No surprises at Wal-Mart shareholder meeting

Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at [email protected]

While Wal-Mart’s profits and international businesses accelerate, investors, shareholders and top executives remain focused on the retail giant’s U.S. operations.

At its annual shareholders’ meeting in Fayetteville, Wal-Mart’s top brass gave pep talks to a packed auditorium of employees, shareholders, and celebrities.

Chairman Rob Walton, son of founder Sam Walton, acknowledged and emphasized that international growth has fueled Wal-Mart’s growth in recent years. Twenty years ago, the retailer opened its first Sam’s Club store in Mexico. Today, Wal-Mart — which will turn 50 next year — has more than 9,000 retail outlets worldwide.

International sales accounted for almost 25% of Wal-Mart’s $419 billion in total sales in 2010, a 3.4% increase from the previous year. In its most recent quarter, international sales jumped 11% compared to a 1.1% dip in same-store U.S. sales, which have lagged for 8 consecutive quarters.

Several executives touched on efforts to rejuvenate U.S. sales.

Chief Financial Officer Charles Holley reminded the audience that "we were up against some very strong economic headwinds" through the recession and slow-paced recovery of the last 3 years. Holley noted that U.S. consumer confidence declined 50% since 2007, but he said that could change.

"The U.S. retail market is expected to grow by $800 billion in the next 5 years, so there are definitely opportunities in the U.S,” he said.

Some of those opportunities may come in the form of new store formats, e-commerce and a return to Wal-Mart’s "everyday low price" roots.

Wal-Mart is experimenting with smaller stores in some areas of the country and has modified its urban store formats as it expands into large cities like Chicago. In its suburban and rural markets, Wal-Mart has seen a loss of market share to low-priced dollar stores.

The company emphasized a return to "EDLP" — "Everyday Low Prices" — a one-time branding campaign in its earlier days. Recently, the company launched a new advertising effort to recapture that market position and message.

Another area of growth that Wal-Mart is exploring involves online commerce through computers and smart devices.

"The new retail world is evolving and Wal-Mart is ready to embrace it," said Eduardo Castro-Wright, vice-chairman and CEO of Global eCommerce and Global Sourcing. "Our mission was to create a seamless shopping experience for the customer from the store to the web to their mobile devices."

Castro-Wright noted that it annually draws 10.5 billion visitors to its stores, 1.5 billion online visitors, and 6 million fans on Facebook. He said a new Wal-Mart Labs division would pursue new technology development to capitalize on emerging markets and changing customer shopping patterns.

As further evidence of company leaders acknowledging the evolution of consumer shopping habits and new communications channels, Chairman Rob Walton explained what he thought his father would be doing running Wal-Mart if he was alive today.

"I imagine that if dad were alive, he’d be tweeting from a plane somewhere over the Pacific at some ungodly hour," Walton joked.

THE CEO SPEAKS
Wal-Mart CEO Mike Duke used his comments to address the "next generation customer" and tied several of the individual executive presentations together.

"Our ‘next generation customer’ will include the millions who are striving to join the emerging middle class around the world," said Duke. "They are in charge of when they shop and how they shop and, believe me, they know who has the lowest prices."

Duke said the retail giant was "in the sweet spot" to reach those new customers. He said that sustainability and low costs were pivotal to capturing their trust.

He also briefly touched on concerns about U.S. same-store sales.

"Comp sales growth in the U.S. remains our greatest priority for me and the entire U.S. Wal-Mart team," Duke said. He expressed support for the efforts put forward by Bill Simon, Wal-Mart’s U.S. division chief.

Simon has proposed a return to Wal-Mart’s low price leadership and launched several initiatives aimed at reversing the domestic sales slide.

Returning to Castro-Wright’s comments on global e-commerce, Duke said Wal-Mart’s price transparency and multi-channel marketing were advantages over its competition.

"In global e-commerce, we will not just be competing, we will play to win," said Duke.

And in a loose reference to a looming federal class-action lawsuit regarding gender discrimination, Duke said that recruiting more diverse talent was also a key management priority.

"We’re going to do more for women and minorities and that is a promise," he said.

BUSINESS & CELEBRITY
In other business, Wal-Mart shareholders voted on 9 resolutions. Shareholders approved the election of 15 directors and an annual review of executive compensation.

It defeated proposals regarding gender identity discrimination, political contributions, sustainability reporting, and climate change. Formal vote totals will be revealed in the company’s 8-K filing next week.

Wal-Mart’s annual shareholders meeting is also known for the celebrities it attracts. Actor Will Smith, musicians Alicia Keys, the Black Eyed Peas, and American Idol winner Scotty McCreery all spoke or performed.