Wal-Mart Stores Inc plans to buy back US$15 billion more of its shares and expects to add more than 500,000 employees in the next five years as it increases its global presence.
At the same time, the discounter is working to turn around sales in its US Walmart business, which have fallen at existing stores for the past four quarters, chief executive Mike Duke said at the company’s annual shareholder meeting.
In setting out his vision for the next several years at the world’s largest retailer, Duke, who is in his second year at the helm, said the company needs to widen its price gap with competitors as the Internet helps consumers find bargains.
PHOTO: REUTERS
“We will win on price leadership and we will win big,” Duke told 16,000 cheering employees and shareholders assembled at the University of Arkansas’ basketball arena for the annual meeting, which doubles as a star-studded pep rally.
While employees were entertained by Oscar-winning actor Jamie Foxx and musicians such as Mariah Carey and Mary J. Blige, shareholders were given a new US$15 billion share repurchase plan that comes on top of US$10 billion in shares the company bought back in the past year.
However, that might not be enough for shareholders who have seen Wal-Mart’s stock stagnate and question whether it can retain shoppers won in the recession.
Wal-Mart shares fell 2.5 percent to close at US$50.40 on the New York Stock Exchange, but performed better than the Standard & Poor’s 500 Index, which dropped 3.4 percent due to weaker-than-expected payroll data and fresh concerns over Europe’s debt troubles.
“I don’t think the US$15 billion is enough at the moment,” Brian Sozzi, an analyst at Wall Street Strategies said. “The company simply needs to display to its shareholder base that it can execute on its sustainability message in the attempt to drive down costs and regain lost traffic, either through lower prices or improved merchandising in higher margin departments.”
Duke conceded the company, with US$405 billion in annual sales, has work to do, both in improving sales at its US discount stores and in increasing memberships and products at its Sam’s Club chain.
Internationally, where business units account for about one-quarter of total sales, “we need to continue to set an impressive pace of growth and have a constant emphasis on returns,” Duke said.
As part of that growth, Wal-Mart will add 500,000 jobs to a base of 2.2 million. Wal-Mart’s international business is growing at a much faster clip than in the US. The company already has 4,110 stores in 14 countries besides the US and is eyeing an entry into Russia.
As to the future of the US economy, Duke said the job market was still a concern for its customers.
“I would not say that I could predict that there will be any decline,” Duke said of the economy. “But I still sense a great deal of pressure on the customer base.”
The latest snapshot of the US jobs market was disappointing, with the government saying on Friday that the private sector hired fewer people than expected last month. Wal-Mart said it had received 13 million job applications at its US stores in the past two years.
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