VOL. 129 | NO. 111 | Monday, June 9, 2014
Wal-Mart CEO: Speed Up Pace of Change
ANNE D'INNOCENZIO & MAE ANDERSON | AP Retail Writer
FAYETTEVILLE, Ark. (AP) – Wal-Mart's CEO Doug McMillon said the world's largest retailer's task is to more quickly bring e-commerce together with physical stores to better serve shoppers.
At Wal-Mart Stores Inc.'s annual shareholders meeting on Friday, McMillon talked about a service that Wal-Mart offers at its Asda.com Web site in the U.K., where customers can order groceries online and then pick them up from trucks at various pickup points. He also showed off miniature figures of executives to illustrate how some Wal-Mart stores have been using 3-D printers to create miniature figurines for customers in the U.K.
"Our purpose of saving people money will always be relevant, but we'll do it in new ways," said McMillon, a 23-year-old Wal-Mart veteran who took over as CEO in February. "We need to be at the forefront of innovation and technology."
McMillon's remarks come at a time when the retailer is seeking to address concerns over its declining sales and business practices at home and overseas. About 14,000 Wal-Mart workers around the world attended the meeting, which as usual had celebrity entertainment: Actor Harry Connick Jr. was master of ceremonies and Pharrell and Robin Thicke performed.
Despite the festivities, Wal-Mart is under scrutiny. Revenue at established Wal-Mart stores in the U.S. has declined for five consecutive quarters. The number of customers has also fallen six quarters in a row at the division, which accounts for 60 percent of the company's total sales.
Like many other retailers that cater to working-class Americans, Wal-Mart has been hurt by an uneven economic recovery that has benefited well-heeled shoppers more than those in the lower-income rungs. Moreover, shoppers are increasingly looking for lower prices at online rivals like Amazon.com and at dollar chains and pharmacies.
As a result, Wal-Mart is opening more small stores, like Walmart Express and Neighborhood Markets. It's also pushing online grocery services. It's also adding money transfers and other services to cater to low-income shoppers. Meanwhile, Wal-Mart has more than tripled the number of items it sells online to more than 7 million from 2 million just 18 months ago.
At the same time, Wal-Mart is still facing critics who argue that its workers' wages are skimpy. The issue came up at Friday's meeting when a worker, Charmaine Givens-Thomas, introduced a shareholder proposal for an independent chairman. "Something is wrong when the richest family in America pays hundreds of thousands of workers so little that they cannot survive without public assistance," she said.
Wal-Mart also is facing tough ethical questions overseas as it continues to confront concerns over how it handled bribery allegations that surfaced in April 2012 at its Mexican unit. The company is being pressured to increase its oversight of factories abroad following a building collapse in April 2013 in Bangladesh that killed more than 1,100 garment workers. Wal-Mart wasn't using any of the factories in the building at the time of the collapse, but it is the second-largest retail buyer of clothing in Bangladesh.
Among the proposals by shareholders was a call for an independent chairman that doesn't serve as an executive at Wal-Mart, a move that was backed by Institutional Shareholder Services but failed in a preliminary tally of votes. Wal-Mart has said ISS's request for disclosure of "specific findings" in regard to possible violations of the Foreign Corrupt Practices Act, which prohibits companies from bribing foreign officials, is "contrary to the best interests of the company" because such a disclosure could interfere with the ongoing investigations.
ISS also recommended that shareholders vote against the re-election of board members, citing the failure of the board to provide more information to shareholders about specific findings of the investigation into bribery outside of the United States. All 14 directors were re-elected.
Wal-Mart is expected to file the final tally of proxy votes with the Securities and Exchange Commission early next week. With descendants of Wal-Mart's founder owning more than 50 percent of Wal-Mart's shares, activist shareholders have little chance of passing shareholder proposals.
Meanwhile, Wal-Mart named Greg Penner to the new position of vice chairman, signaling that succession planning on the board could be in the works.
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