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What's new in various product categories; monthly update.

The Latest Wal-Mart News

The good, the bad, and the amazing.

Collected by Mike Hartnett (May 23, 2005)

Wal-Mart Disappoints, Target Pleases.

Wal-Mart's net sales for the quarter rose 9.5% to $70.9 billion, but same-store sales rose only 2.9%, below the company's previous guidance. Net income was up 13.6% to $2.5 billion. Earnings/share was up eight cents to $0.58; excluding one-time charge, earnings were $0.55, a penny below analysts estimates.

President/CEO Lee Scott blamed high gas prices and poor weather, and promised better results in the second half of the year. In a pre-recorded call, EVP/CFO Tom Schoewe warned that the company now expects "below-plan sales" for the second quarter.

Meanwhile, Target's earnings rose 15% to $494 million or $0.55/share, two cents better than analysts expectations. Sales rose 13% to $11.17 billion, and same-store sales rose 6.2%. A confident Chair/CEO Bob Ulrich said he expects Target will "continue to enjoy profitable market share growth throughout 2005 and beyond."

Wal-Mart Miscellaneous.

1. Does Wal-Mart adjust its stores to the local community? You bet. The new store in Middlefield, OH (Amish country) has 37 hitching posts in the parking lot.

2. Maryland Governor Robert Ehrlich Jr. vetoed a bill that would force Wal-Mart to pay more for its employees' health care, saying jobs could be at risk if he doesn't, reported the Baltimore Sun. Wal-Mart is considering building a distribution center in Maryland. As CLN had reported, the bill would require Maryland companies with 10,000+ employees to spend at least 8% of their payroll on workers' health care, or pay a tax to make up the difference. The bill is being considered a model by lawmakers in other states. Pennsylvania is the latest state to introduce a similar bill. Ehrlich's veto may be overridden, the Sun reported.

3. On a recent trip to New York to meet with stock market analysts, CFO Thomas Schoewe told the New York Times that analysts asked him if CEO Lee Scott knew "what Tom Coughlin was up to." Coughlin is the former VP being investigated for misusing company funds for anti-union activities.

4. The discounter has added upscale household goods and self- service checkout lines to revive same-store sales and fend off more-profitable Target, Bloomberg.com reported.

5. Simon Langford, manager of Wal-Mart's Radio Frequency Identification (RFID) strategy, said the retailer is already seeing efficiency gains in its test of the technology, reported the RFID Journal.

6. Vendors visiting Wal-Mart might detour to the new Supercenter in Rogers, AR which "could be considered a walk-in laboratory," reported the Arkansas Gazette. "I would guess that when we open stores next month, there will be changes based on what we�ve done here," said CEO Lee Scott. The store has new displays, designs, and merchandise that, if successful, may be replicated throughout the system. More skylights and fewer signs hanging from the ceiling result in a more open feeling, and the floors are earth-toned concrete rather than tile. There are also examples, particularly in the computer section, of Wal-Mart's efforts to sell pricier products.

7. According to a survey of 10,000 participants at a Food Marketing Institute conference by Capgemini, a consulting firm, more than 40% think Wal-Mart is their biggest challenge. Retailers planned to counter the Wal-Mart threat by penetrating new markets (39%); lowering operating costs (18%); investing in new technology (17%); and improving customer service (16%).

8. John Menzer, former CEO of the defunct old Ben Franklin operation and now head of Wal-Mart's international division, told AFX News Limited and Forbes the company will boost its purchases from China to $18 billion and will open up to 15 stores in China this year. The company currently has 46 stores in China. The export business is growing 20% a year, Menzer said.

9. The U.S. Treasury Department threatened official action if China doesn't allow its currency, the yuan, to float visa vi other currencies. "Chinese policies are highly distortionary and pose a risk to China's economy, its trading partners, and global economic growth." Without "substantial alteration," the U.S. may designate China as a "currency manipulator," reported USA Today, and that would trigger formal U.S.- China negotiations. USA Today cited Charmaine Buskas, an economist at Economy.com, who expects any revaluation to be in 5%-10% increments over a number of years.

10. Wal-Mart is testing a robot that would accompany blind consumers around the store to help them shop, reported CIO Insight. The store is in North Logan, UT, near Utah State U. where the robot is being developed. It is a remarkable story. For details, visit www.cioinsight.com/print_article2/0,2533,a=151386,00.asp.

11. The New York Times recently detailed the apparently growing trend of Congressmen, unions, academics, and others pressuring Wal-Mart to pay its employees more. The company earned about $10 billion in profits on sales of $288 billion last year.

Talking About Wal-Mart.

(Note: In case you missed this item in the current edition of CLN: The following was emailed to CLN after various phone conversations and emails from the author. We're publishing this out of professional courtesy and because we've concluded he is not pro- or anti-Wal-Mart.)

Have you done business with Wal-Mart? And how has doing business with Wal-Mart shaped your business? For a book about Wal-Mart, an award-winning national journalist wants to speak with business people who have worked with Wal-Mart, particularly those who have worked for companies that are (or were) Wal-Mart suppliers. Charles Fishman, a senior writer for Fast Company magazine, is writing a book about Wal-Mart's impact on business in the U.S. If you've had experience doing business with Wal-Mart, and can talk about how that experience affected the company you worked for and its products, feel free to contact Mr. Fishman. He'll be happy to provide more information on his book, which is to be published in spring 2006 by Penguin.

Confidentiality is assured. Email: cnfish@mindspring.com or walmartbook@mindspring.com.

A Vote For Wal-Mart.

I keep reading the continuing controversy about Wal-Mart and I wanted to share my opinion with you.

I live in rural Northern California, in the county seat of a primarily agricultural county. When I moved here 15 years ago we did not have a Target, nor did we have a Wal-Mart. When I shopped for things, I rarely did it at home, traveling instead about 30-45 minutes to get to regional malls and suburbs which actually had many shops.

About ten years ago Target came to town, followed a few years later by Wal-Mart and, this past fall a second Target. (By the way the town and county haven't grown fast enough to accommodate this.)

And I found something interesting. I now do almost all my shopping in town. And this does not mean Wal-Mart and Target exclusively, but all the smaller shops as well. And I'm not alone in this. The presence of these stores has increased business (and therefore employees, tax revenue, and new businesses) throughout our town.

When Wal-Mart wasn't around, I needed to go somewhere else to find choices as a consumer. Either there wasn't a shop like that around or there wasn't enough business in our county to make it worth it for a store to stock something like an inexpensive watch.

Yes, I know in many places Wal-Mart looks like the bad guy. But I would disagree. For me as a consumer, they have allowed me to purchase a wider, less expensive range of goods than I could before (a point brought up in the past). This benefits many people. It has employed people who weren't employed before. And it has benefitted my county through greater tax revenue and other businesses in the area by keeping people shopping in town.

I tend to think people's reaction to Wal-Mart is knee-jerk, and that before condemning them, we should think about whether we can redirect our businesses to complement Wal-Mart or work with them. � Janet Perry, Napa Needlepoint

(Note: To comment on Wal-Mart or any other industry issue, email your thoughts � on or off the record � to CLN at mike@clnonline.com.)

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