits such as Washington, D.C.- based Wal-Mart Watch and Sprawl Busters, which is headquartered in Massachusetts.

Nu Wexler, a spokesman for Wal-Mart Watch, said that organization monitors scores of projects throughout the country. The group—with an executive roster that includes the president of the Service Employees International Union and executive director of the Sierra Club — has awarded grants to organizations nationwide, but not to Oppose Wal- Mart.

The tie to organized labor has prompted criticism from Wal-Mart and Rottman representatives. They claim the opposition is a covert ploy by grocery worker unions to drive away nonunion competition, a charge Comar and Wexler deny.

“Keep in mind we’re outspent (by Wal-Mart) by margins of 5-1 or 10-1,” Wexler said. “Most of these groups start out with a local community organization.”

Wal-Mart spokesman Aaron Rios said the company would not disclose how much it has spent fighting legal challenges in other communities.

A lawsuit filed by Save Our Crossroads, a Clovis group created to fight a Supercenter in the city next to Fresno, delayed construction of that project for nearly four years while lawyers challenged the results of an environmental study.

The Clovis City Council, which approved Wal-Mart’s proposal in 2003, formally certified the results last week. Construction is slated to begin in 2009, Rios said.

“What we see in most municipalities is that some sort of group that is formed,” he said. “These special-interest tactics have been unsuccessful since they haven’t been able to get our associates (rank-and-file employees) to organize.”

Meanwhile, the retailer has taken an increasingly visible role in the North County, recently donating $20,000 to the Veterans Memorial Committee for a planned statue at Atascadero Lake Park.

It’s part of a pattern of charitable giving that Wal-Mart supporters say is frequently overlooked. In Hanford, where a 209,000-square-foot Supercenter opened last year, the company donated more than $46,000 to groups, including the Hanford Soup Kitchen and Kings County Commission on Aging.

But critics such as Comar have called such tactics an attempt to buy favor from local residents.

“You can bet Wal-Mart will spend a king’s ransom” to get its way, Comar said. “… I don’t think people are going to go for it.”

What’s at stake

Supporters estimate the $100 million retail center, named The Annex to recognize the original name of the Carlton Hotel, could bring in more than $1 million in annual sales taxes and create hundreds of new jobs.

Rottman Senior Vice President Keith Mathias, the Santa Barbara developer’s public face in Atascadero, has said the company will pursue a ballot initiative if the council does not accept its application.

Wal-Mart, meanwhile, has said only that placing the matter before voters is one of several options the firm would consider if the council tries to halt the project. Rios has said the company does not plan to abandon the store.

The shopping center has already required a significant financial investment from the Rottman Group. Mathias said it has already spent several million dollars and borrowed about $9 million more for the project.

Allowing the environmental review to proceed, Mathias said, is the best way for the City Council to learn how the center could affect the community and make an informed decision in a final vote.

“We don’t want to go to a ballot, but we’re prepared to do that,” he said last month.

David Paynter, the Irvine developer whose Clovis shopping center will include a Wal- Mart, said he did not consider launching a ballot initiative for his project.

But, he said, individual cities must weigh carefully the possible benefits of allowing the world’s largest retailer in the town.

“It’s really a philosophical question,” he said of controversies surrounding Wal- Mart. “… It’s a big sales tax generator. It’s just that, philosophically, is that what a community wants?”

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New Stores on Wal-Mart Meeting Agenda

By MARCUS KABEL
Associated Press
10.21.07                                   [back to top]  

Wal-Mart Stores Inc. may talk about ideas for new, smaller stores as a way to bolster its flagging U.S. growth when it holds an annual two-day conference for investors and financial analysts starting Tuesday.

Analysts said the issue may come up after the world's largest retailer, which in June announced plans to open fewer big new stores each year, said this summer it is considering new store sizes and types in the U.S.

Until now, Wal-Mart (nyse: WMT - news - people ) has mainly run large discount stores and Sam's Club membership warehouses in the United States. But sales growth at Wal-Mart stores opened at least a year, a key retail measure, slowed to 0.8 percent through September this year, from 1.9 percent for the last full fiscal year and 3 percent in 2005.

Analysts say smaller stores could help by being easier to place in the urban markets where Wal-Mart is trying to expand from its rural base. They could also draw more consumers by being easier to navigate than giant Supercenters, which combine groceries and general merchandise in stores as large as 200,000 square feet.

New store types, or formats, may also be necessary to adapt to competitive pressure from large rivals such as Tesco (nasdaq: TESO - news - people ) of Britain, which is entering the U.S. this year with much smaller, convenience-oriented grocery stores of about 10,000 square feet in Southern California, Arizona and Nevada.

"The new trend in retail that I keep hearing about everywhere is specialization and smaller stores," said Patricia Edwards, managing director and retail analyst at Wentworth, Hauser and Violich in Seattle, which manages about $12 billion in assets and holds about 35,700 Wal-Mart shares.

Wal-Mart did launch a full-size grocery store called Neighborhood Market in 1998. But that chain has remained fairly small, accounting for 125 of Wal-Mart's more than 4,100 U.S. stores as of September.

Edwards said Wal-Mart may need to go smaller or more specialized with new stores. She said Wal-Mart could look to the model of its Mexico subsidiary, which has Suburbia clothing stores and smaller Bodega shops as well as Supercenters and Sam's Clubs.

Retail analyst Charlie Georgas at Jackson Securities said Wal-Mart has been right to focus on its traditional strength of low prices after a brief foray last year into more fashion.

"In a slowing economy, all income groups have a tendency to step down in terms of their purchases and that can drive traffic to some of the discount retailers," Georgas said.

Wal-Mart's announcement this week that it is cutting prices on 15,000 holiday items, after similar announcement on toys and back-to-school supplies, helps bring more shoppers into its stores, Georgas said.

Georgas also said its important to remember that Wal-Mart has a growing international operation, with stores in 13 countries including Central and South America and China and a joint venture in India. That provides a connection to rising income levels in developing nations.

"There's definitely still growth opportunities for them," Georgas said.

Copyright 2007 Associated Press. All rights reserved.

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Wal-Mart: to grow or not to grow?

By Nicole Maestri,
Reuters
October 20th, 2007                            [back to top]  

NEW YORK- Twice in the past year, Wal-Mart Stores, Inc has given its stock a shot in the arm by announcing plans to rein in expansion in the United States.

Investors are now watching to see if there will be a repeat performance at the retailer's annual analyst meeting on Tuesday and Wednesday. Wal-Mart, whose shares have done very little this year, typically outlines its capital spending and store expansion plans there.

"Next week's analyst meeting could prove a positive near-term catalyst if management further reduces square footage growth or capex," Goldman Sachs analyst Adrianne Shapira wrote in an research note.

But since Wal-Mart has cut its growth plans twice in the past year -- once at its last analyst meeting and again at its shareholders meeting in June -- it raises the question of how much more room there is for the world's largest retailer to pull back.

"I would be surprised if between June and now that they made a huge material change to what they told us, but they might," said MFC Global Investment Management analyst Sarah Henry.

PUSHING FOR A SLOWDOWN

Analysts have pushed Wal-Mart to pull back on U.S. expansion so it can concentrate on improving sales at its more than 3,400 namesake discount stores and supercenters, which combine grocery stores with the discount store format.

Its shares rose nearly 4 percent last October when it said it would delay opening new stores that are close enough to existing locations to draw away customers, and planned to build smaller ones where possible to reduce costs.

The Bentonville, Arkansas-based company also said it expected retail space to grow by 7.5 percent in the fiscal year that started February 1 -- a modest slowdown from the 8 percent increases in recent years.

The shares jumped 4 percent again on June 1, when Wal-Mart said it would cut the number of supercenters it plans to open by as much as 30 percent this year. It also lowered its fiscal 2008 capital spending to $15.5 billion from $17 billion.

Chief Administrative Officer John Menzer said last month that the retailer's goal was to beat that $15.5 billion capital spending figure.

PLAN FOR SALES IMPROVEMENT

But the planned slowdown has yet to help U.S. sales.

Sales at U.S. stores open at least a year, or comparable-store sales, rose 2.1 percent last fiscal year -- the smallest gain since Wal-Mart began posting such figures in 1980.

For the first eight months of this fiscal year, U.S. comparable-store sales were up 1.5 percent, compared with a year-earlier gain of 2.6 percent.

To try to improve sales, Wal-Mart is emphasizing its low prices and revamping its merchandise, especially clothing. But this effort comes as its core lower-income shoppers are being squeezed by high food and fuel prices, and a slumping housing market.

The company's stock has failed to make gains. Shares of Wal-Mart are down more than 11 percent since the company announced the slower growth plans at its last analyst meeting on October 23, 2006. They trade at 13.5 times next year's earnings.

By contract, rival Target Corp (TGT.N: Quote, Profile, Research) trades at 15.6 times next year's earnings, and its shares have gained nearly 4 percent.

Analysts said they wanted to hear what strategies Wal-Mart will pursue to ensure U.S. sales get back on track.

"I'd rather them come out and be honest and say 'We think it's going to take a couple of years to fix it' instead of a couple of months because, in reality, that's what it's going to take," said JP Morgan analyst Charles Grom.

He said the stock would probably trade in a low- to mid-$40s range until there is a marked improvement in comparable-store sales.

Analysts also said they would like an update on the international business, where Wal-Mart has faced struggles ranging from Japan, where its Seiyu Ltd (8268.T: Quote, Profile, Research) unit is headed for its sixth straight annual loss, to India, where it faces protests over its wholesale venture with Bharti Enterprises.

Analysts also want an update on how Wal-Mart may fare during the holidays after it vowed to aggressively cut prices to win sales. On Thursday, Wal-Mart cut prices on 15,000 more items.

"I think that strategy can be effective if you can get the customers to shop the rest of the store" and buy higher-margin items, Henry said.

But she added: "It's tough to drive comps if you're continually taking down the price on everything."

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Living Paycheck to Paycheck Gets Harder

By ANNE D'INNOCENZIO
Associated Press
10.20.07                                         [back to top]  

NEW YORK - The calculus of living paycheck to paycheck in America is getting harder. What used to last four days might last half that long now. Pay the gas bill, but skip breakfast. Eat less for lunch so the kids can have a healthy dinner.

Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It's starting to affect middle-income working families as well as the poor, and has reached the point of affecting day-to-day calculations of merchants like Wal-Mart Stores Inc. (nyse: WMT - news - people ), 7-Eleven Inc. and Family Dollar Stores Inc. (nyse: FDO - news - people )

Food pantries, which distribute foodstuffs to the needy, are reporting severe shortages and reduced government funding at the very time that they are seeing a surge of new people seeking their help.

While economists debate whether the country is headed for a recession, some say the financial stress is already the worst since the last downturn at the start of this decade.

From Family Dollar to Wal-Mart, merchants have adjusted their product mix and pricing accordingly. Sales data show a marked and more prolonged drop in spending in the days before shoppers get their paychecks, when they buy only the barest essentials before splurging around payday.

"It's pretty pronounced," said Kiley Rawlins, a spokeswoman at Family Dollar. "It seems like to us, customers are running out of food products, paper towels sooner in the month."

Wal-Mart, the world's largest retailer, said the imbalance in spending before and after payday in July was the biggest it has ever seen, though the drop-off wasn't as steep in August.

And 7-Eleven says its grocery sales have jumped 12-13 percent over the past year, compared with only slight increases for non-necessities like gloves and toys. Shoppers can't afford to load up at the supermarket and are going to the most convenient places to buy emergency food items like milk and eggs.

"It even costs more to get the basics like soap and laundry detergent," said Michelle Grassia, who lives with her husband and three teenage children in the Bedford-Stuyvesant section of Brooklyn, N.Y.

Her husband's check from his job at a grocery store used to last four days. "Now, it lasts only two," she said.

To make up the difference, Grassia buys one gallon of milk a week instead of three. She sometimes skips breakfast and lunch to make sure there's enough food for her children. She cooks with a hot plate because gas is too expensive. And she depends more than ever on the bags of free vegetables and powdered milk from a local food pantry.

Grassia's story is neither new nor unique. With the fastest-rising food and energy prices since the 1980s, low-income consumers are stretching their budgets by eating cheap foods like peanut butter and pasta.

Industry analysts and some economists fear the strain will get worse as people are hit with higher home heating bills this winter and mortgage rates go up.

It's bad enough already for 85-year-old Dominica Hoffman.

She gets $1,400 a month in pension and Social Security from her days in the garment industry. After paying $500 in rent on an apartment in Pennsauken, N.J., and shelling out money for food, gas and other expenses, she's broke by the end of the month. She's had to cut fruits and vegetables from her grocery order - and that's even with financial help from her children.

"Everything is up," she said.

Many consumers, particularly those making less than $30,000 a year, are cutting spending on nutritious food like milk and vegetables, and analysts fear they're further skimping on basic medical care and other critical services.

Coupon-clipping just isn't enough.

"The reality of hunger is right here," said the Rev. Melony Samuels, director of The BedStuy Campaign against Hunger, a church-affiliated food pantry in Brooklyn.

The pantry scrambled to feed 5,000 new families over the past 12 months, up almost 70 percent from 3,000 the year before.

"I am shocked to see such numbers," Samuels said, "and I am really concerned that this is just the beginning of what we are going to see."

In the past three months, Samuels has seen more clients in higher-paying jobs - the $35,000 range - line up for food.

The Regional Food Bank of Northeastern New York, which covers 23 counties in New York State, cited a 30 percent rise in visitors in the first nine months of this year, compared with 2006.

Maureen Schnellmann, senior director of food and nutrition programs at the American Red Cross Food Pantry (nasdaq: PTRY - news - people ) in Boston, reported a 30 percent increase from January through August over last year.

Until a few months ago, Dellria Seales, a home care assistant, was just getting by living with her daughter, a hairdresser, and two grandchildren in a one-bedroom apartment for $750 a month. But a knee injury in January forced her to quit her job, leaving her at the mercy of Samuels' pantry because most of her daughter's $1,200 a month income goes to rent, energy and food costs.

"I need it. Without it, we wouldn't survive," Seales said as she picked up carrots and bananas.

John Vogel, a professor at Dartmouth College's Tuck School of Business, worries that the squeeze will lead to a less nutritious diet and inadequate medical or child care.

In the meantime, rising costs show no signs of abating.

Gas prices hit a record nationwide average of $3.23 per gallon in late May before receding a little, though prices are expected to soar again later this year. Food costs have increased 4.5 percent over the past 12 months, partly because of higher fuel costs. Egg prices were 44 percent higher, while milk was up 21.3 percent over the past 12 months to nearly $4 a gallon, according to the Bureau of Labor Statistics.

The average family of four is spending anywhere from $7 to $10 extra a week - $40 more a month - on groceries alone, compared to a year ago, according to retail consultant Burt Flickinger III.

And while overall wage growth is a solid 4.1 percent over the past 12 months, economists say the increases are mostly for the top earners.

Retailers started noticing the strain in late spring and early summer as they were monitoring the spending around the paycheck cycle.

Wal-Mart and Family Dollar key on the first week of the month, when government checks like Social Security and public assistance generally hit consumers' mailboxes.

7-Eleven, whose customers are more diverse, looks at paycheck cycles in specific markets dominated by a major employer, such as General Motors (nyse: GM - news - people ) in Detroit, to discern trends in shopping.

To economize, shoppers are going for less expensive food.

"They're buying more peanut butter and pasta. And they're going for hamburger meat," Flickinger, the retail consultant, said. "They're trying to outsmart the store by looking for deep discounts at the end of the month."

He said the last time he saw this was 2000-2001, when the dot-com bubble burst and the economy went into a recession after massive layoffs.

For now, low-price retailers are readjusting their merchandising and pricing.

Wal-Mart is becoming more aggressive on discounting. It announced Thursday it is expanding price cuts to 15,000 items, ranging from Motts apple juice and Progresso soups to women's fleece tops, heading into the holidays.

Family Dollar, whose food offerings were limited to candy and snacks until two years ago, has expanded its mix of groceries like fruit cups, cereal and such refrigerated items as milk and ice cream while cutting back on shoes. This summer the chain began accepting food stamps.

Food pantries are also getting creative. Samuels said her church, Full Gospel Tabernacle of Faith, just started offering free cooking classes to teach clients who are diabetic or have other health conditions how to prepare vegetables like squash. It's also offering free exercise classes.

"We are trying to make them health conscious," Samuels said. "It's not right to give them just anything. Our mantra is eat well and live well."

Associated Press Writers Geoff Mulvihill in Mount Laurel, N.J., and Terry Tang in Phoenix, Ariz., contributed to this report.

Copyright 2007 Associated Press. All rights reserved.

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Stratford, Wal-Mart facing fight

By Paul Cluff,
Sun Media
October 19th, 2007                 [back to top]  

STRATFORD -- Wal-Mart and the City of Stratford appear headed for a showdown at the Ontario Municipal Board.

City council is expected on Monday to approve a committee recommendation not to allow Wal-Mart to build a 112,000-square-foot store in Stratford's east end.

If the recommendation is approved, Wal-Mart would have 21 days to file an appeal with the Ontario Municipal Board.

Stratford's planning and heritage committee voted on Wednesday night not to allow Wal-Mart to build in the east end.

"The OMB exists for this sort of situation where we feel the facts are in our favour and it has been strongly suggested Wal-Mart would be an appropriate fit for the market," company spokesperson Kevin Groh said after the vote.

"Whether we take that route is yet to be decided but we are disappointed in tonight's decision because the facts stack up so highly in our favour."

Before voting, committee members listened to a number of passionate speeches from citizens.

They mainly fell into two camps of opposition -- those who don't want a Wal-Mart at all and those who want to see it built in the west end, where future development has been outlined as key in a city-commissioned study.

A common theme among presenters was the negative affect a Wal-Mart store would have on the downtown. Brian Blowes of Blowes Stationery said Wal-Mart would take up to 17 per cent of the $300-million retail business in Stratford, sending profits to its head office in Arkansas.

What route the 11 voting members would take on Wednesday was up in the air before the 2 1/2-hour meeting at the city hall auditorium.

In June, there appeared to be consensus in favour of the east-end location.

Up until the vote, Mayor Dan Mathieson was reluctant to give his position on the topic. He voted against giving Wal-Mart a green light to build in its preferred location near the junction of C.H. Meier Boulevard and Douro Street.

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Wal-Mart Withdraws Realistic Animals Toy Set

Dow Jones Newswires
October 19th, 2007                          [back to top]  

Wal-Mart Stores Inc. (WMT) said late Friday it was pulling animal toy sets from its shelves after discovering that they contained excessive levels of lead.

Wal-Mart said lead was not found in the surface coatings of the toys but in the base materials. The retailer said it shared its results with the Consumer Products Safety Commission, but did not elaborate on how many units were affected by the recall.

The toys sets were described as "Farm Animals," "Dinosaurs," and "Jungle Animals."

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Wal-Mart Recalls Toy Animals for Lead

Associated Press
10.19.07                                    [back to top]  

Wal-Mart Stores Inc. is recalling toy animals because of excessive lead levels discovered since it stepped up safety testing in August, the Bentonville, Ark.-based retailer said Friday.

Wal-Mart (nyse: WMT - news - people ) described the recalled items in a news release as toy sets of "realistic animals" that included farm animals, jungle animals and dinosaurs. It did not provide a brand name or say in the statement how many toys were subject to the voluntary recall or where they were made.

A Wal-Mart spokesman was not immediately available for comment.

Wal-Mart said independent testing revealed excessive levels of lead in the base material, not the surface coating.

Copyright 2007 Associated Press. All rights reserved. 

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Wal-Mart Worker Gets His Finger Stuck

Associated Press
Oct 18                                           [back to top]  

LAFAYETTE, Colo. (AP) -- A little goofing off during a break from work led to a time-consuming, embarrassing ordeal for a Wal-Mart employee. Authorities said the man got his right index finger stuck in an oval-shaped hole of a cast-iron picnic table outside the store.

Co-workers tried in vain to help the man get free before help was summoned. A half-dozen firefighters and emergency workers responded.

They freed the man by cutting a square out of the tabletop, then slicing through the metal around his finger.

Lafayette Fire Department Assistant Chief David Friedel said the unidentified man was OK, except for being upset, shaking and embarrassed about the ordeal.

Friedel says the man told him it was an act of "stupidity."

The man's name was not released.

© 2007 The Associated Press. All rights reserved.

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2ND UPDATE: Wal-Mart Lowers Prices On 15,000 More Items

Dow Jones
October 18, 2007                     [back to top]  

NEW YORK (Dow Jones) -- Wal-Mart Stores Inc., in an aggressive move to entice holiday shoppers, said Thursday it cut prices on 15,000 additional items this week, 20% more than last year. The world's largest retailer signaled more price cuts to come, portending a competitive holiday season.

The move follows the retailer's rollbacks, or price cuts on in-season products, on popular toys earlier this month. This week's price cuts were applied to food, home, appliances and apparel. The Bentonville, Ark.-based company (WMT) said it also plans to cut prices on electronics as well as other items. Wal-Mart sells more than 100,000 items, analysts said.

Wal-Mart's action comes as a trade group forecast retailers to have their worst holiday season in five years, prompting competitive price cuts to lure shoppers whose budgets are tightened amid record-high oil prices and a declining housing and credit market.

Retailers from Target Corp. (TGT) and J.C. Penney Co. (JCP) to Toys "R" Us Inc. and Best Buy Co. (BBY) may be forced to follow in Wal-Mart's footsteps to cut prices, analysts said.

"Anytime Wal-Mart does this, it puts a lot of pressure on their competitors," said Joe Feldman of Telsey Advisory Group, in an interview. "It's a good thing for Wal-Mart. They need to cut back on their prices and get back to their roots. It's helping to drive sales for them."

The company failed last year to lure higher income shoppers, who usually only buy Wal-Mart's consumable items such as detergent and toilet paper, with more upscale apparel and home furnishing products, said Tom Forte, also a Telsey analyst.

Driving traffic to stores during the holiday season is crucial for retailers because that's the time when many rake in their biggest sales and turn black for the year.

Retailers have reported worse-than-expected September same-store sales, hurt by unseasonably warm weather that analysts said may prompt more discounts heading into the holidays. Retailers from Target to J.C. Penney have lowered their profit forecasts.

U.S. shoppers are concerned about a slowing economy and may increase their holiday spending at the slowest pace in at least four years, a survey from the National Retail Federation showed this week. NRF, the world's largest retail trade group, has forecast sales for the holidays to increase at the worst pace in five years.

Wal-Mart last week raised its third-quarter profit forecast even amid sales shortfall, after it installed a staff scheduling software program, improved customer service and reduced markdowns that were used to clear out old merchandise. The company said then it will focus on lowering prices as its customers are still concerned about the cost of living.

Wal-Mart, citing Global Insight, said it saved the average family $2,500 per household last year. This week's price cuts include items such as Fisher Price Smart Cycle, which sells for $89.88, from $99.88 and a Black & Decker 4-slice toaster, which sells for $24.88, a decline from $29.97.

Copyright (c) 2007 Dow Jones & Company, Inc.

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Wal-Mart: Stop leaking Black Friday deals

Retailer is threatening legal action if Web sites leak its highly-popular Black Friday circular before Nov. 19.

By Parija B. Kavilanz,
CNNMoney.com
October 18 2007                                   [back to top]  

NEW YORK (CNNMoney.com) -- Wal-Mart, clearly annoyed that some Web sites are leaking its much-anticipated Black Friday circular weeks in advance, is threatening legal action if those sites do it again this year.

Brad Olson, the founder of Gottadeal.com, a Web site that markets itself as one of many "official Black Friday deals sites," told CNNMoney.com that he received an e-mail Wednesday from lawyers representing Wal-Mart (Charts, Fortune 500) warning him against "improper release" of the No. 1 retailer's Black Friday sales circular.

And he isn't the only one. Neal Rapoport, founder of Dealtaker.com which also leaks Black Friday ads, received the same legal notice from Wal-Mart on Wednesday.

"It has recently come to our attention that you and/or your company may potentially obtain possession of and untimely release Wal-Mart's sales circulars, advertisements or other information prior to their authorized release dates," the law firm Baker Hostetler, which represents Wal-Mart, wrote in a legal notice e-mailed to Brad Olson and obtained by CNNMoney.com.

Wal-Mart chops prices again The notice said Wal-Mart's circulars are protected by copyright laws, and any unauthorized reproduction, publication or distribution of that information prior to Wal-Mart's release date of Nov. 19 for its Black Friday ads "violates Wal-Mart's right."

"To the extent that the methods of acquisition or use include criminal activity, criminal penalties may also apply," the notice said.

"This is very unusual. I've never been threatened this way by Wal-Mart before," Olson said.

Last year, Olson provided CNNMoney.com with Wal-Mart's Black Friday ad as early as Oct. 30. Wal-Mart didn't officially release its Black Friday deals until closer to the day-after-Thanksgiving salesfest.

Olson has successfully leaked Wal-Mart's Black Friday circular for the past 2 years.

"While I have heard in the past from 2 or 3 retailers about leaking their Black Friday ads, it always has happened after the ad has been posted," Olson said.

"It appears to me that Wal-Mart knows their ad is going to get leaked and is doing whatever they can to intimidate me to prevent the information from being leaked and posted on my site," he said.

Black Friday traditionally is the kick-off to the holiday shopping season. On that day, retailers try to outdo each other with the deepest discounts, or "doorbuster deals," that they offer only for the first few hours that day.

So it's not unusual for people to line up in front of stores as early as 4 a.m. to bag these special low prices on the season's must-have items.

Typically, retailers release their highly-awaited Black Friday circulars listing doorbuster deals only a few days in advance. But lately, more and more Web sites, such as Gottadeal.com and Dealtaker.com, have leaked circulars from Wal-Mart, Target (Charts, Fortune 500), Best Buy (Charts, Fortune 500), Lowe's and other chains weeks in advance.

Although consumers love the early information, it also means that retailers lose the element of surprise as well as much of the sales hype that they would've liked to generate closer to Thanksgiving.

Olson said he hasn't yet decided what he's going to do.

"I think it's unfair. I don't understand why they would do it," he said. He said he has gotten Wal-Mart's circulars sent to him from people who design the ads, print it, sometimes even from Wal-Mart employees.

John Simley, spokesman for Wal-Mart, said the retailer is focused on stopping the leakage at all levels.

"We have tried other methods with inadequate results," Simley said. "We believe that the unauthorized distribution of [Wal-Mart ads and circulars] is a violation of our legal rights. This needs to be respected."

"Every year Wal-Mart's ad is the most anticipated one on our site. We get 2 million clicks on the ad between October and November," Olson said. "This is great publicity for Wal-Mart."

"Not being able to post Wal-Mart's ad will be a big blow to us," he said, adding that he hasn't received it yet.

The other fear for Olson is that he also has an affiliate relationship with Wal-Mart in which Gottadeal.com gets a commission from walmart.com links on its Web site. "We get a small percentage for any product bought on walmart.com through the our links," Olson said.

Olson said he was relieved that the legal notice didn't address Gottadeal.com's business relationship with Wal-Mart. "I'm nervous that could be next," he said.

Dealtaker.com also has the same affiliate relationship with Wal-Mart and other retailers.

"I haven't asked anyone to do anything criminal in order for us to get the ads. We certainly didn't ask anyone to steal it and we're not trying to get into any fights," Dealtaker's Rapoport said.

Rapoport said last year Best Buy threatened to end its business relationship with his company if he leaked the retailer's Black Friday deals.

"The only reason we agreed to not post their deals was because our business contract with Best Buy explicitly said we can't leak their ads," Rapoport said. "I don't think we have this condition with Wal-Mart."

"I think we will do due diligence with Wal-Mart's ads this year," Rapoport said. "If we get it anonymously, I won't guarantee that we won't post it. But if it's an e-mail marked walmart.com, then I probably won't."

Edward Naughton, an intellectual property attorney with the law firm Holland & Knight, said Wal-Mart doesn't have much of a copyright claim if all that these Web sites are doing is printing a list of Wal-Mart's deals.

"It can be argued that factually a list is not copyrightable," Naughton said. "But if these sites scan Wal-Mart's circular and post it to the Web sites, that gets into copyright infringement issues."

What's more, Naughton believes that Wal-Mart is threatening legal action based more on misuse, or theft of confidential information and trade secrets.

Naughton said any Wal-Mart employee, design firm or distribution firm that is associated with its Black Friday ads is probably under contract with Wal-Mart not to leak the information.

"As a general proposition, someone can be liable for misuse of trade secrets if they know that the information they received was obtained in violation of a confidentiality agreement," Naughton said.

In other words, even if Olson or Rapoport got Wal-Mart's Black Friday ad anonymously, Naughton said Wal-Mart can argue that Olson or Rapoport would've been aware that someone breached their contract with Wal-Mart.

"Still, I am not convinced that these leaks are damaging to Wal-Mart. If anything, they only create more buzz and business for Wal-Mart," he said.

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Big-box ban approved

By Matt Brown,
Lodi News-Sentinel
October 17th, 2007                   [back to top]  

The Galt City Council passed an ordinance Tuesday banning retail stores of 140,000 square feet or larger that also sell groceries. The 4-1 vote does not scuttle a proposed 132,000-square-foot Wal-Mart store on Twin Cities Road east of Highway 99.

The council considered a Planning Commission-recommended ban on 120,000-square-foot stores that would have killed Wal-Mart's plans, but decided to pass the ordinance as it was originally written. Councilman Darryl Clare dissented.

"We're disappointed that the council decided to vote against consumer choice," Wal-Mart spokesman Aaron Rios said after the meeting. "But we are pleased that they raised the threshold to allow our proposal to go forward." About 100 Galt residents packed the Council chambers for a standing-room-only debate that became heated at times. Speakers for and against the ordinance reflected a split in a community that craves shopping options but clings to its small-town image.

Supporters of the ordinance said big box stores like Wal-Mart take customers from small businesses, forcing those businesses to close and leaving communities blighted. Mayor Tim Raboy gives his opinion on the ordinance banning big-box stores in Galt on Tuesday evening during the Galt City Council meeting.

Opponents said Galt, with lagging sales tax receipts, is in no position to limit business in the city. They said they loathed having to drive to Lodi or Elk Grove to buy simple things like socks.

Many people saw the debate as a referendum on Wal-Mart in Galt. One group of residents from the Emerald Village neighborhood near the proposed Wal-Mart supported the store but didn't want it in their backyard because of the traffic it would create.

Vice Mayor Andrew Meredith, who spearheaded the ordinance, said the law was about protecting the community not limiting Wal-Mart's plans.

"This is in no way an ordinance to keep one project from happening," he said. "We started this long before we had a proposal from Wal-Mart."

Galt resident Reuven Epstein said Wal-Mart would provide a shopping option in a city where businesses are not booming.

"People keep saying it's going to hurt existing businesses," he said. "I'm not sure what existing businesses. There aren't many. You can't buy much in the way of shoes or other clothing."

David John said government shouldn't meddle in business. "Don't tell business what to do," he said. "We're in a free market enterprise system."

Supporters of the ordinance, like Connie Connelly, said allowing big box stores in Galt is a slap in the face to small business owners. "Small business made Galt what it is," she said. "We need to treat small business with respect."

Speaking before the council, Rios held a stack of postcards he said were from Wal-Mart supporters. Wal-Mart mailed letters to Galt residents in the past week urging them to voice their support for the large retailer.

As Rios explained Wal-Mart's plan for a Galt store, some members in the audience booed and cut him off.

In voting against the ordinance, Clare said the law doesn't solve the issue of traffic near the proposed Wal-Mart.

"We did nothing about Wal-Mart tonight," he said. "We still have to solve the traffic problem."

Meredith said he will work on an amendment to the ordinance that would limit retail store hours from 5 a.m. to 11 p.m.

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Wal-Mart worker fired after stopping robbery

By Alexa James ,
Times Herald-Record
October 17th, 2007                            [back to top]   

Newburgh — In the corporate world, the customer is always right. But what if the customer steals handbags and belts and then punches you in the face? What if you, the customer service manager, raise your arm to protect yourself or strike back and then get fired for touching the customer?

Victoria Smith said she was terminated this week for defending herself against an accused shoplifter at the 24-hour Super Wal-Mart on Union Avenue in the Town of Newburgh.

"This is so embarrassing," she said. "I was just defending myself and this store. I need this job. I have kids to feed."

The boss who fired Smith on Sunday — three days after the incident and halfway through her shift — would not comment on the situation. Wal-Mart media relations did not return calls yesterday, and district manager Sidney Knowles was out of the office.

But the Town of Newburgh police, who interviewed multiple witnesses and reviewed the store's security tapes, said Smith reacted in a way that most victims would in similar circumstances.

The problem started Thursday night, when a customer tipped off Smith to a potential shoplifter who wasn't scanning handbags and belts in the store's self-checkout lane.

Smith, a customer service manager, took up a post at the exit, next to the giant smiley face on the floor, and started checking random customers' receipts. When her shopper of interest left the in-store Mc Donald?'s and headed her way, she asked to see her receipt, too.

It didn't match the items she had. Normally, Smith then would suggest that some of the customer's items might not have rung up correctly on the register and they'd have to take a closer look. It's a nonaccusatory way for customers to see their way out of sticky situations, Smith said.

"I've been in customer service for 16 years," she said. "I know the routine."

But Smith said the young woman's temper flared. She yelled at Smith, threw her receipts on the floor and bolted.

Then the irate shopper — whom police identified as 18-year-old Angel Rivera of the City of Newburgh — rushed back into Wal-Mart, screaming at Smith and wielding a Mickey D's cup of soda, police said. They say she smashed the drink over Smith's shoulder and landed a hard hook to her cheek.

And Rivera didn't stop there. Police said she slugged another associate in the eye, spit in the face of a loss-prevention employee and pummeled another manager who grabbed her shopping cart. No one was seriously injured.

Police were called and arrested Rivera at the scene. Rivera was charged with robbery and assault, felonies, and petty larceny, a misdemeanor. Police said she stole about $34 worth of merchandise and was sent to Orange County Jail on $2,500 bail.

Smith said she was the only employe terminated after the attack. She dropped by the store yesterday to pick up a couple of things and say goodbye to her favorite cashiers. Before this, she had hoped to move up in the company.

"Now, I don't know if I even want to work in retail anymore," she said. "It's just not right."

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Let's Not Sell Ourselves Too Cheaply

By Brian Yap ,
New Straits Times
October 17th, 2007                        [back to top]  

I LIVE in a township that is relatively new. A significant number of residents moved here within the past couple of years. In fact, development is still going on at a breakneck pace -- more houses and apartments, as well as shops and offices. Plans are also afoot, I hear, for two major hypermarkets in the near future. This is in addition to one already established.

In the rest of the Klang Valley, three major shopping malls opened in just the past month.

One has more than a million square feet of retail space. The other two are extensions to already very successful malls.

While I have my reservations about the viability of the sudden boom in retailers, shopping malls and hypermarkets in such a short time, clearly people who actually do this for a living think it's going to work out well for them.

Last week, even Wal-Mart -- which carries the commanding title of the biggest retailer in the world -- and Germany's Metro both applied to enter the Malaysian market, for a piece of our RM 60? billion-a-year retail industry. Such news is certainly welcome at a time when there is concern about our steadily declining foreign direct investment Keeping a balance between attracting foreign investors and protecting Malaysian small business owners, workers and consumers has never been easy.

In this age of globalisation, perfectly symbolised by a retailer such as Wal-Mart, it's an ever more urgent concern. After all, the reason why foreign hypermarkets were banned from April 2002 until recently was that while they create jobs and lower prices, they also affect local small and medium enterprises. Today, there are virtually no independent, locally-owned supermarkets in the Klang Valley, except for Mydin and those of the smaller variety. A significant percentage of the city's residents buy their groceries from Carrefour, Tesco and Dairy Farm International (which operates Guardian pharmacies, Giant hypermarkets and Cold Storage supermarkets).

The three corporations invested RM 1?.6 billion in the retail and wholesale industries here last year.

When Tan Sri Muhyiddin Yassin was minister of domestic trade and consumer affairs, he imposed restrictions on the size, location and opening hours of these hypermarkets to protect local retailers.

It's hard to believe those measures made much of a difference. Even if the foreign-owned hypermarkets were smaller, closed earlier and were in the middle of nowhere, these big boys always win because of sheer size.

Their prices will be lower because of the volume they order and the leverage they have over suppliers. And now, even the ban on hypermarkets has had to be eased. Fighting the tide of a globalised economy might be noble in idea, but it seems exasperating in practice.

Instead of putting in place arbitrary restrictions in the name of protecting locally-owned small and medium enterprises, the ministry could better spend its energy helping local businesses be better prepared to keep up with international competitors. The idea is not to bring others down to our level but to raise our game to theirs. In terms of money, it's a walkover for sure. But in other areas -- service, product sourcing and understanding the local market -- being small could be an advantage. Both big and small businesses can then cater to different needs.

Workers must also benefit from hypermarkets. Job creation has always been one of the key arguments for opening up the retail sector, but the government must keep the interests of workers close to heart. While a minimum wage remains a dream, at the very least the Ministry of Human Resources should protect the right of the unionised and ensure uncompromising enforcement of labour laws.

The authorities must be ready to take action against hypermarkets -- yes, even against the biggest retailer in the world -- if it is found to flout laws, whether in business practices or treatment of workers.

This is particularly worth mentioning in light of Wal-Mart expressing interest in entering the Malaysian market. For an idea just how huge Wal-Mart is, in 2004, the company spent US$18 billion (RM 61? billion) on products from China alone. If it were an individual economy, the company would rank as China's eighth-largest trading partner -- Malaysia's current ranking. With great power comes great scrutiny, and Wal-Mart has been a regular target of not only criticism but legal action.

Allegations of it undercutting competitors out of business are common, as are criticisms of working conditions and use of illegal workers. Many have taken issue with its low wages, inadequate healthcare and anti-union stance.

Malaysia needs the investment, for sure. Just let's not sell ourselves too cheaply.

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Western Union Comes to Wal-Mart Canada

Associated Press
10.16.07                                               [back to top]  

ENGLEWOOD, Colo. - Money transfer services provider Western Union Co. and Wal-Mart Canada Corp. on Tuesday said they reached an agreement to offer Western Union bill-paying and money transfer services at Canadian Wal-Mart stores.

Financial terms were not disclosed.

Western Union (nyse: WU - news - people ) money transfer services became available Tuesday at certain Wal-Mart (nyse: WMT - news - people ) stores in the Toronto area and a chain-wide rollout of both money transfer and bill-paying services is scheduled to be completed in early 2008, the companies said.

Wal-Mart Canada operates 287 stores.

Western Union shares rose 7 cents to $19.76, while shares of Wal-Mart Stores Inc. fell 49 cents to $45.96 in morning trading.

Copyright 2007 Associated Press. All rights reserved

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Wal-Mart Whistleblower Lands a Job

Months after her complaint put her in hot water with her boss, Chalace Lowry's ordeal has ended in a new job—with a surprising twist

by Pallavi Gogoi
BusinessWeek.com
October 16, 2007                              [back to top]  

Chalace Epley Lowry, the whistleblower at Wal-Mart Stores (WMT), has a job.

In June, BusinessWeek.com wrote about Lowry (BusinessWeek.com, 6/13/07), an administrative assistant in the company's communications department, after she reported what she believed could have been insider trading by a senior executive and then found herself looking for a new job. At the time, Wal-Mart told Lowry she had 60 to 90 days to find another position within the company, but it would not promise her a new post.

A Harrowing Process Four months later, Lowry has a full-time job at Wal-Mart headquarters. It hasn't been an easy journey. Lowry applied for more than 30 positions within Wal-Mart. She was called to interview for five positions and didn't end up with any of them. Later, she received a post in human resources that she hadn't formally put in for. Lowry says the past weeks couldn't have been more stressful, contributing, she believes, to her recent diagnosis of stress-induced angina and to the breakup of her marriage. "The past four months have been very hard and, in my opinion, unfair to an honest, 51-year-old woman who chose to do the right thing," says Lowry.

Lowry made her controversial complaint last spring. Mona Williams, vice-president for corporate communications, had asked her to make digital copies and send some papers that Lowry thought were related to stocks. A few days later, Lowry found out that Wal-Mart was planning a $15 billion stock buyback, and she worried that Williams might have traded on insider information by exercising her stock options. Lowry was prompted to file her complaint with the company's ethics department in part because of an orientation session she had when she started at Wal-Mart in January that put a heavy emphasis on corporate ethics. "I acted in good faith, just pointing out that there might have been some wrongdoing," said Lowry in June.

Wal-Mart has said that its ethics office investigated the matter and that Williams was cleared the same day the complaint was filed. A spokesman for the company said in June that Lowry mistook a deferred compensation form for an options exercise request.

Disclosure Led to Discharge Soon after she filed the complaint, however, Lowry's identity as the whistleblower was disclosed to Williams. Wal-Mart says Lowry agreed to disclosure, but Lowry says she was never given a choice. At that time, a distressed Lowry said it was impossible to remain in the communications department since Williams was effectively her boss, so she asked to be transferred. That's when Lowry says she was told she had 60 to 90 days to find another position at the company.

Lowry is relieved that she finally landed a new job at Wal-Mart. But she is a bit shaken by the process. In the days following the complaint, she was questioned by Wal-Mart's human resources, legal, and ethics departments about the circumstances surrounding her speaking up. In one instance, a representative from human resources wanted Lowry to write and sign a document stating that she voluntarily asked to be removed from her job. Lowry declined to comply, because she felt cornered and under pressure. "Associates should proceed through [Wal-Mart's] Open Door policy with extreme caution," she says. Wal-Mart didn't respond to requests for comment for this story.

While she was looking for a job within Wal-Mart, Lowry on Sept. 5 filed a whistleblower complaint with the Occupational Safety & Health Administration. OSHA administers whistleblower protections under the Corporate & Criminal Fraud Accountability Act of 2002, better known as Sarbanes-Oxley. The law was enacted July 30, 2002, to protect employees in publicly traded companies from retaliation for providing information that an employee believes is a violation of Securities & Exchange Commission regulations or other federal laws relating to fraud against shareholders.

Still "Under the Microscope" Around mid-August, Lowry was moved to assist a legal team of two attorneys in Wal-Mart's human resources group, known as the People division. On Oct. 1, Lowry was informed that her job is no longer temporary and she could work there full-time. "I guess I should consider myself lucky at this point," she says. "But all of this should never have happened. I still feel I'm under the microscope."

Ironically, one of the two attorneys that Lowry will be working for is Sharon Butcher. She was the attorney at Enron who was given the task of handling Sherron Watkins' request for reassignment to a new position after Watkins wrote a memo to then-CEO Ken Lay questioning the company's accounting.

Gogoi is a contributing writer for BusinessWeek.com.

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Wal-Mart's head of outreach to environmental groups leaving

Marcus Kabel,
THE ASSOCIATED PRESS
Tuesday October 16th, 2007                            [back to top]  

A former nun and conflict resolution expert is leaving Wal-Mart Stores Inc. just over a year after she was hired to help the world's largest retailer rally support from environmental groups and other nonprofits in its battles with union-led critics.

Harriet Hentges was hired in July 2006 as Wal-Mart's first "director of stakeholder engagement" to work with outside groups to develop Wal-Mart policies in areas including the environment and health care.

Hentges will leave Friday for personal reasons, Wal-Mart spokesman David Tovar said. He declined to elaborate on those reasons.

Hentges helped mediate conflicts in Iraq and the Balkans for the United States Institute of Peace. She has maintained a home in Washington, D.C., while commuting to Wal-Mart's headquarters in Bentonville, Ark., according to people familiar with her work.

Tovar said Wal-Mart is seeking a replacement for the same position and remains committed to working with outside groups on issues including the environment.

Hentges was hired after chief executive Lee Scott pledged in late 2005 to cut energy use, reduce solid waste and offer more organic and environmentally beneficial products in its more than 4,000 U.S. stores.

Her position was one of a flurry of changes at Wal-Mart as it faced organized criticism from union-backed groups Wal-Mart Watch and WakeUpWalMart.com over worker pay, health insurance and other issues.

Some environmentalists, including the Sierra Club, are allied with the union critics.

Other green activists, including Environmental Defence, have opted to work with Wal-Mart to take advantage of what they see as the huge potential for influencing change at the world's largest retailer and its network of over 60,000 global suppliers.

Gwen Rutta, director of corporate partnerships for Environmental Defence, said Hentges's background with nonprofit groups made her a credible contact to those groups for Wal-Mart.

"They've got some very big shoes to fill in replacing her," Rutta said

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Wal-Mart Stores, Inc. to Webcast Annual Analysts and Investors Meeting

PR Newswire
10/16/2007                           [back to top]   

BENTONVILLE, Ark., Oct 16, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Wal-Mart Stores, Inc. (NYSE: WMT) will webcast its annual analysts and investors meeting Tues., Oct. 23 and Wed., Oct. 24.

An audio webcast, including slide presentations and question and answer sessions, will take place at the following times. All times are CDT:

Tues., Oct. 23
10:00 a.m. - 11:30 a.m. -- Financial update
1:00 p.m. - 3:00 p.m. -- Wal-Mart Stores U.S.
7:30 p.m. - 7:50 p.m. -- Corporate reputation

Wed., Oct. 24
7:30 a.m. - 8:30 a.m. -- Sam's Club
10:30 a.m. - 12:00 p.m. -- Wal-Mart International
12:45 p.m. - 1:45 p.m. -- Leadership & innovation
1:45 p.m. - 3:00 p.m. -- State of the industry and Wal-Mart Stores, Inc. - Lee Scott, president and chief executive officer

The audio webcast, presentations and videos can be accessed via the Company's Web site at http://www.walmartstores.com/investors. Additional information on the agenda is also available on the site.

For anyone unable to hear the audio webcast of the presentations, a live conference call will be available by dialing 1-800-430-0496 in the U.S. and 1-303-248-0286 for outside the U.S. The pass code for this call is 2239005. The webcasts will be available until October 31, 2008, on the Company's Web site.

SOURCE Wal-Mart Stores, Inc.

Copyright (C) 2007 PR Newswire. All rights reserved

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Western Union Teams With Wal-Mart Canada to Offer Western Union Money Transfers(R) and Quick Collect(R) Services

BUSINESS WIRE
Tue Oct 16                            [back to top]  

ENGLEWOOD, Colo. & MISSISSAUGA, Ontario--The Western Union Company (NYSE: WU), a leader in money transfer services, and Wal-Mart Canada Corp., a leading Canadian retailer, today announced an agreement to provide fast, reliable and convenient global money transfers and Quick Collect® services to consumers in Canada.

With a national, chain-wide rollout scheduled for completion in early 2008, Western Union® services will be available effective today at select Wal-Mart stores throughout the Greater Toronto area. Wal-Mart Canada currently operates 287 stores coast to coast, serving more than 1 million Canadians daily.

“Customers turn to Wal-Mart for convenience and value – and we are constantly looking for ways to introduce new services at everyday low prices,” said Trudy Fahie, Vice President Financial Services, Wal-Mart Canada Corp. “Through this relationship with Western Union, our customers can enjoy the best overall value when it comes to choosing a money-transfer service provider.”

Through Wal-Mart Canada, Western Union will offer consumers the ability to send and receive Western Union Money Transfers® transactions to over 200 countries and territories. The Western Union Quick Collect® service enables consumers to send payments for their mortgages, credit-card bills, as well as car and consumer loans using cash or a debit card at Wal-Mart Canada stores.

“Wal-Mart and Western Union are brands consumers know and trust,” said Brian Fox, Vice President and General Manager, Western Union Canada. “Through Western Union’s world-class network of more than 312,000 Agent locations, consumers will now enjoy even greater choices when sending or receiving money transfers, along with the flexibility to send bill payments from locations throughout Canada.”

About Wal-Mart Canada Corp.

Established in 1994 and headquartered in Mississauga, Ontario, Wal-Mart Canada operates a growing network of 293 outlets nationwide. The company employs more than 70,000 Canadians and has been repeatedly ranked one of the best companies to work for in Canada by human-resources firm Hewitt Associates and Report on Business Magazine.

About Western Union

Western Union, together with its affiliates Orlandi Valuta and Vigo, is a leading provider of global money-transfer services, providing people with fast, reliable and convenient ways to send money around the world, pay bills and purchase money orders through a network of more than 312,000 Agent locations in over 200 countries and territories. For more information, visit www.WesternUnion.com.

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Wal-Mart Opposes tougher safety regulations on Chinese imports

By Mark Drajem,
Bloomberg News
October 15th, 2007                                        [back to top]  

Republican Representative Michael Burgess won his Texas seat five years ago as a free-trade proponent and has been a reliable vote for each of the seven market-opening agreements sent to Congress since then.

No more. When U.S. companies this year recalled millions of Chinese-made toys and a local news station reported that imported flip-flops caused painful foot rashes, Burgess had a change of heart.

``In my household, if it's made in China, it does not come home,'' the 56-year-old lawmaker, a physician, told Mattel Inc. Chief Executive Officer Robert Eckert at a recent hearing.

``It's one thing to talk about free trade,'' Burgess said in an interview. ``It's a whole different issue when it comes to safety.''

Burgess isn't the only free-trader souring on China. Across Congress, even Republican lawmakers who have backed President George W. Bush on open markets are increasingly seeing safety risks, not economic opportunities, when they look overseas. As a result, they are pushing measures that may slow the flow of imports, especially some of the almost $300 billion in goods from China.

The House and Senate are considering a raft of measures aimed at clamping down on unsafe imports. They include expanding funding for import inspections; allowing states to regulate consumer products; and increasing by tens of millions of dollars the fines for companies selling defective products.

The Bush administration has warned lawmakers against embracing protectionism in the name of safety. Still, the White House will be under pressure to agree to what would be the first significant expansion of consumer-product legislation in more than 15 years, lawmakers, lobbyists and consumer advocates say.

`A Wakeup Call'

``If you think this is a partisan issue, you are out of your mind,'' Representative Tom Reynolds, a New York Republican, told officials from the U.S. Trade Representative's office at an Oct. 4 House hearing. ``There is a wakeup call in Congress, and we need to see some results.''

Washington Democratic Representative Rick Larsen and Illinois Republican Representative Mark Kirk, who run Congress's China Working Group and were among the leading opponents of new barriers to Chinese imports, have proposed that fines on makers of unsafe items be increased to as much as $50 million and that U.S. government inspectors be deployed inside Chinese factories for the first time.

They say their concerns were reinforced by an August visit to Beijing, where Chinese officials told them the import-safety problem is only media hype.

China's Problem

``They felt the issue was being overblown and would be used as leverage against them,'' says Larsen, 42, whose district is home to a Boeing Co. plant and exported more goods to China than any other in the U.S. last year. ``But we told them to lead, follow or get out of the way. This is something Congress is going to act on this year.''

U.S. concern about Chinese products has escalated since March, when melamine, a substance used to make plastics, was found in pet food and blamed for killing cats and dogs. Anxieties grew with revelations of tainted vitamins and Cub Scout badges, and of dangerous cribs and Halloween toys.

Product recalls alarmed Arkansas Senator Mark Pryor enough that he was willing to sponsor measures opposed by his state's biggest corporate resident and the world's largest retailer, Bentonville-based Wal-Mart Stores Inc.

Bucking the Leadership

Pryor, 44, a Democrat, had bucked his party's leadership by voting for the Central American Free Trade Agreement in 2005. Now, as head of a key Commerce Committee panel, he is sponsoring legislation that would require outside safety inspections of all imported toys, allow all 50 U.S. state attorneys general to enforce product-safety laws and compel public disclosure of confidential company safety information.

The measure, which would also raise by 50-fold to $100 million the fines companies face for selling unsafe goods, is backed by Committee Chairman Daniel Inouye, a Hawaii Democrat.

Consumer groups have cheered; Wal-Mart hasn't. In testimony to Pryor's panel, Wal-Mart's lobbying group, the Retail Industry Leaders Association, argued that the higher fines and public disclosure might damage American retailers.

Some of the bill's provisions may also ``undermine the critical cooperation'' between companies and federal regulators, Al Thompson, the group's vice president, testified.

The House has already taken steps to increase penalties on companies making unsafe products. Lawmakers last week voted to boost maximum fines to $10 million, from $1.83 million.

Tainted Food

Senator Richard Durbin of Illinois tried for a decade to require companies to report contamination of their food supply within 24 hours. The measure never gained traction until fears about Chinese seafood and toothpaste emerged; Congress passed it last month, and Bush signed it.

Now Durbin, 62, the Senate's second-ranking Democrat, is pressing for user fees on imports to pay for more inspections, drawing companies' ire.

``We believe that adopting retaliatory measures, such as increasing tariffs or assessing user fees on imports, will do more harm than good,'' a coalition of dozens of companies including Wal-Mart, Minneapolis-based Target Corp., Atlanta- based Home Depot Inc. and New York's Citigroup Inc. wrote in a letter to members of Congress on Sept. 26.

Retaliation

Chinese officials say they're working to improve the safety of exports. ``China is always ready to work with the United States to settle the various product-related issues through dialogue,'' says Wang Baodong, a spokesman for the Chinese embassy in Washington. Still, ``we are opposed to the politicization of the product issue.''

Vice Premier Wu Yi was placed in charge of cracking down on unsafe products, and she vowed on Sept. 27 to ``create a chain of oversight covering the whole manufacturing and food- production process.''

The Bush administration says trading partners will retaliate if lawmakers turn protectionist.

Congress can't use ``food safety as an excuse for being protectionist,'' U.S. Trade Representative Susan Schwab said in an interview Oct. 12. ``Whatever we do on imports coming into our country, other countries can do to our exports.''

Even so, business lobbyists say they expect the administration will be compelled to agree to at least some of the measures. ``Something is going to get passed, and it's going to be signed'' by Bush, says William Reinsch, a former Clinton administration trade official who is now president of the National Foreign Trade Council, which represents Boeing, Caterpillar Inc. and other exporters.

Burgess, who supports measures to toughen food-safety rules and increase inspections on imports, says restrictions are inevitable because of public demand. ``The power of the consumer here is much greater than the power of Congress,'' he says.

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Wal-Mart, Metro To Set Up Shop In Malaysia

Vivian Wai-yin Kwok,
Market Scan
10.15.07                                          [back to top]  

Wal-Mart and German hypermarket chain Metro AG are reportedly planning to enter the tightly controlled Malaysian retail market.

Both retailers have submitted applications to open stores in Malaysia, Domestic Trade and Consumer Affairs Minister Datuk Shafie Apdal told reporters after conducting price checks at a farm market, according to The Edge financial daily.

Shafie said the Malaysian government is vetting the applications and studying the effects they would have on local retailers. The applications were pretty much welcomed by the minister, but he stressed that Wal-Mart (nyse: WMT - news - people ) and Metro could not open new stores at their own discretion, as there were guidelines governing the country’s retail market.

Metro AG declined to comment on the report that it had applied to set up a joint venture with Wal-Mart. “We are of course always looking for expansion markets, especially in eastern Europe and Asia,” a Metro spokesman responded, “'But we will not comment on anything until a decision is taken.”

Shafie first revealed in June that the Malaysian authority was set to loosen restrictions on foreign hypermarket operators so as to lure foreign investors to take part in the country’s $18 billion a year retail market. He also disclosed the ministry was in talk with Metro AG.

To protect local retailers, former Domestic Trade and Consumer Affairs Minister Muhyiddin Yassin banned foreign operators from setting up superstores in April 2002. The authority also restricted shop sizes, business hours and locations available to foreign retailers already operating in the country.

Currently, the country of 26 million people is served by four big box retailers: Jardine Matheson’s affiliate Giant Supermarket, the French Carrefour, U.K.-based Tesco (nasdaq: TESO - news - people ) and local supermarket chain Mydin.

With 2,378 stores, Metro AG is the second-largest supermarket chain after Carrefour in while Wal-Mart tops its peers with more than 4,000 stores in and more than 2,900 in 15 countries worldwide

Thomson Financial contributed to this article.

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Wal-Mart's labour practices face trial yet again

The India Times
15 Oct, 2007                               [back to top]  

ATLANTA: A short-haired, heavyset woman of 59, rings flashing from every finger and both thumbs, glares from the witness stand at a conservatively suited, confident young lawyer who is trying to rip apart her case against the largest retailer in the world. Wal-Mart’s labour practices are on trial, again, this time in the three-river town of Hastings, Minnesota. Plaintiffs, granted class-action status, say the company stole time from some 56,000 hourly workers at Minnesota Wal-Marts and Sam’s Clubs by making them work off the clock.

Screens around the courtroom display time records for December 26, 2000. They show the witness clocked out for lunch at 2 pm and clocked back in precisely 30 minutes later, the maximum Wal-Mart allowed. Not 28 minutes. Not 31 minutes. The exactitude hints that a supervisor might have changed the record to slip in a lunch break the witness never took. “You have no way of telling us that meal period wasn’t actually taken that day,” asked Shawn Rabin, a lawyer for Wal-Mart.

“Correct,” replied the witness, Debbie Simonson. And so the defence chips away, a few dollars here, a few dollars there, at the plaintiffs’ claim that Wal-Mart stole $27.3 million in wages from them. This case and others like it pose a classic question. How do you prove a widespread practice if individual incidents create nominal harm and are hard to pin down?

If not through a class action, how are those who profit from a little bit of wrong done on a big scale stopped and punished, and how are the wronged compensated? In the Minnesota case, as in 30 other attempted or successful class actions around the country, plaintiffs say Wal-Mart knowingly hired too few people to do too much work. To fill the gap, managers pushed hourly workers to skip a lunch here, a rest break there, and sometimes stay a few minutes after clocking out, the lawsuits claim. Basic human functions took a back seat to the work, the workers say.

“Skip the bathroom and get your butt back up front ASAP,” Simonson said she was told during one of her many failed attempts to take a break. “It was a constant problem,” said Simonson, who worked the jewellery counter and other posts at a suburban Minneapolis store. She testified September 25 on the trial’s first day. The plaintiffs count millions of infractions, none worth much, given that their pay hovered around minimum wage. It’s rarely worth it for individual employees to sue on their own or complain to government labour enforcers.

If you’re a company as big as Wal-Mart, the dollars add up. Shaving one-tenth of 1% off Wal-Mart’s payroll would save the company $138 million, Wal-Mart’s then-chief executive officer, David Glass, said in 2001 while exhorting managers to cut back on labour costs, the Minnesota plaintiffs’ lawyer, Justin Perl, said in opening statements.

“When one inflicts minor harm across a dispersed population, the defendant is, as a practical matter, immune from liability unless a class is certified,” the New Jersey Supreme Court said in allowing a class-action case against Wal-Mart. While plaintiffs emphasise the big picture in these cases, Wal-Mart focuses on specifics. The strategy has served the company reasonably well in pre-trial skirmishes, not so well at trial.

Lawyers for the company convinced courts in 19 of 30 attempted class actions that the workers’ complaints were too individualised to be lumped together, especially not with others who may have no complaint. When class status is denied, the case usually dies. “The class proposed by plaintiffs is far too large to approximate, even remotely, the group of hourly associates who may have been aggrieved,” New York trial judge Richard Platkin wrote in rejecting a statewide class.

Of the remaining 11 attempts, 10 suits won class status and one awaits a decision. The core of the case is Wal-Mart’s company-wide conduct, the New Jersey court said. Common issues outweigh “individualised defenses advanced by Wal-Mart,” the court said. So far only two such class actions have made it all the way to verdict, and they brought whopping wins for the plaintiffs: $141 million in actual damages, punitive damages and state penalties in Pennsylvania and $172 million in California. Wal-Mart settled a similar suit in Colorado for $50 million.

As for specific infractions, cash register records in California, for example, showed employees were ringing up sales during the same 30 minutes that time records showed them at lunch. An internal Wal-Mart audit from 2000 showed that during a single week’s time, in 126 out of 127 stores surveyed nationally, workers missed or cut short 76,472 breaks. Plaintiffs’ experts have extrapolated those findings to apply them to the class, a practice Wal-Mart has tried to rebut. Add to that the fact that store managers were urged to reduce labour costs every year and rewarded financially for doing so. If it took forcing employees to work off the clock, those passing out the bonuses looked the other way, the lawsuits claim.

Since these cases began getting traction, Wal-Mart has changed its practices. Now, cash registers alert the cashiers when break time is approaching and lock them off the register when it’s time, according to John Simley, a Wal-Mart spokesman, who declined to discuss the case in Minnesota. He says it’s not clear whether these changes resulted from the lawsuits or from an independent upgrading of technology. It’s hard not to see a link to the litigation. As the New Jersey court said, “By denying shelter to an alleged wrongdoing defendant, we deter similar transgressions against an otherwise vulnerable class.”

Copyright © 2007 Times Internet Limited. All rights reserved. 

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Protesters Tell Wal-Mart to Quit India

BusinessWeek Online
Monday October 15                                [back to top]  

Police were everywhere at Mumbai's famous Azad Maidan -- Independence Grounds -- on the morning of Oct. 10. The intense security, usually reserved for rallies by some of the city's rabble-rousing politicians, was for India's largest demonstration ever against organized retail in India.

More than 7,000 porters, traders, shopkeepers, street hawkers, and farmers came from Mumbai and all over the state of Maharashtra to protest against companies like Wal-Mart (WMT) and Germany's Metro (MEOG.DE). Some protesters carried the Indian tricolor. Others were more direct, waving red flags scribbled with "It's Now or Never: Wal-Mart Quit India."

The protest was organized by the Federation of the Association of Maharashtra, which represents 750 trade associations. The demonstrators turned out, under a searing sun, to oppose the arrival of big retailers such as Wal-Mart and Metro that they consider a threat to their livelihood. They also targeted Reliance Retail, the newly established Indian retail operation of the $27.2 billion petrochemicals player Reliance Industries.The Federation promises more such protests across the country. "This is only the beginning," yelled Mohan Gurnani, the Federation chairman, from a six-foot-high, red-carpeted dais packed with federation officials.

Edging Out Small Markets The past two years have seen sporadic agitation against large retail operators in India, mostly from the small, unregulated street-side vegetable vendors and the 12 million neighborhood mom-and-pop shops called kirana stores. But now among those protesting are traders, hawkers, and porters -- people who are high in India's poorly run but active retail ecosystem, the Agricultural Producers Marketing Co-operatives [APMC].

These state-run open markets sell fruits and vegetables and are starting to feel the heat of big businesses edging them out of their established space. APMC traders are the single-point intermediaries between the farmers and retailers for fixing the prices of fresh produce and grains.

Four years ago, New Delhi invited private players to set up APMC-like wholesale markets across India. There were no local takers, but the foreign players seized the chance to get a foothold in the Indian market. Germany's Metro now has wholesale outlets in Hyderabad, Bangalore, and Kolkata, and plans to open one in Mumbai soon. Wal-Mart, which has a tieup with Bharti Enterprises, is planning to open its first wholesale outlet by mid-2008, while Bharti will go solo with retail until New Delhi relaxes rules for multibrand multinational retailers, i.e., Wal-Mart and its ilk.

Fighting Foreign and Local Chains What began as protests against international chains like Wal-Mart, Tesco (TSCO.L), and Carrefour (CARR.PA) entering India has now grown into a full-blown opposition to organized retail, including Indian players. In the last two months, Reliance has been at the receiving end of protests in the Indian states of West Bengal, Orissa, Uttar Pradesh, and Kerala. Last month, the government of heavily populated Uttar Pradesh, in the northern part of the country, shut down Reliance stores. This was followed by similar moves in Bengal. Reliance has had to lay off staff -- 400 in Bengal and 1,000 in Uttar Pradesh. The company has four stores in Mumbai's eastern suburbs but, fearing further agitation, has put expansion in the city on hold.

People like Ramdeo Chavan, 50, genuinely fear the looming changes. Chavan has worked as a porter for more than three decades at a state-run open market in Mumbai, loading and unloading goods. Now he believes he could be one of the casualties of Reliance Retail's growth. At the protest rally, Chavan explained that he makes $80 to $100 a month. He worries that 200,000 porters like him working in Maharashtra's 29 markets could lose their jobs if private-sector companies expand aggressively. "We know no other job but this," says Chavan.

Branching Out Beyond Food Organized retail has plenty of potential in India. It accounts for just 3.5% of India's total $336 billion retail market -- and the opportunities are enormous. By 2017, retail consultant KSA Technopak projects organized retail will account for 28% of the $1 trillion Indian retail market. Reliance's $3.9 billion retail project, for instance, includes setting up one-stop shops for wholesale markets, retail outlets, and entertainment centers at bus junctions in smaller towns across India. And at last count, Reliance had opened 325 convenience stores in India, with 205 more planned by the end of fiscal 2008.

However, burdened by the challenges posed by political opposition to its expansion, Reliance has decided to diversify its risk beyond fresh foods, which entails direct contact with farmers and inevitable problems with middlemen like the APMC. The company, on Oct. 10, opened Reliance Trends in Gurgaon, near New Delhi. The store will sell private labels and branded apparel, luggage, and accessories.

On Oct. 9, Reliance announced its first international brand deal, winning exclusive marketing and distribution rights for Apple (AAPL) products. Reliance will set up 10 iStores in India showcasing iPods, Macs, and [when Apple is ready to market them in India] even iPhones. The first iStore will open in Bangalore in November -- just in time for the Hindu New Year, which is the peak spending season in India.

Old Laws Aid Local Businesses To realize the full potential of retail in India, New Delhi still has to repeal archaic laws that hinder land acquisition for organized retail. So far, the government has moved cautiously. Only single-brand foreign companies are permitted to set up retail operations in India. Multibrand players can set up wholesale or cash-and-carry operations. Metro has been doing that since 2003 and Wal-Mart's joint venture with Bharti will be opening something similar next year. Neither Tesco nor Carrefour has been successful in searching for local partners and both have shelved their India retail plans for now.

That's creating opportunities for local companies such as Reliance, Tata, Bharti, ITC and the Aditya Birla Group. The newest entrant into the retail business is tractor- and automaker Mahindra & Mahindra, which plans to open stores selling luxury products. Retail "is a natural extension of the group's existing business," says Raghunath Murti, executive vice-chairman of Mahindra Intertrade.

India has just begun to change into an economy with an organized retail environment. And as more supermarkets and hypermarkets spring up around India, the mom-and-pop shop owners are likely to become more aggressive. It's a good bet there will be a lot more demonstrations like the one at Mumbai's Independence Grounds in the coming months.

Copyright © 2007 BusinessWeek Online. All rights reserved.

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Phased, low-key launch for Bharti-WalMart: Mittal

domain_b.com
15 September 2007                 [back to top]  

Kolkata: According to Bharti Group chairman and managing director, Sunil Bharti Mittal, the launch of its retail venture, for which it has partnered US retail giant Wal-Mart, will be a phased, low-key affair, with its launch planned in phases over a period of time, similar to the group's telecom business.

Bharti Enterprisesd has reportedly planned to invest $2-2.5 billion by 2015 in the retail sector, and has entered into an equal joint venture with Wal-Mart for its wholesale cash-and-carry business. Bharti will handle the front-end retail part of the business on its own.

According to Mittal, Bharti will be in the frontline and Wal-Mart in cash and carry businesses. He expects no changes to this model till the government eases FDI norms in retail.

In the cash-and-carry business, a company operates like a bulk dealer on behalf of several manufacturers, selling merchandise to retail traders.

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Consumer advocates worried about safety of Wal-Mart toys

By Steve Painter,
Arkansas Democrat Gazette
October 14th, 2007                                                  [back to top]   

Retailers are about to find out if nearly a year’s worth of bad news in the toy business is going to foul up their make-or break Christmas shopping season.

They hope to entice shoppers with a combination of the latest play technology, time-tested names such as Elmo and Barbie and an old concept called physical exercise.

In Washington, Congress is holding hearings on what to do about dozens of toy recalls related to lead paint, magnets that can detach and be swallowed and other threats to children’s safety.

Wal-Mart Stores Inc., the world’s largest retailer and top toy seller, says it has stepped up toy inspections and is rechecking documentation of previous inspections.

“We think, really, the toys will be the safest this year” compared to previous years, said Laura Phillips, Wal-Mart’s chief of toy merchandising.

Consumer advocates aren’t convinced. They contend that the nation’s consumer protection apparatus has been weakened to the point of being meaningless.

“It’s ridiculous, it’s laughable, to think that they are going to make sure that all the toys that come into our country meet standards,” said Jean Halloran, director of food policy initiatives for Consumers Union.

“It’s my impression that the market is so swamped with products that cause problems that we really need a massive effort to clean it up,” she said.

Consumers Union is a nonprofit advocacy group headquartered in Yonkers, N. Y., and publisher of the magazine Consumer Reports.

From January through Oct. 4, the federal Consumer Product Safety Commission listed more than 50 toy recalls as a result of various defects.

In September and the first week of October alone, 20 toys were recalled.

Nineteen other nontoy products also were recalled during that period. Of the 39 recalled products, toy and nontoy, during that period, 32 were made in China and 20 involved lead in paint. In a recent video-conference address to a Hong Kong gathering of more than 600 Chinese toy manufacturers, the president of the U. S. Toy Industry Association said safety concerns and worries about the economy will be a challenge to toy retailers this year. “In the best of circumstances, this [Christmas ] season may be below last year,” association president Carter Keithley told the group.

THE HOT LISTS Two of the toys on three of the major “hot” lists this year may bring smiles to parents’ faces. The Smart Cycle from Mattel Inc. ’s Fisher Price division, aimed mainly at preschoolers, is a stationary bike that plugs into your TV. It requires youngsters accustomed to being entertained by a television or computer screen to get some exercise as they pedal through games, learning exercises and races.

“It really is right on trend,” Phillips said. Several of this year’s new offerings are designed to work with either television or computers.

The Aqua Dots Super Studio from Spin Master encourages artistic expression as children create their own designs or use templates that accompany the device.

Christopher Byrne, an independent New York consultant also known as The Toy Guy and a contributor to Toy Wishes magazine, picks the Smart Cycle as a sure winner for the 3- to 6-year-olds and music video game Guitar Hero III: Legends of Rock a top pick for teens. He doesn’t see parents scaling back on toys as a result of the recalls or of economic concerns surrounding the turmoil in the housing market. “Generally, toys tend to suffer less than other products during downturns because parents — Santa Claus still flies,” he said. “Despite everything that’s going on, parents want to provide that wonderful Christmas for their kids.” Other new toy options this year: Future duck hunters could get some early practice with the Nerf N-Strike Disc Shot from Hasbro Inc. A wireless remote device launches foam discs to be shot down with a blaster that fires soft darts. Hannah Montana, the everygirl TV character with a secret life as a pop star, comes in doll form with a pop-star stage. The Littlest Pet Shop Paws Off Electronic Diary barks at intruders who don’t know the password. Phillips expects it to be a big hit among young girls.

THE CHINA FACTOR Lead in paint has been banned in the United States for use in toys since 1978, the same year it was banned for use in house paint.

At high levels, lead in the body has been shown to cause seizures, abdominal pain, constipation and other ailments.

Even at lower levels, however, lead can interfere with the development of children’s brains, leading to learning disabilities.

The advantage of lead in paint: It’s cheaper than paint without lead.

Consumers Union faults retailers for putting pressure on Chinese manufacturers, the source of an estimated 80 percent of toys sold in the United States, to hold costs down.

“We believe that the pressure major retailers place on suppliers to cut costs often results in cut corners. The net effect can be seriously harmful or deadly products,” Donald Mays, the group’s senior director for product safety planning and technical administration, told the Interagency Working Group on Import Safety.

President Bush established the group in June after a series of toy and food recalls.

The issue also has provided fuel for critics of Bentonvillebased Wal-Mart. They also blame the retailer for relentless pressure on suppliers to curb costs.

“At this point, it’s the manufacturers that have been scapegoated,” said Nu Wexler, spokesman for Wal-Mart Watch, a group funded mostly by the Service Employees International Union.

A September poll by the Connecticut-based Sacred Heart University Polling Institute suggests shoppers are looking more closely at where their products originate.

The poll of 1, 000 U. S. residents found that 68. 6 percent said they check labels for country of origin, manufacturer or ingredients, up 15. 7 percent from 52. 9 percent a year earlier.

“I’m sure it’s due to the recalls and the front-page news nationwide. People are concerned,” said Jerry Lindsley, director of the Fairfield, Conn., school’s polling institute.

“I don’t know that it will slow spending, but it certainly will hurt particular manufacturers who are known to have imported goods that are unsafe, or food,” he said.

Bob Friedland, a spokesman for Toys "R" Us, was skeptical of the poll’s results.

“We’ve found that customers really don’t shop by country of origin,” he said.

George Whalin, a longtime retail consultant from Carlsbad, Calif., also had doubts.

“I don’t think people pay much attention to these recalls,” he said.

Steve Melody, who operates the Melody’s Choices toy stores in Fayetteville and Springdale with his wife, Paula, said he hears some concerns about China-made products.

“We have some customers come in and want to buy U. S. made,” he said.

Melody said he has been requesting letters from each of his vendors, seeking clarification on where their products are manufactured.

THE DEBATE Congress has responded to the recalls with a number of proposals. One co-sponsored by U. S. Sen. Mark Pryor, D-Ark., was the subject of recent hearings. It would increase funding for the federal Consumer Product Safety Commission over seven years at 10 percent a year, beef up the agency’s staff and laboratory capabilities, increase civil fines and criminal penalties for violating U. S. product safety laws and require independent, third-party certification on all children’s products entering the country.

The proposal also would require labels on children’s products that would expedite tracking in recall situations, allow state attorneys general to sue for damages and give whistle-blower protection to workers who bring safety issues to light.

Pryor said that the commission’s staffing has shrunk too much in recent years for it to be effective.

“In today’s world, because they’ve lost employees, they’ve lost ground on the budget, and with the dramatic increase in imports, they’re just not equipped to handle the challenges they face today,” Pryor said.

At the hearing, the bill drew high marks from the Consumer Federation of America, a Washington-based research and advocacy coalition made up of about 300 nonprofit organizations.

“We view it as the most important piece of consumer legislation to be offered in several years,” said Travis Plunkett, the group’s legislative director. The hearing was webcast live on the Internet.

Last month, the Toy Industry Association urged Congress to standardize testing procedures, establish criteria for testing labs and require all imported toys to be tested to U. S. standards.

Wal-Mart spokesman Melissa O’Brien said the company is actively involved in the regulatory discussions, but has not endorsed any specific proposal.

Byrne, The Toy Guy, said that because many of the bigger recalls happened early in the year, retailers should be well-stocked for the Christmas shopping season, barring any new, large-scale recall.

And Phillips, Wal-Mart’s toy chief, said the retailers’ toy shelves will not go empty.

“We have plenty of toys to sell. No fears on our part.”

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China Plans Virtual World for Commerce

By RACHEL KONRAD
Associated Press
10.14.07                              [back to top]  

SAN JOSE, Calif. - Your favorite pants are fraying? You may soon be able to order replacements directly from the factory where they were made, according to the chief scientist of an ambitious Chinese Internet project.

China's government is building a vast virtual world dubbed Beijing Cyber Recreation District, which founders say will help the manufacturing superpower evolve into an e-commerce juggernaut.

Some supply-chain experts say the project is impossibly grandiose in its goal to provide direct links between tens of thousands of Chinese manufacturers and millions of individual customers around the world. But every "Made in China" label eventually could include a Web site where customers could order more - and Chinese factories would produce custom-made goods and send them directly to consumers' homes, mused Chi Tau Robert Lai, chief scientist of the virtual world.

The 3D world is supposed to be the online counterpart to the China Recreation District, a theme park, mall and playground being built in a former steel plant in Beijing for the 2008 Olympics.

Some Chinese-language Web sites of the CRD are already up, but most of it - including the first direct links to manufacturers - won't come until the second half of next year at the earliest, Lai said.

In addition to connecting factories with people outside China, the project will allow businesses outside China to tap the nation's burgeoning middle class, he said.

"This makes you have to think of China in a different way," Lai said Thursday evening at the Virtual Worlds Conference & Expo in San Jose. "We are stepping back and trying to blend the human and the computer to touch everything associated with people's lives."

The CRD's dream of eliminating middle men - brokers, shippers, purchasers, even retailers - is not new. Toyota Motor Corp. began experimenting with "just-in-time" manufacturing in the 1950s, though it took decades to refine the process.

But just-in-time manufacturing for less expensive items such as clothing, electronics and toys is still years away. The low cost of labor in China - and Sri Lanka, Vietnam and other developing countries - makes it cheaper to ship bulk items to retailers around the world and then sell overstock online or in discount stores.

China's plants - also grappling with quality concerns and U.S. recalls over excessive lead and other toxins - are unlikely to deliver consumer goods to doorsteps abroad anytime soon, said Robert L. Bartlett, a retail industry consultant in San Rafael, Calif.

"In the long run, the age of technology will allow us to do just-in-time responsive manufacturing based on consumer needs - but the superior customer experience in truth is still in a retail store," said Bartlett, consultant to Gap Inc., Wal-Mart Stores Inc. and other major retailers. "People shop online for convenience, and if your shirt isn't delivered for six weeks because it's being made in China, where's the value?"

Lai acknowledged that Chinese manufacturers can't efficiently crank out just one custom-ordered shirt. But they can wait until numerous people and clothing shops around the world submit similar orders, then assemble 5,000 of the same blue, pinstriped button-down shirt and ship it within a day or two, he said.

Lai said the CRD could eventually become a bigger version of eBay Inc., which connects buyers and sellers worldwide online in both auction and fixed-price formats. EBay is now also creating social networks where registered users can discuss everything from shoes to Barbies.

Just-in-time manufacturing is expected to generate the largest amount of revenue for the CRD, but the network also will host cultural exchanges, corporate meetings, educational classes and other events common in virtual worlds. Registration will be free, Lai said. Users will buy virtual items with credit cards or micropayments in dozens of currencies.

The CRD will be based on technology from Sweden's MindArk, maker of the "Entropia Universe" virtual world. Entropia built virtual "islands" from company templates. CRD's e-commerce transactions will go through Paynova, Sweden's equivalent of PayPal, and Germany's CryTek will provide some of the graphics.

Everything in the CRD will live on servers in Beijing maintained by government programmers. The government has dictated that there will be no pornography or online gambling on the CRD, which it is touting as a public-private partnership.

China's communist regime promotes Internet use but filters out material it considers subversive. In the weeks leading up to the Communist Party Congress, which convenes Monday, authorities have been deleting blogs about the death penalty or human rights, for example.

Lai said the government would take a "hands-off" approach to taxing companies or individuals that do business through the CRD, however.

Christian Renaud, chief architect of Networked Virtual Environments at Cisco Systems Inc., said Westerners would likely have an "immediate allergic reaction" to the CRD because it is state-owned.

But a centrally controlled site could have unique advantages over World of Warcraft, Second Life, There.com, Kaneva and dozens of other Western virtual worlds, which appeal to different users and don't interact with each other.

"The beauty of it is they can create uniformity," Renaud said. "In the United States, if you tried to get all the virtual worlds together, you'd still have Senate meetings on it 15 years from now."

Copyright 2007 Associated Press. All rights reserved.

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Wal-Mart: America's Tax Deadbeat

By Al Norman,
Huffington Post
October 13th, 2007                             [back to top] 

Local officials who welcome Wal-Mart to town, love to praise the taxes---but the giant retailer hates to pay the taxes. In fact, Wal-Mart's corporate mantra appears to be "low, everyday taxes -- always."

A report released this week by the non-profit group Good Jobs First, concludes that Wal-Mart methodically works to lower its taxes by challenging the assessed value of its stores and distribution centers. Just as the company has become legendary for shaking down its vendors---so the retailer shakes down cities and towns for tax rebates.

The nonpartisan research center in Washington, D.C. documented in an earlier study how Wal-Mart has benefited from billions of dollars in public subsidies to build its stores and site infrastructure. Their new analysis, Rolling Back Property Tax Payments, charges that although the financial take is not as large as its public welfare subsidies---Wal-Mart "drains vitally needed funds from communities by regularly challenging the valuation put on its properties by public officials." According to Philip Mattera, research director of Good Jobs First, "When the company succeeds in one of these challenges, it diminishes the funds available to pay for education, police and fire protection, and other essential services provided by local governments."

Good Jobs First reviewed a national sample of Wal-Mart stores and all of its distribution centers open as of the beginning of 2005. Wal-Mart has filed assessment challenges at more than one-third of its facilities around the country. At many facilities there have been appeals in multiple years. Overall, Good Jobs First estimates that Wal-Mart filed more than 2,100 property tax challenges nationwide. "These systematic property tax challenges are part of a larger pattern of state and local tax avoidance by Wal-Mart," Mattera explained.

Property assessment disputes pit Wal-Mart's legal team against local assessors. Such battles are an intimidating financial club wielded by Wal-Mart to lower its cost of doing business. If local assessors balk at giving relief, Wal-Mart just takes their case to a state appellate board, tying up local staff and resources.

Yet Wal-Mart's success rate in such appeals is as low as its prices. "We were surprised to find that Wal-Mart, despite its enormous resources, loses more assessment challenges than it wins," said Greg Le Roy?, of Good Jobs First. "Even when it wins a reduction, it often fails to get as much as it wanted, meaning that the overall dollar amount of Wal-Mart's tax reductions is far below what the company sought."

The Good Jobs First report found that the company's win rate in assessment challenges is just under 50%, and that it has won a total of about $30 million from those appeals over the past decade. Good Jobs First found significant variation in the frequency of assessment challenges from state to state. The largest numbers, both in percentage and absolute terms, were found in Texas. More than 80% of the Texas stores had at least one tax challenge. Other states found to have high appeal rates were Colorado, Kansas, California, New Hampshire and Georgia. While Texas has the most appeals, the company's success rate in the state has been only 43%, far below the 82% success rate in Florida, for example. In California, the state where Good Jobs First found the second largest number of appeals, its success rate has been even lower: 25%.

Although Wal-Mart's overall tax abatement campaign has drawn mixed results, the company has won big tax cuts in some towns. In 2004, Wal-Mart's distribution center in Tomah, Wisconsin was lowered from $43.6 million to $31.4 million, and the company clawed back $300,000 for each of three years--a total of $949,000.

I have been writing about Wal-Mart's tax abatement campaign for at least eight years. Back in 1999, Wal-Mart dragged the small town of Wilton, New York to court over its property tax bill.

Wal-Mart disputed its property valuation in Wilton for 4 years, and ultimately sued the town in the New York State Supreme Court. Wal-Mart wanted Wilton to slash its discount store assessment from the $7.5 million in valuation, to $3 million--a 60% tax reduction.

The taxpayers of Wilton had to hire a special attorney to argue the case, and spent $2,250 in tax dollars to have a special appraisal done. Because of the expense of defending itself against the Wal-Mart litigation, the town had to call on the School District in Saratoga Springs, and Saratoga County to come up with the cash to defend against Wal-Mart---because the county and the school district stood to lose revenue if Wal-Mart's property taxes were slashed. That same year, Wal-Mart bragged that it paid $28 million in local and state taxes in New York state. In 2006, the company picked the same fight with Geneva, New York. Wal-Mart sued to get its assessment more than halved, from $4.8 million to less than $2.3 million. Wal-Mart charged that their store's assessment was too high, because property in the town was assessed at 65% of full value. Wal-Mart eventually dropped the lawsuit, saying "the town has been working well with Wal-Mart on the supercenter...It was a business and policy judgment, in view of the high degree of cooperation.

Even though we still object to the store's assessment, we'd rather go forward with what's being done on the supercenter." A local citizen's group fighting the Geneva superstore, questioned the timing of the retailer's lawsuit, because it was filed only five weeks after the chain announced its supercenter expansion plans, and just as the permit process was beginning. The lawsuit put pressure on the town to act favorably on the superstore. The citizen's group charged that Wal-Mart used the lawsuit as "a bargaining chip" to get its supercenter built. The Town's Supervisor acknowledged that Wal-Mart had unsuccessfully tried to lower its assessment for years, and that Wal-Mart had filed similar lawsuits against municipalities across the New York state. The Town Assessor in Seneca Falls, New York admitted that Wal-Mart files lawsuits against municipalities where supercenter projects are pending and they have existing stores on the real estate market. It's easier to sell an existing store if it has a lower assessment, she said. Wal-Mart's lawyer admitted his company had been "very successful" in getting cities and towns to lower their assessments.

In small town after small town, Wal-Mart has picked the same tax fight. In places like Coolbaugh, Pennsylvania, or Saukville, Wisconsin, Wal-Mart promises a tax revenue bonanza, but as soon as they get in, they try to nickel and dime their taxes down. In Coolbaugh, Wal-Mart challenged the assessment on its 208-acre site for a large distribution center. The County Commissioners in Monroe County, along with Coolbaugh officials, and the Pocono Mountain School District, had to raise $6,000 just to hire an appraiser to review the site's value.

In Saukville, Wal-Mart attempted to lower its store assessment by $1 million. According to the editor of the Ozaukee Press, the abatement would lower Wal-Mart's tax bill by $21,306. The tax cut would have stripped $11,469 from the Port Washington-Saukville School District---an amount, said the newspaper, "that far exceeds the value of the store's well-publicized Teacher of the Year award." The editor of the County newspaper wrote a column criticizing Wal-Mart's move.

"Never mind the fact that the value of almost every property--commercial, industrial and residential--went up this year as a result of a village-wide reassessment; the corporation doesn't want to pay what the village says is its fair share of taxes." The editor added, "No matter how hard the store tries to give the impression that it is a concerned member of the business community, the truth is it is part of a chain whose interest in Saukville is, at best, fleeting, and over which the village has little influence."

The Good Jobs First study demonstrates once again that taxes are just another business expense for Wal-Mart to try to force down---any way possible. In this case, the losers are the very same officials that opened their arms to the retailer.

When this tax dodge study came out this week, instead of assailing the message, Wal-Mart went after the messenger. Study author Phil Mattera told me that Wal-Mart initially did not know how to respond to the Good Jobs First study. "When contacted by the New York Times, which ran the first story on the report, the company was not willing to comment, Mattera said. "Then they reverted to their common practice of union baiting. When reporters contacted Wal-Mart, their public relations people apparently thought that calling Good Jobs First a labor-supported group would discredit our findings. Actually, since our founding, we have received less than 5% of our funding from unions--and most of that has been for consulting work, not donations. Nearly all our money comes from foundations."

Mattera says that Wal-Mart claims it evaluates each tax assessment on its own merits. "But it is hard to believe that assessors have made serious errors at more than one-third of all of Wal-Mart's facilities," he notes. "As for the results themselves, what we have been trying to get people to focus on is Wal-Mart's hypocrisy. When the company is trying to get into a community, it makes great claims about economic benefits. Yet when they later look for assessment reductions, they have to argue in effect that property values have declined."

A colleague of mine says that all major corporations try to push down their property tax costs. "I sit on a tax board of review in small town," he writes. "The Wal-Mart landlord came in last year to appeal their assessment. Long story short -- he is 'connected' to local family of businessmen who presented us with an appeal 'we can't refuse.'

Wal-Mart never stepped foot inside that meeting. They came in without an appointment and walked out as the only business to get their assessment lowered. They presented no evidence other than they just wanted to have it lowered. It came down to my vote to break the tie.

I voted for it because the assessor recommended we do so. It came down to a matter of $20,000 of tax breaks a year for Wal-Mart. It would cost $20,000 of village funds to fight them in an appeal.

We all knew that voting no could mean a world of hurt for us personally. It makes it so someone doesn't even want to serve on these boards."

This coming year, as many as several hundred communities will receive such a visit from Wal-Mart's lawyers regarding a tax abatement. But enthusiasm for Wal-Mart at the local level continues unabated. Four weeks ago, when Wal-Mart opened up its new supercenter in the small southern Oregon community of Eagle Point, Mayor Leon Sherman was front and center at the ribbon cutting. "We've been working for three or four years to get this supercenter," the Mayor said, "and we're really happy that they're here. Not only will the store bring extra jobs, but it will also provide an additional tax base for the city as well as the school district."

Mayor Sherman is in for a big, supercenter surprise.

Al Norman is the founder of sprawl-busters.com, and author of the book, "The Case Against Wal-Mart."

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Unfair Labor Practices at Wal-Mart

BNA
October 12th, 2007                          [back to top] 

Wal-Mart Stores Inc. violated federal labor law by discharging a prounion employee for refusing to participate in an investigatory interview without a witness present, the National Labor Relations Board ruled 2-1 in a decision released Oct. 4 (Wal-Mart Stores Inc., 351 N.L.R.B. No. 17, 9/28/07 [released 10/4/07]).

A board majority consisting of Members Wilma B. Liebman and Dennis P. Walsh found that retroactive application of IBM Corp., 341 N.L.R.B. 1288, 174 LRRM 1537 (2004), which reversed precedent and held that nonunion employees do not have the right to a witness during an investigatory interview that might lead to discipline, would cause "manifest injustice." The majority found that applying IBM retroactively would allow Wal-Mart to punish Kenneth Stanhope for relying in 2001 on his then-existing rights as interpreted by the board in Epilepsy Foundation of N.E. Ohio, 331 N.L.R.B. 676, 164 LRRM 1233 (2000).

Dissenting, Chairman Robert J. Battista objected that his colleagues overruled the board's prior decision in this case to apply IBM retroactively. He asserted that there were no "extraordinary circumstances" that would justify granting a motion for reconsideration. The chairman also said there was no evidence that Stanhope acted in reliance on Epilepsy Foundation and that applying IBM "would effectuate the careful balance" the board struck in that decision between the rights of nonunionized employees and employers.

Stanhope Urged Co-Worker to Support Unionization

Stanhope worked at a Wal-Mart store in Wasilla, Alaska. His co-worker Cindy Adams complained to a supervisor on March 11, 2001, about Stanhope's behavior the previous day. Adams later submitted a statement alleging that Stanhope asked her what she thought of "the union" and that when she said she did not want a union, Stanhope said Adams's father was prounion and that she should listen to him. Adams said Stanhope twice used obscenities in criticizing Wal-Mart management and said the employees needed a union "to make it safe" for employees. Adams alleged that Stanhope "got in [her] face" and twice followed her when she tried to leave the area. She said she was scared of Stanhope and wanted him to leave her alone.

Store co-managers Bruce Manderson and Marlene Munsell met with Stanhope on March 16, 2001. Before the meeting, Stanhope said if the conversation "turns into something I don't like, I'll ask for an independent witness." Manderson said the request would be denied. During the meeting, Munsell said a complaint had been filed that Stanhope had used foul language. Stanhope then said he wanted his own witness at the meeting.

Munsell said that although Stanhope had the right to request a witness, she had the right to deny it. Manderson said that if Stanhope insisted on a witness, the managers would send him home and finish the investigation without his input. Stanhope denied using foul language and stood up to leave the room, but he obeyed Manderson's order to sit down. After Stanhope was asked about a heated conversation with a co-worker, and he denied any knowledge of such an incident, Manderson sent him home for the day and asked him to prepare a written statement.

The following day, Manderson asked to meet with Stanhope, who twice refused to do so without a witness present and said "just go ahead and fire me right here, right now." He also refused to provide a written statement. Manderson told Stanhope he was discharged for creating a hostile work environment and using foul language. Stanhope had no prior disciplinary history.

Cooperation Was Factor

Manderson later testified before an administrative law judge that Stanhope's refusal to cooperate with the investigation was one factor in the decision to discharge him and that he would not have fired Stanhope if he had provided a written or oral statement. The ALJ ruled in his first decision in November 2002 that Wal-Mart violated the National Labor Relations Act because it fired Stanhope for invoking his Epilepsy Foundation rights and refusing to cooperate in the investigation.

A few months after NLRB issued IBM, the board decided in December 2004 that Wal-Mart acted legally by denying Stanhope's request for a witness and requiring him to continue with the interview (343 N.L.R.B. 1287, 176 LRRM 1145 (2004); 4 DLR A-1, 1/6/05 ).

However, the board remanded the case for the ALJ to consider the legality of Stanhope's discharge under IBM and to clarify whether he had found that Stanhope was discharged for requesting a witness, which is illegal even under IBM, or for refusing to participate in the interview without a witness, which is legal under IBM.

The United Food and Commercial Workers, which filed the unfair labor practice charge on Stanhope's behalf, asked the board to reconsider its decision to apply IBM retroactively in this case. In an unpublished order in August 2005, the board denied the motion as to Wal-Mart's denial of Stanhope's request for a witness but held the motion in abeyance as to his discharge.

The ALJ found on remand in October 2005 that both Stanhope's request for a witness and his refusal to participate in the interview without one were factors equally motivating Wal-Mart to fire him. The ALJ found that applying IBM retroactively required the result that Stanhope's discharge was legal.

Wal-Mart's Actions Illegal Under Epilepsy Foundation

Under Epilepsy Foundation, both Stanhope's request for a witness and his refusal to participate in the interview were protected activity, the board majority said. It found that Stanhope's protected activity was a substantial motivating factor in Wal-Mart's decision to fire him and that the company failed to show that it would have discharged him regardless of his protected activity.

Manderson admitted that he would not have fired Stanhope if he had answered the co-managers' questions orally, the board said. It also found that Manderson's description of the incident with Adams as creating a hostile work environment, "was, by any reasonable standard, an exaggeration," and that Munsell "admitted that the use of profanity was not automatic grounds for discharge."

Turning to the question of whether IBM should be applied retroactively to Stanhope's discharge, the board explained that the traditional approach is to consider the parties' reliance on pre-existing law, the effect of retroactivity on accomplishing the NLRA's purposes, and whether retroactive application would cause "manifest injustice." Both the NLRB general counsel and UFCW argued against applying IBM to Stanhope's discharge.

"[W]e have little difficulty in inferring that Stanhope relied on Epilepsy Foundation," the board said. It found it "hard to imagine why Stanhope, an at-will employee unrepresented by a union, would have insisted on a witness in an investigatory interview conducted by his employer, unless he believed that he had a legal right to do so." The board also found that the Wal-Mart co-managers were aware of Epilepsy Foundation and that the company had a policy for addressing employees' witness requests.

The board pointed out that IBM said Epilepsy Foundation reflected a "permissible interpretation" of the NLRA. "Declining to apply IBM retroactively, then, would have, at most, a marginal effect on accomplishing the Act's purposes, because the Act permits the opposite legal rule," the board said. It also found that applying IBM retroactively could discourage employees from exercising their board-recognized rights for fear that the board later will cut back protections and encourage employers to violate the NLRA as interpreted by the board at that time in the hope that the board will reverse itself.

Applying IBM retroactively also "would effectively permit [Wal-Mart] to punish Stanhope for relying on his then-existing rights under the Act, as interpreted by the Board in Epilepsy Foundation," the board majority said. It found that requiring the company to reinstate Stanhope "does not prejudice any legitimate managerial interest here" because the company's actions violated the law in effect at the time and the ALJ discredited Adams's version of the incident with Stanhope. Dissent Sees No Grounds for Reconsideration

In his dissenting opinion, Battista pointed out that the board in its first ruling in this case decided to apply IBM retroactively. Under the board's rules, "a party may move for reconsideration based on 'extraordinary circumstances,' " the chairman said. He asserted that his colleagues' "mere change of mind is not an 'extraordinary circumstance' warranting reconsideration."

The board's initial decision to apply IBM retroactively "was quite consistent with the Board's principles on retroactivity," Battista said. He found that the board's "usual practice is to apply new policies and standards retroactively 'to all pending cases in whatever stage.' " He pointed out that the board "applied this principle when the shoe was on the other foot in Epilepsy, and the party seeking to avoid retroactivity was the employer."

"[O]ther than the fact that Stanhope acted consistently with the applicable Board precedent, there is no evidence that Stanhope acted in reliance on that law," Battista said. He found that Stanhope failed to correct Munsell when she said she could deny his request for a witness.

Applying IBM to this case "would effectuate the careful balance the Board has struck between the right of a nonunionized employee to request the presence of a coworker at an investigatory interview, and the right of an employer in such circumstances to choose not to have another employee in attendance," the chairman said. He argued that failing to apply IBM "frustrates the Board's effectuation of that policy."

The decision appears in Section E and also may be accessed on the Internet at http://op.bna.com/dlrcases.nsf/r?Open=smgk-77vmvs.

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Wal-Mart Ends Online Sales of Bassinet

By MARCUS KABEL
Associated Press
10.12.07                                   [back to top] 

BENTONVILLE, Ark. - Wal-Mart Stores Inc. has stopped online sales of a Simplicity Inc. bassinet that is under investigation by federal safety officials after an infant death, although the bed is still available in the retailer's stores.

Wal-Mart (nyse: WMT - news - people ) did not explain why the "Simplicity 4-in-1 Winnie the Pooh" bassinet was dropped from walmart.com. Earlier this week, the Consumer Product Safety Commission confirmed it is investigating the bassinet.

Wal-Mart is the only retailer that carries the bassinet, according to Simplicity. It is not part of a recall last month of 1 million cribs from Reading, Penn.-based Simplicity that were sold at several retailers including Wal-Mart.

On Tuesday, the CPSC said it was investigating the crib after local authorities in southwest Missouri blamed its design for the Sept. 29 asphyxiation death of 4-month-old Katelynn Marie Simon. The sheriff's department and coroner said the infant became trapped between the mattress and a railing.

By late Thursday, the bassinet, with a model number of 3112DOH6, was no longer listed on walmart.com after being on the site as late as Tuesday evening.

Wal-Mart spokeswoman Tara Raddohl said the model is still sold in stores. In an e-mail exchange, she said she did not know why the product is no longer available on the chain's Web site.

"Customer safety is a top priority. The initial testing has shown no safety concerns with this product," Raddohl said.

Raddohl said Wal-Mart is aware that Simplicity "is working closely with the CPSC to ensure the product is safe for its intended use."

Simplicity spokesman Joe Householder declined to comment on Wal-Mart's decision to pull the bed from online sales. Simplicity has declined to comment on the bassinet's design, citing the CPSC investigation.

Neither Simplicity nor Wal-Mart provided the number of the bassinets sold in the past.

Mother Elizabeth Simon and her boyfriend Chris Priddy, of Jane, Mo., found the baby girl unresponsive in her bed around 9:30 a.m. on Sept. 29. Authorities said the girl's parents told them she had been fine during a 5 a.m. feeding.

The McDonald County sheriff's deputy who investigated the death, Jeff Sutherland, said the infant became pinned between the lower of two horizontal railings and her mattress. Katelynn's death was ruled an "accidental positional asphyxiation" by the coroner.

Both Sutherland and coroner B.J. Goodwin have said they want the bassinet recalled as dangerous. Elizabeth Simon, through a lawyer, has also said the bed should be pulled from the market.

Sutherland notified the CPSC after the death. He said an agency investigator came in last week to look at the bassinet and to watch a reconstruction of the accident in the baby's home.

Copyright 2007 Associated Press. All rights reserved.

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Wal-Mart price cuts boost sales

Bloomberg,
Reuters
12 October 2007                              [back to top] 

NEW YORK — Leading global retailer Wal-Mart Stores yesterday reported a 1,4% rise in sales last month at US stores open at least a year.

This was towards the low end of its forecast, but Wal-Mart raised its third-quarter earnings estimate.

Analysts, on average, were expecting same-store sales to rise 1,9%, according to Reuters Estimates. Wal-Mart itself had forecast a rise of 1%-3%.

The Bentonville, Arkansas-based Wal-Mart said it expected third-quarter earnings from continuing operations of 66c-69c per share, up from a previous forecast of 62c-65. It lowered costs for the past two months to meet sales targets.

Wal-Mart said it had reined in expenses while sales in September rose 1,4% at outlets open at least a year. Same-store sales might increase as much as 2% this month, the retailer said.

The retailer tried to lure customers by cutting toy prices two weeks earlier than last year.

Bed Bath & Beyond and Target lowered earnings and sales forecasts for the quarter as consumers limited spending amid higher petrol, home and food costs.

Shoppers seeking bargains on basics might head to Wal-Mart, said David Abella, a Rochdale Investment Management analyst. “People still have to live their lives,” Abella said in an interview this week. “It’s not like somebody forecloses on their house, and then they just decide they’re not going to eat that month.”

The New York-based analyst helps manage $2,5bn in assets, including Wal-Mart shares.

Shares rose 4% before the bell yesterday, after the retailer raised its profit outlook. Shares rose to $47,40 in trading before the opening bell from a close of $45,59 on the New York Stock Exchange.

Wal-Mart rose 38c to $45,59 on Wednesday in New York composite trading. The shares had fallen 1,3% this year before yesterday.

Comparable sales at Wal-Mart stores and super centres, which contain the same items as a regular grocery store, as well as household goods, rose 0,8%. The Sam’s Club warehouse division increased 4,1%, compared with a 4% gain at domestic stores operated by Costco Wholesale, the largest US warehouse chain by sales. Both the Sam’s and Costco data include fuel sales.

Wal-Mart re-emphasised its original message that it was the cheapest destination for basics. In July, the retailer cut prices on 16000 items for the back-to-school season.

“There’s probably overall a little bit of a belt-tightening across the country and that, coupled with Wal-Mart’s aggressive price cutting, will probably hold their market share, or maybe even increase their market share,” Abella said.

On September 24, Target cut its same-store sales forecast for last month by more than half to a gain of 2,5% at most, after customer visits declined. The second-largest discount chain initially projected an increase of as much as 6%.

Copyright © 2004 BDFM Publishers (Pty) Ltd. All Rights Reserved

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Wal-Mart CEO Defends Imports

Chain Store Age
Thursday, October 11, 2007                        [back to top] 

Lee Scott on Thursday defended Wal-Mart Stores' reliance on low-cost imports against what he called “emerging economic nationalism,” the Associated Press reported. The company's chief executive told a retailing conference he would like to stock more American-made goods but that Wal-Mart's business model is based on offering the lowest price for consumers who cannot afford to spend more.

“Lest anybody forget, 20% of Wal-Mart's customers don't have a checking account and they do not have the economic luxury of making a broader social statement," Scott told a conference of the Center for Retailing Excellence, part of the University of Arkansas' Sam M. Walton Business College.

Wal-Mart has been a lightening rod for critics who say overseas buying by retailers has cost U.S. manufacturing jobs. Wal-Mart has said it finds the lowest prices for its customers and creates jobs at its stores.

Scott said he expects "economic nationalism" to remain a hot-button issue in U.S. politics because of presidential and congressional elections next year

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District wants Wal-Mart to pay up

By Jeff Christman ,
The Morning Call
October 11th, 2007                     [back to top] 

Land that Wal-Mart bought in Mahoning Township for a Supercenter store should be taxed at an assessment more than 22 times its currently recorded value, Lehighton Area School District argued Wednesday to the Carbon County Tax Assessment Appeals Board.

But an attorney for Wal-Mart argues the district's appeal to reassess the property is unconstitutional.

In January, Wal-Mart paid $3 million for the property, along Blakeslee Boulevard or Route 443, three-quarters of a mile west of its existing store across from Carbon Plaza Mall. It plans a 203,000-square-foot store that would offer Wal-Mart's typical household goods and clothing, as well as a full grocery store. The undeveloped land is listed in county records as having a fair market value of $134,620, meaning the school district now collects $2,836 a year in property tax on it.

If the market value is reassessed at $3 million, that would jump to $63,195 a year.

The reassessment also would increase township property taxes paid from $236 to $5,250 a year, and Carbon County property taxes from $464 to $10,340.

The overall tax bill for the property would rise from $3,536 to $78,785.

Welcome, stranger. Now you get hit, said attorney Bert Goodman of Wayne, Schuylkill County, who represented Wal-Mart at the hearing, criticizing the district's assessment appeal. Goodman argued that the state constitution requires uniformity in taxation -- that is, the property can't be reassessment when others aren't, essentially singling out the company.

Wal-Mart sold the property of its current store to Lowe's Cos. Inc. for $4 million in 2004 and has rented the store from it as its plans for the new store wind through approvals. Lowe's plans to eventually demolish the store to build a 116,000-square-foot home improvement and supply store and garden center.

Attorney David Rice, representing the school district, argued the district doesn't cherry-pick the properties whose assessments it appeals, but declined to reveal how the district decides which property assessments it appeals. District officials have said they look at properties that sell for more than 10 percent of the assessed value listed with the county.

Rice argued that Wal-Mart paid the 1 percent real estate transfer tax for $30,000 means the company agreed to the property's worth. The board of appeals has 30 days to consider the issue.

Jim Davis, a spokesman at Wal-Mart's in Bentonville, Ark., headquarters, said the company can't speculate when construction will begin because of a right-of-way dispute with a neighbor.

But he said the new store will mean more employees.

Once construction begins, it could take 12 to 18 months to the store's grand opening, Davis said.

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India Revolts Against Wal-Mart

By Ashling O'Connor ,
Times Online
October 11th, 2007                    [back to top] 

More than 20,000 farmers and shopkeepers took to the streets of India’s commercial capital yesterday in the biggest public demonstrations against the market entry of foreign retailers.

The outburst in Bombay reflect a growing fear among India’s 12 million small store owners that their businesses will be destroyed by competition from giants such as Wal-Mart that are keen to break into a $330 billion (£162 billion) retail market forecast to double in size by 2015.

The world’s largest retailer has opened a cash-and-carry business with a local partner, Bharti Enterprises, but is not free to sell directly to Indian consumers because of a ban on foreign investment in the multibrand sector.

Activists claim that the move is a smokescreen to greater ambitions and that the US company will lobby hard for a change in legislation once it has a foothold.

They say that 40 million livelihoods are at stake.

“Wal-Mart got to where it is by squeezing the small guy,” said Vinod Shetty, a labour lawyer and a leader of the Quit Retail movement gathering pace across the country.

“What they want in India is a ready-made market but this is one business that Indian companies do know.

"We do not need to hand it over to them so they can wipe out the competition.”

It is not only foreign retailers that are feeling the heat — big Indian conglomerates with plans to open stores are facing similar opposition.

Reliance Retail, a subsidiary of Reliance Industries, run by India’s richest man, was forced last month to lay off 1,000 staff and close outlets after violent protests in northern and eastern India.

The adverse reaction has forced India’s biggest public company to rethink its $5.5 billion national rollout of a “farm to fork” food retail network.

In the most sensitive parts of the country, it may now refrain from selling fruit and vegetables.

Nearly all the big Indian industrial houses are proposing to run retail ventures.

Mahindra & Mahindra, the $4.5 billion tractor and technology group, joined the fray yesterday with a plan to sell toys and lifestyle products.

Amid the controversy, there is a fear among these groups that the protests could spiral out of control, particularly with opposition politicians fuelling the fires ahead of possible mid-term elections.

Some states are talking about banning modern retail outlets altogether.

“This is going to be a political strain for many years,” Wade Rathke, the founder of Acorn, a US community group helping the Indian campaign against Wal-Mart, said.

The uncertainty has kept other foreign retailers, such as Carrefour and Tesco, out of India where companies — or the so-called organised sector — still account for only 3 per cent of the market.

“In areas like software and engineering we need foreign investment, but retail is not rocket science,” Mahesh Kambli, the chief executive of the Apna Bazaar Co-operative, a chain selling food and medicines, said.

“If we let them in, the market will be run by a cartel of seven or eight retailers who five years down the line will get whatever price they ask for because there won’t be any competition left.”

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Several houses up for sale close to Wal-Mart site

By Greg Rayburn ,
Jacksonville Patriot
October 11th, 2007                              [back to top] 

Behind this house is a small amount of the cleared ground and construction for the 200,000 square foot Supercenter.

Traveling the once-quiet neighborhood which exists in the shadow of the Wal-Mart Supercenter, it would be difficult not to notice several “for-sale” signs which have sprouted up. Driving through the Kayte Lane-Tiffany Circle neighborhood, which touches the Supercenter construction site, there are approximately eight homes with signs indicating they are for sale.

“I do feel bad for the people living further down near the (Wal-Mart) site,” said Joe Williams, who has lived at 100 Tiffany Circle since 1992. “They had the sweetest deal... 47 acres of woods right along their property lines. Now their locations have gone from best to worst.”

Williams lives about a block away from the 200,000-square-foot construction site of Wal-Mart. He says the huge change in his neighborhood has not adversely affected him due to his distance. “It would be a lot worse if I were a lot closer,” Williams said. “If I keep my windows open, I can hear the blasting.”

Property owners on portions of Tiffany and Kayte once had 47 acres of beautify woods and nature to enjoy.

“You had trails in those acres,” Williams said.

Williams said he believes the biggest reason so many homes are for sale in his neighborhood is due to the Supercenter’s construction.

“You normally would not have that many homes up for sale at one time,” Williams said.

At recent public meetings held for area residents to voice their opinions about the Supercenter, several residents who live close to the Wal-Mart property said conditions have been so unbearable for some residents that they have put up their homes for sale. They had asked Wal-Mart officials to erect a 12-foot safety wall to separate their properties from the Supercenter.

Jimmy Bridges, 200 Kayte Lane, said he’s lived in the neighborhood for 12 years.

He says he’s not too bothered by all of the changes, mainly due to the fact that he doesn’t live right up against the Supercenter development.

However, he knows the attitudes of many of the residents near it. “They are pi***ed. It’s just that simple,” Bridges said.

Bridges said blasting has been so loud at times it has shaken his windows.

Bridges said he walks the neighborhood frequently and said there are several reasons houses are up for sale in the neighborhood.

“In that house,” points Bridges. “It’s going up for foreclosure.” He adds, “Oh, and that one, they are getting a divorce.”

One neighbor is especially irate because the Supercenter is the cause of two people backing out of buying her house.

“One of my neighbors was ready to close on selling her home,” Bridges said. “Someone came buy and said they wanted to buy the property when work on the Supercenter just got started. When they had returned some time later, a lot of work on the Supercenter had taken place. When they (the buyers) saw all the work being done, they asked what was going up there. They were told a Supercenter. They changed their mind.”

Bridges said he doesn’t object to the store coming near his neighborhood as long as an access road isn’t built connecting the Kayte/Tiffany area to the Supercenter.

Realtor Jim Fore, of North Little Rock, who has two houses listed for sale in the neighborhood, said he has seen controversial issues similar to the Supercenter come up where neighbors worry about potentially declining property values.

“This isn’t going to reduce property values,” Fore said. “For some people, it is going to be an added convenience that the Supercenter is so close to the neighborhood.”

Fore said he has been in the real estate business for 19 years and in his experience, the frustration will eventually subside.

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CEO says Wal-Mart needs low-cost imports so it can offer prices people can afford

Marcus Kabel,
THE ASSOCIATED PRESS
Thursday, October 11, 2007               [back to top] 

ROGERS, Ark. - Chief executive Lee Scott defended Wal-Mart's reliance on low-cost imports Wednesday against what he called emerging economic nationalism.

Scott told a retailing conference he would like to stock more American-made goods but that Wal-Mart's business model is based on offering the lowest price for consumers who cannot afford to spend more.

Scott was answering a question from an audience member who wanted to know if Wal-Mart would buy more U.S.-made products to reduce the greenhouse gas emissions of global transport and to bring manufacturing jobs back from places like China.

"Right now, the way it works, our model is 'We sell for less.' If we put products out there and we have to sell them for more because our competitors are sourcing more efficiently and more effectively for the same quality of product, our model doesn't work. We cannot be at a price disadvantage," Scott said.

"Lest anybody forget, 20 per cent of Wal-Mart's customers don't have a checking account and they do not have the economic luxury of making a broader social statement," he told a conference of the Center for Retailing Excellence, part of the University of Arkansas' Sam M. Walton Business College.

Wal-Mart Stores Inc., which imported US$18 billion in goods from China in 2004, has been a lightening rod for critics who say overseas buying by retailers has cost U.S. manufacturing jobs. Wal-Mart has said it finds the lowest prices for its customers and creates jobs at its stores.

Scott said Wal-Mart is willing to pay as much as five per cent to 10 per cent more than a foreign-source price for some products made in America, but that many goods will never be made here again because the economy has become global.

"Even with the economic nationalism that's emerging today, the anti-China kind of thing, much of the product, if it moves out of China because of tariffs, is going to move to Indonesia or Vietnam or Cambodia," Scott said.

"Those products where there's no more value added by expertise in the work force, those products are going to move around the world, and they have for years."

Scott said he expects "economic nationalism" to remain a hot button issue in U.S. politics because of presidential and congressional elections next year.

© The Canadian Press, 2007

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Wal-Mart Sales Rise, Boosts Forecast

Associated Press
10.11.07                             [back to top]

BENTONVILLE, Ark. - Wal-Mart Stores Inc., the world's largest retailer, on Thursday raised it earnings outlook for the third quarter, citing better cost controls at Wal-Mart Stores.

The company also said that same-store sales for its U.S. operations rose 1.4 percent in September, driven by growth at its Sam's Club warehouse stores. Analysts surveyed by Thomson Financial expected same-store sales growth of 1.8 percent.

Wal-Mart (nyse: WMT - news - people ) boosted its forecast for earnings from continuing operations to a range of 66 cents to 69 cents per share from an earlier outlook of 62 cents to 65 cents per share.

"For the first two months of the quarter, we have seen improvement in initial margin and expense leverage at the Wal-Mart Stores division, which is driving this change," said Tom Schoewe, chief financial officer.

Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

In October, Wal-Mart expects the same-store sales at its U.S. operations to range from flat to 2 percent.

Copyright 2007 Associated Press. All rights reserved.

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Wal-Mart applies to open Malaysia store

By Manirajan Ramasamy
and Stephanie Phang
Bloomberg News
Thursday, October 11, 2007                          [back to top]

KUALA LUMPUR: Wal-Mart Stores, the biggest retailer in the world, and Metro have applied to open stores in Malaysia, five months after the Southeast Asian nation said it will ease restrictions on foreign hypermarket operators.

"The government is still vetting the applications," the minister of domestic trade and consumer affairs, Shafie Apdal, said Thursday.

Malaysia, the third-largest economy in Southeast Asia, wants to increase economic growth and persuade more international companies to invest in its $19 billion-a-year retail industry. The applications are a test of the government's willingness to open up the industry, said Suhaimi Ilias, an economist at Aseambankers Malaysia in Kuala Lumpur.

"The door is not totally closed despite the fact that we already have a pretty substantial number of operators," Suhaimi said. "It also shows that the industry is actually a growth industry."

Carrefour, Tesco, Dairy Farm International, which operates Guardian pharmacies, Giant hypermarkets and Cold Storage supermarkets in Malaysia, and other companies invested more than 1.6 billion ringgit, or $474 million, in the retail and wholesale industries in the nation last year, according to the ministry.

Prime Minister Abdullah Ahmad Badawi needs to increase foreign investment to help meet the government's 2007 growth target of 6 percent this year, which would be the highest in three years.

Shafie's predecessor, Muhyiddin Yassin, in April 2002 banned foreign operators from setting up superstores. He also imposed restrictions on shop sizes, opening hours and locations for foreign hypermarket companies already in the country, to protect local retailers.

In May, Shafie said there is no longer a ban on new foreign entrants to the hypermarket industry, with the ministry issuing permits on a case-by-case basis.

"The government welcomes investments from foreign countries but they will have to comply to local procedures with regards to retail industry," Shafie said Thursday. "They can't open up as they like, as there are several guidelines in this country that they will have to adhere to."

Foreign hypermarkets have helped to modernize the retail industry in the nation and created job opportunities, Shafie said.

Copyright © 2007 The International Herald Tribune

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Wal-Mart's Better Than Target?!?

Alyce Lomax
The Motley Fool
October 11, 2007                        [back to top]

Until recently, Target (NYSE: TGT) had the masses in thrall, thanks to healthy performance when compared to rival Wal-Mart (NYSE: WMT). But times have changed. Now that Wal-Mart reports supposedly "good" news, the headlines -- and investors -- are going ga-ga over the Bentonville behemoth. Has Target become yesterday's news?

Target's same-store sales in September rose a mere 1.2%, compared to an impressive 6.7% comps increase this time last year. Total sales increased 6.2% to $5.19 billion. The company said its yearly profit will come in below previous earnings guidance for $3.60 per share, the figure analysts were expecting.

True, its missed comps expectations and disappointing on guidance aren't exactly thrilling for the short term. But a quick glance at many retail stocks' moves today illustrates a rally that few of them actually earned, by any measure of performance. Some of them are up significantly, even though they didn't report any data at all.

A single month of sales data is no reason to go hog-wild, and it's pretty clear that September was a pretty lame month for a lot of retailers. Wal-Mart may have improved its profit guidance, but that's not because the consumer actually consumed all that much in September.

I think companies like Target and Costco (Nasdaq: COST) can deliver bulk joy, even in difficult macroeconomic environments. Both retailers are adept at gauging what their customers want, and offering those items at a discount. They both attract a more affluent customer than most discounters, too. That doesn't mean the short term won't have some bumps in the road, but I happen to like Target very much for the long term.

Target might now seem like old hat to some investors, but so what? More prudent investors are probably waiting for a less topsy-turvy day than this to shop for the retail stocks they've been eyeing. If Target stumbles a bit in the short term, it might eventually present a good opportunity to get shares on the cheap.

Bizarro world, Fantasyland -- nope, it just makes no sense. Target didn't miss last quarter. In early August, Seth Jayson took a pass on Target.

©1995-2006 The Motley Fool. All rights reserved.

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Wal-Mart Saves Money and the Market

Kristin Graham
The Motley Fool
October 11, 2007                       [back to top] 

As my Foolish colleague Seth Jayson mentioned earlier today, it was irritating to watch the media hype surrounding Wal-Mart's (NYSE: WMT) bleak September comps report. So-called "expert analysts" gawked over the 1.4% increase in same-store sales. Apparently, the results brought a sense of "relief" concerning the outlook on the entire economy. Thanks to Wal-Mart, literally every retailer was trading up this morning.

It just doesn't make sense. The company recently lowered its yearly earnings guidance. Now, two months later, it boosts its outlook for the third quarter, and Wall Street believes this has miraculously lessened concerns about the economy? Wal-Mart only improved its outlook because it was able to pass on additional inflationary food costs to its consumers. Now investors are just plain living in retail fantasyland.

And check out this quote regarding Wal-Mart, posted by Bob Pisani on CNBC's website: "They raised their guidance, reminding everyone that it is still the BOTTOM LINE, not the TOP LINE that truly matters."

OK, Bob, we know the bottom line counts. And sure, Wal-Mart is doing a nice job of managing its initial margins and expense leverage. But revenue is important, and seeing that the company's sales came from food and pharmacy -- not apparel or home goods -- offers no indication that our economy is doing just fine.

Aside from its impact on the rest of the market, Wal-Mart has been struggling to please its customers. Despite what Wall Street deems "impressive," these comps were nothing to boast about, and the company has more to blame than just the general economy. Consumers are flocking to stores like Costco (Nasdaq: COST) -- helping the company deliver bulk joy yesterday -- and Target (NYSE: TGT), though it did just post comps slightly lower than Wal-Mart's.

I have to hand it to Wal-Mart, though. Its measly rise in comps made quite a statement throughout the world of retail, and I'm betting that a lot of retailers -- particularly Gap (NYSE: GPS) and Wet Seal (Nasdaq: WTSLA) -- owe it a debt of gratitude for masking their own paltry results. The market has pulled back from its irrational exuberance, though today's sales reports should have sent it tumbling from the very beginning. You're in for a rude awakening if you believe that results like these will drive the entire market into a state of lasting optimism.

©1995-2006 The Motley Fool. All rights reserved.

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Photo Shows Child Playing Behind Wal-Mart Pharmacy Counter

wftv.com
October 10th, 2007                     [back to top]

A customer spotted three children playing behind the counter of the pharmacy of the Super Wal-Mart in east Orange County. The pharmacist said they were her children and those of another pharmacy employee.

Image Of Child Playing Behind Pharmacy Counter The customer told Eyewitness News she saw the children playing on the floor with empty pill bottles, pill bottles the pharmacist fills with medicine. She was disgusted and worried the children would get a hold of some dangerous drugs.

Jordyn Alioto snapped a picture of the scene, a young child playing in the Wal-Mart pharmacy surrounded by bottles and bottles of prescription drugs.

"One pill could have easily had fatal consequences to that small child in the picture," she said. Jordyn took the picture with her cell phone at the store on East Colonial Drive on Friday. She said the young boy was not the only child behind the counter.

"I saw three young children playing within the shelving where all of the medication is stored," she said. "The youngest one was playing with the empty bottles, rubbing them on the floor."

The pharmacist told Jordyn she and another employee were called in on their day off and had to bring their kids to work.

"It's unacceptable, period. There should be consequences," Jordyn said.

Jordyn told Eyewitness News the pharmacist caught her snapping pictures and tried to bribe her. "She said, 'I will take care of the prescription,' and I told her, no, I wanted to pay for it and she said, 'No, I will take care of it,'" She said.

Jordyn, who is a registered nurse, said she paid for her prescription at another counter and told a manager about the kids behind the counter and he said he would take care of it. When she went back to the store Wednesday, Jordyn saw the same woman who brought her kids to work filling prescriptions.

"I'm not surprised. After I spoke with the manager, he didn't seem that concerned about it, but it's scary," she said.

Wal-Mart wouldn't comment to Eyewitness News, but a spokesperson gave thanks for bringing it to their attention and said it was a violation of policy; only employees are allowed behind the pharmacy counter. They would not say if the two workers would be disciplined.

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Study Says Wal-Mart Often Fights Local Taxes

By DAVID CAY JOHNSTON
NY TIMES
October 10, 2007                                    [back to top]

Wal-Mart doesn’t believe just in lower prices — it believes in lower property taxes, too. The big discount chain has sought to reduce the property taxes it pays on 35 percent of its stores and 40 percent of its distribution centers, according to a report to be released today by Good Jobs First, a group that is critical of Wal-Mart.

Over all, the company wins lower taxes in half the challenges it brings, the group found. Because it had not seen the report, Wal-Mart did not wish to comment in detail, said a spokesman, John Simley.

Mr. Simley added that the study should be viewed with caution because “they are a union-funded group.” Wal-Mart has had tense relations with unions, which have criticized pay and working conditions there.

Good Jobs First said that less than 3 percent of its financing came from unions, with the bulk from foundations, including the Rockefeller and Ford foundations. The group said a donor, whom it declined to identify, paid for the tax study; the donor has no union affiliation, it said.

Both homeowners and businesses have a legal right to challenge their tax assessments, and it is commonplace for them to do so. But the Good Jobs First report questioned whether Wal-Mart was damaging public schools and other tax-supported government services with an overly aggressive strategy of pursuing reductions.

The group sampled 10 percent of the 2,833 Wal-Mart retail stores open at the start of 2005 and found that the company had challenged property taxes at 35 percent of them. The report also looked closely at Texas, where Wal-Mart challenged assessments at 83 percent of 400 stores. Good Jobs First said it looked at records of all Wal-Mart distribution centers across the country and found that lower property tax bills were sought for 40 percent of them.

At its retail stores, windowless concrete boxes that carry a low value for property-tax purposes, the company saved an average of $40,000 a store where it filed a challenge, the report found. The distribution center savings averaged $289,000 for each challenge, it said.

The report suggested that Wal-Mart saves about $3 million annually from challenging property tax bills, a small sum compared with the company’s revenue, nearly $1 billion a day.

Many cities and counties vie for Wal-Mart facilities — especially distribution centers, the huge warehouses from which the company ships goods to local stores — because they perceive an economic boost from the added jobs, even when they have to give ground on how much tax Wal-Mart will pay.

Wal-Mart, in a statement last night, said it challenged only those property tax assessments that it believed were “excessive, arbitrary or just incorrect,” and “anything that we can do to lawfully reduce our costs we pass along to customers in the form of lower prices.” The company would not specify how much it pays in property taxes, but said these taxes were a “significant” portion of $2 billion in state and local taxes it paid last year.

David E. Brunori, a professor at George Washington University and contributing editor of the journal State Tax Notes, said that any major employer was more likely than a homeowner or small business to benefit from “a bias by property tax officials who want to cut them some slack.”

Other experts said that because property tax assessments involved judgments about the value of land, buildings and equipment, there was a growing industry of challenging assessments.

Philip Mattera, who directed the study by Good Jobs First, said his researchers spoke to many local officials who said they lacked resources to fight Wal-Mart and gave tax reductions they believed were not warranted. “Other taxpayers have to pick up the slack” when Wal-Mart pays lower property taxes, he said.

Hernando County, Fla., spent more than $100,000 fighting Wal-Mart’s request to exclude sales taxes from the value of its shelving and other fixtures, said its lawyer, Gaylord Wood of Bunnell, Fla. The Florida Supreme Court last year ruled against Wal-Mart.

Mr. Wood and others said that when local officials refused Wal-Mart’s requests for lower tax bills they “suddenly find Lincoln Town Cars full of attorneys arriving at their offices.” He said the tactic made a statement about how costly it would be to resist the company.

Don R. Hurst Jr., the assessor in Johnson County, Ark., said that happened to him when Wal-Mart sought to reduce the assessment on a distribution center in Clarksville, Ark., to $23 million from $33 million, starting in 2003.

“Wal-Mart showed up with their property-tax executive, three lawyers and a couple of accountants,” Mr. Hurst said. He added that he had been acquainted with Sam Walton, the legendary founder of Wal-Mart, and “I am sure he would not approve” of trying to reduce the money “that goes for our kids’ schools.”

Wal-Mart, which is based in Arkansas, sued Mr. Hurst and lost.

That Wal-Mart would challenge the property taxes on a third of its properties did not surprise one of the outside appraisers it hires, Alexander L. Hazen. However, Mr. Hazen, president of International Appraisal Company in Upper Saddle River, N.J., said he was surprised that Wal-Mart prevailed only half the time.

Companies typically do their homework and go forward only on the best appeals, he said, so, “I am surprised that their success rate is only 45 percent on retail to 67 percent on the distribution centers. I would expect it would be higher than that.”

Some Wal-Mart stores are built in part with sales taxes that the company collects from customers but then retains, an increasingly common technique of local economic development. The company also makes widespread use of tax-exempt bonds and deals in which a local government acquires land for the company, leasing it to Wal-Mart at below-market rates.

Copyright 2007 The New York Times Company

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Small Shops Protest Big Store Entry

Associated Press
10.10.07                         [back to top]

MUMBAI, India - Thousands of small shop owners and traders in rallied in Mumbai on Wednesday to protest the growth of large retail chains that they say will ruin family businesses and cost millions of jobs.

More than 2,500 shop owners raised clenched fists and shouted, "Down, down Reliance" and "We will not be moved" in an open ground in downtown Mumbai, India's financial and entertainment capital. They were referring India's Reliance Industries Ltd., which is setting up a chain of Western-style supermarkets across the country.

The protest is part of a growing drive that began earlier this year against big retail chains in India, where small mom-and-pop shops dominate.

"We have to come out on the streets because they are kicking us in our stomach," said Jatin Maini, who owns a grocery store in central Mumbai. "How will families survive if small shops close?"

Some 12 million small, family owned shops selling grains, household provisions and groceries dominate India's unorganized retail trade, which is estimated to be worth more than $250 billion and growing 20 percent annually.

Small retail outlets have been part of the lives of most Indians in small villages and big cities. But India's fast-paced economic growth, averaging 8.5 percent annually, its 1.1 billion population and growing middle class have made it an attractive destination for global retailers.

U.S. giant Wal-Mart (nyse: WMT - news - people ) recently announced a partnership with India's Bharti Enterprises to build wholesale outlets in the country to buy goods from farmers and small manufacturers and sell to retailers.

Global retailers such as Tesco PLC (nasdaq: TESO - news - people ) of Britain, Metro AG of Germany and Carrefour SA of France are also looking at the Indian market.

Small shop owners warn they will fight the push by Wal-Mart and large Indian stores such as Reliance into the retail market.

"Small family shops are the heart of this business," said Prabhakar Mane, head of Apna Bazaar, whic