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Letter to the editor

Wal-Mart ready to fight

The giant retailer not only plans to battle its critics, it cranks up ambitious growth plans.

By MARK ALBRIGHT
Published June 4, 2005

Folks who think Wal-Mart's battle to silence its organized critics will end soon should think again. The CEO of the world's biggest retailer says he ignored a campaign organized by two service workers unions too long.

"We ceded too much ground letting them tell a story about us that is not factual," said Lee Scott, president and chief executive of Wal-Mart Stores Inc. "Going forward (fighting back) is going to be my life. Any time two union groups spend $25-million to take us down, I have to be out there."

Scott's words came in a conference call after the company's marathon five-hour annual meeting/pep rally in Fayetteville, Ark., on Friday. The session drew 20,000 shareholders, more than 4,000 of them clerks hand-picked from every store for a pilgrimage to the home office, and had all the usual flash and dazzle.

Executives wiggled their rear-ends doing the Wal-Mart cheer. There were concerts featuring Jimmy Buffett, Brad Paisley and Will Smith. Gospel artist Yolanda Adams kicked things off. Outfitted in a bare-midriff shirt, Jessica Simpson sang the national anthem, Jon Bon Jovi belted out a few tunes and Garth Brooks paraded onstage in a blue Wal-Mart vest.

But the meeting's real headliner was Scott, who admitted the company made mistakes and was fixing them, but is more committed to wooing more customers and building supercenters even faster than the company's ambitious plan.

Supercenters, huge combinations of a discount store and a supermarket, have been the driving force of Wal-Mart's growth for the past decade. Wal-Mart has 1,713 of them, with 950 in the development pipeline. Company officials are convinced they can build them as close together as 2 miles in densely-populated cities. Scott wants to accelerate the company's plan to open 250 a year each of the next five years to 350 or more a year. He thinks Wal-Mart can paper the county with 4,000 of them.

"Zoning is only going to get more difficult," Scott said. "I'd like to get them out there as quickly as we can."

The company got off to a five-year head start in the supercenter business over rival Target Corp., which is just beginning to roll out its SuperTargets. Wal-Mart executives say they are close to an almost insurmountable 10-year lead over any rival.

Nonetheless, Wal-Mart has been dogged by a growing chorus of critics. The store-building frenzy has created zoning fights so fierce that Wal-Mart plans in 27 cities had to be taken to a citywide vote. Wal-Mart won 22.

Unions have made Wal-Mart their punching bag for the challenges facing the American worker: living wages, health care and job loss to Chinese imports.

Meantime, the chain has been confronted with the biggest sexual discrimination case in U.S. history. Federal officials recently raided stores to round up undocumented workers hired by contractors to clean stores after hours. The company reached an out-of-court settlement in a child labor case in which teen clerks in three states were allowed to use heavy equipment in violation of safety laws. The company's vice chairman was fired a few months before his scheduled retirement after an accounting scandal became the subject of a criminal investigation.

"It used to be that we had to go to a Third World country to find this kind of exploitation," said Ed Smith, chairman of the Illinois State Board of Retirement, one of several shareholder groups to ask for a review of the company's internal controls.

The unions staged a protest parade the night before the annual meeting in Arkansas. They also got a formal cease-and-desist letter from Wal-Mart to shut down a computer-dialed phone campaign that urged potential Wal-Mart whistleblowers to call a toll-free line. The company said the automated message sounded too much like its line for whistleblowers.

"With a grand jury investigating allegations of corporate wrongdoing, we can understand why Wal-Mart would try to stop its employees from airing legitimate grievances," said Andrew Grossman, director of the union-linked Center for Community and Corporate Ethics.

The company's stock price has fallen, its earnings growth has slowed, and the stream of bad publicity has been relentless. But if Scott's job was in jeopardy, the annual meeting offered scant evidence. Shareholders rejected all eight proposals ranging from making the board more independent to taking steps to enhance the environment.

Martha Burk, chairwoman of the National Council of Women's Organizations, got a big hand for chiding the company for having only two women on its 14-member board. But Scott drew much louder applause when he closed the meeting with a pledge to continue battling the critics and reminded employees they have a role.

"We are the focus of one of the most organized, most sophisticated, most expensive corporate campaigns ever launched against a single company," he said. "That means we will continue to be judged by a higher standard than any other company. That makes it more important than ever that we focus on doing the right things and doing things right every time."

--Information from Times wires was used in this report. Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

[Last modified June 4, 2005, 06:14:28]