Wal-Mart Shareholders Cheer Company's Year Performance

Last updated Friday, June 6, 2008 8:54 PM CDT in News

By Kimberly Morrison
The Morning News

"This is one great story to tell," Schoewe said.

Good Timing

There was significant operational improvement driving those numbers.

Wal-Mart laid out a plan last year to slow its U.S. store growth to focus on improving existing stores and expand its international presence.

The retailer now has operations in 14 countries, and is looking at Russia for further world expansion.

"International holds great promise for the future," CEO Lee Scott said.

The retailer's international operation continues to drive strong returns for the company. International net sales were $90.6 billion, up 17.5 percent from the prior year. The United Kingdom, Brazil, China and Argentina have consistently driven strong performances.

Scott said the company's timing on implementing changes in its U.S. stores was important as economic pressures made low prices more relevant to low-income shoppers.

"The fact is, the biggest problems out there today are problems that our customers struggle with more than most," Scott said, noting increasing fuel costs, a credit crunch, health care costs and food inflation are among the biggest challenges for Wal-Mart shoppers.

"During difficult times in the past, Wal-Mart has been there for our customers and our members. But I think we are there for them now more than ever."

Shareholders & Singers

The only surprises during the meeting were the guest performers, which are a closely guarded secret prior to the meeting.

Following an opening number of stunning acrobatics and drumming, Queen Latifah emerged as master of ceremonies. Musical performances included Joss Stone, Jennifer Hudson, David Cook and Tim McGraw.

Between the cheers, there was some business to attend to. Three company proposals were approved, which included electing Gregory Penner and Arne Sorenson to the board. Seven shareholder proposals were defeated and one was withdrawn.

F&C Management of Boston, Mass, which holds 124,895 shares, submitted proposal 10 requesting Wal-Mart issue a social and reputation impact report. It was withdrawn after Wal-Mart management agreed to meet in October with proponents of the proposal.

Evolving Culture

Board chairman Robson Walton addressed criticism the new face of Wal-Mart is a departure from the values of his father and company founder Sam Walton.

"There have been people who look at the changes we've made and say, 'Sam wouldn't have done that or done it that way,'" Walton said. "The fact is that no one changed things more often than dad."

Walton said the company core culture remains strong, and he believed his father would be proud of the company's direction and focus on "saving people money so they can live better."

The retailer's initiatives in health care and sustainability, Walton said, are in the spirit of his father.

The company's $4 generic prescription drug program introduced last year have saved customers more than $1.1 billion in three countries, Scott said.

Honoring Employees

Walton and sister Alice Walton jointly presented the company's "Sam M. Walton Entrepreneur of the Year Award," created to honor the company's employees.

Four departments were nominated for the award - the Sam's Club inventory and replenishment team, the grocery strategic business unit, Walmart.com's site-to-store team (which circumvents shipping charges for online purchases by delivering products to the nearest store) and the corporate sustainability team.

Ultimately, the sustainability team led by Andy Ruben, the company's former executive vice president for corporate strategy and sustainability, won. Ruben was involved in the company's sustainability initiatives for three years before he moved on to a position in Wal-Mart's private brands midyear.

Wal-Mart took a moment to express sympathy and gratitude to its Chinese employees. The country was hit with a devastating earthquake, which killed more than 41,000 and closed 15 of Wal-Mart's stores in the country.

Wal-Mart's employees assisted in distributing aid throughout the country and worked to quickly open stores.

The retailer's 5,500 employees in China included some 600 who suffered lost or damaged homes.

Susan Chambers, executive vice president of people, also honored employees Jose Angel Gallegos, Patti Bentley and Kenny Mateas with a "Gold Star Award" for exemplary service to the company.

Challenges Ahead

Scott said there remain significant challenges ahead, including the aging of the baby boomer generation, income inequality, the disruptive power of technology and increased demand for technology.

He said the company will continue to transform to meet the challenges.

"It would be easy to take comfort in the success we have had in our business and the larger role we are now playing in the world," Scott said. "If you know something works, why not just replicate it and replicate it and replicate it? Well, we've done that before. For several years, we did what we knew worked very well.

"But in time, the world changed. People's expectations of us - and corporations in general - changed. And we found ourselves playing catch up. We can never let that happen again."

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