Wal-Mart Stores Inc.'s chief executive told shareholders Friday that the company is positioning itself for 20 years of worldwide growth and that it plans to hire another half-million employees over the next five years.
The company also unveiled a new $15 billion stock buyback. But it was short on specifics on how it will improve weak sales at its U.S. Wal-Mart stores as the rest of the retail industry, including its key competitor Target Corp., has started to heat up.
Wal-Mart, which already has 2 million employees, has been trying to shake off effects of the recession. In between celebrity performances at its annual extravaganza, executives said the company needs to solve problems with its merchandise mix and reverse the decline in customer traffic. It also pledged that it would step up its game on prices.
Wal-Mart CEO Mike Duke focused on long-term issues, saying he wants to expand Wal-Mart's influence in social issues and "become a truly global company."
Duke focused on how the company, with 8,000 stores worldwide, can position itself to grow for the next 20 years.
"Just over the next five years, we'll create 500,000 jobs around the world," Duke said. "We need to learn to recruit the best talent and identify the best talent in our ranks."
Duke said the company, which is the target of a class-action bias lawsuit in San Francisco, is committed to training women "everywhere in our company and at all levels of our company."
The lawsuit, with more than 1 million potential members, accuses Wal-Mart of discriminating against women in hiring and promotions. The New York Times reported Friday that Wal-Mart had hired a prominent law firm more than six years before the largest sex discrimination lawsuit in history was filed to examine its vulnerability. The firm's report found widespread disparities in pay and promotion, the Times reported.
Duke said the company must further tighten its expenses to keep its hallmark low prices lower than the competition.
"Wal-Mart must widen the gap here. We will win on price leadership, and we will win big," he said. He told investors that the retailers will soon "enter an era of price transparency" — where shoppers can see the best prices anywhere, including online, creating challenges for the
Wal-Mart has lagged in its online presence for years, something Duke addressed,
"Quite frankly, some of some of our competitors are ahead of us here. So let me be clear, building the best website will be just as important as getting our store formats right," Duke said.
Tom Schoewe, Wal-Mart's chief financial officer, told the audience of 16,000 that the company's board approved a new $15 billion share repurchase program. A previous $15 billion repurchase program was retired after about $10 billion in shares were bought by the company.
The world's largest retailer reached $100 billion in sales in its international division for the first time and its Sam's Club warehouse stores built membership to 47 million.
But its Wal-Mart grocery and general merchandise stores saw traffic decline for two consecutive quarters. While the company has maintained the weak economy had been the biggest factor, it also blamed its own missteps, such as cutting out too many products as part of its campaign to declutter stores, as well as not being aggressive on price cuts to meet increasing competition from rivals.
Wal-Mart Vice Chairman Eduardo Castro-Wright said high fuel prices, competition and unemployment have also pressured sales.
"These external headwinds are real and they have contributed to slower traffic in our stores over the last couple of quarters," Castro-Wright said. Those factors also led to four consecutive quarters of a decline in revenue at stores open at least a year, a key indicator of how a retailer is faring.
Castro-Wright also alluded to Wal-Mart's removal of some name-brand items from its shelves and replacing them with goods under Wal-Mart's own label.
"We have been fine-tuning our merchandise strategy," he said.
Castro-Wright said the company is doing more to call attention to its price rollbacks to help build customer loyalty.
"In any economy, in any competition, your Wal-Mart will always be the price leader," he said.
The meeting, held in a packed basketball arena on the University of Arkansas campus, had its usual celebrity appearances. Jamie Foxx performed hip hop and sang in his Ray Charles persona. He also acted as master of ceremonies.
Wal-Mart shares slipped more than 1 percent, or 65 percent, to $51.07.
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