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Wal-Mart puts spotlight on the customer

Fayetteville, Ark. — It has been a hard sell to suppliers and an even harder sell to Wall Street and the media, but today Wal-Mart sang the gospel of its ongoing efforts at change to stockholders and associates attending its 27th annual meeting here. And, ceo and president Lee Scott even gave the companywide push a name: "Wal-Mart out in front."

Change is infused in the Wal-Mart culture, Scott said. "We are constantly innovating and experimenting. We are constantly finding ways to improve."

Home Textiles Today asked Claire Watts, executive vp of merchandising and apparel, how the program using better merchandise and marketing to pull its Target-type grocery customers "across the aisle" into its general merchandise shelves has been going. "We're still working on it," said Watts. "It's still a work in progress."

For decades, Wal-Mart has stressed its "low prices, always" motto. The new mantra at the $312 billion retailer is: "It’s about the customer, always." Still, investors like to think it’s about them, too. Executive vp and cfo Tom Schoewe pointed to the 2005 cash flow of $17.6 billion cash from operations, which was used for these items:

-$14.6 billion on capital expenditures
-$1.5 billion on dividends
-$0.6 billion on acquisitions
-$3.6 billion on stock buybacks

The company had a fiscal year debt-to-total capitalization ratio of 42%, not perfect but manageable and expected in light of recent international acquisitions. Schoewe noted that in the most recent quarter, while sales grew by more than 12%, inventory grew by less than 3% - and that mainly from the acquisitions, while core stores actually pressed inventory downward.

Still, Wall Street was not kind, in light of Wal-Mart’s industry-lagging May comp sales performance. By midday, the price of shares dropped by nearly 2%.

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