Wal-Mart's plan to conquer the world

By Kris Hudson
and Rob Wells,
Wall Street Journal

AP

Patti Waldmeir
financialexpress.com
3/31/2007                                       [back to top]

The US Supreme Court on Monday struggled to decide whether setting minimum prices for retail goods is always illegal, with several justices warning that any change in present price-fixing rules could transform the US retail industry and the fortunes of discounters such as Wal-Mart. The issue before the court is whether to overturn a century-old precedent, that bars manufacturers and retailers from striking agreements setting minimum prices by making such deals an automatic violation of America's antitrust laws. The US government says that price-fixing in these circumstances should not automatically be deemed illegal, because it can often, paradoxically, be good for competition. The case pitted Leegin Creative Leather Products, a manufacturer of women's accessories, against a family-owned retailer in Texas that wanted to discount Leegin's product line. The manufacturer insisted that the Texas store follow its suggested retail prices, and cut off supplies when the store refused. But the case could have implications for much larger retailers, including big box stores such as Wal-Mart, Target and other prominent national discounters, lawyers for the Texas retailer told the court. Other justices suggested that the current blanket ban on minimum price agreements underpins the success of Wal-Mart and others. "Hasn't a whole industry of discount chains grown up around this rule?" asked Chief Justice John Roberts. Leegin's lawyer, Theodore Olson, a former US solicitor-general, argued that allowing minimum resale price agreements, although it raises prices within brands, can be good for consumers because it stimulates price competition between brands. He argued that the loss of competition on price would be more than made up for by the way a price floor would allow retailers to compete on service rather than on price. ?The US Supreme Court agreed yesterday to consider whether shareholders can try to recover losses from a public company's business partners by claiming they were part of a scheme to defraud, writes Brooke Masters in New York. The court is to consider reviving a lawsuit by shareholders of Charter Communications, a cable television provider, against Scientific Atlanta, owned by Motorola. The plaintiffs alleged they suffered losses when Charter inflated its revenue by $17m in 2000 by a deal in which it paid high prices for cable boxes and Scientific used the money to buy advertising from Charter.

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Marketplace madness

Local traditional grocers face basketful of new rivals

By Jon Ortiz
Sacramento Bee
Thursday, March 29, 2007                     [back to top]

New figures show that Sacramento's rapidly changing grocery market is beginning to exhibit the same competitive fault lines that have split the industry nationwide as traditional supermarkets and discounters, particularly Wal-Mart Stores Inc., wage a pitched battle for shoppers.

During the last six months of 2006, Wal-Mart's local market share, though small, grew 33 percent, according to industry tracker Nielsen Trade Dimensions' Market Scope. Trader Joe's Co. Inc., based in Monrovia, grew its share the most, up 64 percent. Nearly every other chain was flat or declined.

The list of local market share winners, which includes a slight rise for Safeway, reflects the grocery industry's national fragmentation. Discounters like Wal-Mart, Costco Wholesale Corp. and Target Corp. are pulling in customers who believe big box equals low price.

At the other end, grocers who offer unique products, like Trader Joe's, are ringing up stronger sales.

Others, including Safeway, are winning customers with new store formats while emphasizing things like organic food and more take-home meals.

Sacramento is becoming polarized, said David Rogers, president of DSR Marketing Systems Inc., a retail research firm based in Deerfield, Ill. "You have Wal-Mart and WinCo emphasizing price, Safeway and Nugget offering a value-added upscale experience, and Raley's headed in that same direction. No one wants to be caught in the middle."

Trade Dimensions' June-through-December report tracks a portion of grocery wholesale distribution figures at stores in El Dorado, Sacramento, Placer and Yolo counties.

The representative samples are then used to estimate a company's market share.

The six-month survey monitored a particularly volatile time for Sacramento-area grocers and their customers. Many area shoppers scrambled last year for a new place to buy food after Ralphs Supermarkets closed its Sacramento-area stores in April. A few months later, Albertsons LLC closed five of its 26 local stores, then in November sold all of its 132 Northern California operations to Save Mart of Modesto.

While Raley's and Safeway continue to control about 57 percent of the Sacramento market, Wal-Mart's growth during the last half of 2006 -- when it had just two local Supercenters selling a full line of discounted groceries across the aisle from general merchandise -- reinforces its reputation as a powerhouse that can cast a long shadow.

And with a third Supercenter now open in Citrus Heights, and others coming in West Sacramento, Orangevale, Folsom and on Florin Road, Wal-Mart appears to be positioning itself to grab more of the region's grocery business.

Meanwhile, experts agreed that Trader Joe's eclectic product mix, along with Safeway's steady rollout of its new "lifestyle" store designs, netted more shoppers willing to pay a little more for food.

"The thing that's different today from, say, three years ago is that people predicted that Wal-Mart and other discounters would be the only stores growing," said Ted Taft, managing director of Meridian Consulting Group in Westport, Conn. "Now it's growing at both ends, high and low."

Grocery industry experts say area consumers can expect to see continued change in the market:

• More remodeled or "next generation" stores from Raley's, Safeway and Nugget Markets that push service, fresh goods, natural and organic items, store-prepared food and variety in an inviting setting to counter Wal-Mart's low-price emphasis.

• A price war between Wal-Mart and grocery-only discounters such as WinCo Foods and, perhaps, Save Mart, which is entering the market after buying Albertsons.

• Intense grocery labor negotiations as the unionized chains argue for concessions to remain competitive with Wal-Mart, Trader Joe's and Costco and other nonunion grocery sellers.

Wal-Mart's Roseville and Antelope Supercenters alone accounted for 4.8 percent of the Sacramento region's market, up 1.2 percentage points from June, according to Trade Dimensions. Only food sold at Wal-Mart's Supercenters is counted.

Safeway gained half a point to 21.1 percent. Trader Joe's share rose 0.9 percentage points to 2.3 percent of the market.

Meanwhile, West Sacramento-based Raley's, which controls 36 percent of the area's grocery business, slipped 0.9 percentage points, as did Albertsons, Trade Dimensions reported.

Raley's spokeswoman Nicole Townsend said it would be a mistake to conclude from those figures that the company lost business. She said the survey's figures are "not reflective of Raley's total market share" and that based on its cash register sales "our market share and food dollars are significantly growing."

Woodland-based Nugget Markets Inc., which also operates Food 4 Less stores in Woodland and Cameron Park, fell slightly from a 3.9 percent market share to 3.7 in the six-month period.

Eric Stille, Nugget president and chief executive, said the Market Scope numbers "are not the best estimate" for "someone small like us." He said Nugget sales for all stores in the chain open for at least two years have been "up 10 percent" over the last 12 months.

Raley's and Nugget are privately owned and do not make specific sales figures public.

Experts say changing consumer habits also are playing a role in the success of discounters such as Wal-Mart and Costco. Shoppers once bought all their groceries at neighborhood supermarkets. Now they split their business among several stores.

Dale and Georgia Parsons exemplify the trend. The West Sacramento retirees regularly drive to the Antelope Wal-Mart to stock up on groceries and usually pick up things from the other side of the store, too.

A recent shopping list included soup, pecan pie, Roundup weedkiller and Miracle Grow fertilizer.

"I figured it out," Dale Parsons said.

"We pay for the gas to drive up here just on what we save from stocking up on soup."

For daily items -- milk, bread and the like -- the couple shop at the West Sacramento Nugget.

"People say that Nugget is expensive, but they have good quality stuff and things you don't see at other stores," Georgia Parsons said.

As shoppers divide their loyalties, traditional grocery chains are re-branding themselves.

It's a tacit admission that fighting with Wal-Mart on price "is a great way to compete your way into bankruptcy," said Nugget Chief Financial Officer Dennis Lindsay.

Since Austin-based Whole Foods Market Inc. made a nationwide splash a few years ago by selling a unique mix of natural and organic foods in an upscale setting, other chains have moved in a similar direction.

Safeway piloted its upscale "lifestyle" store format in Roseville and Sacramento and subsequently has poured millions into remodeling stores across the country.

Raley's also has rolled out a new generation of stores with architectural flair; its new Elk Grove location offers online ordering with carside pickup service.

Nugget, which first updated its look seven years ago at stores in Davis and Vacaville, recently opened a Roseville location with an interior design inspired by an English garden, complete with wrought iron artwork.

Meanwhile, industry watchers are waiting to see what Save Mart, known from Bakersfield to Galt for running no-frills stores, will do with its Albertsons properties.

"The question now is whether Save Mart will keep its low-price model or come up with some sort of second, more upscale format for Sacramento," said DSR's Rogers.

Save Mart, which aims to convert all its Albertsons stores by year's end, declined to comment.

Copyright © The Sacramento Bee

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Wal-Mart: 'On the Side of the Angels'

BusinessWeek
March 30, 2007                     [back to top]

CEO Lee Scott talks about going green, aiming for the affluent, battling opponents, and what it's like to be a major issue in the 2008 Presidential campaign You would think from reading the headlines that being chief executive of Wal-Mart Stores (WMT) would be a pretty tough job these days. Workers grumble about pay and benefits. Union groups wage ongoing campaigns against your company. Cities and towns try to stop you from putting up new stores. And the Democratic candidates for the 2008 presidential nomination have decided that hammering your company for the next year and a half could be a pretty good way to get votes (see BusinessWeek.com, 11/16/06, "Can Barack Wake Up Wal-Mart?").

But Lee Scott, Wal-Mart's CEO, isn't distracted by headlines. During a lunch with BusinessWeek editors and reporters, he made it clear that he's too focused on the retailing business to be bothered much by bad press. He's outspoken about the criticism of Wal-Mart, attributing it mostly to union groups that are worried about their own futures. But he said the evidence is clear that Wal-Mart has a huge number of supporters: the country's largest retailer pulled in $345 billion in revenues last year.

In a wide-ranging interview, he covered many of the company's challenges and successes. He acknowledged that the company's pursuit of more affluent shoppers, particularly in apparel, was "too far, too fast." And he said opposition in some cities was preventing the company from opening up certain stores. Yet he sees plenty of promise ahead for the company in international markets and green products.

What follows are edited excerpts of the conversation.

Scott: I've been directed to be not quite as provocative as I was yesterday [at the New York Times (NYT), which ran a story titled "Wal-Mart Chief Writes Off New York."]

Since we all read about it this morning, what is your view about New York?

Well, what I was thinking was, we were sitting in New York City, in Manhattan, talking about stores. It's not something I brought up, [but] I said, I don't care if we ever have a store here. From that then came the story that we don't want a story in New York City, which then implies that we don't want stores in the boroughs. Obviously, we do want stores at some point in the boroughs. Whether we even get them, we'd like them. That's how that occurred.

Mona Williams (spokeswoman for Wal-Mart): You were expressing your opinion but you're just one vote in the process to determine where we put our stores.

Scott: Once a month on Mondays, the first Monday of the month, we go to a real estate meeting and these young people stand in front and they post on the board. It's done electronically, but a city, the trade area, the number of stores in the area, the income level of the people, and all of those things. It takes about five minutes, and then we vote on the stores. I don't pick the store sites, I don't pick the towns we go to, I have a part in that process. But anyway, I think people in New York are sensitive when you say you don't want to be here.

What is you next big push in the area of sustainability and the environment?

We were in Secaucus in the morning, walking through the store, and the department manager in hardware had to show that his compact fluorescents are outselling his incandescent bulbs 4 or 5 to 1—it might even be more than that. That is a very small part of our business, but on the other hand at a big company you need something that manifests the effort so that people can get their minds around it.

We have a lot we're doing in packaging—it's one of the big efforts; it's both the quantity of packaging and the type of packaging. We have a lot at the store level about energy usage that our people are very encouraged about and feel very confident that the stores this year and next year can be at least 25% more energy-efficient than the stores we have opened previously. And that they can get their goal of a 50% energy savings over, I think, the next 3 to 5 years. I'm not as confident but they made a presentation the other day that was very compelling.

So you have all those things that are happening in a very serious way. And there is also this step of trying to figure out the carbon footprint of what we sell. And then working with our suppliers to help them reduce that carbon footprint.

I heard about your molecules memo—the chemical concern of the week or month.

Well, there are things like pacifiers or chew toys for children that in other countries they don't have those chemicals in them. And they've been banned in other countries; they're not banned here. Why wait until something is done about that? It's cost-neutral, so why not just do the right thing and get it done?

Those are the kind of things we're working on. We're not squeezing suppliers. We are asking suppliers.

How does that work?

We bring them in and we very nicely talk to them about what it is we're trying to accomplish, what they are doing in their company. P&G [Procter & Gamble (PG)] is already doing a lot of work with cold-water Tide, and they're doing a lot of work in concentrating the soap to a third of the size it was. It will take a third of the transportation costs, a third of the packaging.

It doesn't mean that you resolve all the environmental issues. What it does mean is that the things you're buying every day can be better for the environment. I've not had a supplier yet that's said, we're not going to do this; we think it's wrong. People are pushing us too hard. The truth is if the customer wants Tide and Tide comes in a 50-gallon barrel, that's what we're going to sell. But between us and P&G we can figure out how to make that a smaller package with the same effectiveness, same number of uses. We can promote it and help convince the customer that it has the same value that the bigger bottle did, then together we can have an impact.

Is there a day when someone chooses just not to participate in packaging, three or four years down the road?

Oh, I think you'll start by favoring the people who are doing the right them by giving them the aisle space, the end caps, letting them be in the monthly tabs we run. I think you do it on the front end with a carrot. But ultimately if something is just wrong, people will have to correct it.

Have you studied whether your customers will pay a premium for green and how much?

We haven't studied it. But we put product out that is green and has a premium and it just doesn't do well in our stores. I think there are probably stores, Whole Foods (WFMI) for example, where the greener it is the more people are willing to pay.

Did you say, though, that people were buying the more expensive lightbulbs instead of the traditional ones?

But, they save money.

But it's a short-term vs. long-term issue?

What we're seeing is like the lady in Nebraska or South Dakota who has a motel. She changed the lightbulbs one a week until she got all of her lightbulbs changed. So if you have 300 million people, you start making those decisions. Our goal this is year is to sell 100 million of them.

Are you backing off your pursuit of the selective, more affluent shopper?

Well, it didn't seem to work real well.

Yeah, why didn't that work?

Because we are defined by our customer, not by us. And we can't wake up one morning and say we're going to be something different and something more to you and not earn it. We just can't. We're going to have a different marketing campaign, we're going to try to put some different merchandise in there. You've been buying Crest from us for 25 years and all of a sudden you're going to walk across the aisle and buy all of your apparel from us? Maybe their experience with apparel because of the price points we did have and the quality was such that seeing a sweater for $35 when they are used to the quality they get when they do pick up that sweater for real casual activity for $9, in their mind are they going to equate the fact that we're going to a $35 sweater that we've improved the quality the same amount? I think we went too far too fast.

Are you going to abandon it?

No, we're not going to abandon it. You just have to earn your way there. There is no reason we should not be able to sell apparel and home to those customers who are in our stores, but we've got to do it based on the product and the price points that we can build to. Maybe we should have taken a shorter margin. Maybe we should have put more quality into a $19 sweater rather than going to $35. Just rethink and that's what Eduardo [Castro-Wright, CEO of Wal-Mart's U. S. operations] and John Fleming [chief merchandising officer] are doing. How do you stay in this area that you are and just bump the edges out rather than jumping out of the circle entirely and staking out new territory entirely.

How are you going to reach out to the customers you targeted through your marketing?

You know what? I'm not a big fan of marketing. I mean, I think the guy Wal-Mart has running marketing is brilliant and a great find. I think at Wal-Mart Stores with 137 million customers that you put the right sweater in the right colors at the right price out there, you will sell that sweater. Marketing doesn't need to do anything other than to help understand who the customer is, customer insights, understand the individual stores so that you put those sweaters in the right kind of stores, and to communicate a message of the whole entirety of the store. You couldn't have spent enough marketing on Wal-Mart apparel last year to have changed the dial.

When Wal-Mart came under attack on a variety of fronts was that a problem of marketing or the substance of its policies?

In my mind, and I may be absolutely wrong on this, it has nothing to do with marketing. It has to do with a very specific issue we had when we got into food. The UFCW [United Food & Commercial Workers Union] felt like there was a long-term danger to them, which created then the offshoot of Wake Up Wal-Mart and Wal-Mart Watch. The political pressure, the funding behind stopping stores from growing, big-box bills, the health-care bill in Maryland—if you look at any one of those things, you'll see that union money is behind those efforts.

That has to do, first of all, with the fact that our opponent has extraordinary political power and a lot of money. But it also has to do with our lack of sophistication in the area of corporate affairs, not marketing, in corporate affairs. In the late 1990s, when it started and our board said you all have to do something about this, we said, well, we really don't. Our sales are still good and earnings are very good, record sales and record earnings. The board would complain about it. My thoughts were always, well, that's because the board is going to cocktail parties with people who aren't shopping at Wal-Mart. In the end, the board was right. They were sensing, I think, getting into their group earlier than what we were.

It still doesn't resonate at the customer level. All the polling we do shows that less than one-tenth of 1% of the people polled would not shop at Wal-Mart or have stopped shopping Wal-Mart because of what they've read about Wal-Mart. But it's an important issue in getting future stores. It's a very important issue for our associate morale, seeing their company bashed day after day after day.

Why don't you think Wal-Mart gets more credit for some of the really great stuff it does?

I think we do. I mean, I think that's why we did $345 billion last year. I think from a customer standpoint, we do get that credit. We don't get that credit from government or institutions. But how else could you have withstood this onslaught? But if you think about it—yes, some of it's self-induced by doing things wrong—but an ad that shows a nuclear bomb going off because of Wal-Mart? If the customers didn't like the store and didn't trust us, over the last several years we would have paid a very dear price for it.

A lot of attention has been focused on higher gasoline prices as a factor in the decline of same-store sales in the U.S. In your view, what are the other important factors besides gas prices?

I think there are two. Our business is quite healthy in consumables, food, fresh food, pets, electronics. You go across our store and we're doing very well in almost all the areas. We are not doing well in apparel and home. And we just missed it.

You mentioned that competitors are narrowing the price gap. Do you see any need to evolve the Wal-Mart brand?

I guess that I don't know that I agree that you have to evolve it. I've been here since '79 and the pricing has always been under pressure, whether it was Gibson's or TG&Y or Kmart or Target (TGT) or the grocery stores. Whoever it was, there's always been an ebb and flow of how do you separate yourself. I just read something where we're doing some things to separate ourselves from a competitor. That's just an ongoing process that occurs.

We are going to sell for less. I believe that long after we are gone, the person who sells for less will do more business than the person who doesn't. If you look at it, the core issue at Wal-Mart is in how you create a value for the consumer where a brand name doesn't exist. Because we don't need to evolve this company when it comes to selling Tide or All or selling Advil—things where the customer knows, here's what the price is, here's the value. We can drive that business and we can create the separation that we need if we have the wherewithal to do that on pricing. But where we really have our challenge is to create the price perception on those things that are not branded.

Which is like apparel and home, where you have your private label. Where you've done better is existing national brands.

We sell 20-some percent of all the denim bottoms sold in the U.S., but we only sell 5% of the shirts because you have branded bottoms but you don't have branded tops.

It's a pretty straightforward issue that Eduardo and his team are thinking about and John Fleming, who's got the ability and creativity to do it: How do you make that move, and how do you create that back through marketing, that consistent message that gives credibility to that in-store brand? Kohl's (KSS) has done a very good job of it, but Kohl's has the brands that they built the private label off of. Wal-Mart doesn't have the brands to build the private label off of.

Why do you think Wal-Mart needs a new ad agency and what do you hope that the Martin Agency does for you?

As a company, Wal-Mart Stores Inc. did not participate in deciding that we needed a new ad agency in the Wal-Mart Stores division. That is a divisional issue that is overseen by Eduardo and his team. I think that with the new people coming in, with Eduardo being new and his vision of how you make all of this thing come together in a different way, so that the whole is greater than the sum of the parts, that they needed to look at a different ad agency to see what was out there. That started the process, and I think it's a healthy process.

Advertising at Wal-Mart is not like advertising at most companies. Sam [founder Sam Walton] didn't care about it. I've seen some of the best and the worst in the world and they don't impact our business. I think the consumer insight and helping to build our understanding of the customer and the individual stores and how we assort those stores and how we get consistency across the company, there is a role that marketing can play in that. And in-store signage, those kinds of things, that give you leverage over the 137 million people who are there. That's the value. How many pages they buy in Vogue and all the silly stuff they did, I just don't think has any value.

A lot of company money has been spent on it, though.

I agree. But I think at our size it is more dangerous to not try things than it is dangerous to try them. I have opinions. That's all they are: They're opinions. If you go and say, O.K., this is the way we've always done it, you can't do this. How do you know? So they spent money against it. The Vogue ads were quite well done. But at the end, when you look at the product and how it came together and the understanding we have today in retrospect, it wasn't worth doing. But I don't know if you would have had the same insight if you hadn't done it.

Yet Wal-Mart is spending $570 million a year on ads. If there's no difference in impact between a good and a bad ad and it's all about low prices, why spend that much?

I think it is important. We need to send our message out there to the customers of what we stand for. We stand for saving people money so they can live better. Reinforcing that message over a long period of time with ads is important. Whether or not the ad gets an award or whether the ad is just reasonable I don't think makes a defining difference in how much sales we do. I think that the reinforcement of the message is important. That's what I was trying to say.

DVDs are an important business for Wal-Mart. How do you respond to more content moving from discs to online?

I think you look for ways to facilitate it, not to fight it. Ordinarily the customer is going to go where they are going to go, so how do you participate? Is there room for Wal-Mart to play in that space? Is there some advantage if we join with Steve [Jobs, CEO of Apple (AAPL] or whoever else and help them become even more successful and help customers move into that area? I think the worst thing you can do as a retailer is to fight it and try to hold on to what you have. If there is a more efficient way of doing business, it can't be Wal-Mart and our size that causes that to slow down and not move as fast as it should move. If we really stand for the customer, then that's a sacrifice we've got to make.

Do you see a Wal-Mart downloading service?

I think that might be there. In some cases, it might just be links. In some cases, it might be something at a store that people can do that they can't do at home because you have a bigger pipe or more capacity at a store. I think there are lots of different things. But in the end, you can't be the company that says, we're going to lose sales. Therefore we're going to do everything we can to not allow that technology to exist. You can't do that.

How does Sam's Club fit into the whole and will it ever be dominant?

I don't know if it will be dominant or not. It's not a word we use. We would prefer to never be dominant. At our size we would like to be competitive.

Sam's Club is doing very well. It has a wonderful president in Doug McMillon, a very young man who is doing a great job with his team. They're growing sales and profits, and profits much faster than sales.

They have a wonderful competitor—at least one—who sets a high standard and causes them to continue to work to be better. It would be foolish for me to say that we would overshadow that competitor in the near future. They're a great competitor and fun to compete with. Sinegal [James Sinegal, CEO of Costco Wholesale (COST)] is a first-class human being. I think they make us better, but on the other hand I think we make them better. The time before last I saw Jim I saw him in Secaucus in the Sam's Club walking through and looking at it. He's in our clubs and we're in his clubs. I've got my Costco card in my briefcase.

You mentioned that the political reaction against the company hasn't chased away existing customers. But does it increase the opposition you face in opening new stores?

Yes, take California. Every store we put in there takes three years. We get the approval and then a lawsuit is filed. I forget what the name of that lawsuit is, but it's always the same one. It takes three years, but we get almost all of them. At the end of three years we open the stores and the stores do well. It just takes longer.

But then you have other communities where you would like to go and people step in and say, Wal-Mart cannot go there. On the other hand, we opened a record number of stores last year and we will open 265 Supercenters this year. The total numbers have not been hurt by it, though there are specific sites. In a lot of cases where we are turned down, we actually will come back and continue to come back in many of those locations and find a place. Honestly, sometimes we try to put stores where we shouldn't be putting them.

What is Wal-Mart's U.S. market share?

We think it's about 10% of retail sales, nonautomotive, nonrestaurant.

Mona Williams: Can you speak about the 20-year bonuses?

We put wage caps in at the stores. That is a difficult, difficult thing to do. I did in the distribution centers in the 1980s. When we put them into the stores, the long-term associates, who are our most loyal associates, really then feel the brunt of that. It is, clearly, the right thing to do for the company if what you want to do is be competitive in your starting salaries and all that. We had cashiers that were making $25, $26 an hour, which is so disproportionate to what the cashier income is in the industry. It simply means that at the end of the day you can't pay your starting wage where it needs to be and be competitive overall with your pricing. It was the right thing to do.

What Eduardo did, though, that I thought was brilliant, is as the year unfolded the things he rolled out worked really well and the profit numbers were coming in. He sat down at the end of the year and said, the changes we've made, the impact we've had to have on people have come together to create greater shareholder value. We can afford to take a portion of that and give it back to those long-term associates, creating a bonus for everybody who's been here 20 years or more of one week's worth of pay. I thought it was the right thing to do. It cost millions of dollars, but the store associates supported the company through what is a very difficult program change. They made it work and they ended up with a record year and now they have a bonus that they will be getting each year. It's not based on profits or anything. Assuming we have profits, it will be a share they get over the long term. It's very positive.

Why does Wal-Mart get so much more heat than Target?

I think the issue is that when we started with our Supercenters and the success of those Supercenters and the impact they had on the grocery stores that it frightened the chains as they sorted through what they were going to do. I think it frightened them, it frightened the UFCW. Target was not into food at that time and so we became the focal point. The thing people miss on Target is that over the long term they are bright enough that their Super Targets will in fact be good stores. Many of them are today and they will be better. They just get better. They will be a force to be reckoned with.

I find it interesting that all this attention is focused on Wal-Mart but today Walgreen's (WAG) is selling more food than they've ever sold. The historical grocery industry itself is under attack from Dollar General (DG), from Aldi's, from any number of things. But they have found that if they focus on Wal-Mart, they can get themselves heard. It's just the litmus test this year in the residential election. You've got to go on the bus tour if you're going to get the support. Long-term it's the issue of what is their space and what happens to their members if Wal-Mart Supercenters are as successful as they have been. How do you stop that, because they haven't been able to stop us through putting a store across the street and taking the business. So how do you stop us politically? It's a battle about politics. It's about power. And thank God we're on the side of the angels.

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

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Wal-Mart shakes up management

Vice Chairman John Menzer is named administrative chief; President and CEO Eduardo Castro-Wright will now report to Chief Executive Lee Scott.

Reuters
March 30 2007                        [back to top]

LOS ANGELES (Reuters) -- Wal-Mart Stores Inc. said Friday its vice chairman, John Menzer, will assume the responsibilities of chief administrative officer, solidifying his leadership of strategic planning and many company-wide support functions.

Additionally, Eduardo Castro-Wright, president and CEO of Wal-Mart Stores - U.S.A., who had previously reported to Menzer, will now report directly to Chief Executive Lee Scott, the company said.

The move puts all three of the company's operating divisions - Wal-Mart, Sam's Club and International - directly under Scott.

Shares of Wal-Mart (Charts) edged higher Friday on the New York Stock Exchange, while shares of rival Target (Charts) and Sears (Charts) edged lower.

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Wal-Mart-funded group suspends Web site

Associated Press
Mar. 30, 2007                          [back to top]

NEW YORK (AP) - Working Families for Wal-Mart (NYSE:WMT) -- a national advocacy group funded primarily by Wal-Mart Stores Inc. to combat mounting criticism -- is suspending its site called paidcritics.com.

The move was disclosed on the paidcritics.com site Friday.

Working Families for Wal-Mart launched the site in July 2006, linking WakeupWalMart.com and other critics to unions, liberal groups and Democrats. Union-backed WakeUpWalmart.com, one of the retailer's most vociferous opponents, in turn started its own Web site called abunchofgreedyrightwingliarswhoworkforwalmart.com, which attacks the retailer's public relations and lobbying figures.

On Friday, paidcritics.com posted the following statement: 'Working Families for Wal-Mart is proud to have brought the Paid Critics motives to light. Those motives are now crystal clear, and their attacks are failing. So we have decided to move on and focus our time and energy on other Wal-Mart matters.' The statement said the site will remain as an 'online encyclopedia' and directed viewers to forwalmart.com or walmartfacts.com.

Kevin Sheridan, spokesman for Working Families for Wal-Mart Stores Inc., could not be immediately reached. Dave Tovar, a Wal-Mart spokesman, declined to comment.

But Chris Kofinis, a spokesman at WakeUpWalmart.com said the site's closing is a reflection of what he believes is the company's failed public relations moves. 'Everything they've done they failed at. And clearly it is a waste of money. They would be better off putting that money to better health care and wages for its workers.' The suspension of paidcritics.com appears to be the latest in a series of stumbles for Working Families For Wal-Mart. Last October, Ron Galloway, a filmmaker whose work praised Wal-Mart, quit the group over the pay caps adopted in August. At the time, Sheridan said that Galloway had left over environmental policy differences. In August, civil rights leader Andrew Young stepped down as chairman of the steering committee after making remarks that were seen as racially offensive.

Copyright 2007 Associated Press. All rights reserved.

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Tell Wal-Mart – Require Chong Won to negotiate with independent union

Maquila Solidarity Network
March 28, 2007                                     [back to top]

Six months after receiving reports from the Philippine Workers’ Assistance Center (WAC) of violent attacks by Export Processing Zone police on striking workers, as well the unjust firings of two union leaders and 117 strikers, Wal-Mart has still not taken sufficient action to rectify the situation.

In addition to carrying out its own investigation, Wal-Mart has since received reports from two other investigations verifying that the workers’ rights have been violated. The first report, based on an independent investigation by the Worker Rights Consortium (WRC), was submitted to Wal-Mart in December 2006. A second report, from the US monitoring organization Verité, was submitted to Wal-Mart in the beginning of March.

While Wal-Mart is telling its supplier to immediately reinstate the 117 unjustly-fired union members, it is not demanding that the company negotiate a collective bargaining agreement with the independent union. Management’s refusal to enter into negotiations with the union is the main reason behind the strike.

WHAT YOU CAN DO:

Send a letter to Wal-Mart today, urging the world's largest and most powerful retailer to use it considerable influence to put a stop to these blatant violations of the Chong Won workers' rights.

**************************************************************

BACKGROUND:

In early September, 2006, the International Labor Rights Fund (ILRF) and MSN received an urgent request for the Philippine Workers' Assistance Centre (WAC) to assist Chong Won workers who were being harassed, intimidated and physically assaulted for supporting their union.

WAC also reported that two union leaders had been unjustly fired and that company security guards had distributed flyers to the workers threatening that if they voted in favour of a strike, the company would lose orders and the factory would close.

ILRF and MSN immediately contacted Wal-Mart and demanded that they pressure their supplier to respect its code of conduct and Philippine labour law. Wal-Mart agreed to carry out an investigation and to correct any problems that were identified. However, to date, it has not shared its findings with MSN. The factory had previously been audited by a commercial auditing firm.

In the days and months that followed, the workers were forced to go on strike because their employer refused to negotiate with their union, a number of strikers were assaulted by EPZ police, 117 of the strikers were served termination notices, and many of the strikers were denied entry into the Export Processing Zone, leaving a handful of workers on the picket line.

Shortly after the beginning of the strike, company management illegally involved itself in the establishment of a “Caretaker Committee” which claimed to represent the Chong Won employees. The Caretaker Committee included supervisory personnel and was supported by approximately 100 temporary contract workers (neither of whom is legally entitled to be part of the union under Philippine law).

The Caretaker Committee petitioned the Philippine Department of Labour and Employment (DOLE) seeking to de-certify the legitimate union on the basis that the union’s leadership (who had been illegally dismissed) was no longer employed at the factory.

In early October, 2006, MSN received word from WAC that its chairperson, Bishop Alberto Ramento, had been stabbed to death in his church by an unknown assailant. According to WAC, Bishop Ramento's name had been put on the military's "Order of Battle," or hit list, before he was brutally murdered. The murder took place during a wave of killings of journalists, union leaders and human rights activists.

On November 7, 2006, in response to a request from MSN, seven major US apparel brands, including Wal-Mart, signed a joint letter addressed to the Philippine president, raising their concerns about the increasing number of assaults on and killings of union leaders and human rights activists in the Philippines.

In early November, Wal-Mart facilitated two meetings between Chong Won management, two intermediary companies that had placed the Wal-Mart order with Chong Won, the union, WAC, and the local Wal-Mart staff person. According to WAC, it appeared that there was general agreement among the parties at the meeting that Chong Won should recognize the union and start negotiating for a collective bargaining agreement, however the employer was unwilling to do so. The Philippine DOLE had previously overturned several appeals by the company aimed at avoiding recognizing or negotiating with the union.

In late October and early November, the Worker Rights Consortium (WRC) carried out an investigation of the alleged worker rights violations at Chong Won, in response to a complaint from Chong Won employees. The results of the investigation were shared with Wal-Mart and the factory owner.

Not satisfied with these findings, Wal-Mart contracted the US monitoring organization Verité to carry out yet another investigation.

On December 7, 2006, ILRF staff person Brian Campbell was barred from entering the Philippines and told his name was on a government blacklist. In addition to working on the Chong Won case together with MSN, ILRF has also been active in international protests against human rights abuses and extra-judicial killings of journalists and labour and human rights activists in the Philippines.

On December 11, two union activists with the Solidarity of Cavite Workers labour organization were shot by a lone assassin outside the gates of the Yazaki-EMI factory. Jesus Buth Servida was killed instantly, and his companion, Joel Sale, sustained gunshot wounds. The gunman reportedly walked casually away from the scene of the crime.

The assassination follows an early shooting of a Solidarity of Cavite leader, Gerardo Cristobal, in April near the same plant. One of the three gunmen in that case was later identified by Critobal as a Senior Police Officer. While these assaults are not directly connected to the Chong Won dispute, they are disturbing signs of growing repression against union leaders and human rights activists in the Philippines.

On February 6, 2007, a local official from the Philippine DOLE issued an order in response to the union de-certification petition launched by the management-initiated Caretaker Committee. The order de-certified the independent union based on the circular reasoning that as its membership and leaders had been fired (for their union activity) they were therefore no longer able to represent the union. The order has been appealed.

On February 21, 2007, the WRC released its final report on its Chong Won investigation. The overwhelming conclusion of the WRC report is that Chong Won's practices violate Filipino law and applicable corporate and university licensee codes of conduct. The WRC found that “with respect to freedom of association, Chong Won's misdeeds are among the most egregious and persistent that WRC investigators have encountered.”

The WRC was also highly critical of the response of Wal-Mart and other buyers, calling them "inadequate and ineffective". The full WRC report is available here.

In the beginning of March, 2007, Verité submitted its own report to Wal-Mart and met to discuss remediation plans. Wal-Mart's synopsis of the Verité report was released publicly on March 26. According to the synopsis, the report recommended that termination notices for 117 unjustly fired union members be withdrawn, confirmed that the independent, legitimate union is the legal representative of the workers, and confirmed that a majority of permanent workers currently support the union. Verité's full report has not been released.

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Wal-Mart boosts debt sale to $2.25 bln

Reuters
Thu Mar 29, 2007                   [back to top]

NEW YORK, March 29 - Wal-Mart Stores Inc. <WMT.N> is planning to sell $2.25 billion of debt on Thursday, up from an originally planned $2 billion, a market source said.

The three-part sale includes five- and 10-year notes and a 20-year bond issue, according to joint lead manager Deutsche Bank Securities.

The other joint lead managers on the sale are JP Morgan and Lehman Brothers.

(Additional reporting by Caryn Trokie)

© Reuters 2007. All rights reserved.

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Wal-Mart Asks: Why are You Really Buying That Chocolate Bunny?

Study shows Easter is a time for sweet self-indulgence

PRNewswire-FirstCall                  [back to top]

BENTONVILLE, Ark., March 29 /PRNewswire-FirstCall/ -- With Easter only weeks away and an abundance of tasty treats to choose from, Wal-Mart Stores today released information sharing that nearly half of all consumers are buying the sweet stuff for themselves! Based on a 2006 survey of more than 6,300 participants, that number increases if you are between the ages of 18-34 or age 55 and above*.

The study concluded that the most popular reason consumers are purchasing Easter candy is to create an Easter basket. Eating Easter sweets yourself placed second on the survey while filling your home candy dish ran third. Purchasing Easter candy to coordinate an Easter egg hunt took the fourth place spot while candy for Easter gifts and work treats followed respectively.

"There is something irresistible about Easter candy selections," said Paul Ley, Wal-Mart vice president of the candy division. "From traditional to organic, decadent to sugar-free, there are treats to tempt everyone -- and always something new and fun that you can only enjoy during this time of the year!"

Many Easter candy offerings are seasonal and are only made available during the weeks leading up to the holiday. Some nostalgic offerings such as Marshmallow PEEPS and Cadbury Creme Eggs are known as traditional Easter-time selections that consumers can only enjoy this time of year. New items to hit the shelves for Easter include Hershey's Vanilla Creme Kisses and Hershey's Coconut Creme Kisses, Spring Selection M&M's and Whitman's Organic Milk Chocolate Eggs.

Easter candy selections are popular with Wal-Mart customers no matter what the reason is for their purchase. Wal-Mart customers buy enough Reese's and Cadbury Creme eggs during the Easter season that, if you laid them end-to-end, they would stretch 3,000 miles. Marshmallow PEEPS chicks alone are such a traditional Easter treat that, if you lined them beak-to-tail, the number that Wal-Mart shoppers purchase would reach from New York City to Los Angeles.

*2006 BIGresearch survey provided by Hershey's

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Look Who's Working at Wal-Mart!

Diane Sawyer, Bill Murray, Sandra Bullock, Barbara Walters, Elizabeth Taylor, Betty White, Mike Meyers, Jeff Gordon, Janet Jackson and Barry Williams Can Be Found Working at Wal-Mart!

PRNewswire News
March 29, 2007                         [back to top]

BENTONVILLE, Ark., March 29 /PRNewswire-FirstCall/ -- It's no April Fool's joke that famous names are working for the world's largest retailer. Wal-Mart Stores, Inc. WMT revealed today that it's not unusual for customers to come across a celebrity name in their local Wal-Mart and Sam's Club locations.

Diane Sawyer can be found working in the Wal-Mart Connection Center while Jeff Gordon is leading the Sam's Club meat department and Elizabeth Taylor is helping Wal-Mart customers select the perfect fragrance. Barbara Walters is providing customer service, Betty White is offering Wal-Mart shoppers domestics advice and Sandra Bullock is completing customer claims. Bill Murray is a store manager, Barry Williams works on customers' cars, Mike Meyers replenishes produce and Janet Jackson is a Wal-Mart cashier.

With 1.3 million associates across the United States, Wal-Mart customers are bound to hear a "celebrity" name at their local Wal-Mart store or Sam's Club location, even if the name doesn't match up to a well-known face. And, in a friendly gesture of goodwill, the company is extending an invitation to the actual celebrities, inviting them to meet their Wal-Mart and Sam's Club namesakes and provide an opportunity to job shadow for a few hours.

Having the same name as someone well-known in the entertainment or sports industries has allowed associates to become "celebrities" of sorts in their own communities. As they go about their jobs of taking care of their neighbors who have come to know them in their local stores or clubs, they have interesting stories to share.

One example is Betty White at the Lebanon, Ore., Wal-Mart. A domestics manager since the store opened 16 years ago, Betty has felt like a "celebrity" all her life -- her maiden name was Betty Grable. Customers kid her about going from a "pin-up girl" to a "Golden Girl!"

Oregon, Ohio, store manager Bill Murray enjoys the fun remarks he gets from customers when they see his name and connect it with his celebrity counterpart. He began his career in the Meadville, Penn., store 15 years earlier unloading trucks in night receiving.

"The store manager's name is at the bottom of every receipt as an added customer service and many of our shoppers get a kick out of seeing 'Bill Murray' on their receipts," said Oregon manager Murray. "It certainly is an easy name to remember ... especially around Groundhog Day!"

Diane Sawyer has been assisting Wal-Mart customers for four years and can currently be found at the Dyersburg, Tenn., store in the electronics department. Helping shoppers make their technology selections at the Connection Center, Sawyer enjoys sharing her name with her "newsworthy" namesake.

Fragrance is a specialty for both Elizabeth Taylors as the Wal-Mart associate of the same name has been helping customers select the perfect perfume and other beauty aids for more than 20 years. The Lamar, Mo., Taylor says that she has no bias when helping her Wal-Mart customers make the selection that best suits their needs.

Although Barry Williams may be known for his Brady Bunch fame, the Monticello, Minn., Wal-Mart store associate by the same name is busy helping Tire & Lube customers. Williams, a retired military pilot, is working part- time at Wal-Mart while attending school to get his electrician's degree.

Janet Jackson is regularly seen at the Logan, Ohio, Wal-Mart working at the cash register and wishing customers a nice day. She is commonly asked by customers about "her" Super Bowl appearance!

Austin Powers comments are frequently heard by Wal-Mart produce replenishment manager Mike Meyers. With the company for more than 11 years, he began as a Wal-Mart hourly associate before being promoted to an assistant manager. His current role positions him to interact with buyers, suppliers, store, distribution center and transportation associates.

Sandra Bullock has nearly seven years under her belt with Wal-Mart, the majority of that in the claims department at her local Millington, Tenn., store. She appreciates the impact of her name and recalls a supplier bringing in his daughter to meet her because the daughter's favorite actress was Sandra Bullock. Bullock remembered a slightly disappointed experience for the girl when realizing she wasn't the Miss Congeniality star!

As a front-end manager at her local Hartwell, Ga., Wal-Mart, Barbara Walters has enjoyed six years helping customers and supporting the Children's Miracle Network. Just recently, she was paged over the store intercom system and couldn't help laughing at the number of customers looking around the store for her celebrity counterpart.

Jeff Gordon has been with the company for nearly eight years and scores a variety of "points-paying victories" with Sam's Club members daily. Currently leading the club's meat department in Oklahoma City, Gordon receives a variety of remarks from members about "his" speedway success.

And in Niles, Ill., some Wal-Mart customers get "all shook up" when they see the name badge of the associate waiting on them in the paint and hardware department. The associate badge spells out the bright blue letters E-L-V-I-S from below a big smile. Many even request a favorite song from "the King." Obviously, Elvis has not left the building and is still working at Wal-Mart!

Wal-Mart is the country's largest private employer, providing a diverse and multi-cultural work environment built on respect, support and service to customers, associates and suppliers. Positioned to serve more than 127 million weekly customers, the company provides a positive work environment for more than 1.3 million associates around the United States.

Copyright 2007 PRNewswire

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Bare-Knuckle Enforcement for Wal-Mart's Rules

By Michael Barbaro,
New York Times
March 29th, 2007                               [back to top]

The investigator flew to Guatemala in April 2002 with a delicate mission: trail a Wal-Mart manager around the country to prove he was sleeping with a lower-level employee, a violation of company policy.

The apparent smoking gun? “Moans and sighs” heard as the investigator, a Wal-Mart employee, pressed his ear against a hotel room door inside a Holiday Inn, according to legal documents. Soon after, the company fired the manager for what it said was improper fraternization with a subordinate.

Wal-Mart, renowned to outsiders for its elbows-out business tactics, is known internally for its bare-knuckled no-expense-spared investigations of employees who break its ironclad ethics rules.

Over the last five years, Wal-Mart has assembled a team of former officials from the C.I.A., F.B.I. and Justice Department whose elaborate, at times globetrotting, investigations have led to the ouster of a high-profile board member who used company funds to buy hunting equipment, two senior advertising executives who took expensive gifts from a potential supplier and a computer technician who taped a reporter’s telephone calls.

The investigators — whose résumés evoke Langley, Va., more than Bentonville, Ark. — serve as a rapid-response team that aggressively polices the nation’s largest private employer, enforcing Wal-Mart’s modest by-the-books culture among its army of 1.8 million employees.

Wal-Mart is certainly not the only company, or even the first, to investigate its employees, a practice used widely in corporate America to guard against fraud and protect trade secrets. But despite the retailer’s folksy Arkansas image, few companies are as prickly — or unforgiving — about its employees’ wayward behavior, a legacy of its frugal founder, Sam Walton, who equated misconduct with inefficiency that would cost customers money.

No case better demonstrates the company’s prowess — or, former employees say, its ruthlessness — than the exhaustive investigation of Julie Roehm and Sean Womack, two former top Wal-Mart marketing executives.

After Ms. Roehm sued Wal-Mart for wrongful termination, the company disclosed the results of the investigation last week in a detailed and at times salacious countersuit. Investigators obtained records that they said showed the two married executives had engaged in a sexual affair, accepted free meals from an advertising agency vying to win Wal-Mart’s business and begun negotiating a deal to leave Wal-Mart to work for that agency.

Yesterday, Ms. Roehm called Wal-Mart’s investigation “a smear campaign” intended to destroy her reputation and, in a nod to Wal-Mart’s investigative firepower, said the company had outmanned her with “ex-C.I.A. operatives” and “former F.B.I. men.”

The Wal-Mart investigation was striking in its scope. Lawyers for Wal-Mart subpoenaed Mr. Womack’s wife, Shelley, compelling her to give sworn testimony about how she discovered a sexual relationship between her husband and Ms. Roehm. They prompted her to turn over dozens of embarrassing e-mail messages that her husband had sent to Ms. Roehm from a private account.

“I miss you ridiculously,” began one of the e-mail messages from Ms. Roehm to Mr. Womack. “I hate not being able to call you or write you. I think about us together all the time. Little moments like watching your face when you kiss me.”

Wal-Mart investigators also persuaded the top executives at a major advertising agency, Draft FCB, and its parent company, the Interpublic Group of Companies, to turn over hundreds of confidential e-mail messages, dinner receipts and notes from meetings. One revelation was that Ms. Roehm accepted a case of Effen vodka, valued at nearly $400, from the chief executive of Draft FCB, calling the gift, which violated Wal-Mart’s policies, “a HUGE hit” in a thank-you e-mail message.

Ms. Roehm and Mr. Womack have denied they engaged in a sexual relationship or did anything wrong. Mr. Womack did not respond to phone messages.

Kenneth H. Senser, a former top official at the C.I.A. and F.B.I. who runs Wal-Mart’s security department, said cases like these showed that Wal-Mart was determined to enforce consistently its employment policies, no matter how high the rank of the workers involved. Both Mr. Womack and Ms. Roehm, for example, were senior executives with six-figure salaries.

“It’s been very clear from these investigations that the company has taken a definitive stand,” said Mr. Senser, who interviewed both Ms. Roehm and Mr. Womack before they were fired in late 2006. “The chips are going to fall where they may. If it’s a senior vice president or cashier in the store, we are going to look at the allegations the same way — and not give somebody a pass.”

Mr. Senser, 47, and his staff of roughly 400, investigate allegations of misconduct, guard Wal-Mart executives and prepare for potential crises of all kinds, from hurricanes to terrorist attacks. (During Hurricane Katrina, they established an emergency response center inside Wal-Mart’s headquarters, filled with flat-screen televisions, that resembled one used by the F.B.I.)

Their backgrounds are impressive, if not slightly intimidating. Mr. Senser was a senior officer in the C.I.A.’s office of security, which was responsible for investigating agents considered a security risk. After that, he supervised the development of an internal security department at the F.B.I. when the agency discovered that Robert P. Hanssen, one of its agents, had spied for the Soviet Union and Russia.

Joe Lewis, who runs the internal corporate investigations unit at Wal-Mart, worked at the F.B.I. for 27 years, serving as acting assistant director for criminal investigations. He works closely with Thomas C. Gean, chief legal compliance officer, who was the United States attorney for the Western District of Arkansas.

In an interview, H. Lee Scott Jr., Wal-Mart’s chief executive, said that “it has reached the point where there are issues that take specialized skills to get to the bottom of.”

Mr. Scott conceded that the team has been unusually busy lately. “You almost have to laugh,” he said of executives engaging in egregious conduct. “You can’t make this stuff up.”

Three weeks ago, for example, Wal-Mart fired a computer technician, Bruce Gabbard, and one of his superiors, Jason Hamilton, after a two-month investigation conducted by Mr. Senser and his staff. They found that Mr. Gabbard, acting alone, had taped phone conversations between members of Wal-Mart’s media relations staff and this reporter of The New York Times. Using equipment he bought on eBay, he also intercepted text messages sent from his colleagues’ BlackBerries.

Mr. Scott, who personally apologized for the incident, said Mr. Gabbard had tried to uncover the source of leaked internal documents shared with newspapers like The Times “because he thought what was happening to his company was unfair and he was going to do something about it.” Mr. Gabbard has declined to comment.

Behind Wal-Mart’s response to such cases is a proud preoccupation with sticking to the rules. Inside Wal-Mart’s spare headquarters, large signs affixed to the doors of meeting rooms spell out a ban on gifts of any value from potential vendors, whether it is a free plane ticket or a cup of coffee.

No wonder, perhaps, that wasted money — from suppliers and Wal-Mart employees — is a recurring theme in the company’s investigations.

One of the company’s biggest investigations was of a board member and former vice chairman, Thomas M. Coughlin, whom it accused in 2005 of dipping into company funds to pay for CDs, beer, an all-terrain vehicle, duck-hunting boots and a customized dog kennel. His total theft, Wal-Mart said, was more than $500,000.

As with Ms. Roehm and Mr. Womack, Wal-Mart spared no detail in its case against Mr. Coughlin, who pleaded guilty to federal charges in the case. Investigators documented dozens of improper purchases that included fiber supplements and doughnuts and, in legal filings, described him as a rogue executive committed to defrauding the company.

But not all of Wal-Mart’s investigations involve money, or even high-stakes business matters, prompting employees to protest that the company’s investigative arm is, at times, used to intimidate employees who question authority or raise issues their bosses wish to remain secret.

James W. Lynn, a factory inspection manager at Wal-Mart, was fired in 2002 for fraternization with a subordinate after an investigation that extended across several countries.

During the investigation, a company investigator followed Mr. Lynn and a lower-level female colleague who worked in Costa Rica on a business trip to Guatemala City, where he spied on the pair for at least four days — even booking a hotel room directly across the hall from the female employee’s room to keep watch on the pair. (In the end, both Mr. Lynn and the woman did say they kissed.)

Mr. Lynn, in an interview and in a wrongful-termination lawsuit filed against Wal-Mart, claims he was singled out because he openly criticized the working conditions in the Central American factories he inspected.

“Wal-Mart is the ultimate Big Brother in corporate America,” Mr. Lynn said. He disputes Wal-Mart’s claim that it investigates every employee the same way. “They are very opportunistic,” he said. “If it is someone they want to get rid of, they will go all out. If it’s somebody whose career they want to save, they won’t.”

Sarah Clark, a Wal-Mart spokeswoman, said the company “took the steps it deemed necessary to investigate the allegations of fraternization” and denied the company was motivated by Mr. Lynn’s criticism.

Mr. Senser, who arrived after the investigation of Mr. Lynn, said his staff knew its boundaries.

“We are not in the business of prosecuting people, or pursuing an allegation to find a violation of the law,” Mr. Senser said. “We operate for the benefit of our shareholders to make sure this company is being appropriately and ethically run. There is a difference.”

Stuart Elliott contributed reporting.

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Wal-Mart's plan to conquer the world

Failure in Germany, South Korea show the retail powerhouse is fallible. But as its home market shrinks, Wal-Mart has no choice but to find success overseas.

By Parija B. Kavilanz,
CNNMoney.com
March 29 2007                                [back to top]

NEW YORK (CNNMoney.com) -- Despite Wal-Mart's wobbly track record overseas, industry experts say it's becoming more crucial than ever for the world's largest retailer to get its international act together, and quickly.

Here's why.

Wal-Mart (Charts) is running out of room to grow in the United States, its largest market, where it already operates about 4,000 stores. With each new store, it risks eroding sales at older stores.

Sure enough, sales growth at older stores open at least a year, known in the industry as same-store sales, have slowed considerably, growing 1 to 3 percent on average during the last three years from more than 5 percent previously. That puts Wal-Mart behind its archrival Target Corp. (Charts)

Wall Street rewards expansion but not through cannibalization. Therefore, Wal-Mart's stock has languished in a trading range for the past few years, unable to break it's all-time high of $69.

As slower sales growth and other negatives started to accrue - Wal-Mart became a lightning rod for critics about its labor practices, among other things - Wal-Mart executives realized that they need a shiny object to appease investors. To that end, Wal-Mart CEO Lee Scott late last year announced that the company would ramp up international growth while slowing domestic expansion.

"Think about it this way. The U.S. gives Wal-Mart some 260 million shoppers. The world gives Wal-Mart 6 billion shoppers. You do the math," said Edward Weller, analyst with Think Equity Partners.

Wal-Mart may rule the retail roost at home, but it hasn't met with the same measure of success abroad. In key markets like China, European competitors like Tesco, Carrefour and Metro have outperformed Wal-Mart and grabbed more market share.

Bentonville, Ark.-based Wal-Mart currently operates close to 3,000 stores in 13 countries outside of the United States. These markets accounted for about 23 percent of its total sales of $381 billion in 2006.

But last year it pulled out of Germany and South Korea after industry watchers said it realized that its low-price merchandise offerings and big-box, no-frills stores didn't really appeal to consumers in those markets.

"Many American companies have had a choppy history overseas because they assume they can replicate their U.S. business model in other countries," said Dana Telsey, a retail industry expert and founder of research firm Telsey Advisory Group.

Instead of rushing into a new market, she said, companies would be better off first learning the local tastes, scouting good locations and tailoring their merchandise accordingly.

At the same time, Telsey said Wal-Mart is learning from its mistakes. For instance, in China where it operates 73 stores, the discounter has started selling live seafood in its stores.

In February, Wal-Mart struck a $1 billion deal to acquire Chinese rival Trust Mart by 2010, challenging French chain Carrefour's dominance as the largest operator of the huge grocery and retail outlets known as "super-centers" in China.

In India, from where Wal-Mart already exports about $1.5 billion worth of merchandise to its stores, the company last year set up a liaison office to study the Indian market.

It subsequently entered into a joint venture with an Indian company to open hundreds of stores across the subcontinent.

Wal-Mart cannot enter the Indian market directly. This is because current regulations pertaining to foreign direct investment only allow "single-brand" retailers such as Nike or Gucci to own 51 percent of their business operations in India. But this still precludes market entry to global merchants like Wal-Mart that sell a variety of brands.

In line with what is permitted under existing guidelines, Wal-Mart said it will focus on the back-end supply chain management, giving Bharti access to its knowledge in information systems, logistics and supply chain management.

According to Wal-Mart spokeswoman Amy Wyatt, the stores in India "will be 100 percent owned, operated, managed and run by Bharti.

"In partnership with Bharti, and in full compliance with existing guidelines, we are setting up a wholesale cash-and-carry business in India," Wyatt wrote in an email to CNNMoney.com. "Our primary business philosophy for wholesale cash-and-carry is to sell merchandise at very low prices to our members, organized and unorganized retailers including the small neighborhood stores."

"As a Wal-Mart investor, China and India excite me," said Steven Baumgarten, an analyst with PNC Advisors, a Philadelphia-based investment firm that manages $54 billion in assets, including Wal-Mart shares.

"These are two very large markets with growing middle-class populations with disposable income. These are ideal Wal-Mart consumers."

Think Equity Partners' Weller also pointed to Wal-Mart's ongoing success in Mexico where Wal-Mart de Mexico has become the country's largest retailer.

And a recent note Goldman Sachs said Wal-Mart plans to open 10 Wal-Mart supercenters in Canada, adding to its base of 289 stores in the country.

As it gradually irons out its wrinkles overseas, Wal-Mart is reaping the financial benefits to both its top and bottom line.

For its recently completed fourth quarter, Wal-Mart's international sales soared 30 percent versus a 10.9 percent increase for its U.S. operations, which included its Wal-Mart discount stores and its Sam's Club Warehouse division.

Still, PNC's Baumgarten said, Wal-Mart has more challenges ahead. "In order to drive down expansion costs, it has to drive up efficiencies in those markets. It's not there yet," he said.

Both Baumgarten and Weller also shot down suggestions that instead of gambling on international growth, perhaps Wal-Mart is better off giving money back to investors or buying back shares in a bid to reignite its stock.

Earlier this month, Wal-Mart approved a 31 percent increase in its annual dividend to 88 cents share, yielding about 1.8 percent.

Said Baumgarten, "Wal-Mart has consistently paid out dividends to shareholders and bought back shares, but the stock still hasn't done much. So I don't buy that argument."

Meaning international growth for Wal-Mart is now more crucial than ever.

Clarification: An earlier version of the story did not clarify that under current Indian regulations, Wal-Mart cannot directly enter the Indian market. Therefore, Wal-Mart will provide back-end support while the new stores will be wholly-owned and operated by its Indian partner.

--Analysts quoted in the story do not personally own shares of Wal-Mart and their firms do not have an investment banking relationship with the company.

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RediClinic opening nine retail health centers in Wal-Mart

By Michael Johnsen,
Drug Store News
Thursday, March 29, 2007                             [back to top]

RediClinic on Thursday morning announced the opening of nine convenient health care clinics in leased space inside Richmond, Va.-area Wal-Mart Supercenters. "We are delighted to introduce the quality, affordability and convenience of RediClinic to residents of greater Richmond through Wal-Mart Supercenters," stated Web Golinkin, chief executive officer of RediClinic. "In connection with our Richmond launch, we are offering $39 sports and camp physicals and our 7 Vital Tests for Women package for just $15 so everyone can experience how easy and inexpensive health care can be."

Eight of the clinics already are open, and the ninth clinic will open in April.

"At Wal-Mart, we know that family health and wellness is a high priority for our customers and their families," stated Alicia Ledlie, director of health business development for Wal-Mart Stores. "In-store clinics like RediClinic provide consumers with convenient and affordable access to basic health care, and we are excited to bring this service to Richmond residents."

The clinic openings also launch an exclusive partnership between RediClinic and Bon Secours Richmond Health System for the operation of all RediClinics in the greater Richmond area. In this partnership, Bon Secours provides physician oversight to the nurse practitioners who staff the RediClinics.

"Bon Secours is the health care leader in Richmond, and we are honored to be partnering with them here," stated Christopher Kersey, chief business development officer and chief medical officer of RediClinic. "RediClinic and Bon Secours share the common goals of improving access to and affordability of quality health care in Richmond, so it was logical that we would decide to collaborate."

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Wal-Mart Chief Writes Off New York

By MICHAEL BARBARO
and STEVEN GREENHOUSE
New York Times
March 28, 200                                     [back to top]

Wal-Mart to New York: fuhgeddaboudit.

Frustrated by a bruising, and so far unsuccessful battle to open its first discount store in the nation's largest city, Wal-Mart's chief executive said yesterday, "I don't care if we are ever here."

H. Lee Scott Jr., the chief executive of the nation's largest retailer, said that trying to conduct business in New York was so expensive - and exasperating - that "I don't think it's worth the effort."

Mr. Scott's remarks, delivered at a meeting with editors and reporters of The New York Times, amounted to a surprising admission of defeat, given the company's vigorous efforts to crack into urban markets and expand beyond its suburban base in much of the country. In recent years, Wal-Mart has encountered stout resistance to its plans to enter America's bigger cities, which stand as its last domestic frontier.

Much of the opposition to Wal-Mart in cities like New York is led by unions. Organized labor, fearing that the retailer's low prices and modest wages will undercut unionized stores, have built anti-Wal-Mart alliances with Democratic members of city councils.

Yesterday, labor leaders, upon learning of Wal-Mart's apparent retreat from New York - or at the very least Manhattan - returned Mr. Scott's sentiment.

"We don't care if they're never here," said Ed Ott, executive director of the New York City Central Labor Council. "We don't miss them. We have great supermarkets and great retail outlets in New York. We don't need Wal-Mart."

For Wal-Mart, New York City has long loomed as a tantalizing prize - the home of more than eight million consumers and attention-grabbing stores for just about every major retailer in the country.

But Wal-Mart, a cost-minded retailer known for its dowdy merchandise, and New York, a city of excesses known for cutting-edge style, have long had an uneasy relationship.

Wal-Mart executives have argued that low prices would be the universal language that bridged the gap. So far, they have not.

During the questioning, Mr. Scott repeatedly referred to New York, but after the meeting a Wal-Mart spokeswoman, Mona Williams, called to say that Mr. Scott was referring to only Manhattan, not the entire city.

Wal-Mart, which has nearly 4,000 stores in the United States, has sought to open stores in Rego Park, Queens, and in Staten Island, but both plans fell through in the face of intense union, community and political opposition.

Mr. Scott said yesterday that the opposition to Wal-Mart in New York, Chicago, Cleveland, Los Angeles and other cities had a common thread: "The glue is the unions."

Despite setbacks in each of these cities, Wal-Mart has had success in urban areas. In Chicago, for example, Wal-Mart opened a store last year that attracted thousands of job applicants and has, Mr. Scott said, performed better than expected.

He said that Wal-Mart executives have lobbied for a store in New York, but he said he remains unconvinced. "It's too hard to make money here," he said.

Late yesterday, Ms. Williams sought to amend Mr. Scott's remarks.

"Entering New York has been difficult, but not something we rule out," she said in an interview. "Lee said he personally didn't care if we built stores there or not. It might be more trouble than it's worth, but that he would leave that up to the real estate group that makes these decisions."

As he does in many public appearances, Mr. Scott was quick yesterday to talk up the chief potential benefit of a Wal-Mart in New York City, particularly for its many struggling residents with modest incomes: lower prices because of the chain's vast purchasing power and highly efficient distribution system.

Surveys have repeatedly shown that Wal-Mart's grocery prices are typically 10 to 30 percent lower than those of its competitors.

But labor leaders assert that while Wal-Mart's prices are low, its wages and health benefits are often so skimpy that they leave many workers below the poverty line and pressure competitors to reduce pay and benefits.

"We don't like how they do business," Mr. Ott, the New York union official, said.

But as Mr. Scott sees it, there is another reason Wal-Mart has such a hard time making inroads into some of the nation's biggest enclaves. Speaking about what he sees as snobbish elites in New York and across the country, Mr. Scott added, "You have people who are just better than us and don't want a Wal-Mart in their community."

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Wal-Mart CEO Not Sold on Big Apple

Chain Store Age
Wednesday, March 28, 2007                     [back to top]

Wal-Mart Stores CEO Lee Scott said he “doesn't care” if the chain ever opens a store New York City, The New York Times reported on Wednesday. The chain has fought a long and so far unsuccessful battle to open a store in the Big Apple, where it has encountered stiff resistance from community, labor and various political groups. . In a published interview in the newspaper, Scott said trying to do business in New York City was expensive and exasperating and he didn't think that “it's worth the effort.”

Scott said Wal-Mart executives have lobbied for a store in the city, but he remains unconvinced.

"It's too hard to make money here," he said.

Wal-Mart spokesperson Mona Williams subsequently emphasized to the Times that Scott was referring only to Manhattan, and not the entire city.

"Entering New York has been difficult, but not something we rule out," she told the newspaper. "Lee said he personally didn't care if we built stores there or not. It might be more trouble than it's worth, but that he would leave that up to the real estate group that makes these decisions."

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Retailer still has banking in mind

By Steve Painter,
Northwest Arkansas Democrat-Gazette
March 28th, 2007                                                [back to top]

Wal-Mart Stores Inc. will try again to win federal approval to operate an industrial bank, H. Lee Scott, chief executive officer, said Tuesday.

The company, citing the political controversy ignited, withdrew its 2-year-old application March 16. In a wide-ranging television interview with Fox News host Neil Cavuto, Scott also called a new TV ad aired by one of its union-funded critics “an act of desperation,” refused to talk about a counterclaim Wal-Mart filed against fired advertising executive Julie Roehm and said the company could have another disappointing sales year if gasoline prices remain high.

Bentonville-based Wal-Mart has said repeatedly that it wants approval to run an industrial loan company so it can process credit and debit card purchases from its stores and thus save money it now pays to other companies. Rival Target Corp. has a similar industrial bank.

Wal-Mart, the world’s largest retailer, apparently had given up on the idea when it withdrew its application in a move that drew praise from Sheila Bair, chairman of the Federal Deposit Insurance Corp.

On Tuesday, Scott told Cavuto, “We’re looking at how can we get another bite of that apple, because our customers in many ways are underserved.”

“We’re going to take another look at it,” Scott said.

“Oh, really ? So it’s not a dead issue ?” Cavuto asked.

“No,” Scott said.

On the lawsuit that Roehm filed against Wal-Mart, Cavuto suggested that in filing its counterclaim, “You came back like a ton of bricks.”

The counterclaim alleges that Roehm had a sexual relationship with an assistant in a violation of company policy and that both sought employment at the advertising agency Roehm selected to handle Wal-Mart’s account. Wal-Mart withdrew its business from the agency, Draft FCB.

“You just need to read the court filings,” Scott replied.

The television commercial funded by Wake Up Wal Mart. com, which in turn is funded primarily by the United Food and Commercial Workers union, accuses Wal-Mart of thwarting efforts to improve port security. The ad, featuring the image of al-Qaida leader Osama bin Laden and a nuclear mushroom cloud, claims Wal-Mart is blocking proposals to scan all incoming containers for nuclear weapons.

“It’s desperate. It certainly isn’t true,” Scott said. The company, along with others in the retail industry, is looking at ways to make ports more secure, he said. Given an opportunity to fire back at Democratic presidential contenders who have criticized the company, including former Wal-Mart board member Sen. Hillary Clinton, D-N. Y., Scott passed. “I like Hillary Clinton. I do not think Hillary Clinton bashes us,” he said. Wal-Mart’s top executive said that when Clinton served on the board and Scott had the job of assistant director of the company’s truck fleet, “she always treated me with respect and courtesy.” Wal-Mart shares closed down 35 cents, or 0. 73 percent, to $ 47. 49 in trading Tuesday on the New York Stock Exchange. Shares have traded as low as $ 42. 31 and as high as $ 52. 15 over the past year.

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CHINA: Wal-Mart, Carrefour Sales See Rapid Growth In Country

Namnews                                  [back to top]

Wal-Mart and Carrefour have seen their Chinese sales grow by over 30% in 2006, helped by rapid store expansion, and this trend is likely to persist in 2007. A report by the China Chain Store Franchise Association said that Carrefour saw sales grow 53% to 24.8bn yuan ($3.21bn) last year, while Wal-Mart's sales rose 30% to 15.03bn yuan. Their growth easily outpaced the overall market's 14% rise.

However, foreign firms came a distant second to domestic players. In 2006, the top retailer by sales was home appliance giant Gome Electrical, which saw revenue rise 74% to 86.9bn yuan.

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Wal-Mart CEO says cautious as fuel prices rise

Reuters                               [back to top] 

NEW YORK - Wal-Mart Stores Inc. <WMT.N> Chief Executive Officer Lee Scott said the world's largest retailer is adopting a cautious stance, considering that rising fuel prices could mean this year will not be easy.

"With fuel pries going up, it feels like it's going to be a challenging year," he said on Tuesday during a television interview on Fox News.

"I wouldn't say worried is the right word. But I think we're cautious thinking through what it means. Fuel prices have an impact on our basic customer," he added.

Wal-Mart is considered a barometer of the health of the U.S. retail sector. More than 127 million customers visit a Wal-Mart store or a Sam's Club location in America every week, and Wal-Mart has 1.3 million employees in the United States.

Scott's interview came late on Tuesday after U.S. stocks fell following a weak consumer confidence report, which fueled concerns the housing slowdown may spread into the broader economy and hurt profits.

The Conference Board, a private research group, said its index of consumer sentiment declined in March amid rising gasoline prices and turmoil in financial markets.

Wal-Mart has been struggling to revive sales at its U.S. store base, which have been hurt by lackluster shopper response to its efforts to sell trendy clothing and a disruptive store remodeling program.

Its shares closed down 35 cents, or about 0.7 percent, at $47.49 on the New York Stock Exchange.

Copyright 2007 Reuters News Service. All rights reserved.

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Ahead of the Bell: Wal-Mart Stores

The Associated Press
March 27, 2007                          [back to top]

NEW YORK (AP) - Wal-Mart Stores Inc., which owns British retailer Asda Group Ltd., is looking to regulators to see whether it can join the takeover war for struggling supermarket chain J Sainsbury PLC, The Independent reported Tuesday.

Sainsbury was Britain's biggest supermarket chain just over a decade ago. But the London-based company has become less popular due to stiff competition from Tesco PLC, Britain's largest supermarket chain, and Chief Executive Justin King has led a turnaround program that has included job cuts and the closing of underperforming stores.

Related newsStocks Close Mixed on Quarter's Last DayTribune Among Movers on Wall StreetSector Snap: Airline Stocks MixedPremarket Movers: PMC-Sierra GainsConsumer Spending and Incomes Up Meanwhile, Marks & Spencer Group PLC and a Qatar investment fund have both been touted as rival suitors for Sainsbury, while a private equity group that consists of CVC Capital Partners, Kohlberg Kravis Roberts & Co. Ltd., Blackstone Group International Ltd. and TPG Capital LLP is also expected to make an offer.

The London newspaper said the CVC-led consortium may announce a deal by the end of the week, but Citigroup analysts say a bid from Asda for Sainsbury cannot be ruled out.

Shares of Wal-Mart finished at $47.84 on the New York Stock Exchange.

© 2007 The Associated Press. All rights reserved.

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Wal-Mart Comes To India

By Gary Weiss,
Forbes.com
March 26th, 2007                        [back to top]

Sorry, but I've never been a big fan of Wal-Mart's business practices. I love the stores--they're the first place I go when I run out of glue and kitty litter--and I even owned the stock some years ago. But Wal-Mart's aggressive attitude toward suppliers and its impact on small business give me an uneasy feeling in the pit of my stomach. It's a bit how I feel when I see a Rottweiler sniff a kitten. Is it going to lick the kitty, or turn it into lunch?

Wal-Mart's plans to invade India give me just that kind of lump-in-the-gut feeling.

Sure, it makes a great deal of economic sense, and I’m sure it fits squarely into the whole concept of "globalization," "free markets," and other mom-and-apple-pie platitudes. The company has signed a memorandum of understanding with an Indian company, Bharti Enterprises, to explore business opportunities in the country. That's about as specific as it gets, but I can see them now: big boxes dotting the Indian landscape. Think of it: morning at the Taj Mahal, afternoon buying glue!

What’s wrong with that picture? Plenty, in my view.

As a business decision, it is a terrific one from Wal-Mart and Bharti’s perspective. The statistics are, as they usually are for India, massively intimidating.

Network Magazine, an Indian business publication, observes in its current issue that retailing is India's largest industry, accounting for over 10% of the country's gross domestic product and around 8% of employment. "The Indian retail industry is valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015," says the magazine. Only 2% to 3% of that is "organized." That is, actual stores instead of open-air markets, roadside stands and other beneficiaries of India's relaxed attitude toward urban planning.

That sound you hear is retail executives drooling.

There's no question that Wal-Mart's fabled "efficiencies of scale" and modern distribution methods would be a breath of fresh air (so to speak) in India, with its rampant inefficiency and corruption. Indeed, Wal-Mart is not the only major retailer sniffing around India. India's own Reliance Group plans to expand its chain of supermarkets in India, though they are far more limited in scope than Wal-Mart's big-box business model.

What troubles me about Wal-Mart's India move concerns the potential for social disruption.

There are 12 million people working in retail in India, ranging from operators of boutiques to the fellows who sell "cold water" on the streets of Delhi. I think the water guy and the kid selling fresh coconut juice in Mumbai don't have much to worry about (avoid the water, but try the coconut juice, by the way). What troubles me are the "organized retail" shops, which are often run by the same family for generations. What happens to their businesses and what happens to the markets--or bazaars as they are known in Farsi-derived Hindi?

In India, "Main Street" is not a street, but a bazaar. Delhi alone has dozens, ranging from Old Delhi's Chandni Chowk--a real bazaar in the Middle Eastern sense of the word--to roadside hovels to upscale markets like the two in Greater Kailash. In Central Market, a sprawling shopping district in South Delhi, you can get a suit made, order world-class opticals, buy dates from Saudi Arabia or, for that matter, buy pretty much anything else you could want. The merchants are competitive with each other, usually, and Delhi shoppers will go from shop to shop, bargaining for a better deal.

In other words, the bazaar is an institution, a way of life. And, in the view of a growing number of people in India, it is endangered by Wal-Mart.

The opposition comes from quarters that are, I suppose, predictable: some elements of the ruling Congress Party, trade unions, the Communist Party and, of course, the merchants themselves. The rhetoric has been remarkably similar to what you usually hear when a big-box store comes to a small town. "We believe Wal-Mart is going to ruin this country and millions of people will lose their jobs," one anti-Wal-Mart organizer told Reuters.

The difference is that when people lose their jobs in India, they sometimes starve.

I think the opponents to Wal-Mart in India have a point.

It's easy to view such opposition as politically motivated or the griping of people opposed to progress. But then I think about a family friend, now in his 40s, who as a boy used to work in his father's parchun store, selling dried beans, rice and spices along the train tracks leading south out of Delhi. His father ran the store before him. Today he is one of the leading real estate developers on the outskirts of Delhi.

I tend to doubt that he would be in that position if he had spent his youth mopping up aisle 9 at the Greater Kailash Wal-Mart.

Admittedly, I am tilting at windmills here. The Indian government, responding to the protests, is launching an inquiry into the social and economic effects of big-box retailers moving into the country. But I am sure Wal-Mart is inevitable. The march of progress cannot be impeded. The small merchants of India will have to compete, or be crushed.

Globalization must, ultimately, triumph. After all, as one supporter of the deal once pointed out to me--what about outsourcing to India depriving Americans of jobs? Don't get all sentimental about a few million Indians losing their jobs, he told me.

He's right, I guess. But somehow the thought of that comeuppance, or all that economic efficiency, can't make that knot in the pit of my stomach go away.

Gary Weiss has covered business for more than 20 years as an investigative reporter and author. His latest book is Wall Street Vs. America: The Rampant Greed and Dishonesty That Imperil Your Investments.

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Wal-Mart Not Required to Provide Interpreter When Firing Deaf Man

By LINDA COADY, ESQ.,
Andrews Publications                          [back to top]

Wal-Mart's failure to provide an interpreter for a deaf employee during his termination meeting was not a violation of the Americans with Disabilities Act, a federal appeals court in Atlanta has ruled.

The U.S. Court of Appeals for the 11th Circuit found that the worker's ability to communicate effectively at the meeting was neither an "essential function" of his job nor one of the "privileges and benefits" of employment requiring a reasonable accommodation under the ADA.

Donald Novella, who is deaf, worked for Wal-Mart as an unloader of merchandise from October 2002 until November 2003.

According to his lawsuit, Novella told store management in May 2003 that he saw vulgar and offensive messages on the men's room walls about his fiancée, who was also a Wal-Mart employee.

When Novella repeatedly complained about the alleged obscene writing, store managers told him they had a videotape of him writing on the bathroom walls, the complaint said. Wal-Mart allegedly denied Novella's request to see the tape.

At his termination meeting Novella asked for an interpreter so he could understand the reasons he was being fired, but Wal-Mart refused to provide one, the complaint said.

Two local police officers escorted Novella from the store after the meeting and Wal-Mart has denied him access to its store to make purchases ever since, Novella said.

He claimed that this retaliation on the part of Wal-Mart has forced him and his fiancée to drive 30 miles to buy food, clothing and groceries.

Novella sued Wal-Mart in the U.S. District Court for the Middle District of Florida, claiming that the company fired him in violation of the state Whistleblower Act in retaliation for reporting the bathroom graffiti.

He also said Wal-Mart denied him a reasonable accommodation of his disability under the ADA because it refused his request for an interpreter at his termination meeting.

The District Court granted summary judgment to Wal-Mart, finding no violation of either law.

Novella appealed to the 11th Circuit, which affirmed.

The panel said that, under Equal Employment Opportunity Commission regulations, a "reasonable accommodation" includes two types of modifications: those that enable an employee to perform the essential functions of his or her job and those that allow an employee to "enjoy the equal benefits and privileges of employment" as other, non-disabled workers.

The court concluded that an "accommodation" is reasonable only if it enables the employee to perform the essential functions of the job. Communication at a termination meeting is not an "essential function" of an employee's job, the court said.

Noting that the 11th Circuit has not yet addressed whether the ability to understand charges and defend oneself at a termination meeting qualifies as one of the "benefits and privileges" of employment, the appeals court panel skirted the issue in this case and based its decision on the "essential functions" portion of the "reasonable accommodation" definition.

Finally, the appeals court rejected Novella's whistle-blower claim, finding that he failed to establish any link between his reporting of the graffiti and his firing, as required by state law.

Novella v. Wal-Mart Stores Inc., No. 06-12919, 2007 WL 812058 (11th Cir. Mar. 19, 2007). Employment Litigation Reporter Volume 21, Issue 19 03/26/2007

Copyright 2007 West, a Thomson business. All Rights Reserved

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Ark. Supreme Court hears Wal-Mart challenge of exec exit pact

By JON GAMBRELL,
Associated Press 
March 26, 2007                            [back to top]

LITTLE ROCK, Ark. (AP) — Wal-Mart lawyers argued before the Arkansas Supreme Court on Thursday that the retailer should be allowed to break a multimillion-dollar retirement package with a former executive because he acknowledged defrauding the company.

But a lawyer for former vice chairman Tom Coughlin said a lower court dismissal of Wal-Mart's claim should stand, as Coughlin didn't defraud the company while in negotiations for his retirement agreement. Lawyers in the case say the package is worth between $12 million and $15 million.

Coughlin attorney William W. Taylor III said in a perfect world, no company or person would have to sign contracts when ''unaware'' of potential liabilities.

''But that's not the real world and that's not what these parties wanted to do,'' Taylor said.

Coughlin worked for Wal-Mart Stores Inc. for 28 years, a protege of company founder Sam Walton. Coughlin retired in January 2005.

By April 2005, Wal-Mart disclosed it was suspending Coughlin's benefits amid allegations that the former executive used Wal-Mart money and gift cards to pay for a slew of personal items, from hunting trips and hunting dog training to clothes, alcohol and parts and service for personal vehicles.

Coughlin pleaded guilty to fraud and tax charges in federal court and began serving a 26-month home detention in October.

Bentonville-based Wal-Mart filed a circuit court lawsuit to cut Coughlin's retirement benefits, but a judge dismissed the suit. Theodore Boutrous, a lawyer for Wal-Mart, told the state Supreme Court that Coughlin had a ''duty of loyalty and candor'' to the company to be honest as he sat down in retirement negotiations.

''He knew that if he told the truth, he wouldn't get a retirement package,'' Boutrous said. ''If he told truth, he would be terminated. And so he lied.''

Boutrous said concealment of theft should be enough to void Coughlin's retirement package.

The court is expected to issue a decision on Wal-Mart's appeal in the coming weeks. Meanwhile, Coughlin faces another hearing April 12, when the 8th U.S. Circuit Court of Appeals in St. Louis will hear an appeal by federal prosecutors calling for a harsher sentence for his fraud and tax convictions.

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Wal-Mart sees the light

Chain cutting energy use -- and its bills

By Jim Downing
Sacramento Bee
Sunday, March 25, 2007                       [back to top]

Store manager Joe Sanders squinted up at the sunny rectangles that march across the ceiling of the Wal-Mart in Dixon.

"I really didn't believe in the skylights" at first, he said.

It's a simple concept, now standard in new Wal-Marts: Let the sun shine on the store floor, dim the fluorescent bulbs and cut daytime lighting costs by as much as 80 percent.

But it hasn't been without hassles.

"(The lights) used to go completely out," Sanders said. When he took over his first store with skylights, in Palmdale in 2005, a bug in the control system for the overhead lights left things gloomy.

For Sanders, though, just flipping on the lights wasn't an option. His job depended on making the skylight system work as intended: The store's electric bill was part of his performance review. "The home office is really pushing this," he said.

Looking to reduce operational costs, boost a public image scarred by criticism of its labor practices and aggressive expansion, and reverse a long -- if gradual -- stock slide, Wal-Mart has over the past year taken on climate-friendliness as both a rallying cry and a business strategy.

With more than 3,900 stores and distribution centers across the country, Wal-Mart is the nation's biggest electricity user outside the federal government. As public and government concern about global warming grows, Wal-Mart and many other businesses are taking stock of their greenhouse gas footprint.

Rules to cut emissions aren't far away. California's climate change regulations are set to take effect in 2010. The federal government may soon follow suit: House Speaker Nancy Pelosi, D-San Francisco, has vowed to introduce a climate-change bill by July 4.

With that outlook, businesses around the country are examining how they can both cut their emissions and remain competitive. In the retail sector, Wal-Mart and key competitors like Target Corp. have already done a lot: skylights, rejiggered refrigeration systems and new air conditioning units -- all of which let stores use less juice. That means lower electricity bills, which often make up a big chunk of operating costs.

"We would be missing out on a huge opportunity," by ignoring energy efficiency, said Wal-Mart Vice President Charles Zimmerman.

By 2012, the company has promised, existing stores will generate on average 20 percent less greenhouse gas emissions than in 2005. Emissions tied to newly constructed stores ultimately will be as little as half that of old models.

Cutting the first 10 percent or 20 percent of electricity consumption is relatively straightforward, Zimmerman said. Going further means getting creative.

In the future, motion-detectors may switch on display lights only when a customer is near. Dark-colored "solar walls" may gather the sun's energy on cold days and use it to heat the store. Meat and cheese displays may be covered by doors to keep the cold air from escaping.

Those plans have drawn praise from national environmental groups. And state regulators charged with implementing California's greenhouse-gas reduction target -- a 15 percent cut by 2020 -- are looking to Wal-Mart for leadership.

At a recent climate-change conference in Sacramento, Zimmerman's presentation of Wal-Mart's efforts fairly stole the show.

"It's the most inspiring talk I've ever seen," said California Energy Commissioner Art Rosenfeld.

Environmental groups echo that endorsement of the efficiency programs, though they reserve the right to criticize other aspects of Wal-Mart's operations.

"This is not a blanket endorsement of corporate policy at Wal-Mart," said Ralph Cavanagh, energy program co-director at the Natural Resources Defense Council. "But is Wal-Mart serious on the issue of energy efficiency? We think it is."

While Wal-Mart's efficiency strategy has given the company a green sheen, the program is hardly altruistic: Wal-Mart's projects have to pay for themselves in direct energy savings -- and quickly. So, for example, the company isn't planning to install solar panels on its rooftops or wind turbines in its parking lots.

"They don't have the payback," Zimmerman said.

To evaluate the energy savings from new technologies, as well as to optimize operations of existing equipment, Wal-Mart uses an elaborate central monitoring system.

Stopping in front of a long case of chicken, Sanders pointed to a number on the refrigerator unit, close to the floor. Every Wal-Mart freezer and refrigerator case in the nation has a unique identification code and is monitored by computer from company headquarters in Bentonville, Ark.

When a customer opens a freezer door to grab a package of fish sticks, a computer in Bentonville can tell.

And if there's a problem, Sanders gets a call telling him to fix it.

"They'll get you back on track," he said.

The significance of Wal-Mart's efficiency commitment has much to do with its size. With 2006 sales of $344 billion, Wal-Mart is the planet's largest company. It uses about 1 percent of all the electricity sold in the United States.

Wal-Mart's influence also extends to the companies that make the equipment it uses to help make its stores more efficient. Earlier this month, Lennox International, a major manufacturer of climate-control and refrigeration equipment, announced the release of an ultra-efficient rooftop air-conditioning unit designed in partnership with Wal-Mart.

Other major big-box store and supermarket chains, including Target, Costco Wholesale Corp. and West Sacramento-based Raley's, have taken several of the same efficiency steps, if more quietly than Wal-Mart. Representatives from those companies all cited the competitive need to cut costs by reducing electricity consumption.

But for proudly acknowledging climate change and insisting that it makes business sense to cut emissions, Wal-Mart has won special recognition.

"They really are pushing things," said Elizabeth Sturcken, managing director of corporate partnerships with Environmental Defense, a national environmental advocacy group that has advised Wal-Mart on its green programs.

Environmental Defense considers the progress of Wal-Mart's planet-friendly initiatives so important that, following the lead of thousands of the company's suppliers, it has opened an office near Wal-Mart's headquarters.

That's not to say that Sturcken's group feels that Wal-Mart is beyond criticism.

She pointed out Wal-Mart's plans call for greenhouse emissions reductions on a per-store basis, not companywide. As Wal-Mart continues to build and purchase more stores around the globe, its total greenhouse emissions are projected to keep rising, even as each store gets more efficient, she said.

Sturcken said she believes Wal-Mart's real impact may be in prompting changes in its tens of thousands of suppliers.

Zimmerman said that Wal-Mart's global operations are responsible for the equivalent of 19 million metric tons of carbon dioxide emissions each year, two-thirds of that from electricity usage. He estimated the company's suppliers collectively emit 10 times that amount.

"You could pick any product, and I could tell you how Wal-Mart could push to improve it environmentally," Sturcken said in an e-mail. "That's the power that they have to create environmental change on a massive scale."

Setting it straight: On Business Page D1 Sunday, a story about Wal-Mart's energy efficiency initiatives misstated the percentage of the nation's electricity purchases made by Wal-Mart. The company consumes about 0.5 percent of the purchased electricity, according to data from the company and the U.S. Department of Energy.

Copyright © The Sacramento Bee

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Wal-Mart Seeks Identity

By Anita French,
The Morning News (Arkansas)
March 25th, 2007                                   [back to top]

Yearly sales: $340 billion

Profit: $12 billion

Finding the right image: Priceless
And tricky.

Bentonville-based Wal-Mart Stores Inc.'s seems to be in search of an identity. That's the opinion of some analysts and experts, who say the world's largest retailer's struggle to regain its financial foothold is making the company whipsaw between images of being a low-price discounter or an upscale retailer; of being a company that often cites pearls of folksy wisdom from founder Sam Walton, while hiring outside consultants to polish its urban appeal.

"For the first time in its 45-year history, Wal-Mart is uncertain what it should be," wrote The Economist on Feb. 16.

"We actually wonder if Wal-Mart would be better served by thinking a little less and acting on instinct a little more. Pay less attention to the consultants and analysts and just go out and be Wal-Mart," Kevin Coupe, owner of Coupe Communications and a regular guest speaker for the Food Marketing Institute, commented at his Web site recently.

They aren't alone.

"Clearly, Wal-Mart has an identity crisis because of the pressure the company is feeling from competitors," agreed Cassandra Toroian, president and chief investment officer at Blue Rockefeller LLC, in an e-mail to The Morning News. "To name a few, Target, BJ's (and) Costco all are competitors that don't seem to have an identity crisis. It appears somewhere along the way the Wal-Mart management team took their eye off the ball and started becoming followers instead of leaders, which is when their issues started."

GROUP PURSUIT

Blue Rockefeller is a Delaware-based investment firm with $175 million in assets under management. Toroian is also a regular contributor to The Street.com and Real Money.com. Neither she nor her company owns Wal-Mart stock, Toroian said.

In early March, John Fleming, the new chief merchandising officer of Wal-Mart and Stephen Quinn, its new chief marketing officer, seem to indicate that the company is once again trying to redefine the company's shoppers when they told the The New York Times that after a year of intense research, Wal-Mart is seeing its 200 million customers as belonging to three groups: brand aspirationals, price-sensitive affluents and value-price shoppers.

The new categories are significant because for the first time, Wal-Mart thinks it finally understands not just how people shop at its stores, but why they shop the way they do, the newspaper reported.

Wal-Mart boasts of "Always low prices" and being home to the middle- to low-income shopper. But when the company turned its attention recently to a more upscale consumer by introducing a stylish line of apparel and home decor, the move flopped.

Same-store sales became sluggish, and Wal-Mart management conceded it made missteps and began talking about returning to basics. In a conference call while reporting fourth-quarter and full-year earnings Feb. 20, President and Chief Executive Officer Lee Scott praised the strong sales momentum of the fourth quarter, which benefited directly from the company's return to deep discounts across all categories.

"It's a reaffirmation of the proposition that's synonymous with Wal-Mart: saving people money so they can live better," Scott said in the call. "Sam Walton started our company in 1962 with this simple principle, and this is the mission that drives our strategy around the world today."

'SLUGGISH SALES'

It was an abrupt change from last year when Eduardo Castro-Wright, president of Wal-Mart Stores U.S. division, said the company would drive sales by trying to draw in "those customers who shop at Wal-Mart for basics, but don't see us as an alternative for home, apparel or electronics," according to Business Week.

Wal-Mart made no secret of trying to attract a more upscale consumer by introducing its Metro 7 apparel line and opening a pilot store in Plano, Texas that featured a redesigned format selling sushi and expensive wines, among other things.

But Wal-Mart's apparel and home sales were soft in 2006. Electronics sales were positive, but only because Wal-Mart slashed prices on hot items, Business Week said.

Toroian isn't sure that Wal-Mart just returning to basics will help.

"In my opinion, there is more competition for Wal-Mart now than before, which is the driver of sluggish sales. Merchandising issues, coupled with competitors who offer similar pricing and better merchandising, are the primary reasons I believe the company is suffering from sluggish sales," she said.

Art Turock, who heads a retail consulting firm in California and has followed Wal-Mart over the years, said one of the problems that comes with success is facing "limits to growth."

"Wal-Mart's success has come from serving core customers better than anyone else. The original Wal-Mart stores brought low-price consumable goods to budget-challenged families in rural America. There were no major chains competing for this customer in the early decades of Wal-Mart's history. In order to grow sales today, Wal-Mart is now embarking on new customer groups, including more affluent customers and those living in urban areas, groups who are already served well by excellent competitors," Turock said in an e-mail reply to questions submitted by The Morning News.

GOING AFTER MOM

Wal-Mart's store traffic in the United States has been falling for four quarters. Even the deep discounts the company offered in the fourth quarter failed to bring people into stores. Same-store sales for the quarter were up 1.3 percent, driven by an increase in the average ticket during the quarter, while customer traffic declined slightly, the company said in its fourth-quarter report.

Even Wal-Mart's usually thriving Sam's Club division seems to be unsure of its sales strategy. Greg Spragg, executive vice president of merchandising for Sam's, said recently that Sam's Club needed to focus more on "moms."

Studies show women make the majority of buying decisions and that's why "we have to be more relevant to mom," Spragg told investors at a Citigroup retail conference in Florida.

Spragg's comment seems to fly in the face of what Doug McMillion, president and CEO of Sam's Club, told journalists at a Wal-Mart media conference held in Northwest Arkansas last year. He said Sam's was going to refocus on its core customer, the small-business owner.

Asked to explain the seeming switch, Wal-Mart spokesman David Tovar told The Morning News that small business is still the foundation at Sam's Club and "we remain committed to serving these members."

"The female shopper controls a high percentage of household spending. She is also opening small businesses at an increased rate. We are simply thinking of her preferences and patterns as it relates to her behavior in the market," Tovar said.

Sales at Sam's Club stores open at least one year, a measure of a retailer's health, rose 2.9 percent in 2006, compared with a 4 percent gain a year earlier. In January, same-store sales rose 3.4 percent, compared with a 6.6 percent gain a year earlier.

"Sam's flip-flopping is reflective of Wal-Mart's U.S. business that is still trying to formulate a winning strategy for sustainable growth," Turock said.

LOW RATINGS

Wal-Mart also is dealing with more than its image as a low-price but upscale retailer. In late February, the University of Michigan released its annual American Customer Satisfaction Index, which showed that consumers' overall happiness with the goods and services they received during the fourth quarter of 2006 was the highest since the report began in 1994.

Wal-Mart, however, ranked at the bottom in customer satisfaction in the supermarket category. While supermarkets scored a 75 rating as a group, led by an 83 from Publix and impressive jumps by Safeway, Wal-Mart lagged the category with a 69, the survey reported. Tovar seemed to suggest that Wal-Mart's recent earnings report disputed the survey's results.

"Earlier this week, Wal-Mart announced record sales and profits for last year underscoring that Wal-Mart continues to be the shopping destination of choice not only in the U.S., but around the world," Tovar said about the year-end annual report Wal-Mart released Feb. 20.

Turock said Wal-Mart's low rating in customer service may be the result of the company's business model, which puts priority on low prices and one-stop shopping.

"The costs associated with earning high customer service ratings, especially providing product knowledge training, are too costly for this business model. Wal-Mart is counting on getting an accurate product assortment, largely of brands that are well known to shoppers, who come to Wal-Mart feeling assured of the lowest price," he said.

By The Numbers:

200 million: Estimated number of people who shop with Wal-Mart Stores Inc. each year.

75: Overall customer-satisfaction rating of all supermarkets according to the University of Michigan's annual American Customer Satisfaction Index.

69: The customer-satisfaction rating of Wal-Mart, the lowest rating of all supermarket operators.

Notable: "There are a number of strategies for Wal-Mart to embark on. Here are two: First, stick with the customers who've historically been fans of Wal-Mart over retail rivals, but address new needs of these core customers, such as expanding services ... or focusing more on niches within the budget-constrained shoppers. Second, Wal-Mart could expand into new industries, which have non-elastic pricing, high volume, and are efficient operators -- such as convenience or financial services. There are no easy answers." -- Art Turock of Turock and Associates in Seattle.

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TV ad implies threat to security from unlikely source: Wal-Mart

By Joe Malinconico,
New Jersey Star-Ledger
March 25th, 2007                                  [back to top]

The television advertisement starts with an ominous warning about 9/11. Then it shows a nuclear explosion, followed by a photo of Osama bin Laden and a ship loaded with cargo containers.

"Since 9/11, it is one of the greatest threats we face, a nuclear weapon in the hands of Osama bin Laden shipped through an American port," says the voice-over.

Finally, the ad reveals its villain: an outfit based in Arkansas that has a network of 1.8 million workers around the world who operate at 3,900 locations in the United States. Its corporate name is Wal-Mart Stores Inc.

What's the world's largest retail chain doing as the target of an apocalyptic television ad campaign that will begin running tomorrow in New York and other major U.S. cities?

Well, Wal-Mart happens to be America's largest importer of containerized cargo. It also has taken a definitive position in the ongoing debate on how best to protect the country's ports from terrorist attacks.

And a labor advocacy group, Wake Up Wal Mart.com, has seized upon that position to broaden its campaign against the retail chain's workplace practices to an entirely different arena.

"Wal-Mart. Profits first. America's security second," says the voice-over in the ad, which has already been posted on You Tube.com.

Wal-Mart spokesman Robert Traynhman said the ad was in "poor taste" and called it "an irresponsible attempt to avoid facts, play upon people's fears and disparage our company."

The ad focuses on the question of whether all cargo containers shipped to America should go through scanners before they leave foreign ports. Over the past year, there's been widespread disagreement among elected officials, security experts and commerce executives about the goal of 100 percent scanning.

Some say America's best chance at preventing terrorists from sneaking bombs into the ports is to require all cargo containers to go through radiation and imaging detection equipment overseas. Just two weeks ago, U.S. Sen. Robert Menendez (D-N.J.) convinced his colleagues to amend their 9/11 Commission Bill to require the Department of Homeland Security to come up with a plan for 100 percent scanning.

But others, including Homeland Security Secretary Michael Chertoff, have advised against prematurely making a commitment to scanning all cargo at foreign ports. They have argued that America ought to wait for the results from a pilot project starting this year at several foreign ports before setting deadlines for scanning all containers.

Wal-Mart, along with the Retail Industry Leaders Association, say they support 100 percent scanning "in concept," according to Traynhman.

"But it's our understanding that the technology is not ready," he said.

During the past year, trade groups also have warned that scanning all cargo would stall international commerce and hurt the country's economy.

At present, Homeland Security identifies high-risk cargo containers, based on information provided by shippers and other intelligence. A small percentage of those containers are examined by customs officers at foreign ports. Others undergo inspections after they reach terminals in the United States.

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Wal-Mart under fire on port security issue

By Clynton Namuo,
New Hampshire Union Leader
March 24th, 2007                                          [back to top]

KITTERY, Maine – Wal-Mart opponents launched a national campaign rapping the nation's largest retailer Thursday for lobbying against plans to screen all cargo coming into the United States.

Using the Portsmouth Naval Shipyard as a backdrop, officials called on Wal-Mart to support port security by backing checks of all cargo containers coming into the United States. Currently, about 5 percent to 6 percent of inbound cargo is checked, officials said.

"Profits should not come at the expense of security," Tom Carvalho of the United Food and Commercial Workers Local 1445 told reporters.

Thursday's news conference was part of a broader campaign led by anti-Wal-Mart Web site Wake Up Walmart.com, which organized similar kickoff events in 15 cities across the nation.

The site is also sponsoring television ads in 16 markets saying Wal-Mart's lobbying against increased port security could result in a nuclear bomb being shipped into the United States. The ad ends with the tag line, "Wal-Mart. Profits first. America's security second."

In a statement issued yesterday, Wal-Mart defended its stance and was highly critical of the ad.

"Wal-Mart is proud of our efforts to ensure a more secure supply chain, and we will continue to play a central role in defining real solutions to enhance cargo security," the statement said.

"This union-funded ad is in poor taste and an irresponsible attempt to avoid the facts, play upon people's fears and disparage our company and its 1.8 million associates worldwide. The 127 million Americans that shop our stores every week know that the UUCP's failing campaign is about politics and nothing else."

Manchester and Des Moines, Iowa, are included in those 16 markets, a play for attention in the upcoming Presidential elections, union officials said. The ad, along with a bevy of other material critical of Wal-Mart, can be viewed at the group's Web site.

Carvalho said yesterday Wal-Mart was singled out because it is the nation's largest retailer, with one of its containers coming into the country every 45 seconds, and not because of past grievances.

"We're not here to stick a stick in Wal-Mart's eye," he said. "We're here to make them a responsible corporation."

Others said Wal-Mart's size and influence holds so much sway in Congress that they hope changing the company's direction would lead to an increase in port security.

"When you're in the fight, you pick the biggest dog," said Paul O'Connor, president of the Metal Trades Council, the shipyard's largest union, with about 2,500 members.

U.S. Rep. Carol Shea-Porter, R-N.H., also offered a statement of support.

"We live in a dangerous world, and leaving 95 percent of containers unscanned makes it even more dangerous," the statement said. "For example, the unsecured nuclear material in the former Soviet Union could be purchased by terrorists and end up in a container bound for one of our major ports.

"It's the responsibility of all Americans -including our corporate citizens - to protect the public from such nightmare scenarios. Indeed, it's our and their patriotic duty."

Maine Democratic Congressman Tom Allen also sent a representative in a show of support.

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You can leave Wal-Mart with almost anything but your soul

By Hanna Ricketson,
The State Press
(Arizona State University)
March 23rd, 2007                                      [back to top]

As a freshman, I would soothe my periodic bouts of homesickness by finding the nearest Wal-Mart and wandering its aisles.

I would be comforted by the familiarity of the store - the $5.50 movie bin that rarely holds anything worth watching and the giant wire tower of bouncy balls that is perpetually being prodded by a number of small children.

A Wal-Mart in Arizona is pretty much like a Wal-Mart in Arkansas, although I lived in a dry county, so mine never sold alcohol, which I tend to forget and become baffled by when I visit my home state.

There are things I like about the store: the fact that you can buy a mop, a CD, a paperback and Nutella in one stop, for instance, and that you can buy all those things for low prices.

But at the same time that I appreciate those attributes of Wal-Mart, I'm also freaked out by the sheer vastness of its empire. Wal-Mart employed approximately 1,800,000 people worldwide as of January 31, 2006.

At the same time, the company was operating 3,856 domestic stores, and a further 2,285 in other countries, for a total of more than 6,000 stores.

All this since Sam Walton opened a Ben Franklin variety store in Arkansas in 1945. In just over 62 years, Wal-Mart (itself not incorporated until 1969) has become the largest retailer in the world, and it doesn't show any signs of slowing down.

The company's dominance is one of the reasons I very much understand recent outrage over some of Wal-Mart's practices.

The United States' Attorney's Office and the FBI are both looking into a recent scandal wherein a Wal-Mart technician allegedly intercepted text and pager messages and taped telephone calls between Wal-Mart employees and a New York Times reporter over several months.

Another recent development has Wal-Mart first applying for a banking charter, then quickly withdrawing its application amid a firestorm of criticism from banks nationwide.

Wal-Mart claims the charter's purpose was to allow the company to internally process debit and credit transactions, which would pass savings on to consumers.

Bankers worried that Wal-Mart would soon branch into consumer banking, an understandable concern given the company's history of expansion and domination. Despite the retraction of the charter application, Wal-Mart claims it still plans to work with its partners to provide new services like mortgages and loans.

And I still haven't forgotten the Kathie Lee clothing line controversy of 1996, when the National Labor Committee reported the clothes (sold in Wal-Mart stores) were made in sweatshops. Wal-Mart's touch is felt around the globe, and this is what freaks me out.

It may be paranoid and Orwellian, but I can envision a terrifying world where every service is provided by Wal-Mart, and Wal-Mart alone.

Once they conquer the banking industry, driving other chains out of business the same way they did the mom and pop store, it's not such a stretch to see them controlling the automobile industry.

Then it's on to oil, and if they've got oil, they've got everything.

As much as I like Nutella and paperbacks, I can find them both elsewhere, in stores where I feel like I'm allowed to leave with my soul intact.

The store is a nice place to visit. It continues to remind me of home and comfort me. But I don't buy anything anymore, because I definitely don't want to live there.

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Wal-Mart: Thanks for the Bonuses, But...

By Pallavi Gogoi ,
Business Week
March 23rd, 2007                              [back to top]

Store workers are glad for the extra cash, but critics say the bonuses don't make up for the retailers' track record of poor compensation

There's going to be a few extra beers going around at Rosetta Brown's home in Chicago tonight. The hardworking 45-year-old mother of five just got her $616 bonus check from Wal-Mart Stores, her highest annual payout since starting work there nine years ago. The best part is that her husband, Robert Ollison, a custodian at the nearby Wal-Mart store, also got a bonus of $1,935. The couple hopes to use the money for a down payment on a new car. Brown, and 1 million of Wal-Mart's hourly workers, will for the first time in the company's history also be eligible for quarterly, rather than the annual so-called My$hare, bonuses. "We hope that this will help increase performance, which will directly impact business results and help retain our employees," says Sarah Clark, a spokeswoman for Wal-Mart. Wal-Mart says it awarded $529.8 million in bonuses on Mar. 22 to a total of 813,759 Wal-Mart and Sam's Club hourly workers in the U.S—80% of its 1.04 million hourly workers. The retailer employs 1.34 million people in the U.S.

Too Little, Too Late?

Bonuses are based on the performance of each store. Workers receive the check if their stores meet targets for sales, profits, and inventory turns. Some employees receive bonuses of thousands of dollars, others get nothing. In addition, the 13,400 workers who have worked at Wal-Mart for more than 20 years are rewarded with one week's extra pay.

Still, some of the employees' happiness was tinged with a little irony. Cynthia Murray, who works at the Wal-Mart store in Lauren, Md., says the store needs to give back to its associates and that the $1,000 deposit in her bank account is the best bonus that she has seen in her seven years of employment there. "But they should reinstall the merit raises for people who have worked there for many years and make health care more affordable," says Murray, referring to the salary caps the company installed a few months ago.

Murray, 50, doesn't have health-care coverage because she can't afford it. In her area, Wal-Mart's cheapest plan costs $30 per pay period with a $1,000 deductible. "It's a waste of money to pay for a plan that you can't even use," says Murray.

Critics Aren't Satisfied

Wal-Mart has come under increasing attack in recent months from politicians including Presidential hopefuls Senator Barack Obama (D-Ill.) and former Senator John Edwards (D-N.C.) because of its low pay and benefits. Many politicians and labor groups have called on the company to improve its labor relations. While Wal-Mart says the bonuses are unrelated to criticism, most outsiders see the changes as part of an effort to tamp down the attacks. Wal-Mart says these initiatives are part of the "associates out in front" effort it launched last year to make Wal-Mart a better place to work.

Wal-Mart's critics say they aren't impressed by the employee bonuses. They point out that in contrast to the $650 that workers received on average, Chief Executive Lee Scott received a $3.94 million bonus for the fiscal year ended in January, 2006, part of a total compensation package of $15.7 million, excluding restricted stock awards. (The 2007 proxy hasn't yet been released.) "Wal-Mart values are so misplaced that it gives executives hundreds of millions in bonuses and then mere crumbs to associates who have had their hours cut, salaries capped, and affordable health care eliminated," says Chris Kofinis, spokesman for Wake Up Wal Mart.com, a union-backed group that has long been critical of the retailer.

The bonus program was originally started in 1986 by Sam Walton to give workers a way to share in the company's success. And even though many employees won't get a raise this year, the bonus check goes a long way. Across the country, Wal-Mart employees celebrated as the checks were handed out. At the Rogers (Ark.) store that met some of the inventory goals, the management staff celebrated by setting up an impromptu grill at the back of the store and cooking steaks and chicken for the staff. "The bonuses can give us a little extra money to spend on luxury items," says Larry Ferguson, 60, a full-timer who sells DVDs and music at the store.

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Wal-Mart, unions face off on port security

Protesters bring attention to port security in front of Rash Field by the Inner Harbor on Thursday.

By Dave Carey,
Baltimore Examiner
March 23rd, 2007                         [back to top]

BALTIMORE - The United Food & Commercial Workers International Union wants nothing less than 100 percent.

Working through one of its national campaigns, WakeUpWalMart.com, the group wants to hold Wal-Mart accountable for its business actions. At the Inner Harbor on Thursday the local 27 chapter of the UFCW, along with WakeUpWalMart.com, took Wal-Mart to task for the mega-retailers stance on a piece of port security legislation in Congress.

The groups, joined by the Maryland chapter of the American Federation of State, County and Municipal Employees, voiced displeasure with Wal-Mart’s opposition to a bill that would require security to check 100 percent of the containers that come through the port.

“There has to be tighter and better security,” said Brian Nesbit, organizer of the Baltimore rally for the UFCW Local 27. “We have an opportunity to make sure that we have secure ports and to take care of them.”

Wal-Mart, which spent more than $760 million in Maryland during 2006, views the UFCW’s attack through both advertisements and news conferences nationwide as unwarranted.

As of February, Bentonville, Ark-based Wal-Mart employed more than 15,650 people in Maryland.

“Wal-Mart is proud of our efforts to ensure a more secure supply chain and we will continue to play a central role into finding real solutions to enhance cargo security,” Wal-Mart spokesman Robert Traynham said. “This union-funded ad is in poor taste and an irresponsible attempt to avoid facts, play upon people’s fears and disparage our company and the 127 million Americans that shop our stores every week.”

Port officials view the issue as being one that will require both sides, and the legislature, to find a common ground.

“We are in favor for as high a percentage as practical, but the key is finding the right balance between effective and efficient trade and security and that balance is critical so to not negatively impact the flow of commerce,” port spokesman Richard Scher said.

By the end of April, the Port of Baltimore expects to be screening 100 percent of its incoming containers for radiation or radioactive materials.

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Wal-Mart blasted

By Chris Quartarone,
Portsmouth Herald News
March 23rd, 2007                               [back to top]

PORTSMOUTH NAVAL SHIPYARD "" On average, one Wal-Mart cargo container enters the United States every 45 seconds, and local activists are saying the government practice of checking only 5 percent of them is not enough.

Local civic leaders and members from the activist group WakeUpWalMart have called for Wal-Mart, the No. 1 importer of port containers in America, to "help stop the next 9/11" and reverse its lobbying efforts against 100 percent scanning of port containers. Activists claim the chain's actions are helping to keep America's ports and cities vulnerable to a possible terrorist nuclear attack.

A news conference was held at the Portsmouth Naval Shipyard Wednesday to announce a campaign against the retail giant.

"Wal-Mart has a simple choice to make," said Jim Carvalho, a member of WakeUpWalMart and a political representative from United Food and Commercial Workers. "What is more important "" Wal-Mart's profits or America's security? Sadly for Wal-Mart, we know the answer is profits first and America's security second."

Carvalho said WakeUpWalMart held the news conference at the shipyard because yard workers are similar to those working at ports around the country that are at the most risk.

He said he believes Wal-Mart is worried additional container scanning will decrease profits.

"Even if it cost $100 to scan each container, it would only raise the cost of the goods inside by .2 percent," he said.

In itscampaign to get 100 percent of port containers checked, WakeUpWalMart.com has launched a new television ad critical of the store.

Wal-Mart spokesman Robert Traynham disagreed with Carvalho's group.

"This union-funded ad is in poor taste and is an irresponsible attempt to avoid the facts, prey upon people's fears and disparage our company," he said.

Traynham said customers will know "this is a desperate campaign that is rooted in politics and nothing else."

The U.S. House of Representatives has passed H.R. 1 (implementing the 9/11 Commission Recommendations Act of 2007), which would require 100 percent scanning of cargo containers bound for the United States. The U.S. Senate is currently debating its version of the 9/11 bill.

Kyle Noonan, assistant communications director for Maine Congressman Tom Allen, attended the rally, saying Allen "will continue to be a strong ally for 100 percent scanning of port containers."

Dudley Dudley, district director for Congresswoman Carol Shea-Porter, read a letter on Shea-Porter's behalf that "currently the technology does exist for scanning 100 percent of port containers."

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Ad accuses Wal-Mart of stifling port security

By Steve Painter,
Arkansas Democrat-Gazette
March 23rd, 2007                                    [back to top] 

A union-funded anti-Wal-Mart group debuted a television commercial Thursday charging the world’s largest retailer with blocking efforts to make ports more secure.

Wal-Mart and a business lobbying group it works with, the Retail Industry Leaders Association, said the allegations by Wake Up Wal Mart. com are baseless.

The group and its commercial contend that Wal-Mart is the major force blocking use of scanning equipment on all incoming containers to guard against terrorist deployment of nuclear weapons. The 30-second spots feature the images of Osama bin Laden, leader of the al-Qaida terrorist organization, and a mushroom cloud resulting from a nuclear explosion.

The company is singled out because “Wal-Mart is RILA for all intents and purposes,” Chris Kofinis, spokesman for Wake-Up Wal Mart. com, said in an interview. He said the organization is blocking efforts to scan all incoming ship containers for nuclear weapons. “This is probably one of the most important issues the country faces,” he said. “We are putting our heads in the sand and not realizing how important this is.”

Kofinis said the group will spend “six figures” to begin airing the commercials Monday in Baltimore; Charleston, S. C.; Houston; Philadelphia; Kansas City, Mo.; St. Louis; New York City; Savannah, Ga.; Des Moines, Iowa; Manchester, N. H.; Mobile, Ala.; Carson City, Nev.; Detroit; San Jose, Calif.; Niagara Falls / Buffalo, N. Y.; and Tulsa.

Wal-Mart spokesman Robert Traynham said the company is working with the federal Department of Homeland Security and is not blocking the move toward scanning equipment. “This union-funded ad is in poor taste and an irresponsible attempt to avoid the facts, prey upon people’s fears and disparage our company,” he said. The Retail Industry Leaders Association, whose membership includes several large retailers in addition to Wal-Mart, supports a law that took effect in October that requires scanning of shipping containers at three foreign ports as a pilot project, said Al Thompson, the organization’s vice president for global supply chain policy. The results of the project should be evaluated before more mandates are added, he said.

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Wal-Mart view on cargo inspections draws fire

By Meredith Cohn,
Baltimore Sun
March 23rd, 2007                          [back to top] 

A union-backed activist group called yesterday for Wal-Mart Stores Inc. to drop opposition to the inspection of all cargo containers that come through U.S. ports for bomb-making materials.

Wake Up Wal-Mart, which has long targeted the giant retailer's pay and benefit policies, held news conferences in 15 cities yesterday to unveil a new television ad and draw attention to one of the nation's largest importers.

The group does not represent port or Wal-Mart workers, although the union backers have sought to organize the retailer's work force.

"Tighter security benefits everyone," said Brian Nesbit, a local coordinator for Wake Up Wal-Mart and an organizer for the United Food and Commercial Workers Union. "The port is obviously an exposed avenue for potential terrorist activity."

A Wal-Mart spokesman said the company does not oppose 100 percent scanning of containers, but it joined with other industry officials who have said that they don't believe the technology yet exists to do it efficiently.

"Wal-Mart is proud of our efforts to ensure a more secure supply chain, and we will continue to play a central role into finding real solutions to enhance cargo security," said spokesman Robert Traynham.

"This union-funded ad is in poor taste and an irresponsible attempt to avoid facts and play upon people's fears and disparage our company. The 127 million Americans that shop at our stores every week know this is a campaign rooted in politics and nothing else."

In December, the Department of Homeland Security said it would begin screening for nuclear and radiological material in containers at six foreign ports before they leave for the U.S.

The pilot program, based on one operating in Hong Kong, will affect just 7 percent of the 11 million containers that enter U.S. ports annually, but officials hope to expand the program if global companies like Wal-Mart, governments and others embrace it.

The containers, 20- to 40-foot- long metal boxes, hold many of the items typically sold by American retailers such as electronics, furniture, toys and clothes.

In a separate move yesterday, Wal-Mart publicly disclosed that it would pay $529.8 million in bonuses to 813,759 full and part-time workers at Wal-Mart and Sam's Club stores in the U.S.

The payments average $651, the company said. It was the first time in more than a decade of giving the bonuses that the discount retailer, which is under pressure to boost employee wages and benefits, has made the information public.

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Wal-Mart Takes Control of Landslide Site

Associated Press
March 23, 2007                            [back to top]

PITTSBURGH (AP) - Wal-Mart has taken control of its portion of a proposed shopping complex where a massive landslide occurred last year, the retail chain announced.

In a statement Thursday, Wal-Mart said it was "immediately assuming full operational control" of the property in Kilbuck Township, relieving the developer, ASC Development and its subsidiary, Kilbuck Properties Inc.

Wal-Mart plans to stabilize the site where a Sept. 19 landslide sent rock, dirt and debris onto Route 65 and some nearby Norfolk Southern rail lines. The road, used by about 22,000 motorists daily, was closed for two weeks. One lane still remains closed.

Wal-Mart owns 80 percent of the property just west of Pittsburgh.

The state Department of Environmental Protection in January fined the developer $470,000 for failing to properly stabilize the 75-acre site. The developer vowed to fight the fine.

The department said Thursday Wal-Mart had notified the state about taking control of the site.

"The department reiterated to Wal-Mart that only work related to ensuring permanent stability of the site will be considered," according to a DEP statement.

Any future development plans would have to be proposed to the state through new permit applications, the department said.

A message left after business hours Thursday at ASC Development was not immediately returned.

© 2007 The Associated Press. All rights reserved.

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Wal-Mart's Neighborly Approach In Landover Hills

Retailer Tries to Fit In

By Ylan Q. Mui
Washington Post 
Saturday, March 24, 2007                    [back to top]

The new Wal-Mart in Landover Hills doesn't sell alcohol or guns. It does have skylights to cut down on energy use. It does not operate 24 hours.

Such concessions were unheard of at Wal-Mart's cookie-cutter stores several years ago. But they are just a few of the compromises the world's largest retailer reached with Prince George's County residents and community leaders concerned about the store's impact on the neighborhood.

It's a new way of doing business for the company, whose hopes for domestic growth lie in conquering urban areas such as Landover Hills, where it has faced strong opposition from labor unions and small businesses. The store symbolizes how far Wal-Mart was willing to go to gain a foothold inside the Beltway.

The battle mirrors those that occurred in other big cities, like Chicago, when Wal-Mart tried to move in. Mom-and-pop stores worry that they will be unable to compete with Wal-Mart's cutthroat prices. Labor organizations fear the non-unionized retailer would depress wages and benefits in the region. Political leaders are divided between the jobs that a Wal-Mart brings -- more than 11,000 people applied for the 330 jobs in Landover Hills -- and the concerns of their constituents.

"People are not convinced at this point," said Adam Ortiz, mayor of nearby Edmonston, who helped negotiate with Wal-Mart. "Some are very excited. Some aren't sure if this new approach is for real."

Wal-Mart was founded by Sam Walton as a five-and-dime store in Bentonville, Ark., where it still keeps its headquarters. It grew into a national powerhouse by flooding rural areas with huge stores and low prices on everyday goods. But as Wal-Mart has saturated the country, sales growth has slowed. At U.S. stores open at least a year, sales grew 0.4 percent in February compared with last February.

The Wal-Mart name was the most recognized among a list of 15 major companies in a 2005 survey by the Pew Research Center. Ninety-one percent of people responding to the survey said they lived within shopping distance of a Wal-Mart, and 84 percent had been to a store in the past year.

Wal-Mart has become a victim of its own success.

Urban areas are the country's last frontier for the retailer, though they can be fraught with peril. Wal-Mart's first store in Chicago triggered racial tensions and prompted a heated political debate over a living-wage bill aimed at the retailer. The Landover Hills store is particularly significant because of its proximity to the nation's capital, where Wal-Mart has become an influential lobbyist.

Wal-Mart promised that this store would be different. Merchandise is tailored to the area's demographics. There are expanded gospel and Latino music sections, where a CD by 3 Gallos Jugados sells for $9.96. The store carries Wal-Mart's urban apparel line, Exsto, but scaled back the fishing equipment in the sporting-goods department.

"We have worked very closely and very well with the Landover Hills community to build this store," company spokesman Steven Restivo said. "We have worked hard to meet their needs -- and will continue to do so."

Wal-Mart spent nearly two years negotiating with residents and community groups to adopt nine standards covering what it can sell (no alcohol, guns or ammunition) and how the store would be built (an earth-tone facade and environmentally friendly). Wal-Mart also agreed to meet regularly with local leaders to check on the store's progress and address new problems.

The retailer also designated Landover Hills one of 10 "job and opportunity zones" in or near major U.S. cities. Under the program, Wal-Mart said, it will pay for local newspaper ads for five small businesses and allow them to advertise on its in-store radio network. The retailer said it would provide hundreds of thousands of dollars in grants to the community.

Yet details of the program and how it will work in Landover Hills remain hazy. Wal-Mart said it was partnering with the Prince George's County Chamber of Commerce to identify interested businesses. James A. Dula, head of the Prince George's chamber, said he was still in talks with Wal-Mart on the types of businesses they are looking for and did not know when the program would begin.

Dula said he received positive feedback from local businesses at a meeting last week. He said many hoped Wal-Mart would increase traffic the area. The store is on the site of the former Capital Plaza Mall, once occupied by a Montgomery Ward's department store and Hechinger. Now, McDonald's and an outpost of Chevy Chase Bank flank the new store.

"They see Wal-Mart as bringing people to the area," Dula said. "If people come to the area and discover the beauty of their area, they'll start shopping at their stores as well."

Mary Nam has operated the tiny 7 Market on Annapolis Road for almost 22 years. The new Wal-Mart is less than a mile from her store, but she was not worried that it would affect her business. Many of her customers walk to the store to buy bags of chips and sodas, rather than the bulk goods that Wal-Mart sells, she said. But Nam is hoping that Wal-Mart will give her main competitor, the Save-a-Lot across the street, a run for its money.

"I'm happy," she said of Wal-Mart's arrival, adding that maybe Save-a-Lot would close down. "They hurt my business."

But Jim Biedlingmaier, owner of Bill's Hardware, said he had resigned himself to losing customers to Wal-Mart. It happened after Lowe's came to town and after Home Depot opened. Wal-Mart is just the latest big box to invade the area, and Biedlingmaier said he was ready.

"We've never tried to compete with the big guys," he said. "We sell service here, and knowledge."

Biedlingmaier said the national chains have forced him to move into specialty niches, such as the Cajun Injector, which injects spices into poultry. He has also expanded with cast-iron cookware and plumbing-repair parts. He has noticed that his store is busiest now on Saturday afternoons, after shoppers have been to the big-box stores and been unable to find what they wanted.

Ortiz, the Edmonston mayor, said other residents and businesses were waiting to see whether Wal-Mart kept its promises. The store is already exerting its magnetic force, drawing several hundred shoppers in the four hours after it opened Thursday.

"Wal-Mart was coming to our area, like it or not," Ortiz said. "Our goal was to engage them to bring the best possible Wal-Mart."

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Ads Target Wal-Mart on Container Screening

By Kris Hudson,
Wall Street Journal
March 22nd, 2007                     [back to top]

DALLAS -- A union-backed group on Thursday began airing a commercial in 16 U.S. cities alleging that Wal-Mart Stores Inc. does not support comprehensive scanning of cargo containers at U.S. ports.

Wake Up Wal Mart.com, operated by the United Food and Commercial Workers union, accuses Wal-Mart and the Retail Industry Leaders Association trade group in the 30-second television spot of lobbying against legislation to scan all incoming port containers.

Such scanning, the ad says, would "help stop the next 9/11" by avoiding the scenario of "a nuclear weapon in the hands of Osama bin Laden, shipped through an American port." The ad incorporates visuals of Mr. bin Laden, regarded as the mastermind of the Sept. 11 terrorist attacks, and a nuclear mushroom cloud.

Wal-Mart, Bentonville, Ark., disputes the union ad's allegations but does not plan to counter the offensive with its own ads. "The union-funded ad is in poor taste and an irresponsible attempt to avoid the facts, play upon people's fears and disparage our company," said Robert Traynham, Wal-Mart's director of federal media in Washington, D.C.

Mr. Traynham denied that Wal-Mart has lobbied against screening of all containers at U.S. ports. "In theory, we support 100% scanning of cargo coming into this country," he said. "It becomes an issue of how do you do that in terms of manpower and from a funding standpoint? But we do support it."

The container-screening provision is among several security-tightening measures contemplated in legislation now being molded in conference after the House and Senate in recent weeks passed differing bills on the matters. The House measure would require radiation screening of all incoming containers at U.S. ports. The Senate version would not.

The UFCW's Wake Up Wal Mart.com has spent a sum "in the six figures" to produce and air the ads, spokesman Chris Kofinis says. Rarely short on hyperbole, the group in a release issued Thursday accused Wal-Mart of the opposition lobbying it denies. "As the leading opponent of 100% scanning and as the nation's largest importer of containers, Wal-Mart has a moral responsibility to stop its lobbying campaign and join with us, the American people, and our elected leaders to help stop the next 9/11," Wake Up Wal Mart.com campaign director Paul Blank said in the release.

The Retail Industry Leaders Association, a group of major retailers, released a statement pointing out that its members already are helping the Department of Homeland Security study port security as part of legislation passed last year. It added that technology for 100% scanning is not yet ready for use in foreign ports.

Wal-Mart, the world's largest retailer by sales, posted sales of nearly $345 billion and a net of nearly $11.3 billion in its fiscal year ended Jan. 31.

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Critics launch 'terror' attack ads against Wal-Mart

New ad says retailer's opposition to full cargo screening could aid bin Laden; Wal-Mart calls ad 'inaccurate.'

By Parija B. Kavilanz,
CNNMoney
March 22nd, 2007                       [back to top]

NEW YORK (CNNMoney.com) -- A new TV ad from Wal-Mart critic WakeUpWalMart.com features images of a nuclear explosion and Osama bin Laden to suggest that the retailer is putting America's security at risk by opposing scanning of cargo containers at the nation's ports.

The 30-second ad, due to begin airing this week in 16 cities, claims that Wal-Mart's opposition to 100 percent screening "leaves America's ports and cities vulnerable to a terrorist nuclear attack."

The spots, entitled "America's risk," are to air in New York, Houston, Baltimore, Philadelphia, Detroit, San Jose, Calif., and other markets, the union-backed group said.

The campaign is meant to pressure Wal-Mart (Charts), the world's largest retailer and the nation's biggest importer, to "help stop the next 9/11" and reverse its lobbying effort against 100 percent scanning of cargo containers, the group said.

Wal-Mart spokesman Robert Traynhman said the ad's claims were "factually incorrect."

Asked if the company opposes 100 percent screening, Traynhman said, "We are proud of our efforts to ensure a secure supply chain and Wal-Mart continues to play a leading role to enhance cargo security."

He said the ad was in "poor taste" and called it an "irresponsible and desperate attempt to avoid the facts and play upon people's fears and disparage our company and its 1.8 million associates."

Traynhman did not specify how the company would respond, but said Wal-Mart "was exploring all of its options."

The ad's voiceover starts saying, "One of the greatest threats we face since 9/11" is terrorists like Osama bin Laden acquiring nuclear weapons and shipping them into the United States for a terrorist attack. Its opening images are of bin Laden and a nuclear explosion to suggest the catastrophic consequences if port security fails.

The group said the ad can be viewed on its Web site and on YouTube.com.

Wal-Mart remains a lightning rod for groups like WakeUpWalMart.com and Wal-Mart Watch that have attacked the company over its pay, hiring and healthcare policies.

For its part, Wal-Mart has initiated some reforms over the past year. The company has cut by half the waiting time for its part-time workers to get health insurance. On Tuesday, the company announced anew bonus plan for its workers. The retailer has also taken steps to become more environmentally friendly.

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Activists Target Wal-Mart's Stance On Screening Of Port Containers

By AP and WCSH News
March 22nd, 2007                        [back to top]

Wal-Mart came under fire Thursday in Kittery and 14 other locations around the country for what critics say is its lobbying effort in opposition to 100% screening of port containers.

The group "Wake Up Wal-Mart.com" says Wal-Mart is trying to compromise national security. The group says Wal-Mart doesn't want to pay the $50 per container that a new system would cost.

"Right now, we're asking all Americans to let Walmart know that this is unacceptable," said Union organizer Jim Carvalho. "We're asking people to let them know that they should stop their efforts to restrict screening at ports and put America's security first and put their profits second."

Wal-Mart has stated that the technology is not yet workable, and that the law would disrupt the nation's supply chain. A spokesman said the union-funded add was "about politics and nothing else."

The national campaign includes a 30-second TV spot that features images of the threat posed by Osama bin Laden, a nuclear explosion and the risk arising from Wal-Mart's opposition to 100% scanning.

That ad is scheduled to run in the Manchester, New Hampshire market, but not in Maine.

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Wal-Mart grabs Reliance Retail's top execs

domain-b.com
22 March 2007                     [back to top]

New Delhi: Two top execs from Reliance Retail have joined Wal-Mart, Bharti's retail partner, leading to another round of hectic movements in the country's emerging retail sector.

Bharti and Reliance signed a "no-poaching" agreement last week.

S Ramesh, the head of buying operations at Reliance Retail has quit to join Wal-Mart as head of sourcing operations while Abhinandan Shukla, in charge of confectionery, is also learnt to have quit and headed for Wal-Mart.

Those who have received offers at Wal-Mart say that apart from the 30 pc flat hike over existing remuneration packages, Wal-Mart is also throwing its five-day-work schedule as a bait to lure talent which Indian retailers cant' match.

S Ramesh was initially heading Wal-Mart's sourcing office in Bangalore and played a role in increasing Wal-Mart's sourcing from India, which currently stands at around $650 million.

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Wal-Mart Opens First Store Inside the Capital Beltway Near Washington, D.C.

PRNewswire News
March 22, 2007                                  [back to top]

Store receives more than 11,000 applications for 330 jobs

LANDOVER HILLS, Md., March 22 /PRNewswire-FirstCall/ -- At 12 noon today, Wal-Mart WMT opened its first store inside the Capital Beltway in Landover Hills, Md. The store is located in the Capital Plaza shopping center at 6210 Annapolis Road, just a few miles from Washington, D.C. More than 11,000 applications were received for the 330 new jobs at the store.

Related newsWal-Mart Publicizes BonusesStocks Decline Amid Inflation ConcernsBeazer Homes a Big Mover on Wall StreetWal-Mart May Never Enter ManhattanOil Prices Rise Above $64 a Barrel "This store is an example of what working families need and Wal-Mart provides -- good jobs and affordable, quality merchandise that helps everyone live better," said Wal-Mart President & CEO, USA, Eduardo Castro-Wright. "In so many ways and for so many people, by opening these doors today, we are opening the door to economic opportunity."

In an effort to meet the specific needs of the community, the Landover Hills Prince George's County store will feature products that meet the specific needs of the surrounding community, including expanded selections of Hispanic foods, a larger than usual high-tech electronics department with expanded selections in Gospel, Latino and R&B music, and a sports department highlighting games and equipment popular in the area. Outside the store, Wal- Mart representatives met with local school representatives to create an Adopt- a-School program matching Prince George's County stores with local schools. The new Landover Hills store will partner with Port Towns Elementary School in this effort.

"There are many people who have counted the days and hours to our opening, and we want to thank a very professional team of inspectors, the county and community leaders for their full support in helping us meet the necessary approvals expeditiously," said Don Frieson, Wal-Mart vice president and regional general manager. "The Landover Hills Wal-Mart is a true example of our focus to be store of the community by listening to our community members, focusing on customer needs and embracing community involvement. We are proud of the road to success here in Prince George's County and will continue to keep our doors open to future opportunities that make a positive impact for Landover Hills, including working with other area businesses."

Landover Hills was recently selected as one of Wal-Mart's 10 "Jobs and Opportunity Zones" across the country. As part of the initiative, the new store will partner with local businesses and organizations to generate economic opportunity in Prince George's County.

"The fact that there were approximately 30 applicants for every available job underscores the need and interest for local employment opportunities," said Dr. James A. Dula, president & CEO of the Prince George's Chamber of Commerce. "We welcome this new Wal-Mart to the county."

The average wage at Wal-Mart for a full-time hourly associate in the state of Maryland is $10.26 per hour.* Every Wal-Mart associate can become eligible for health coverage, including access to plans that cost as little as $23 per month. This includes both full-time and part-time associates. It also includes their children, who can get coverage starting at less than 50 cents per day, no matter how many children an associate may have.

There are two other Wal-Mart stores in Prince George's County -- one in Bowie and another in Clinton. Just as the new Landover Hills store will partner with Port Towns Elementary School, the Bowie store has partnered with Kenilworth Elementary, and the Clinton store has adopted Stephen Decatur Middle School.

The new store's Capital Plaza location formerly housed a Montgomery Ward and Hechinger's until 1999 and 2000, respectively, and several smaller stores on short-term leases. To meet the unique needs of this community, Wal-Mart worked with local leaders on the store's architectural design and landscaping. The company also made a special commitment to the community that public safety would be a key priority for the store, for instance, by implementing a state- of-the-art security system.

Store Showcases Sustainable Features and Time Saving Services

Elements of the new store showcase Wal-Mart's commitment to sustainability. It has concrete floors made with recycled fly ash content and skylights in the roof to enable daylight harvesting, which can completely eliminate interior sales lighting during sunny days. In keeping with the company's commitment to making sure customers do not have to choose between sustainable products and products they can afford, merchandise such as Baby George organic cotton clothing will be available. The store also will use light emitting diode (LED) lighting in its jewelry and freezer cases, and has a compact fluorescent light bulb display case to educate customers on the environmental and economic benefits of using high-efficiency bulbs.

Designed for convenient one-stop family shopping, the new 144,300 square- foot Wal-Mart store features various general merchandise departments including family apparel, health and beauty aids, dry goods food, electronics, household needs, party supplies and crafts, toys, lawn and garden supplies, jewelry and shoes. In addition, the store offers time saving conveniences such as a Tire & Lube Express, a pharmacy, and a one-hour photo lab. Leased spaced areas around the store contain a portrait studio, a nail salon, and a Subway restaurant.

It will be open to customers from 6 a.m. to 10 p.m. seven days a week and will include 14 full-service and six express check-out lanes. A grand opening celebration will be forthcoming.

Store Opening Provides $37,500 in Community Grants

The store has announced $37,500 in donations to a number of community- based organizations. Monies were given to support a variety of local causes including economic development, education and human services. The store will have a budget to give donations throughout the year. Groups receiving donations upon the store's opening include:

-- The Collective Banking Group

-- The Prince George's County Community Foundation

-- Hoop Dreams Scholarship Program

-- The Bladensburg Senior High School Marching Band

-- The Mission of Love Charities

Wal-Mart's Economic Impact in Maryland

As of February 2007, Wal-Mart employed 15,670 associates in Maryland. Including the newest Wal-Mart store in Landover Hills, the company currently owns and operates the following facilities in the state of Maryland:

-- Wal-Mart Supercenters: 9

-- Wal-Mart Stores: 32

-- Sam's Clubs: 12

-- Distribution Centers: 2

Wal-Mart generated more than $120.4 million in state sales taxes in 2006 and paid more than $16.8 million in state and local taxes that same year. In FY 2006, Wal-Mart spent $746,933,375 with 620 suppliers in the state, supporting more than 29,000 supplier jobs.

Copyright 2007 PRNewswire

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Wal-Mart Announces Bonus Plan for Store Workers

By REUTERS
March 22, 2007                         [back to top]

NEW YORK (Reuters) - Wal-Mart Stores Inc. (WMT.N) announced new initiatives on Thursday to recognize performance and service among its employees, including a bonus plan to recognize store workers who have been with the company for 20 years or more.

The company also said it awarded more than $529.8 million in bonuses to 813,759 hourly associates from its U.S. Wal-Mart and Sam's Club stores on Thursday, a day it is calling Associate Celebration Day.

The world's largest retailer said it employs more than 13,400 hourly workers with 20 years or more of service.

Store associates and assistant managers with 20 or more years of service will get an extra week of pay under the new Servant Leadership bonus plan.

Wal-Mart also said it would reward employees who provide outstanding customer service with a cash bonus. That plan will begin in mid-summer.

Union-backed groups like WakeUpWalMart.com and Wal-Mart Watch have launched grass-roots campaigns to draw attention to what they regard as poverty-level wages, inadequate health-care benefits and other issues at Wal-Mart.

All Wal-Mart hourly full- and part-time store employees are eligible for annual ``My$hare'' bonuses, which are allocated based on store performance. The company said these bonuses will now be distributed quarterly, rather than annually, so that workers are rewarded more frequently.

Wal-Mart, which is based in Bentonville, Arkansas, was not available to provide additional comments about the plan on Thursday morning.

Copyright 2007 Reuters Ltd.

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Wal-Mart publicizes bonuses

By MARCUS KABEL
The Associated Press
March 22, 2007                       [back to top]

Wal-Mart made its annual bonus for store employees public for the first time in two decades Thursday, saying that about 80 percent of hourly workers in its stores would split more than a half-billion dollars.

Wal-Mart Stores Inc. is the target of union-backed critics who decry its pay and benefits. The Bentonville, Ark.-based retailer said it was making the bonuses public as a new way to honor its employees, not in response to critics.

Based on the numbers Wal-Mart released, the mathematical average payment would be $651 per worker but Wal-Mart said the individual amounts varied. It declined to provide a range or the specific level of payments, citing competition with other employers.

In the past, the bonus has been $1,000 for full-time workers and up to $500 for part-timers, according to former Wal-Mart managers who declined to be named because the information is competitive.

Wal-Mart spokeswoman Sarah Clark declined to provide individual figures but said the payments varied based on two main benchmarks: whether an employee's store met profit and sales targets for the year and whether an employee is full time or part time.

Adele Phillips, whose contact information was provided by Wal-Mart, said her bonus was "substantially over $1,000" and more than last year. The full-time administrative assistant at a Wal-Mart store in Moreno Valley, Calif., declined to be more specific.

"Most of the stores are having a barbecue or some kind of special lunch today because everybody's worked hard for this," said Phillips, who has worked for Wal-Mart since 1982.

The company said it awarded more than $529.8 million in bonuses to a total of 813,759 Wal-Mart store and Sam's Club hourly workers in the U.S.

The company employs more than 1.34 million people in the U.S. Of those, just over 1 million are hourly workers who would qualify for the bonus, Clark said.

Clark declined to provide comparative numbers for the previous year.

Wal-Mart, which refers to its employees as "associates," said in a news release announcing the bonuses that it was designating Thursday as Associate Celebration Day. It also announced new programs intended to recognize service and performance.

The bonus program was started in 1986 by founder Sam Walton as a way to give workers a stake in the company's success, Clark said.

An employee gets a check if the store where he or she works meets a benchmark for sales and profit goals for the year. Progress toward those benchmarks is usually charted on a big poster, typically hung in each store's break room.

Michael Bergdahl, a former Wal-Mart human resources executive who has written about the company, said he believed Wal-Mart released the figures this year in an effort to counter negative publicity drummed up by its critics.

"There is so much negative media about Wal-Mart. This is just an example of how they really treat their people well and they're putting it out there to let the facts speak for themselves," said Bergdahl, author of "The 10 Rules of Sam Walton".

Union-backed WakeUpWalMart.com said the payments were a pittance compared to executive bonuses.

Chief Executive Lee Scott's compensation for 2006 was $15.7 million, excluding restricted stock awards.

"Wal-Mart values are so misplaced that it gives executives hundreds of millions in bonuses and the mere crumbs to associates who have had their hours cut, salaries capped, and affordable health care eliminated," WakeUpwalMart.com spokesman Chris Kofinis said.

Wal-Mart's release said the annual bonuses, called "My$hare", will now be distributed quarterly "to reward performance on a more frequent basis."

Among the new programs outlined in the announcement are what the company called "Servant Leadership" bonuses, recognizing employees of 20 years or more with an extra week of pay. More than 13,400 employees have been with the company 20 years or longer, the Wal-Mart said.

Also announced as a new program was the "Customer Champion" award, providing cash bonuses to employees "who go above and beyond in providing excellent customer service." That program will be launched during the summer, the company said.

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Fired Wal-Mart Exec Strikes Back, Claims 'Smear Tactic'

Julie Roehm's Lawyers Lash Out at Company for Using Emails from Her Subordinate's Estranged Wife

By MARCUS BARAM
March 22, 2007                            [back to top]

Julie Roehm, the former Wal-Mart marketing executive who was fired for allegedly having an affair with her subordinate, is striking back.

Accusing the world's biggest retailer of pursuing Roehm in a "vindictive and mean-spirited fashion," her lawyers charge that Wal-Mart's counterclaim, which includes the e-mail evidence, is "nothing more than a smear tactic."

The statement from attorneys John F. Schaefer and B. Andrew Rifkin goes on to accuse Wal-Mart of taking portions of the e-mails out of context and "putting its own spin on them to create sensationalism. It is a shame that Wal-Mart's repudiation of change -- and its determination to legitimize its old ways of doing business by purging the advocates of change -- has turned in such an ugly and hostile direction."

Wal-Mart's counterclaim was filed last week in response to Roehm's lawsuit against the company, which she pursued shortly after getting fired in December.

A Woman Scorned

A woman scorned and the havoc she wreaks is a persistent theme in literature and life.

From Medea and Roxie Hart to Britney Spears and Jennifer Aniston, those women who are spurned by their lovers and who go on to get their revenge become iconic characters.

Add Shelley Womack to the list. She's the spurned wife who teamed with Wal-Mart to punish one of the retailing giant's top executives.

The e-mails that Womack discovered on husband Sean Womack's home computer are some of the key pieces of evidence in Wal-Mart's counterclaim against former marketing exec Julie Roehm.

Some of the buttoned-down retailer's evidence of an alleged affair between Sean Womack and Roehm consists of racy e-mails between the co-workers. One of Roehm's romantic messages: "I hate not being able to call you or write you. I think about us together all of the time. Little moments like watching your face when you kiss me."

Last December, Roehm was fired by the company and she promptly sued them, claiming that it failed to give her severance and didn't return some personal belongings. Monday, the company struck back with its countersuit, alleging that Roehm had a romantic relationship with Sean Womack, who was her subordinate, and showed favoritism to an ad agency competing for a $580 million account with Wal-Mart.

The evidence threatens to undo Roehm's case, in which she has consistently denied having had a romance with Womack, which would be a clear breach of Wal-Mart's policies.

And how did Wal-Mart get its hands on some of the semi-salacious e-mails? Shelley Womack.

Last Sept. 7, she learned that her husband "had set up a secret, personal e-mail account that he used to communicate with Roehm," according to the counterclaim, which describes scenes that belong more in a daytime soap opera than a legal document. When she started reading some of the romantic e-mails, Shelley called Sean and "demanded that he come home immediately."

When he got home, Shelley confronted him with a printout of one of the e-mails. Sean tried to grab it away from her and "when Shelley went to another part of the house to hide the printed material, he went to the computer and attempted to delete all the e-mail messages from his account," according to the counterclaim.

Sean soon admitted to his wife that he was having a sexual relationship with Roehm, sharing several details "including when the affair began and the number of times they engaged in sexual intercourse while traveling on Wal-Mart business." Although he told Shelley that he would end the affair, he later changed his story and the couple separated.

Although Sean believed that his job was safe since he was using his personal e-mail account on his home computer -- once writing to Roehm that "my gmail is secure.… write to me. tell me something. anything …I feel the need to be inside of your head if I cannot be near you" -- not counting on his wife's curiosity.

Around the time that Roehm filed her lawsuit, Wal-Mart lawyers contacted Shelley and obtained the e-mails from her.

And Roehm believes that Wal-Mart coerced Shelley into handing over the e-mails by threatening to withhold Sean's $200,000 bonus.

"I wasn't on the call, but from what I understand, he [the Wal-Mart attorney] called and said that Sean hadn't been paid his bonus and if they could turn it over, then he would be paid," Roehm told ABCNEWS.com in February.

Mona Williams, a spokeswoman for Wal-Mart said it was "not true" that a lawyer for the company had made any threats to Shelley Womack, but declined to comment further.

Since the counterclaim was filed, Roehm has declined to comment. In a previous interview, she insisted that she did not have a romantic relationship with Sean Womack.

"Sean is a great friend, not a romantic friend," she told ABCNEWS.com in February. "He's like a brother to me. Some of my very best friends are men. I know that even in this day and age, it's still hard to think that a woman and a man can be friends."

In a statement, her attorneys described the countersuit as a "smear tactic" and claimed that the e-mails were taken out of context. "There can be only one explanation for Wal-Mart's attempts to file a counterclaim (unless, of course, Wal-Mart hates its money and enjoys paying lawyers), and that is that Wal-Mart wants to try to destroy Ms. Roehm."

And her husband, Michael Roehm, who told reporters a few months ago that the couple was not getting divorced, was not available for comment. In a brief conversation last February, Shelley Womack declined to confirm or deny her role in the case or whether her husband's bonus had been discussed by an attorney for Wal-Mart.

Other evidence cited by the company included accounts by co-workers and friends, one of whom once saw Womack pinning Roehm against a wall "in an intimate pose" in a bar in Fayetteville, Ark. Another friend recounted that Roehm had once admitted to an "emotional affair," and that the co-workers had "fooled around" a "couple of times" and that "she knew she would be fired if the company were aware of her actions with Womack."

Despite the lawsuit, Womack and Roehm are still hitting the road and working together as a team to cultivate new clients. As the counterclaim was making headlines on Tuesday, the duo gave a presentation at the Online Media Marketing and Advertising conference in Hollywood, Calif.

The pair declined to answer questions about the lawsuit or their relationship, although the audience was buzzing about it. "It was the elephant in the room," said Tobi Elkin, the editor at large of MediaPost, which hosted the conference. "Everyone was talking about it."

The scandal hasn't seemed to change Roehm's feelings for Womack. She showed up at the conference only on the condition that Womack appear with her. "She wouldn't' speak without him," said Elkin. "She was hellbent on marketing them together. We wanted her alone, but she wouldn't do it."

Copyright © 2007 ABC News Internet Ventures

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Credit to the Wal-Mart 2

Allen Wastler
Wednesday, March 21, 2007                       [back to top]

You're suing and being sued. Your work skills and corporate acumen are being demeaned. And in the biggest insult, you are tagged with the Scarlet Letter. What do you do? (Cue Animal House track ...) Road trip. Or in this case, Road show. Julie Roehm and Sean Womack, the former Wal-Mart marketing executives currently in a brouhaha with the giant retailer, showed up at a marketing conference in Hollywood this week to pitch their new consulting firm. If you haven't heard about the case, you can read about it here. The quickie version: Roehm was an edgy marketing executive who was fired by the retailer after less than a year of service. She sued for breach of contract. Wal-Mart countersued this week, claiming she had an affair with Womack (then her subordinate) and misused her position to drum up a possible job at an ad agency. And it trotted out some eye-brow raising emails to make its case -- emails that Roehm's lawyers say are being misconstrued. No doubt we'll be hearing about this case, with all sorts of salacious details ... or at least allegedly salacious details ... for a while. It seems obvious there was a clash of culture and approach. Roehm did do a Lingerie Bowl campaign for Chrysler. And Wal-Mart is the Church Lady of corporations. You kind of wonder how they ever got together. Well, the fight should break up the earnings report monotony al least. But you have to give credit to the two executives (notice I didn't say couple) for going into the public eye with such racy stuff being said about them ... even if it was just to talk some marketing mumbo jumbo. Mediapost, which staged the conference, interviewed the two. The first part is really tedious, unless you like marketing talk. But eventually they get to a polite brush off about the Wal-Mart (WMT) suit: you know, the usual talk to the lawyers bit. "I'm just thankful, I think we both are, that people who knows us, who have worked with us in the past, know who we are, they know our character," said Roehm, with Womack nodding by her side. "You just have to stay positive, stay focused and do the things you know you could do well, and thankfully have a big enough support system that you're allowed to do it." What will no doubt be great sport for the gossip crowd (not me mind you), is trying to divine the body language when they are asked about their relationship. "We're very good friends," said Roehm. "We're certainly working together, but that's the context of our relationship." It's just two people talking. Great sport.

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Frieson Named Senior VP Operations for Wal-Mart's Central Division

PRNewswire News
March 21, 2007                               [back to top]

BENTONVILLE, Ark., March 21 /PRNewswire-FirstCall/ -- Don Frieson, a veteran operations and logistics executive, has been promoted to Senior Vice President in charge of Wal-Mart operations in its 14-state Central Division.

Related newsStocks Drop on Soft Housing Market DataLennar Among Big Movers on Wall StreetCrude Settles Slightly HigherPremarket Movers: BioCryst Pharma DropsProduct Recalls Frieson, 48, had been serving as the company's Vice President and Regional Manager in Maryland. In his new position he will have responsibility for more than 600 Wal-Mart stores in Nevada, Utah, Idaho, Montana, Wyoming, Colorado, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Missouri, Iowa and Arkansas. He will be based in Arkansas.

Before moving to Maryland in 2005, Frieson had been Wal-Mart's Regional Vice President of Logistics since 2003. A native of Memphis, Tennessee, Frieson joined Wal-Mart in 1999 as a district manager for the company's private truck fleet. He quickly moved up the ranks and was promoted to Director of Private Fleet Administration and then to the Director of Private Fleet Operations. In 2001, he was promoted to Vice President of Private Fleet Operations, where he managed one of the largest truck fleets in corporate America and supported more than 7,000 drivers, mechanics and office associates.

Prior to joining Wal-Mart, Frieson worked with Schneider National Carriers, where he spent 12 years developing expertise in the trucking industry by working in various positions including service team leader, operations manager and operating center manager.

Frieson holds a bachelor's degree in Operations Management from the University of Tennessee. He is a member of the Board of Regents for Morgan State University in Baltimore, Maryland; a member of the Retail, Hospitality, and Tourism Advisory Board at the University of Tennessee, and a Life member of Kappa Alpha Psi Fraternity, Inc. Frieson and his wife, Marilyn, have two daughters, Kristen and Danielle.

Copyright 2007 PRNewswire

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WestJet announces 'preferred airline' deal with Wal-Mart Stores

Canadian Press
Wed Mar 21                                    [back to top]

CALGARY (CP) - Canada's main no-frills airline has struck a deal to fly around executives from Wal-Mart Stores Inc., the world's largest discount department store and food retailer.

WestJet Airlines (TSX: WJA.TO) announced a 'preferred airline' link with Wal-Mart on Wednesday in a move the discount air carrier hopes will generate new revenues from expanded transportation and group services to the giant retailers' business travellers.

The Calgary airline said it hopes to use the new business with Wal-Mart to attract even more contracts with a broad range of corporate business travellers - anywhere from local to international organizations who want discount flights.

"As we continue to expand our service reach, we become an attractive option for many national and multinational corporations," said Duncan Bureau, WestJet's sales vice-president. "Wal-Mart is one of the most highly regarded organizations of our time."

Duane Futch, director of global travel services for Wal-Mart, said WestJet's discount business model "makes them a valuable business partner and logical choice for our company."

WestJet operates flights to 35 cities in North American and the Caribbean.

Wal-Mart is the world's biggest retailer with operations around the globe and more than 1.4 million employees.

In Canada, Wal-Mart operates more than 280 discount retail outlets, superstores and other branded department stores and has a workforce of more than 70,000 people.

Copyright © 2007 Canadian Press

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Maryland Wal-Mart Bill Loses Court Appeal

Charlotte LoBuono 
The Heartland Institute 
April 2007                                           [back to top]

On January 17, a federal appellate court ruled Maryland's Fair Share Health Care Fund Act--also known as the "Wal-Mart bill"--violates the Employee Retirement Income Security Act (ERISA) of 1974.

The 2-1 ruling by the U.S. Court of Appeals for the Fourth Circuit confirmed an earlier decision by a U.S. District Court for the District of Maryland. Judge William B. Traxler Jr. joined Judge Paul V. Niemeyer in the appellate court majority. Judge M. Blane Michael dissented.

The Maryland law would have required companies with 10,000 or more employees statewide to spend at least 8 percent of their payroll on health benefits or pay into a state Medicaid fund the difference between 8 percent and the percentage they actually spend on health benefits.

Wal-Mart is the only private-sector employer that would have been affected by the measure. Other companies with 10,000 or more employees statewide already meet the 8 percent threshold.

Obvious Intent

In the majority opinion, Niemeyer wrote, "Not disguised was Maryland's purpose to require Wal-Mart to change, at least in Maryland, its employee benefit plans and how they are administered. This goal, however, clashes with ERISA's preemption provision and ERISA's purpose of authorizing Wal-Mart and others like it to provide uniform health benefits to its employees on a nationwide basis."

ERISA sets minimum standards for pension plans in private industry. The law prohibits individual states from imposing health mandates on multistate employers, such as Wal-Mart, to ensure they are able to maintain uniform standards for employee benefits.

Continuing Disagreement

"This decision only confirms what we thought from the very beginning," said Stephen Cannon, a lawyer for the Retail Industry Leaders Association (RILA), a trade group based in Arlington, Virginia, of which Wal-Mart is a member. "The intent and effect of the Fair Share Health Care Fund Act was to interfere with and create new and different obligations for health care plans within the state of Maryland."

RILA sued the state of Maryland in February 2006 to overturn the Fair Share Health Care Fund Act. The law was passed in January 2006 over the veto of then-Gov. Robert L. Ehrlich Jr. (R).

"Today's ruling does nothing to change the public's desire to require large, profitable corporations like Wal-Mart to pay their fair share for health care," said Paul Blank, campaign director for the union-backed group WakeUpWalMart.com, in a January 17 statement.

Joy Bernstein, press secretary for Wal-Mart Watch, a similar union-supported group, agreed.

"Taxpayers in every state pick up the tab every time a business doesn't pay its fair share for health care and pushes its employees onto these [government health care] programs," Bernstein said. "To date, Wal-Mart has been the biggest perpetrator, and the tab is considerable. This ruling doesn't change the fact that Wal-Mart's health care plan is inaccessible and unaffordable for its employees.

"Until large employers and the federal government take action, other states will continue to seek individual solutions to their health care crises," Bernstein said.

National Standards

But individual state efforts may be counterproductive, Cannon pointed out. "Congress enacted ERISA, in part, to create uniformity in national health benefit plans. Differing state and local health mandates would only increase health care costs and serve as a strong disincentive for employers to offer health coverage."

Sandy Kennedy, president of RILA, noted in a January 17 statement, "Today's Appeals Court Decision makes clear that employer health plans are governed by federal law, not a patchwork of state and local laws. The court's decision sends a strong message that similar bills under consideration in other states and municipalities also violate federal law."

For more information ...

The appellate court decision in Retail Industry Leaders Association v. James D. Fielder, Jr., issued on January 17 by the U.S. Court of Appeals for the Fourth Circuit, is available through PolicyBot™, The Heartland Institute's free online research database. Point your Web browser to http://www.policybot.org and search for document #20718.

"Lawmakers Back Away from a New Wal-Mart Bill," by Douglas Tallman, The [Annapolis] Gazette, January 25, 2007, http://www.gazette.net/stories/012507/frednew155718_32326.shtml

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Tangled case of Wal-Mart vs. former execs, all hinges on e-mails

by Harry Fuller
March 21, 2007                                   [back to top]

You and I have no idea who's to blame, who's blameless. Or who'll win and who'll lose. We do know retailer Wal-Mart, known for a few brick and mortar stores around the planet, is suing a former exec. That's Julie Roehm, who had earlier sued Wal-Mart when they fired her.

Roehm was a marketing exec for Wal-Mart, which claims she was using her position to try to score a job with an ad agency. That's where fellow exec Sean Womack comes in, says Wal-Mart, because he also wanted a job at the agency. The agency was pitching Wal-Mart at that time for business.

But the plot thickens as Wal-Mart says it has e-mails showing Roehm and Womack had a relationship that violated company policies. Not only did Wal-Mart monitor its employees' emails--it can do that without needing any National Security Letter or whatever--it even got personal e-mails from Womack's wife. This is complex gossip worthy of any soap opera.

AdAge sorts out the threads of the fired Wal-Mart execs and their e-mails. Will otherwise smart people ever learn not to put damaging information into e-mails?

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Wal-Mart bank fight not over yet, Okla. Bankers Assn. President

by Brian Brus
Journal Record
Mar 20, 2007

Wal-Mart's withdrawal of its charter application to enter the banking business is a relief for Oklahoma community bankers, Oklahoma Bankers Association President Roger Beverage said, but he doesn't expect the issue to dissipate.

"We're obviously pleased, but it doesn't mean the war is over," Beverage said. "It just means this particular battle front has been resolved.

There's not any doubt that Wal-Mart wants to get into the banking business in some fashion."

The world's largest retailer announced Friday it had given up on an industrial loan corporation charter, or ILC, which was filed with the Federal Deposit Insurance Corp. in 2005.

An ILC is eligible for FDIC deposit insurance, but not subject to the same ownership restrictions banks face.

Critics of the action such as Beverage's group said the move effectively would have opened the door to direct competition with community banks, putting them at a disadvantage behind Wal-Mart's much larger funds.

Jane Thompson, president of Wal-Mart Financial Services, has said the ILC was never intended as a step toward bank branching but only an attempt to save on operations costs by internalizing store check and credit card transactions.

The company had never asked for the authority to take deposits.

Regardless, Beverage and his counterparts in 25 other states sent a letter to the FDIC encouraging the agency to deny Wal-Mart's application.

And the Oklahoma Legislature passed the Industrial Loan Company Branch Act of 2006, prohibiting any ILC from establishing a branch location in a retail store in Oklahoma.

Instead of running its own bank, the retailer revealed Friday that language will be included in leases to give other bank branches operating out of Wal-Mart stores the right to offer limited financial services that may include mortgages, insurance products and consumer loans.

Beverage said the FDIC hearings on whether to do away with industrial loan corporations will continue even though Wal-Mart is no longer directly involved in the issue.

"We'll have to see where it goes; as you know, it only takes one senator to stop legislation from moving forward," Beverage said.

"But I think Wal-Mart is still going to look for ways to utilize technology to provide more services to their customers. This fight isn't over by a long shot," he said. "They've put too much money and energy into this. At some point you have to consider the stubbornness factor."

Copyright 2007 Dolan Media Newswires

Wal-Mart fights back over firings

Reuters
2007-03-20                                [back to top]

NEW YORK (Reuters) - Wal-Mart Stores Inc. asserted in a court filing that two former top marketing officials engaged in a sexual relationship while choosing new advertising agencies and sought jobs with one of the agencies they recommended, The New York Times reported.

Wal-Mart accused Julie Roehm and Sean Womack of extending their visits with Draft FCB, an ad agency involved in the review, to spend more personal time together and to promote themselves to the agency as job candidates.

Reached by the Times in Las Vegas, Roehm denied Wal-Mart's accusations of an affair with Womack, and said she had not had job discussions with Draft FCB. The Times said Womack did not return a call for comment.

Roehm was abruptly fired from Wal-Mart on December 4 after less than a year as head of marketing communications. She has sued the company, claiming breach of contract and fraud. Womack, who was vice president of marketing communications, left the company at the same time as Roehm.

Wal-Mart said in its request to file a counterclaim against Roehm that it would seek compensation from her for legal fees in the case and for other damages.

(c) Reuters 2007. All rights reserved.

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Community, Labor, Faith-Based Leaders to 'Welcome' Wal-Mart to Prince George's County

Will Hold a Press Conference to Urge Company to Provide Employee Health Care, Stop Lobbying Against Port Security

PRNewswire-USNewswire                     [back to top]

LANDOVER HILLS, Md., March 20 /PRNewswire-USNewswire/ -- The following is being issued by UFCW Local 400:

A broad-based group of Prince George's County community leaders, union members, clergy and members of area congregations will hold a press conference to "welcome" a newly-opening Wal-Mart to the Capital Plaza Mall and urge the world's largest retailer to become a responsible, community-minded corporate citizen.

They will call on Wal-Mart to provide its workers with health benefits, stop burdening Maryland taxpayers with $27 million in the cost of providing care to the company's employees, and stop burdening Prince George's County Hospital Center with the cost of uncompensated care. They will also demand that Wal-Mart stop putting its $11 billion in annual profits ahead of America's national security and reverse its opposition to legislation requiring that all containers entering U.S. ports be scanned for weapons terrorists might try to smuggle into the country.

WHAT: Community/Labor/Faith-Based Press Conference to Welcome Wal-Mart

WHEN: Wednesday, March 21, 2007, 11:00 am

WHERE: Capital Plaza Safeway Parking Lot, 4600 Coopers Ln., Landover Hills, MD.

WHO: Joslyn N. Williams, president, Metropolitan Washington Council, AFL-CIO Rushern Baker, former member, Maryland House of Delegates Adam Ortiz, mayor of Edmonston, Maryland MacArthur Bishop, president S.C.L.C. Prince George's Co., MD Dr. Jarvis Johnson Mark Federici, director of strategic programs, UFCW Local 400 Other community, labor and faith-based leaders

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Will You Marry Me ... at Wal-Mart?

Wal-Mart Proposes Love Connections With In-Store Weddings on 7/7/07

PRNewswire News
March 20, 2007                              [back to top]

BENTONVILLE, Ark., March 20 /PRNewswire-FirstCall/ -- Wal-Mart WMT is known for being a one-stop destination for a variety of consumer needs but ... true love? In celebration of today's Proposal Day, the retailer provides couples extra incentive to get down on one knee with its Lucky in Love Weddings Search. On July 7, (7/7/07), one of the most sought-after wedding dates in recent years, Wal-Mart and G Squared, a Wal-Mart exclusive brand from Gartner Studios, will give seven betrothed couples wedding ceremony and reception packages at local Wal-Mart Supercenters in the lawn and garden areas.

Experts anticipate that more than twice as many weddings will take place on 7/7/07 than on the corresponding weekend in 2006(1) -- and that means that many would-be-brides are finding most venues and vendors booked solid. Recognizing the dilemma, Wal-Mart is offering seven couples a lucky solution -- everything they need to make their day special, memorable and unique.

"The popularity of 7/7/07 can be attributed to the symbolism associated with the number seven," said Kathi Mishek, vice president for Gartner Studios. "Both Gartner Studios and Wal-Mart appreciate that this is a major day in couples' lives and we're proud to be able to share in these celebrations."

Wal-Mart is no stranger to love and has a rich history of making connections. Not only have store associates fallen in love while stocking shelves side-by-side, but many shoppers have met, reunited or simply strengthened their relationships in stores. And 7/7/07 won't be the first time that brides and grooms have marched down the Wal-Mart aisles into wedded bliss; local lawn and garden areas have provided a vibrant backdrop for a variety "I do's" over the years for those who have "found love" at Wal-Mart.

The seven couples selected to walk down the wedding aisle at Wal-Mart will also receive a Wedding Package with an estimated value of more than $5,000. This packet not only includes the decorated wedding venue in Wal-Mart's colorful lawn and garden area surrounded by the season's bright foliage, but also an adjacent tent for the reception area, wedding cake and party food.

The selected seven Lucky in Love Wedding Search couples will receive a Wedding Package that includes the wedding ceremony and reception venues, bride and groom 14kt gold and diamond wedding bands, wedding invitation package, wedding and groom's cakes, fresh floral bouquets, digital cameras and digital photo frame, portable GPS, reception food and $1,000 Wal-Mart gift card. (See below for Wedding Package details.)

"We understand that life's full of celebrations for our customers and we want to help those times be memorable," said John Fleming, Wal-Mart executive vice president and chief merchandising officer. "We're excited to provide solutions for these couples who will allow us to be a part of this major moment in their lives."

Considering that the average American wedding costs a whopping $22,000 (2) and requires multiple trips to various vendors, the betrothed will be delighted to save money and time at Wal-Mart. What's more, the retailer's registry, available in stores and online at Walmart.com, caters to thousands of couples every month and offers a wide selection for a new husband and wife to start their life together, from the Stainless Steel Hamilton Beach 6-Qt Slow Cooker to the Polaroid 32" Widescreen LCD HDTV and Canon DC100 DVD Camcorder.

(1) More than 31,000 couples who plan to wed on 7/7/07 have signed up on the wedding Web site TheKnot.com-that's already more than 20,000 the number of couples who married on the corresponding weekend in 2006, according to the New York Times
(2) National Association of Wedding Ministers

Copyright 2007 PRNewswire

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Wal-Mart Returns Fire On Executives Sacking

Namnews
Tuesday 20th March 2007                         [back to top]

Wal-Mart has stated in a court filing that former marketing officials Julie Roehm and Sean Womack, who were sacked by the retailer, had extending their visits with Draft FCB, an ad agency involved in a review of Wal-Mart’s ad agencies, to spend more personal time together and to promote themselves to the agency as job candidates. Roehm denied Wal-Mart's accusations of an affair, and said she had not had job discussions with Draft FCB.

Roehm was abruptly fired from Wal-Mart in December after less than a year as head of marketing communications. She has sued the company, claiming breach of contract and fraud. Womack, who was VP of marketing communications, left the company at the same time as Roehm.

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Corporate branding oops

By Parija B. Kavilanz,
CNNMoney.com
March 19th, 2007                  [back to top]

Wal-Mart, Home Depot, JetBlue suffered some big marketing missteps over the past year; Plus: A look at brands that got it right.

NEW YORK (CNNMoney.com) -- Lately, anytime you put the words "corporate" and "blunder" in the same thought, Wal-Mart inevitably seems to come up.

Maybe that's because Wal-Mart suffered suffer some embarrassing branding blunders over the past few months. But it wasn't the only offender, industry experts said.

Branding experts said JetBlue made one of the biggest marketing blunders in the past year after it stranded passengers in its planes for more than 10 hours.

Apple continues to solidify its brand leadership with strong innovation at the core of its business supported by clever advertising.

"Again we've had no shortage of big branding mistakes last year and even early this year," said Kelly O'Keefe, an independent branding consultant and CEO of O'Keefe Brands.

O'Keefe has published an annual branding "Hall of Shame" for five consecutive years.

He hasn't yet published his most recent list - that's due in upcoming weeks.

However, he picked JetBlue, Home Depot and Turner Broadcasting (a Time Warner division and parent of CNNMoney.com) as examples of other companies that he would induct into his most recent branding "Hall of Shame."

Wal-Mart

Some analysts argue that being the world's largest retailer makes the discount behemoth an easy target for critics. While that might be so, O'Keefe counters that Wal-Mart itself does a pretty good job in generating plenty of easy fodder for its critics.

The retailer had a string of recent bloopers. It abruptly fired its new ad agency, DraftFCB, last December just a month after awarding it a $580 million contract.

Wal-Mart also fired marketing head Julie Roehm because she reportedly violated its strict ethics policy by having a personal relationship with another colleague and allegedly accepted gifts from clients. Roehm sued the company claiming Wal-Mart's charges were false and said that Wal-Mart was a difficult employer.

"The flip-flop with the ad agency was a huge debacle and was pretty embarrassing," said O'Keefe.

Additionally, Wal-Mart's upscale clothing push with "Metro 7" fell flat in 2006. In October, Wal-Mart pulled the plug on its teen social-networking endeavor called "The Hub" after only 10 weeks following humiliating reviews in the media.

"Wal-Mart made the mistake of trying to run away from its brand rather than building on it," O'Keefe said.

"Wal-Mart grew by catering to mid-America values of great customer service, low prices. It took care of its employees. That's the Wal-Mart that Sam Walton built," he said. "Today's Wal-Mart looks more like a Kmart. It's lost those values that made it great. Wal-Mart needs to reconnect with itself rather than trying to compete with Target or somebody else."

Robert Passikoff, branding expert with Brand Keys Consulting, agreed.

"Wal-Mart often appears to be an impatient brander. Is this corporate hubris? Maybe. Wal-Mart should realize that the 'anything you can do I can do better' attitude doesn't work all the time," Passikoff said.

JetBlue

JetBlue suffered a tremendous fall from grace earlier this year when a winter storm paralyzed its operations in the Northeast for nearly a week and stranded hundreds of travelers in airports. Some passengers were stranded on Jet Blue planes for more than 10 hours and frustrated passengers posted videoclips of the chaos on YouTube.

"In today's electronic age, bad news spreads fast," said O'Keefe. "JetBlue was one of the strongest brands in the country before this fiasco. It was a service leader and the company was growing by leaps and bounds."

He faults JetBlue CEO David Neeleman for taking too long to apologize for what went wrong. "He took over 24 hours to make an apology," O'Keefe said. "He should've acted much faster to say he regretted what happened and that JetBlue would make amends."

Nevertheless, Neeleman kept his job and JetBlue said it would spend millions of dollars refunding cancelled tickets. It also published a "Customer Bill of Rights." O'Keefe said it will take a long time for JetBlue to repair its tarnished image.

Turner Broadcasting System

Turner's guerrilla marketing campaign for the Cartoon Network show "Aqua Teen Hunger Force" went awry earlier this year.

The campaign consisted of battery-powered cartoon advertising signs that were placed around Boston and other cities. The signs led to a massive security alert around Boston amid fears of a bomb scare.

Turner Broadcasting apologized for the incident and compensated the city $2 million for any disruptions that occurred. Moreover, the head of Cartoon Network subsequently resigned

"The rules of marketing dictate that you don't scare people and you don't do anything illegal like putting devices on public structures," O'Keefe said. "This reminded me of IBM's graffiti ads from a few years ago when IBM paid people to spray 'peace, love and Linux' ads on sidewalks and these ads didn't wash off."

Home Depot

O'Keefe said the home improvement retailer's brand took a blow when its CEO Robert Nardelli resigned in January after a prolonged speculation about his leadership style and Home Depot's slowing profits.

While Home Depot is still one of the largest retailers in the world, O'Keefe said the brand still has had a tough time connecting with its customers, especially women shoppers. "Lowe's is far more successful in that regard."

The successes....

Apple

Analysts said Apple's iPod held its own over the crucial holiday shopping season despite a big attack from Microsoft's competing product, Zune.

O'Keefe said Apple's OS X operating system also continues to be favored over Microsoft's new Vista operating system.

"It's astonishing to think that Apple could possibly trump Microsoft on its home turf," he said. "Moreover, Apple's iPhone is hotly anticipated as is Apple's iTV. Apple did the right thing by changing it's name to Apple Inc. from Apple Computer because it truly is evolving into a consumer electronics company."

Stephen Colbert

Time magazine named the Comedy Central satirist one of the 100 most influential people in 2006. In December, GQ named him Man of the Year.

"The decision to take someone who played a phony correspondent on 'The Daily Show' and give him his own show has paid off well," O'Keefe said. "Colbert's charm has made him one of the best and strongest brands of 2006."

Federated Department Stores

The operator of Macy's and Bloomingdales announced last month that it would rename itself to Macy's Group to reflect a more uniform brand identity among consumers nationwide.

Federated changed the name of 400 May stores to Macy's last year after acquiring May in August 2005. It also decided to remove the iconic Marshall Field's name in favor of Macy's last year.

"I'm neutral about this one for now. It is a big gamble to rebrand so extensively and it could go either way," O'Keefe said.

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Thank You For Banking at Wal-Mart

The Other End Of The Telescope
March 19, 2007                                      [back to top]

Wal-Mart Stores Inc. (WMT) has withdrawn its application for a bank charter following months of debate over whether the giant retailer should be allowed to become a federally insured bank. The move means that the public will be denied the many advantages of banking their local Wal-Mart.

Wal-Bank would have featured:

Spacious 50,000 square-foot bank offices with parking for 10,000 cars

All customers greeted at the door by a friendly old man in a polyester vest

Free direct deposit for customers earning minimum wage

Teller staff committed to superior customer service while also improving their English

Free checking with no hidden fees except for the charges clearly marked on the large cartoon price tags

Low-rate consumer loans for paying off Wal-Mart credit card

Everything inside the front door made in China

Savings accounts with “Always-Low” interest rates

Each branch loaded with free unintended consequences: increased traffic, environmental problems, depressed wages and benefits, predatory loan pricing.

24 hour banking: many bank employees locked inside overnight

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Microchips Help Wal-Mart Track Inventory

by Jacqueline Froelich
NPR                                                                 [back to top]

Morning Edition, March 19, 2007 · Wal-Mart, the world's largest retailer, is accelerating its new inventory-tracking program. The company wants to keep tabs on all of its merchandise by outfitting its products with microchips, which broadcast radio signals.

Jacqueline Froelich reports for member station KUAF.

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Wal-Mart Cancels Its Bank Plan

Halt to 'ILC' Effort Is Move by Retailer To Stop Controversy

By Kris Hudson
and Rob Wells,
Wall Street Journal
March 17th, 2007                                [back to top]

Wal-Mart Stores Inc. lost one potential path for driving its legendary sales growth by withdrawing its application to operate an industrial-loan company, a form of bank.

Citing the "manufactured controversy" surrounding its July 2005 application to operate a so-called ILC, Wal-Mart Friday said it pulled the request from consideration by the Federal Deposit Insurance Corp. It said it would instead expand further into other financial services that don't require an ILC charter, such as check cashing and bill payment.

Amid an outcry over Wal-Mart's application, the FDIC had put the retailer's application and others like it on hold as Congress mulled whether to disallow commercial interests from owning IL Cs?. FDIC Chairman Sheila Bair applauded Wal-Mart's withdrawal as a "wise choice."

Wal-Mart's critics, primarily community-banker groups such as the Independent Community Bankers of America, were also pleased. The group Friday pledged to keep backing national legislation aimed at keeping ILCs out of commercial hands.

Wal-Mart, of Bentonville, Ark., had repeatedly said it intended to use the ILC only to process credit-card transactions, not to operate its own bank branches in its 4,000 U.S. stores. IL Cs?, chartered by states, can offer most of the same products and services as regular banks, including loans, mortgages and credit cards.

Criticism from union groups, community groups and some lawmakers has dogged Wal-Mart's efforts since it made the ILC application 20 months ago. The latest controversy involved its revision of the wording of its leases with third-party banks in its stores to allow the retailer to eventually offer services such as mortgages and consumer loans. Critics alleged that the changes signaled that Wal-Mart meant to delve further into banking than it had claimed. Jane Thompson, Wal-Mart's president of financial services, described the revision as a "one-word change" to terms established in the leases long ago.

Wal-Mart already had begun pondering dropping the ILC bid when the FDIC in January extended its moratorium on such applications by a year, Ms. Thompson said in an interview. "Probably 5% of what we did had to do with the bank, but it was getting 200% of the noise," she said. "We just want to put the noise behind us."

Wal-Mart said it isn't ready to divulge the new financial services it intends to launch in lieu of the ILC charter. Wal-Mart doesn't report results for its financial-services business, but Ms. Thompson said the division's sales are growing by 50% or more annually. Wal-Mart includes its financial-services revenue in its much larger "other income" category, which increased 11.7% last year to $348.7 million.

The world's largest retailer, with $345 billion in sales last year, Wal-Mart already has been facing constraints on its growth rate. Already dominant in the U.S., the retailer is running out of new markets to conquer domestically. Its U.S. division's sales increased at their slowest rate last year -- 7.8% -- in a decade.

Wal-Mart's international operations, accounting for 22% of its overall sales, aren't yet large enough to continually displace its U.S. operations as the engine generating most of its sales gains without relying on massive acquisitions. That leaves adding services as a significant way to boost Wal-Mart's revenue, with banking among the most lucrative options. All told, the more than 8,000 U.S. community bankers garnered income of $139 billion last year, according to the Independent Community Bankers of America. Wal-Mart previously made several unsuccessful attempts to enter banking, including failures in Oklahoma in 1999, in California in 2003 and a failed Canadian joint venture in 2001.

Wal-Mart's withdrawal of its ILC application "is an acceptance that the financial-services industry is not one in the U.S. where they're going to redefine their market larger," said Morgan Stanley analyst Gregory Melich, who rates Wal-Mart's shares equivalent to neutral and owns none.

A Wal-Mart spokesman described the theory of Wal-Mart running out of options to maintain its growth rate as "nonsense," adding that the company sought the ILC charter not to open branch banks and generate revenue but to cut transaction-processing costs.

The FDIC insures deposits for the 58 existing IL Cs?, which control $176.6 billion of assets. Roughly half of these IL Cs? are chartered in Utah, where Wal-Mart filed its application. Several other companies applying for ILC charters saw their requests put on hold by the moratorium. Some of those, including Home Depot Inc. and Daimler Chrysler? Financial Services Americas LLP, said Friday that Wal-Mart's withdrawal had no relevance to their applications. The Daimler Chrysler operation is a unit of Daimler Chrysler Financial Services Group, in turn a unit of Daimler Chrysler AG.

In Congress, the chairman of the House Financial Services Committee, Rep. Barney Frank (D., Mass.), said he still intends to close a regulatory loophole that allows commercial firms to own banks. Mr. Frank and Rep. Paul Gillmor (R-Ohio) are sponsoring a bill to restore the wall between banking and commerce and stem the expansion of the ILC charter.

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Wal-Mart Abandons Bank Plans

By Eric Dash,
New York Times
March 17th, 2007                         [back to top]

Few efforts illustrate the breadth of Wal-Mart’s ambitions — and the fears that they at times generate — as much as a nearly decade-long drive to establish its own bank.

Yesterday, Wal-Mart Stores abruptly abandoned those plans for its own bank, withdrawing its application to obtain a special banking charter after a firestorm of criticism from lawmakers, banking industry officials and watchdog groups.

Yet the company, the world’s largest retailer, also said that it was not pulling back from plans to roll out a stream of new financial products, which could include mortgages and other types of consumer loans.

“We don’t plan to do this again,” said Jane Thompson, Wal-Mart’s president for financial services. “The bank is behind us. We will use our partners to roll out new products.”

Wal-Mart’s latest banking bid, made in July 2005, had been stalled after the Federal Deposit Insurance Corporation announced in late January that it would delay reviewing applications for so-called industrial loan corporations. And a move in Congress to bar nonfinancial companies like retailers from owning banks has been gathering steam.

Representative Barney Frank, Democrat of Massachusetts and a co-sponsor of a bill that would prevent Wal-Mart from operating an industrial bank, said that Wal-Mart’s withdrawal “doesn’t remove the need for a bill,” but he conceded that it might “dial down the temperature” for passage in the Senate.

The opposition to Wal-Mart’s application had initially come from bankers, who had feared that Wal-Mart would eventually open traditional consumer banks that accept deposits and dispense loans. Such a move, they argued, could wipe out small community banks and hurt profits at bigger ones, given Wal-Mart’s huge economic might and record of vanquishing rival retailers.

Wal-Mart insisted that it was not interested in running a retail bank, but saw obtaining a banking charter as a way to save money by internally processing credit and debit card transactions. Other nonfinancial companies — including Target and General Motors — had already received approval to operate industrial banks.

But its opponents said that Wal-Mart could not be trusted. The banking application soon escalated into an issue well beyond financial circles, becoming a political flashpoint among longstanding critics and a referendum on the company itself.

In an interview yesterday, Ms. Thompson said that Wal-Mart made the decision to withdraw the bank application late last week after seeking approval from H. Lee Scott, the company’s chairman and chief executive. Wal-Mart determined that it could pursue other ways to achieve cost-savings and offer its customers more financial products without the glare of the national spotlight. The uncertainty surrounding the F.D.I.C.’s moratorium, which meant that the application could not be approved until next January, also contributed to the decision.

Wal-Mart’s announcement came as a surprise to many on Capitol Hill. Next week, the House Committee on Financial Services is scheduled to hold hearings on a proposed bill that would close the remaining loopholes that allow nonfinancial institutions to operate an industrial bank and prevent existing ones from expanding. It is sponsored by Mr. Frank, the committee’s chairman, and Representative Paul E. Gillmor, an Ohio Republican.

“Wal-Mart is the proverbial red blanket in front of the bull,” said Bert Ely, a banking consultant. “The blanket has now been pulled away, and I am not sure how much force there is to get this through Congress.”

While there still appears to be strong support in the House, its chances for Senate approval are less clear. Senator Christopher J. Dodd, the Connecticut Democrat who is chairman of the Senate Banking Committee, said in a statement yesterday that he intended to continue examining the issue.

But Senator Robert F. Bennett, an influential Republican committee member from Utah, where many industrial banks are based, said in a statement that he would continue his effort to preserve the granting of industrial bank charters.

The F.D.I.C., said Sheila C. Bair, its chairwoman, would wait for Congress to weigh in on whether commercial entities should own industrial banks.

While the fate of any new laws is being closely watched throughout the banking industry, its most immediate effect could be on Home Depot and eight other commercial entities that have industrial bank charters pending regulatory approval.

For Wal-Mart, the company’s decision to withdraw its application is the strongest evidence to date that the retailer’s public relation’s troubles are restricting its ability to grow, something that company executives are reluctant to acknowledge.

“This is the fourth time they have struck out since 1998 in trying to get into the deposit-taking business,” Mr. Ely said. “They clearly could have played the game better.”

Earlier this week, Wal-Mart’s credibility was again questioned. On Thursday, Mr. Gillmor, the Ohio representative, released a leaked e-mail document that he said was evidence that the retailer’s motives extended far deeper into banking than it previously disclosed.

Ms. Thompson, the Wal-Mart executive, called it a “manufactured controversy” and said that the company’s decision to withdraw its application yesterday was “just a coincidence.” Ms. Thompson played down the effect that the withdrawal of the banking application would have on Wal-Mart’s business, suggesting that it had captured a substantial part of the cost-savings they had hoped for as credit and debit card processing fees have declined over time.

And she vowed that the retailer would expand its financial offerings in the first half of this year. It currently offers check cashing, a branded credit card and a limited number of other financial services. She declined to elaborate on what products Wal-Mart would offer through third-party partnerships, but also did not rule out making loans.

“As far as lending per se,” she said, “all I can say is that we are looking for all the needs of our customers.”

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Wal-Mart the Ex-Banker; They Still Don't Get It

By Jon C. Ogg
03-16-2007                               [back to top]

Wal-Mart (NYSE: WMT) has withdrawn its Industrial loan charter application, in what is an obvious throwing in of the towel. This will generate a sigh of relief among community bankers and regional finance and banking operations.

What is odd is that if you read through the comments and quotes you will see that this company has not learned what the public and the media are trying to teach it: humility and a better personality. I have personally noted that Lee Scott is not doing the right job of leading the company and not helping out investors. He needs to go for sure, and his recent pay package "bonus" is one that went above and beyond what investors would consider an alignment with shareholders. The company needs a new face, and if the rest of the board and the Walton heirs would get their act together and replace Scott with a better face person it would generate a better feel from Wall Street.

After reading this woman's comments below it may even be evident that the company need an entire Spring cleaning. Wal-Mart Financial Services President Jane Thompson released the following statement today (condensed from original version):

"We notified the FDIC today that Wal-Mart has withdrawn the application we made in July 2005 for an Industrial Loan Company (ILC) charter. This action follows January's FDIC decision to extend the moratorium on a number of pending ILC applications. Unlike dozens of prior ILC applications, Wal-Mart's has been surrounded by manufactured controversy since it was submitted nearly two years ago. At no stage did we intend to use the ILC to establish branch banking operations as critics have suggested -- we simply sought to reduce credit and debit card transaction costs. Wal-Mart's financial services already save customers over $245 million a year so they can live better. Since the approval process is now likely to take years rather than months, we decided to withdraw our application to better focus on other ways to serve customers. We fully intend to continue to introduce new products and services that champion those who deserve convenient, lower priced financial services."

This reads just like the normal belligerent Wal-Mart of late. The company tried coming out with a new commercial campaign that showed a better, kinder, and more generous Wal-Mart. It just made a huge deal in China that investors should frankly be ecstatic about because it was an instant doubling of its presence in China for what seemed like a bargain. But this company needs to learn to smile and show a better face. I will be the first to admit that there are always going to be anti-Wal-Mart activists regardless of what the company does, but the company can make certain attempts that it is not making. For heaven's sake, stop whining. Some critics can never be pleased, but that doesn't mean keeping the same strategy is the right move. The company needs to find a spokesperson and face man like a Will Rogers that knows Wall Street and Main Street.

Will Rogers probably never met Lee Scott. Lee Scott is the head of the company and he should not let any spokesperson issue a whining statement like this. He just got a $22 million bonus because of some internal sales targets, and that is after a $5.23 million salary and a total package that amounted to roughly $15.7 million. It is amazing that shareholders haven't picketed the headquarters when the consumer activist groups are the ones on the offensive.

The tides were against the company ever launching a banking unit because of how Wal-Mart has dominated the retail sector. The company should be thankful if you think about it, even if they claim to only want to save on their internal processing fees. Sure, and we are all swim suit models. There was so much talk that Wal-Mart was going to get in the mortgage business, and now the company at least doesn't have to worry about getting caught up in the Sub-Prime Slime that has been the prevailing theme of the last two weeks. Anyhow, enough about this for now. This was about as obvious 2+2=4 and the company just needs to learn to act better.

"Always Low Prices" may be the company slogan, but shareholders don't want it to pertain to the price of their stock.

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Wal-Mart's snooping case exposes its James Bond side

By Anne D'Innocenzio,
Associated Press
March 16th, 2007                                             [back to top]

NEW YORK — Wal-Mart's disclosure that an employee was tapping phone conversations and text messages is drawing attention to a growth industry within corporate America: The business of keeping things secret.

Wal-Mart Stores fired the employee, Bruce Gabbard, maintaining he acted alone and didn't receive authorization to eavesdrop. Federal authorities are investigating.

In an interview with The Wall Street Journal, Gabbard said he worked in an amply staffed unit whose mission was to shore up the walls around Wal-Mart's internal data and communications, protecting them not just from Internet hackers but from leaks to company critics. He declined further comment when contacted this week by The Associated Press.

Corporations are increasingly using James Bond tactics and employing security specialists with FBI, CIA or private eye backgrounds in an effort to safeguard proprietary information and any internal dealings that, if made public, could hurt a company's image and stock price, said Ken Springer, a former FBI agent and president and founder of Corporate Resolutions, which conducts character and integrity checks.

In the past, Springer said, the biggest fear in corporate America was theft, but now the concern is anything that poses a threat to a company's reputation — including having information leaked to outsiders such as the media and, in the Internet era, bloggers. Wal-Mart said Gabbard, a systems technician, had monitored phone calls and text messages of employees and non-employees, including a New York Times reporter.

The growth of the corporate intelligence business is no secret. Last month, Cofer Black, vice chairman of the security company Blackwater USA and a former CIA counterterrorism expert, announced he had formed a new company called Total Intelligence Solutions, which focuses on providing intelligence gathering to companies. Its services will include rooting out insiders who are causing harm.

"With all this new technology, there are new challenges. Companies need to take proactive steps to protect trade secrets," Springer said. "Reputation is everything. Companies have to use technology to stay ahead of employees' hurting the company or outsiders who gain access to proprietary information."

Russell Corn, senior managing director of intelligence broker Diligence LLC, whose advisory board member includes former CIA and FBI Director William Webster, agreed, saying the corporate intelligence business is fast expanding. He estimated that it's about a $500 million industry now; it was about one-fifth that amount back in 2000.

Diligence's business, meanwhile, has tripled to $20 million over that time. "It used to be a hard sell," Corn said, adding that Diligence's focus is on intelligence gathering for companies seeking to do business in emerging markets like Khazakstan.

Diligence has been caught doing its own spying: The accounting and consulting firm KPMG sued the company in 2005 for allegedly sending people posing as government spies into KPMG's Bermuda office to coax an employee into giving up proprietary data about an ongoing probe. The suit was settled in 2006.

At Wal-Mart, the head of corporate security is Kenneth Senser, a former FBI and CIA agent. In the interview with The Wall Street Journal, Gabbard said he was a member of Wal-Mart's Threat Research and Analysis team, and that Senser instructed him and another team member to find the source of the leaks of internal memos. Gabbard said Senser told him he was tired of telling Wal-Mart Chief Executive Lee Scott Jr. that he didn't know the source.

It's not known yet whether Gabbard's orders ultimately came from the upper levels of Wal-Mart management. But if snooping did involve top management, Wal-Mart conceivably could find itself in a position like that of Hewlett-Packard, whose ill-fated effort last year to find the source of boardroom leaks to the news media led to the indictments of Patricia Dunn, the company's former chairwoman, another executive and two private investigators. A California judge dismissed charges against Dunn Wednesday and the other defendants pleaded no contest, but the episode remains an embarrassment for H-P.

Wal-Mart, which has been under pressure to change its employee and other policies by union-backed groups like WakeUpWalmart.com, is perhaps more anxious about leaks than other companies these days. Over the last year and a half, internal memos have been leaked to the media about a range of issues from health care benefits and wages to attendance policies. Negative headlines have depressed its stock — which three years ago traded at $60 but is now in the $45 range — and harmed the retailer's reputation.

Patricia Edwards, a portfolio manager and retail analyst at Wentworth, Hauser & Violich in Seattle, said she doesn't know whether Gabbard acted alone, but she said: "I am getting the feeling that Wal-Mart is becoming more sensitive and more paranoid. I understand their paranoia."

Wal-Mart has declined to comment further on the eavesdropping case after it announced on March 5 that Gabbard recorded phone messages between a Times reporter and members of the retailer's public relations team. He also intercepted pages and text messages from other employees and non-employees, using his own personal equipment.

The company fired Gabbard last week as well as his direct supervisor, Jason Hamilton. A third person was put on disciplinary action.

Gabbard declined to comment in a text message sent Monday to an AP reporter. Hamilton said at his home in Springdale, Ark., on Tuesday that he hadn't been contacted by any federal investigators. He declined to comment further.

Wal-Mart's uneasiness about security also follows years of being shrouded in secrecy in the backwoods of Arkansas. This is a company that has a reputation for gathering sophisticated information about its consumers — and lets employees know it is monitoring their computer and Internet usage.

Senser, whom Wal-Mart hired in 2003, had helped create a new unit at the FBI focusing on security. The Threat Research and Analysis team, where Gabbard worked, is relatively new, and focuses on overseeing security of Wal-Mart's information systems; it's still unclear whether it was also charged with finding the source of leaks, as Gabbard said. Dave Tovar, a Wal-Mart spokesman, declined to give out any information about the team.

Wal-Mart said it believes the unauthorized recording of telephone conversations by Gabbard did not violate any applicable federal or state laws because Wal-Mart policies subject all employees' communications to possible monitoring or recording. Still, the company said that Gabbard's recording of the calls was against company policy; Wal-Mart has maintained that it only records associate phone calls in compelling circumstances and with written permission from the company's legal department.

Federal law prohibits intercepting wireless communications without a court order, according to Jim Dempsey, policy director of the Center for Democracy and Technology.

Bruce Schneier, a computer security expert with Counterpane Internet Security, said the situation is complicated, adding that "we don't know a lot of the details of the (Gabbard's) motivation."

The real reporting relationship between Senser and Gabbard and whether Senser knew of Gabbard's activities aren't clear.

Schneier said it may be difficult to prove that Gabbard had pressure from superiors — if in fact he did. In the HP case, board member Thomas Perkins and his attorney demanded information from HP about the methods used to identify another board member as a leaker.

"One of the board members said, 'this will not stand,"' Schneier said. "That is how it broke."

AP Business Writer Marcus Kabel in Bentonville, Ark., contributed to this report.

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ICBA Statement on Wal-Mart Pulling Its ILC Application

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Washington, D.C. (March 16, 2007)—The Independent Community Bankers of America (ICBA) cheered Wal-Mart's decision to withdraw its application for federal deposit insurance for a Utah-based industrial loan company (ILC).

"America's consumers and America's communities are the true winners," said James P. Ghiglieri, Jr., ICBA chairman and president of Alpha Community Bank, Toluca, Ill. "ICBA has fought long and hard to preserve the economic diversity necessary to sustain vibrant and dynamic communities and to protect the safety and soundness of America's deposits."

"A Wal-Mart bank — owned by the world's largest commercial retailer — is the poster child for what could go wrong and would pose significant risk to the safety and soundness of the Deposit Insurance Fund and to the stability of our financial and economic system by breaching the long-standing wall between banking and commerce," said Camden R. Fine, ICBA president and CEO. "Congress now needs to act quickly to address other pending commercial ILC applications and possible future applications by closing the ILC loophole and passing the Frank-Gillmor legislation."

Despite Wal-Mart's decision to withdraw its ILC application, ICBA will continue to fight to close the ILC loophole and work diligently with Congress to pass the Industrial Bank Holding Company Act (H.R. 698) introduced by Reps. Barney Frank (D-Mass.) and Paul Gillmor (R-Ohio) and co-sponsored by 81 members of Congress. The measure would close the ILC loophole in the Bank Holding Company Act and prohibit Wal-Mart, Home Depot and other non-financial companies from using an ILC charter to skirt the law preventing commercial firms from owning FDIC-insured financial institutions.

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Statement by NAR President on Wal-Mart Withdrawal of Bank Application  

PRNewswire-USNewswire                       [back to top]

WASHINGTON, March 16 /PRNewswire-USNewswire/ -- Pat Vredevoogd Combs, president of the National Association of Realtors(R), today released the following statement to its members on Wal-Mart's decision to withdraw its application to open an industrial loan company (ILC):

"As FDIC Chairman Sheila Bair stated earlier today, 'Wal-Mart made a wise choice' in withdrawing its application to the FDIC to open an ILC. This is a major victory for our country and our financial security."

"As NAR has written, testified and continued to discuss, mixing banking and commerce puts our national economy at risk. When commercial firms are allowed to engage in banking, the bank functions under an inherent conflict of interest. This conflict imposes unnecessary risks to the financial system of the bank, the parent corporation, and the national economy."

"We thank House Financial Services Chairman Barney Frank (D-Mass.) and Rep. Paul Gillmor (R-Ohio) for their relentless pursuit of this important issue. We also acknowledge the decision made by FDIC Chairman Sheila Bair and the FDIC Board to extend the current moratorium on ILC applications from commercial firms giving Congress the time to examine the ILC issue. NAR believes it is time to close the ILC loophole by enacting H.R. 698, the Industrial Bank Holding Company Act of 2007. We look forward to working with all interested parties in ensuring that banking and commerce remain separate and that the ILC loophole is permanently closed."

The National Association of Realtors(R), "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

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Wal-Mart, Citing Controversy, Abandons Bank Plans

By Alison Vekshin,
Bloomberg
March 16th, 2007                              [back to top]

March 16 (Bloomberg) -- Wal-Mart Stores Inc. scrapped plans to open its own bank, ending a controversy that roiled financial- services companies that feared direct competition from the world's largest retailer.

Wal-Mart said today it notified the Federal Deposit Insurance Corp. it was withdrawing an application to open a so- called industrial bank in Utah. The unit would have enabled the Bentonville, Arkansas company to process credit-card and debit- card transactions internally.

Unlike dozens of prior industrial-bank applications, ``Wal- Mart's has been surrounded by manufactured controversy since it was submitted almost two years ago,'' Wal-Mart Financial Services President Jane Thompson said in a statement. The decision was made ``to better focus on other ways to service customers.''

Wal-Mart's move represents a victory for banking lobbies that threw up hurdles since the retailer's application since it was filed with the FDIC in July 2005. Banks said Wal-Mart would have used the bank to eventually open branches in its stores and dominate the industry.

``Wal-Mart made a wise choice,'' said FDIC chairman Sheila Bair in a statement. ``This decision will remove the controversy surrounding their intentions.''

Congressional Interest

The House Financial Services Committee scheduled a March 22 hearing on whether to ban new commercially owned industrial banks, including Wal-Mart's. Industrial banks are state- chartered, limited-service institutions based in a handful of states.

The House panel's chairman, Barney Frank, a Massachusetts Democrat, and U.S. Representative Paul Gillmor, an Ohio Republican, introduced legislation in January that would ban new industrial banks owned by commercial companies, including Wal- Mart and another applicant, Atlanta's Home Depot Inc.

Wal-Mart said it never planned to open branches. It won't be applying for any other bank charter, John Kelly, Wal-Mart's director of tax and financial services, said in an interview today.

The retailer will continue to expand into financial services, Kelly said. Wal-Mart already offers a store credit card, check cashing, money orders, wire transfers and bill- payment services in partnership with outside vendors. Those offerings saved its customers $245 million last year, he said.

Celebration

``We're popping champagne corks around here,'' said Cam Fine, president of the Independent Community Bankers of America, a Washington-based group representing small banks that led the opposition to Wal-Mart's application. ``We have worked very, very hard for the 18 months to achieve this result.''

A state banking official in Utah, home to about half of the nation's industrial banks, welcomed the decision.

``We're hopeful that this will allow the FDIC to begin the process of approving the applications that are waiting,'' said Paul Allred, deputy commissioner at the Utah Department of Financial Institutions. ``It's been frustrating for the department to not have anything take place in the last 17 months,'' he said.

In January, the FDIC extended for one year a freeze on industrial-bank applications from commercial companies to give Congress time to set policy on the issue. The federal regulatory agency insures deposits at U.S. banks and oversees industrial banks.

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Wal-Mart Admits Defeat on Banking Proposal

After Nearly Two Years of Trying, Nation's Largest Retailer Ends Attempts to Establish Its Own Financial Institution

By CHARLES HERMAN
ABC News Business Unit
March 16, 2007                                             [back to top]

Wal-Mart today announced that it has decided to end its quest to open an "industrial loan company," or ILC, a move that would have allowed the nation's largest retailer to process its own credit and check transactions and save potentially millions of dollars in fees that it currently pays to third-party vendors. While Wal-Mart insisted that it would use the ILC only for this purpose, critics said the retailer would use the loan company to open banking branches in stores.

When other companies like Target and GM sought ILC approval, their applications did not cause controversy. Wal-Mart's July 2005 application, however, united bankers, labor unions and many in Congress and led to the the first-ever hearings by the Federal Deposit Insurance Corp. into whether or not it should approve the application from Wal-Mart and provide insurance for its ILC.

Wal-Mart Financial Services President Jane Thompson said in a press release today, "Unlike dozens of prior ILC applications, Wal-Mart's has been surrounded by manufactured controversy since it was submitted nearly two years ago. At no stage did we intend to use the ILC to establish branch banking operations as critics have suggested -- we simply sought to reduce credit and debit card transaction costs."

The FDIC decided to issue a six-month moratorium on all ILC applications while it examined the issue. Then, when that expired on Jan. 31 of this year, the FDIC again extended the moratorium, this time for a year.

Sheila Bair, chairman of the FDIC, said in a statement today, "Wal-Mart made a wise choice. This decision will remove the controversy surrounding their intentions. They don't need an ILC to play an important role in expanding access to financial services; they can do so by partnering with banks and others. We look forward to working with Wal-Mart in meeting the need for low-cost financial services across all populations."

In July 2005, Avivah Litan, a senior analyst with Gartner told ABC News that Wal-Mart had tried three other times to buy or partner with existing financial institutions. "The other three times, the community banks in Wal-Mart stores fought Wal-Mart from opening banks. Those earlier proposals were more ambitious. This one is more narrow. There are only a few industrial banks in the U.S., about a 100. All this bank would be doing is credit card transaction acquiring."

In the end, even the ILC proved to be too much for Wal-Mart's critics, and their resistance led to Wal-Mart's withdrawal of their application.

But just because Wal-Mart lost this fight, industry watchers say the company is still exploring ways to expand its business into financial products. On Thursday, several news reports highlighted e-mails from Wal-Mart that detailed lease agreements with banks that currently rent space inside Wal-Mart stores. The leases provide Wal-Mart the ability to provide consumer lending services, such as mortgages and home equity loans. Wal-Mart said the leases were nothing new and according to one press person quoted in one article, they don't "signal anything new."

Dow Jones reported yesterday, "There are more than 300 different banks with 1,200 branches inside Wal-Mart stores across the country, and the company plans to add 200 more by 2009. Most of the banks have 15-year leases with Wal-Mart."

Copyright © 2007 ABC News Internet Ventures

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Wal-Mart Exits Banking

Evelyn M. Rusli ,
03.16.07                                     [back to top]

Foreseeing a lengthy and controversial approval process, the world’s largest retailer, Wal-Mart Stores, withdrew its application to enter the banking industry on Friday.

The company had hoped to open an industrial bank in Utah, which would have allowed the company to process credit card transactions internally. But Wal-Mart's application, submitted in July 2005, was highly criticized by lawmakers and major banking institutions, which accused the retail giant of laying the groundwork to open bank branches and offer consumer lending.

Wal-Mart’s withdrawal comes amid growing evidence that retailers will face greater hurdles in the banking sector. Earlier this year, the Federal Deposit Insurance Corp., the body responsible for approving bank charter applications, said it would delay its review of certain applications. Meanwhile, some members in Congress have moved to clamp down on bank charters owned by commercial entities. Next week, Congress will hold a hearing to decide whether commercially owned banks, such as the one proposed by Wal-Mart, should be banned.

"Wal-Mart made a wise choice. This decision will remove the controversy surrounding their intentions," said Sheila Bair, FDIC chairman, in a statement on Friday.

Wal-Mart has repeatedly told regulators that it will not open bank branches and that it only intended to use the Utah bank as a way to save money on processing fees.

But for the retailer’s critics, Wal-Mart's actions seem to contradict its promises.

Republican Congressman Paul Gillmor of Ohio lambasted Wal-Mart for failing to fully disclose its ambitions in retail banking. Gillmor released a company e-mail that said that Wal-Mart reserved the right to offer a full array of financial services in lease agreements with banks that rent space inside Wal-Mart.

In response, Wal-Mart said the language was not new and had been used in many other lease agreements but Gillmor said it was missing from other leases he had seen.

"The only reasonable explanation of Wal-Mart's recent plan to revise its leases is that it plans to enter into full-scale banking," Gillmor said at a news conference in Washington, D.C. this week. "This latest information is the smoking gun of Wal-Mart's dishonesty and deception."

Later this month, Congress will hold a hearing to decide whether commercially owned industrial banks, such as the one proposed by Wal-Mart, should be banned.

Walmart shares were up 0.2%, 10 cents a share, to $46.40 during Friday midday trading.

- The Associated Press contributed to this report.

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Wal-Mart pulls bank petition, Home Depot still in

Reuters                              [back to top]

WASHINGTON/NEW YORK (Reuters) - Wal-Mart Stores Inc. said on Friday it has withdrawn its request to open a specialty bank after immense opposition from politicians, consumer groups and community banks hampered its application with U.S. bank regulators.

Wal-Mart said its application had been surrounded by "manufactured controversy" since it was submitted almost two years ago, and it was walking away to focus instead on introducing new financial services in its stores.

"We have a lot of things that will be coming out this year that we think, one, could have gotten lost in all this controversy, and two, are a lot bigger idea than having a bank," said Wal-Mart Financial Services President Jane Thompson in an interview.

She declined to elaborate on what those services would include.

Wal-Mart submitted an application to regulators in 2005 to allow it to operate a specialty bank known as an industrial loan company (ILC).

The retailer repeatedly insisted that it was not interested in branch banking, but was looking to use the bank to save money by internalizing credit-card and check transactions.

But consumer groups and banks feared Wal-Mart would eventually provide other retail banking services, leading to the demise of community banks.

"Wal-Mart made a wise choice," U.S. Federal Deposit Insurance Corp. Chairman Sheila Bair said in a statement. "This decision will remove the controversy surrounding their intentions."

Bair added: "They don't need an ILC to play an important role in expanding access to financial services by partnering with banks and others."

Wal-Mart's decision comes one day after a U.S. lawmaker released an e-mail that he said indicated the company's interest in consumer banking extended beyond what it had disclosed to banking regulators.

"I'm glad they withdrew their application but there is still a very real need to separate banking and commerce," said Ohio Republican Rep. Paul Gillmor, co-sponsor of legislation to curb commercial ownership of ILCs.

HOME DEPOT STICKS BY ITS APPLICATION

While Wal-Mart has pulled its application, Home Depot Inc. said it remains committed to its application pending before U.S. regulators to acquire an existing bank.

The home improvement retailer said its application to acquire EnerBank USA from CMS Energy Corp. "in no way" is affected by Wal-Mart's decision.

Earlier this year, the FDIC extended a freeze on applications by commercial companies to open or acquire ILCs, and the U.S. House Financial Services Committee is holding a March 22 hearing on the issue.

A U.S. House bill, which is widely expected to be approved by the full House, would also expand the FDIC's powers, but Utah's Robert Bennett, an influential senior Republican on the Senate Banking Committee, backs commercial firms owning ILCs.

Many ILCs -- which can offer a range of products including checking and savings accounts, credit cards, real estate lending and other financing -- are chartered in Utah.

Floyd Stoner, an executive director at the American Bankers Association trade group, said Wal-Mart could always reapply. "I don't think this changes anything," he said.

The American Financial Services Association, a trade group for industrial banks, repeated its call for the FDIC to lift the moratorium and resume reviewing all applications.

Wal-Mart already offers a number of financial services in its stores, like a credit card in partnership with General Electric and money transfers through MoneyGram .

Wal-Mart's Thompson said the retailer had no plans to file an ILC application in the future and instead was looking for partners to work with to develop new services.

"We continue to look for partners who have banks or maybe don't have banks," she said. "A lot of products that we are looking at to grow don't need a bank."

The Independent Community Bankers of America trade group cheered Wal-Mart's decision. "Congress now needs to act quickly to address other pending commercial ILC applications," ICBA President Camden Fine said.

Wal-Mart shares rose 14 cents to $46.14 in afternoon trading on the New York Stock Exchange. Home Depot shares were unchanged at $37.49.

Copyright 2007 Reuters

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Wal-Mart withdraws bid to obtain banking license

Retailer says it only wanted to aid customers with lower fees

By MARCUS KABEL
Associated Press                        [back to top]

Wal-Mart, stymied by a phalanx of opponents from big banks to unions and dogged by conflicting messages about its intentions, withdrew a bid for a banking license Friday and said it would find other ways to serve customers' financial needs.

The world's largest retailer withdrew its application to the Federal Deposit Insurance Corp. for a bank charter after nearly two years of what it called "manufactured controversy."

It was the Bentonville, Ark.-based company's fourth failure since 1999 to open a bank after previous efforts in Oklahoma, California and Canada were stopped by regulators or lawmakers.

Wal-Mart repeatedly said its latest bid was about payment processing, not branch banking for consumers. It said it wanted to open an industrial bank to save millions of dollars it now pays outside banks to handle credit and debit card payments in its stores.

Supporters said it could help reduce fees and costs for consumers and that the industry is in need of more competition.

But a vocal front of opponents – including big and small banks, unions, farmers, convenience store owners and Realtors — protested to the FDIC and Congress that Wal-Mart was secretly planning to start branch banking, which they claimed would concentrate too much economic power in one company.

The withdrawal came one day after a Republican member of the House Financial Services Committee accused Wal-Mart of "a pattern of deception and dishonesty" about its banking intentions.

Rep. Paul Gillmor of Ohio released an e-mail that showed Wal-Mart was renegotiating leases with outside banks in its stores to preserve Wal-Mart's right to offer a range of financial services, including mortgages and loans. Wal-Mart said those lease terms were nothing new.

Wal-Mart's president of financial services, Jane Thompson, denied that the revelation had anything to do with dropping the bank application.

Thompson said Wal-Mart started thinking about dropping the bid after the FDIC in late January extended a moratorium on all industrial bank applications while Congress debates new legislation on those charters.

But Thompson acknowledged that critics' attacks on the industrial bank were a burden on Wal-Mart's plans to keep expanding financial services for low-income customers.

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Wal-Mart Blasted by Congressman

By MARCUS KABEL
The Associated Press
Kiplinger.com
March 15, 2007                                  [back to top]

Wal-Mart Stores Inc. may be eyeing a larger role in banking than it has previously disclosed, according to lease details made public Thursday by a congressman who accused the world's largest retailer of hiding plans to become a retail bank.

Wal-Mart is seeking federal approval to open a limited-purpose bank for processing credit card and other payments. Its executives have pledged in testimony to regulators that they have no plans to open bank branches or start consumer lending.

Rep. Paul Gillmor, R-Ohio, a leader of congressional efforts to draw a strict line between commerce and banking, released a Wal-Mart e-mail detailing lease terms with banks that rent space for branches inside hundreds of Wal-Mart stores.

The terms reserve Wal-Mart's right to offer an array of future financial services in its stores.

The lease terms in the e-mail say Wal-Mart can offer future services including mortgages, consumer loans, home equity loans, investment and insurance products and any other type of service or product that Wal-Mart might develop.

Wal-Mart said the e-mail was nothing new and reflected similar language it has used in leases with outside banks for at least five years.

But that language was not included in other leases Gillmor has seen, his spokesman Bradley Mascho said.

One Wal-Mart lease with a community bank, obtained last year by The Associated Press and confirmed as authentic by Wal-Mart, also did not contain the same specific language.

The lease obtained by The Associated Press refers to Wal-Mart accepting various kinds of cards and offering credit cards and "other financial or investment products and services," but does not specify consumer services laid out in the new e-mail, like mortgages and loans.

The e-mail from Larry Ellis, Wal-Mart's leasing manager for in-store banks, said new services could be offered "in the checkout lanes, at the Customer Service Desk, through automated delivery channels, kiosks, or devices, or in any other location or format within the Store".

Gillmor said the lease terms showed Wal-Mart is secretly planning to move into retail banking despite assurances to the contrary in testimony last year to the Federal Deposit Insurance Corp.

"The only reasonable explanation of Wal-Mart's recent plan to revise its leases is that it plans to enter into full-scale banking," Gillmor said at a news conference in Washington. "This latest information is the smoking gun of Wal-Mart's dishonesty and deception."

Wal-Mart told the FDIC last year that it wants to open an "industrial loan corporation" for the sole purpose of saving money that it now pays outside banks that process millions of payments in Wal-Mart stores by credit card, debit card or electronic check.

"The Bank has made repeated public commitments that it will not branch, and its business plan includes neither lending nor retail deposit gathering," the retailer said in written testimony.

One of Wal-Mart's most vocal critics, union-funded WakeUpWalMart.com, said the new e-mail proved that the retailer plans to compete with community banks across the nation if it can win FDIC approval for its limited-purpose bank.

"Wal-Mart's denials aside, their words and actions prove once again that Wal-Mart's banking ambitions are real and, if not stopped, would pose a dangerous and unacceptable risk to the nation's economy," the group said.

The FDIC in January extended for one year a moratorium on considering nonfinancial companies' applications to establish or acquire banks, including the Wal-Mart application.

Critics say the growth of industrial loan corporations could blur the line between banking and commerce, concentrate assets in the hands of a few big companies and stifle competition.

All contents © 2007 The Kiplinger Washington Editors

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Wal-Mart seen in bigger bank role

Amended lease terms with its bank tenants suggests that Wal-Mart may be interested in offering mortgages and home equity credit to its customers.

CNNMoney.com
March 15 2007                                    [back to top]

NEW YORK (CNNMoney.com) -- Wal-Mart may be looking into offering consumers mortgages, home equity lines of credit and consumer loans, according to published reports Thursday.

According to the Wall Street Journal, the world's largest retailer has quietly renegotiated the terms of leases with a number of banks operating in its stores, giving Wal-Mart (Charts) the explicit right to offer these new financial services to its customers.

Moreover, the amended leases also give Wal-Mart the ability to offer debit cards and investment and insurance products either directly or through a third-party vendor, the report said.

The Journal, citing content from one of the new leases, said Wal-Mart said it could "offer these products and services in the checkout lanes, at the customer-service desk, through automated-delivery channels, kiosks" or any other place in the store.

Wal-Mart has repeatedly tried to obtain a banking charter, and a federal regulator shelved the company's most recent attempt in January for 12 months, the report said.

Still, Wal-Mart would be able to offer many banking products without actually owning a bank or even having a branch within its more than 3,000 stores. Critics, including thousands of community banks, have tried to block Wal-Mart from owning a bank, alleging that Wal-Mart would present a dangerous mixture of banking and commerce and put the deposit-insurance system at risk.

The paper said Wal-Mart's application is on hold while Congress debates the issue. If the company doesn't win a bank charter, it can't receive federal deposit insurance or open branches.

Wal-Mart currently leases store space to 300 different banks who operate 1,200 branches inside its stores across the country, the report said.

Wal-Mart spokesman Kevin Gardner told the paper that the lease language didn't "signal anything new."

"We've been offering services like check cashing, money transfers, branded credit cards and bill payments for some time," he said. "Our strategy is to continue to grow our existing financial services to continue to save our customers money so they can live better."

Fifteen commercial firms already own banks, including Harley-Davidson (Charts) and Target Corp., (Charts) the paper said.

Congressional concern Separately, TheNew York Times reported that a Wal-Mart employee sent emails to Ohio Republican Rep. Paul Gillmor which suggested that the company was laying the groundwork to offer its own banking products.

The paper said Gillmor planned to release the information Thursday since he was concerned that the information suggested that Wal-Mart was telling its tenants, some of which are retail banks, that it was reserving the right to become a full-service bank, including the underwriting of mortgages.

Wal-Mart spokeswoman Mona Williams told the Times the company had updated some of its tenant leases late last year to include the language in question but implied that it had been an option all along.

"There is nothing new here. While we recently updated language in our leases, similar language has been in our agreements for at least five years," Williams said.

Wal-Mart currently offers branded credit cards, check cashing and other services through partnerships with financial institutions.

The new information comes as the House Financial Services Committee gears up for hearings next week on a closely watched law that would bar non-financial institutions, like Wal-Mart Stores and Home Depot, from operating a bank, the report said.

© 2007 Cable News Network LP, LLLP.

 [back to top]

Ohio lawmaker says Wal-Mart has big banking plans

By Nicole Maestri
and John Poirier
Reuters
Thu Mar 15, 2007                                          [back to top]

NEW YORK/WASHINGTON, March 15 (Reuters) - A U.S. lawmaker has released an e-mail he said shows that Wal-Mart Stores Inc.'s <WMT.N> interest in consumer banking extends beyond what the retail giant had previously disclosed to regulators.

At a press conference on Thursday, Republican Rep. Paul Gillmor of Ohio distributed a copy of an e-mail from a Wal-Mart executive with language the retailer has included in tenant leases letting it reserve the right to offer a variety of financial services, including mortgages and home equity loans.

Gillmor said the e-mail suggests Wal-Mart has been deceptive in its disclosure of its banking plans.

"The only reasonable explanation of Wal-Mart's recent plan to revise its leases is that it plans to enter into full-scale banking," Gillmor told reporters. "This helps us pass a bill."

Wal-Mart has submitted an application to U.S. banking regulators that, if approved, would allow it to operate a specialty bank known as an industrial loan company (ILC).

It has long insisted that it was not interested in branch banking, but was looking to use the bank as a way to save money by internalizing credit-card and check transactions.

But consumer groups and banks fear Wal-Mart could eventually provide other retail banking services.

"The e-mail and Wal-Mart's actions seem to contradict past statements in which Wal-Mart publicly stated that they had no intention of offering a broad array of banking services," said WakeUpWalMart.com, a union funded group.

The group called on Wal-Mart to withdraw its ILC application.

The president of a trade group that opposes commercial ownership of banks said the e-mail represents another example of the world's largest retailer shooting itself in the foot.

"Wal-Mart has more smoking guns than a shooting range," said Camden Fine, president of Independent Community Bankers of America.

A Wal-Mart spokesman said the retailer had recently updated language in its leases but had similar language in the agreements for the last five years.

"At this point, no one should be surprised that Wal-Mart is interested in financial services. We continue to grow our product offering like check cashing, money transfers," said WalMart spokesman Kevin Gardner.

While efforts to get its ILC application approved have stalled in the United States, Wal-Mart de Mexico, a unit of Wal-Mart Stores, will open its first in-store bank branch in June. The bank will offer basic savings and loan services to low-income earners with limited access to credit.

MORE HEARINGS

Earlier this year, the Federal Deposit Insurance Corporation extended a freeze on applications by commercial companies to open or acquire ILCs, and the U.S. House Financial Services Committee plans a March 22 hearing on the issue.

Gillmor and Democrat Barney Frank, chairman of the House Financial Services Committee, reintroduced a bill earlier this year aimed at blocking retailers from opening banks and limiting current retailer-owned banks established after Oct. 1, 2003, from expanding.

The bill, which is widely expected to be approved by the full House, would also give the FDIC increased regulatory powers for ILC holding companies.

Gillmor said he has not spoken to Sen. Robert Bennett, an influential senior Republican on the Senate Banking Committee who backs commercial ownership of ILCs, since the two failed to reach an agreement at a meeting in January.

Many ILCs operated by both financial and nonfinancial companies are chartered in Utah, the state Bennett represents.

Bennett has not changed his position, his spokeswoman said on Thursday.

Gillmor signaled that there may be room for flexibility in the bill when negotiating the final outcome with the Senate. "We're going to negotiate that in a conference committee instead of at a news conference," Gillmor said.

Wal-Mart shares rose 38 cents to $46.11 in afternoon New York Stock Exchange trading. (Additional reporting by Mark Porter in New York)

© Reuters 2007. All rights reserved.

 [back to top]

Readers debate Wal-Mart in backyards

Some against more big-box stores, while others would welcome bargains

MSNBC
March 15, 2007                                 [back to top]

Is Wal-Mart a friend or foe to a local neighborhood?

Some people responding to our recent article about communities opposing Wal-Mart development said they would — or are — fighting the retailer's presence in their backyards. But others said they wished there was a Wal-Mart closer by.

Here are a few excerpts:

Give neighborhoods choice Wal-Mart should not be allowed into any neighborhood that chooses not to have one. They do not offer the savings they claim to offer. They are no longer customer- or neighbor-friendly. -mae424

Welcome Wal-Mart Perhaps small-town America needs to become bigger-town America. I would relish a Wal-Mart in my backyard. It would provide jobs and low-priced goods. -A is A

I'd rather move Wal-Mart is trying to build yet another Supercenter in my area. I can say if they succeed in building the one close to me, I will put my house up for sale and get out. We have three Supercenters within 10 miles and do not need it. We live in a small residential area, and I moved there for the mom-and-pop-type stores and less traffic. -Horseplay

No opposition in suburban Philly Personally, I would love to see a (Wal-Mart Supercenter) come to my area. I have access to two regular Wal-Marts reasonably close by, and I hate them because they simply don’t have the selection. The closest (Supercenter) is 45 miles away. I am lucky, I guess, that in my area — suburban Philadelphia — we don’t really have issues where people don’t want to see them sprout up. -19061 is home

We need jobs, bargains Many of us want one in our area. Although I keep hearing about how poor the pay is, I live in the country, and not only do we need more jobs, but Wal-Mart pays better than almost anyone else. Also, there are many things that a lot of people could not afford to buy if it weren't for Wal-Mart. -fire the repubs

Too many in Texas When I lived in Massachusetts, it was a 20- to 30-mile drive to a Wal-Mart. I loved to go to the store and just window shop for craft ideas or whatever. Now, I live outside Dallas, Texas, and we have over 10 (!) Wal-Mart stores in a 10-mile radius of our town. That to me is ridiculous and abusive of the other businesses in the area. -KeltWolf

Better than local stores Wal-Mart may have low wages and benefits, but they still pay a whole lot better than the "mom & pop" businesses in our town that paid their employees minimum wage and no (benefits) whatsoever at the time Wal-Mart arrived. Plus, the prices in the small local stores were so darn high. -R2006

Lost Wal-Mart fight I was part of a fight to keep Wal-Mart out of my home town in Baxter, Minnesota. They tore down over 30 acres of forest land to put up their new store (less than a mile away from their old store). The Supercenter is less than 100 yards away from (my) boyhood home, and citizens did everything to keep them from building a new store, to no avail. -ssoross

Misses Wal-Mart My husband and I just recently moved to the Chicago area from Reno, Nev. I have found it very difficult to find a grocery store that I can afford on my budget. The one and only thing I truly miss about Reno is the four Wal-Mart Supercenters I had to chose from. So yes, I would love to have a Wal-Mart Supercenter near my home. -TSP

Don't need another one They want to build one by my house and I already have three within five miles. We do not need another in Avondale, Ariz.! -Gary M

Wal-Mart forces others out Wal-Marts are showing up on every corner and that is not a good thing. I come from very rural Minnesota where the only shopping is at a Wal-Mart unless you want to drive 45 minutes away to a small mall. The reason ... is because Wal-Mart has forced the other hometown (“mom and pop”) stores to close. -stak

Wal-Mart wanted I live in a town here in southern Illinois that has more cows than people. The nearest Wal-Mart is 25 miles away. ... Wal-Mart tried to put a store out by the interstate three years ago, (but) the city council bumped it right out. The so-called mom-and-pop stores are nearly non-exsistent anymore, and the ones that are here are so overpriced that Wal-Mart is a relief, financialy. I'll drive the 50 miles to get whatever it is that I need. -chicagokid

Don't shop at Wal-Mart If you don’t want a Wal-Mart in your backyard, don’t shop in one in someone else’s backyard. The only way Wal-Mart will stop building more and more stores is if they do not have the business that will support more stores. -Audio1

Use land for parks, not stores I don't want another Wal-Mart in my city of Aurora, Colo. We have three within a 10-mile radius of each other. All this has done is add to the traffic and congestion as well as consume land that could've been made into a public park — so families could do something really strange, like have picnics, bike and walk. -theamanly50

Wal-Mart welcome in my backyard I would love to have a Wal-Mart in my backyard, and it should be my right to sell my yard to them. If you don't want it there, then you buy the land. ... If you like mom-and-pop shops, then shop at them and keep them open. If you think Wal-Mart doesn't pay enough, then don't work there. -adoptiveparentinillinois

One is OK, not five I don't have an issue with Wal-Mart building a store for a community, but five Supercenters in my area of 200,000 people is a little much — no, it is too much. One or even two would have been sufficient. -Rob Balch

© 2007 MSNBC.com

 [back to top]

Wal-Mart's Dangerous Banking Ambitions Exposed Again

New York Times and Wall Street Journal Expose Wal-Mart's Intentions to Enter Banking

PRNewswire-USNewswire                          [back to top]

WASHINGTON, March 15 /PRNewswire-USNewswire/ -- As reported by both the New York Times and the Wall Street Journal, an internal Wal-Mart email shows that Wal-Mart is altering lease terms with its current bank tenants further showing its intentions to get into banking. In fact, the Wal-Mart email, released at a press conference by Republican Rep. Paul Gillmor, discusses changes in tenant leases that would reserve the right for Wal-Mart to offer a variety of financial services, including mortgages and home equity loans.

The email and Wal-Mart's actions seem to contradict past statements in which Wal-Mart publicly stated that they had no intention of offering a broad array of banking services and raises serious questions about the veracity of Wal-Mart's official testimony before the FDIC in April 2006 where Jane Thompson, Wal-Mart's head of Financial Services stated, "The bank will not engage in any lending activity and will never extend credit in any way to any affiliate."

The following statement is attributable to Paul Blank, campaign director for WakeUpWalMart.com:

"It seems that every day another story exposes Wal-Mart's persistent problem with telling the truth to the American people and our nation's elected leaders. Based on today's reports, it seems that Wal-Mart's officials either outright lied or were less than truthful in their public statements and in their testimony before the FDIC.

While Wal-Mart stressed to the FDIC that the company had no intention of offering a broad array of banking services, we now know, based on Wal-Mart's own internal emails, that Wal-Mart is determined to establish a full service 'Wal-Mart Bank' that would pose a serious risk to our nation's economy and financial stability.

Past denials aside, the extent of Wal-Mart's banking ambitions have now been exposed and prove that Wal-Mart wants to pursue a dangerous path of monopolizing the American consumer.

We call on Wal-Mart to be more truthful with the American people and we hope Wal-Mart will withdraw its controversial banking application and that Congress will close the ILC loophole once and for all."

[back to top]

Wal-Mart may have big banking plans

Congressman accuses world’s largest retailer of hiding banking plans

The Associated Press
March 15, 2007                                        [back to top]

Wal-Mart Stores Inc. may be eyeing a larger role in banking than it has previously disclosed, according to lease details made public Thursday by a congressman who accused the world’s largest retailer of hiding plans to become a retail bank.

Wal-Mart is seeking federal approval to open a limited-purpose bank for processing credit card and other payments. Its executives have pledged in testimony to regulators that they have no plans to open bank branches or start consumer lending.

Wal-Mart’s bank effort caused so much furor last year that the Federal Deposit Insurance Corp. held a public hearing, the first ever on a license application. Critics say even a limited banking role for Wal-Mart would vest it with too much economic power.

Supporters, however, say it could help reduce fees and costs for consumers and that the industry is in need of more competition.

Rep. Paul Gillmor, R-Ohio, a leader of congressional efforts to draw a strict line between commerce and banking, released a Wal-Mart e-mail detailing lease terms with banks that rent space for branches inside hundreds of Wal-Mart stores.

The terms reserve Wal-Mart’s right to offer an array of future financial services in its stores.

The lease terms in the e-mail say Wal-Mart can offer future services including mortgages, consumer loans, home equity loans, investment and insurance products and any other type of service or product that Wal-Mart might develop.

Wal-Mart said the e-mail was nothing new and reflected similar language it has used in leases with outside banks for at least five years.

But that language was not included in other leases Gillmor has seen, his spokesman Bradley Mascho said.

One Wal-Mart lease with a community bank, obtained last year by The Associated Press and confirmed as authentic by Wal-Mart, also did not contain the same specific language.

The lease obtained by The Associated Press refers to Wal-Mart accepting various kinds of cards and offering credit cards and “other financial or investment products and services,” but does not specify consumer services laid out in the new e-mail, like mortgages and loans.

The e-mail from Larry Ellis, Wal-Mart’s leasing manager for in-store banks, said new services could be offered “in the checkout lanes, at the Customer Service Desk, through automated delivery channels, kiosks, or devices, or in any other location or format within the Store”.

Gillmor said the lease terms showed Wal-Mart is secretly planning to move into retail banking despite assurances to the contrary in testimony last year to the Federal Deposit Insurance Corp.

“The only reasonable explanation of Wal-Mart’s recent plan to revise its leases is that it plans to enter into full-scale banking,” Gillmor said at a news conference in Washington. “This latest information is the smoking gun of Wal-Mart’s dishonesty and deception.”

Wal-Mart told the FDIC last year that it wants to open an “industrial loan corporation” for the sole purpose of saving money that it now pays outside banks that process millions of payments in Wal-Mart stores by credit card, debit card or electronic check.

“The Bank has made repeated public commitments that it will not branch, and its business plan includes neither lending nor retail deposit gathering,” the retailer said in written testimony.

One of Wal-Mart’s most vocal critics, union-funded WakeUpWalMart.com, said the new e-mail proved that the retailer plans to compete with community banks across the nation if it can win FDIC approval for its limited-purpose bank.

“Wal-Mart’s denials aside, their words and actions prove once again that Wal-Mart’s banking ambitions are real and, if not stopped, would pose a dangerous and unacceptable risk to the nation’s economy,” the group said.

The FDIC in January extended for one year a moratorium on considering nonfinancial companies’ applications to establish or acquire banks, including the Wal-Mart application.

Critics say the growth of industrial loan corporations could blur the line between banking and commerce, concentrate assets in the hands of a few big companies and stifle competition.

© 2007 The Associated Press. All rights reserved.

[back to top]

Wal-Mart, in New Leases, Frees Itself for Banking Push

By Damian PalettaWa,
Wall Street Journal
March 15th, 2007                              [back to top]

Wal-Mart Stores Inc., underscoring its continuing push into financial services, has quietly renegotiated the terms of leases with a number of banks operating in its stores, giving Wal-Mart itself the explicit right to offer mortgages, home-equity lines of credit and consumer loans.

A portion of one of the leases, obtained by Dow Jones Newswires, also gives Wal-Mart the ability to offer debit cards and investment and insurance products either directly or through a third-party vendor. In the wording of the new lease, Wal-Mart said it could "offer these products and services in the checkout lanes, at the customer-service desk, through automated-delivery channels, kiosks" or any other place in the store.

The new lease language comes at a time when Wal-Mart has generated controversy over its repeated efforts to enter the banking business, a push that has drawn fierce opposition from the banking industry, some members of Congress and activist groups. The Bentonville, Ark.-based retailer has a pending application to establish an industrial-loan company in Utah but has promised publicly that it won't open retail bank branches.

The company minimized the importance of the changes, as spokesman Kevin Gardner said the lease language didn't "signal anything new."

"We've been offering services like check cashing, money transfers, branded credit cards and bill payments for some time," he said. "Our strategy is to continue to grow our existing financial services to continue to save our customers money so they can live better."

Mr. Gardner wouldn't say why the leases also protected Wal-Mart's right to eventually offer items it didn't currently sell, such as mortgages, home-equity loans and investment and insurance products. He also didn't say when the company might roll out any of these products.

"We have not made any announcements," he said.

Wal-Mart has repeatedly tried to obtain a banking charter, and a federal regulator shelved the company's most recent attempt in January for 12 months. Still, Wal-Mart would be able to offer many banking products without actually owning a bank or even having a branch within its more than 3,000 stores.

Critics, including thousands of community banks, have tried to block Wal-Mart from owning a bank, alleging that Wal-Mart would present a dangerous mixture of banking and commerce and put the deposit-insurance system at risk. Wal-Mart's application is on hold while Congress debates the issue. If the company doesn't win a bank charter, it can't receive federal deposit insurance or open branches.

There are more than 300 different banks with 1,200 branches inside Wal-Mart stores across the country, and the company plans to add 200 more by 2009. Most of the banks have 15-year leases with Wal-Mart.

Details of the lease agreement were presented to banks by Larry Ellis, Wal-Mart's leasing manager for in-store banks.

The Federal Deposit Insurance Corp., which insures deposits for industrial-loan companies, or IL Cs?, held hearings last April about Wal-Mart's request for a bank charter.

Fifteen commercial firms already own banks, including Harley-Davidson Inc. and Target Corp. The House Financial Services Committee, which is considering a bill that would prohibit companies such as Wal-Mart from owning a bank, is expected to hold a hearing on the issue next week.

 [back to top]

Wal-Mart Is Said to Have Big Banking Plans

By Eric Dash,
New York Times
March 15th, 2007                            [back to top]

An Ohio representative is planning to release information today that suggests Wal-Mart’s ambitions into consumer banking may extend beyond what the retail giant had previously disclosed.

The information, in the form of an e-mail message sent by a Wal-Mart employee, suggested that the company was laying the groundwork to offer its own banking products. Wal-Mart has long insisted that it was not interested in branch banking but was looking to use the bank as a way to save money.

But Representative Paul E. Gillmor, an Ohio Republican, said last night that he was concerned that the undated e-mail message suggested that Wal-Mart was telling its tenants, some which are retail banks, that it was reserving the right to become a full-service bank, including the underwriting of mortgages.

A Wal-Mart spokeswoman confirmed last night that the company had updated some of its tenant leases late last year to include the language in question but implied that it had been an option all along.

“There is nothing new here,” the spokeswoman, Mona Williams, said. “While we recently updated language in our leases, similar language has been in our agreements for at least five years.”

The new information comes as the House Financial Services Committee gears up for hearings next week on a closely watched law that would bar non-financial institutions, like Wal-Mart Stores and Home Depot, from operating a bank.

Wal-Mart submitted an application in 2005 with the Federal Deposit Insurance Corporation for an industrial bank in Utah that it said would be used to process its own credit and debit card transactions for its 3,500 United States stores.

The application almost immediately ignited opposition from lawmakers, consumer groups and financial companies who worried that the company would use its reach to become a retail banking powerhouse. The legislation, and next week’s hearing, are fallout from the application.

In an interview last night, Mr. Gillmor said the Wal-Mart was including a clause in some tenant leases that would allow the company to some day expand its banking operations. Wal-Mart currently offers branded credit cards, check cashing and other services through partnerships with financials institutions.

“We simply became more specific late last year,” Ms. Williams said, referring to the additional term related to the mortgages.

But Mr. Gillmor, who is co-sponsoring legislation that would prevent Wal-Mart and other non-financial institutions from expanding into retail banking, disagreed.

“If they were not going to go into full-service banking, why in the world would they do that? There is no other reason,” he said. “They want to be prepared in case they get their way.”

Mr. Gillmor would not say who provided him the e-mail document, but a person briefed on the situation said that it came from a banking industry group and was probably three or four weeks old.

The e-mail message comes as Congressional lawmakers engage in the latest round of debate over whether non-financial companies, like Wal-Mart and Home Depot, should be allowed to buy or charter so-called industrial loan companies that are operated like banks.

Along with Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, Mr. Gillmor recently introduced the legislation that would prevent such companies from starting an industrial bank and restrict some existing ones from expanding.

Mr. Gillmor said yesterday that he believed he had enough votes to pass the bill in the House and that there was a “very reasonable” chance of winning Senate approval.

Wal-Mart’s application for an industrial loan company charter has been a hot-button political issue with banking industry groups aligning themselves with regulators and some of the company’s fiercest critics. The Federal Reserve Chairman Ben Bernanke said in a speech earlier this month that if Congress was interested in keeping banking and commerce separate, “it should take note of this problem.”

The F.D.I.C. said last month that it would extend a one-year moratorium on new applications for the industrial bank charters to allow lawmakers more time to weigh in on the issue. It first imposed a temporary ban in July. Besides Wal-Mart, Home Depot, DaimlerChrysler and Cargill have applications pending.

Industrial banks have been around for about a century, initially appearing as small, state-charted banks that offered loans to low-income workers who were turned away by traditional banks.

Their special status allowed them to remain exempt from laws barring commercial companies from owning banks. Even though only a handful of states offer charters, their growth has exploded.

Today, they are a $177 billion industry, with about 60 companies from General Motors and General Electric to Target and Merrill Lynch operating industrial banks.

[back to top]

Wal-Mart foes fight development

Activists in communities from Florida to California oppose giant stores

By Allison Linn
MSNBC.com
March 14, 2007                                   [back to top]

Debbie Brinkman didn’t plan on being an anti-Wal-Mart activist. In fact, as a Republican, she felt it was “kind of against my politics to be fighting this.”

But when the Littleton, Colo., resident heard there were plans to build a Wal-Mart Supercenter across from a large and popular park — and within sight of her own front door — she felt she had little choice but to get involved. So Brinkman became one of the early members of Littleton Against Wal-Mart, fighting a store planned for the Denver suburb.

Her story isn’t unusual. Across the country, dozens of community efforts are emerging to block new Wal-Mart development, provoking drawn-out battles that have proven costly and time-consuming for the world's largest retailer and occasionally hindered its expansion plans.

But in some communities, the campaigns are also provoking internal squabbles, with community members divided over whether to welcome or spurn the big-box developments.

The reasons behind the efforts vary widely. Some activists, like Brinkman, say they don’t oppose Wal-Mart in general — they just don’t think Wal-Mart belongs in that particular spot in their community. Others, like Carole Heerman of Woodland, Wash., worry that a Wal-Mart will hurt the town’s other businesses, including her own. Still others, like Michael Funke of Bend, Ore., oppose Wal-Mart because they think its workers should get better wages and benefits.

Experts say the groups are having an impact. Retail analyst C. Britt Beemer said it may be only a few percent of people who boycott because of the negative publicity, but that could still be meaningful for a company beginning to struggle with potential limits to its domestic growth.

By one closely watched measure, same-store sales, Wal-Mart's U.S. growth was anemic last year. Sales at U.S. Wal-Mart stores open at least a year rose a meager 1.9 percent in the company’s latest fiscal year.

That’s not to mention the delays, added legal fees and other obstacles that come when Wal-Mart faces opposition to its development plans — even if the company ultimately succeeds in building the store.

“I’m sure these issues have hurt them all financially,” Beemer said. “In the last few years, it’s gotten to be a bloody mess out there.”

In fact, the Bentonville, Ark.-based company often does succeed in opening its doors despite community outcry. But opponents also have prevailed in efforts to hinder Wal-Mart development in some cities, such as the California communities of Long Beach, San Diego and Turlock, and areas in Florida.

In early March, city council members in Concord, Calif., turned down a project to build a Wal-Mart and other stores in a largely industrial area, citing traffic and environmental concerns. Kevin Loscotoff, Wal-Mart’s senior manager for public affairs in California, said the company is evaluating what to do next. A spokeswoman for the group that opposes the store, Allie Gramm, said she expects the fight to continue.

Company officials in both California and Florida insist the setbacks haven’t hindered the company’s overall growth plans in those states and say they continue to look for ways to draw shoppers from areas where they’ve had trouble building new stores.

In many cases, the battles can drag on for months or even years, proving costly and time-consuming for the opponents as well.

In Bend, Wal-Mart was denied an initial application for a Supercenter and lost subsequent appeals, but opponents expect the fight to continue. Wal-Mart spokeswoman Jennifer Holder said the company plans to submit a new application.

In Littleton, the city council narrowly approved Wal-Mart’s plans, but opponents are gathering signatures for a proposed referendum that would require the council to change its decision or leave it up to voters.

Gray McGinnis, Wal-Mart’s director of public affairs for the mountain region, said the company plans to rally its supporters to turn out in favor of the Wal-Mart.

Wal-Mart officials paint many of the battles as representing niche groups with specific agendas, such as those fighting to unionize Wal-Mart workers or get the company to pay its workers more and offer better benefits.

Some community organizers have accepted money from union labor groups and other anti-Wal-Mart interests, such as grocers who stand to lose business from Wal-Mart competition. Still, many communities also say they received substantial backing from individual members of their communities, and note that individual citizens have devoted hours of volunteer time to the cause.

In Littleton, for example, Brinkman said the group received money from a local food workers union but also did plenty of independent fund-raising.

“There’s not one of us that hasn’t written a substantial amount of personal checks to cover the cost of this fight,” she said.

She insists the community group is concerned about local impact, not someone else's national agenda.

Gramm, who helped oppose Wal-Mart in Concord, Calif., said many volunteers stayed up late into the night for a city council meeting, only to get up early the next morning to commute to their jobs.

"People thought that we were paid people who do this, and we’re not," she said.

However, there are some larger organizations that have had a hand in many Wal-Mart disputes. Those include ACORN, which represents low- and middle-income families and was involved in a failed Chicago effort. The Florida-based activist group WARN, which is a coalition of labor unions, environmentalists and others, said it is or has been involved in 26 Wal-Mart disputes.

In many towns, anti-Wal-Mart groups hasten to point out that they aren’t necessarily against development, or even other chain stores. Some Wal-Mart opponents say they regularly shop at its main competitor, Target. Others favor wholesale club operator Costco, which is known for paying above-average retail wages. Both cater to a higher-end clientele.

“Costco has been an example for us of what we would like Wal-Mart to do,” said Funke, of Bend.

Regardless of the ideology behind the fight, the actual dispute often comes down to whether the project will create untenable traffic concerns, increase police expenses or cause environmental harm — areas where experts say they often see the best practical chance of fighting Wal-Mart development.

“Wherever it’s a problem getting them to be accountable around corporate citizenship in the community, we’ll look for whatever handles are available,” said Wade Rathke, chief organizer for ACORN, which says its primary goal is to work for things like higher wages.

Funke, a longtime labor organizer who helped lead the charge in Bend, said he personally opposes Wal-Mart for ideological reasons but insists he wouldn’t have taken on the retailer’s development effort if he hadn’t seen a groundswell of community support. When 150 people showed up for a meeting, he felt he could fight for what he believes in and also respect the town’s wishes.

Still, Funke said he quickly dropped efforts in neighboring Redmond, Ore., after sensing there was little broad opposition to a planned Wal-Mart there. A Wal-Mart Supercenter is currently under construction.

Other organizers have started tweaking their approach based on community response.

WARN, which stands for WalMart Alliance for Reform Now, counts victories including a Wal-Mart site in St. Petersburg, Fla., in which the company eventually withdrew its plans.

But at another site in Sarasota, Fla., Rick Smith, Florida director for WARN, said his group is working with community members who want the bargains a Wal-Mart will bring. In that case, Smith said the group is pushing for Wal-Mart to provide things like better wages.

Eric Brewer, director of public affairs for Wal-Mart’s southeast operations, says the company withdrew from the St. Petersburg site because it couldn’t resolve traffic concerns.

“WARN’s involvement, while eye-catching, wasn’t the basis for our withdrawal of that application,” he said.

Brewer said citizens do have legitimate concerns when a Wal-Mart comes to town, such as how it will look and how traffic will be affected. But he accuses WARN of “just out-and-out attack using full-time campaigners,” instead of truly trying to meet a community’s needs.

Still, Brewer concedes that efforts by WARN and others have proved time-consuming and costly for the company’s Florida operations.

“We have certainly hit our targets of growth, but we have had to match their efforts (with) our own,” he said.

In some communities, citizens have been divided over whether to welcome or spurn Wal-Mart.

When a developer purchased a closed-down Kmart building in coastal Marina, Calif., many local residents expected the property would be used for a cluster of shops meant to appeal to tourists and visitors. Some were outraged when the developers disclosed that they had struck a deal with Wal-Mart.

“Visitors come to Marina for the natural beauty and the outdoor recreation opportunities. They don’t come to Marina to shop at Wal-Mart,” said Steve Zmak of Citizens Against Wal-Mart in Marina.

Still, Zmak said that his group faced opposition from others locals who remembered when the town was much worse-off financially and felt they should welcome any development. Some older residents on fixed incomes were eager for the bargains.

“We found that there’s sort of a division in Marina,” Zmak said.

In the end, the city approved the Wal-Mart, and it opened in November. Zmak has now turned his attention to trying to prevent Wal-Mart from expanding to a larger Supercenter.

Similarly, in the small town of Woodland, Wash., opponents argue that a proposed Supercenter on the north end of town will snarl traffic in an already congested area, potentially backing up access to a nearby industrial district. A traffic mess could prove devastating to a local trucking business and manufacturing operations that rely on easy highway access.

“I don’t know why you should trade one business for another,” Darlene Johnson, president of Woodland Truck Line Inc., said at a daylong public meeting this year about the proposed Wal-Mart.

Opponents in Woodland also say the Wal-Mart will hurt longstanding efforts to revitalize the small downtown, and worry that the combination of big trucks and Wal-Mart traffic will prove dangerous when a proposed high school is built nearby.

But others complained that they currently have to drive as far as 20 miles to get things like kids’ sports uniforms, and said their cash-strapped families could use the bargain prices.

“Why not let Wal-Mart come in, and those who don’t want to shop there can go somewhere else that they like?” resident Shirley James asked.

Holder, the Wal-Mart spokeswoman, said the company has operated Wal-Marts near schools elsewhere in the country, and argued the benefits Wal-Mart would bring to Woodland would outweigh any potential harm to direct competitors.

A decision on Wal-Mart’s Woodland plans is expected later this month.

© 2007 MSNBC.com

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Cott names new CFO: Juan Figuereo, ex-Wal-Mart VP, PepsiCo executive

The Canadian Press                         [back to top]

TORONTO (CP) - Cott Corp. (TSX:BCB) has named a new chief financial officer, hiring Juan Figuereo, Wal-Mart International's vice-president of mergers and acquisitions since 2003.

Before joining Wal-Mart, Figuereo spent 15 years with PepsiCo in various international finance and general management roles. At Toronto-headquartered Cott, the world's biggest maker of store-brand soft drinks - with Wal-Mart as a key customer - he succeeds Clyde Preslar, who left the company Dec. 1 to pursue other interests.

"Juan's extensive global experience and his hands-on leadership of financial turnarounds is a perfect fit for Cott at this stage in our company's evolution," Cott chief executive officer Brent Willis stated Monday evening.

Cott reported last month it lost US$29.6 million in the fourth quarter on flat revenue of US$400.1 million as volume declined two per cent from a year earlier.

© The Canadian Press, 2007

Top Wal-Mart lobbyist headed to Arkansas

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

Wal-Mart Stores Inc.'s chief Washington lobbyist, Lee Culpepper, is headed to the company's Bentonville, Ark. headquarters to become vice president of corporate affairs, the retailer said Monday.

In his new position, Culpepper will coordinate "corporate reputation advertising," cu