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Wal-Mart Spotlights the Customer

At the annual meeting here last Friday, ceo and president Lee Scott gave the companywide push for change 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...” he said.

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 general merchandise goods has been going. “We're still working on it,” said Watts. “It's still a work in progress.”

Clearly there is work to be done. Investors immediately punished Wal-Mart's stock for coming in at the low end of its sales forecast for May largely, the company said, because of the impact of soaring gasoline prices on its core customer base.

The $312 billion retailer is seeking a broader demographic mix in part to ameliorate those kinds of impacts.

For decades, Wal-Mart has stressed its “low prices, always” motto.

Times change. The new mantra 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.

He 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.

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