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Wal-Mart CEO promotes price message, announces capital cuts at shareholders meeting Saturday, Jun 2, 2007 By John L. Moore Stephens Media FAYETTEVILLE - Talk of upscale clothing and furniture and 300 new supercenters a year were gone from the speeches of executives of Wal-Mart Stores Inc. at the company's annual shareholders meeting Friday. Instead, Wal-Mart CEO Lee Scott and Chief Financial Officer Tom Schoewe announced they will cut the number of supercenters planned to open in fiscal year 2008 and for the three years after that. While nationally known entertainers and Wal-Mart associates made stars for the day took the stage at the meeting in Bud Walton Arena, executives stuck to this year's message: Wal-Mart is a great place to work, Wal-Mart is the price leader and will remain the price leader, and Wal-Mart will better balance growth against shareholder return. "I'm very pleased that they're slowing supercenter growth," said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich, whose $9.6 billion in assets include Wal-Mart shares. "That's what we on Wall Street have been clamoring for a long time." Schoewe announced the company's board of directors voted Wednesday to initiate a $15 billion stock repurchase program and retire the $10 billion repurchase program that had been in place. Executives also promoted their health care initiatives, international growth and environmental sustainability efforts. The new Wal-Mart mantra rolled off the lips of executives again and again. "We save people money so they can live better," CEO Scott said wrapping up his annual speech to the shareholders and associates gathered Friday morning. Scott also defended the company's reputation. "In spite of aggressive attacks by our opponents, our reputation is improving. The attacks from our opponents are just not working and they are not going to work," he said. All 11 shareholder proposals were voted down this year, including several that would have required changes to executive compensation policies or more transparency in compensation policies and political campaign contributions for shareholders. Fifteen directors were elected to the company's board of directors. The only new director is Allen I. Questrom, 67, the former CEO of J.C. Penney who is credited with turning that company back into a money-making venture. Questrom has also been the CEO at various times of Neiman Marcus, Federated Department Stores Inc. and Barney's New York Inc. Although Scott and others touted the strong growth in revenue and income for Sam's Club and international operations, a large amount of time was spent telling shareholders, associates and analysts what the company planned to do to help get comparable sales and income growth back on track for the domestic stores. Schoewe presented a broad overview of the company's overall financial figures for last year, but pointed out that capital expenses have grown by 19.5 percent on average per year for the past 10 years. Operating income grew at 13.9 percent on average per year from $5.6 billion in 1997 to $20.5 billion in 2007. Earnings per share grow at 16.2 percent from 65 cents per share in 1997 to $2.92 per share in 2007. Schoewe said capital expenses will come down as the company reduces the number of supercenters it builds each year. The company originally planned to open 265 to 270 stores this year, but said they will reduce that to 190 to 200 stores in fiscal year 2008 and then to 170 stores a year for the next three years starting in fiscal year 2009. Scott both commented in an analyst web cast following the shareholders meeting that slowing the supercenter growth will allow the company to focus more on implementing operational changes at existing stores and driving comparable sales higher for stores open more than a year. Scott, who has presided over a 24 percent decline in the stock during his seven-year tenure, continues to have the board's support, board Chairman Rob Walton said at the meeting. "The board and the Walton family have absolute confidence in your leadership, Lee," Walton said. Relatives of founder Sam Walton own 41 percent of the retailer, Wal-Mart said in an April 19 regulatory filing with the U.S. Securities and Exchange Commission. "Outside shareholders won't give Scott an indefinite period of time," said Walter Todd, who helps manage $800 million at Greenwood Capital Associates LLC in South Carolina. "However, there's only so much outside shareholders can do if the Waltons continue to support Scott." Greenwood sold its Wal-Mart shares last year. |
