Walmart Faces Shareholder Scrutiny at Annual Meeting

WalMart Stores CEO
April L. Brown/APWalmart CEO Doug McMillon
BY ANNE D'INNOCENZIO

FAYETTEVILLE, Ark. -- Walmart's newly anointed CEO Doug McMillon said the world's largest retailer's task is to bring the changing world of e-commerce together with physical stores to help make customers' shopping experience better as technology evolves.

The comments came at the Walmart Stores' (WMT) annual shareholders meeting Friday. They come at a time when the retailer is seeking to address concerns over its declining sales and business practices at home and overseas.

Our purpose of saving people money will always be relevant, but we'll do it in new ways.

"Our purpose of saving people money will always be relevant, but we'll do it in new ways," said McMillon, a 23-year-old Walmart veteran who took over as CEO post in February. "We're going to invent the new, and bring together the digital world e-commerce with physical world of our stores."

To bolster his point, McMillon talked about a service that Walmart offers at its Asda.com Web site in the U.K., where customers can order groceries online and then pick them up from trucks at various pickup points in the city.

He also showed off miniature figures of executives to illustrate how some Walmart stores have been using 3-D printers to print miniature figurines for customers in the U.K.

"Imagine a day when we can print small household items and replacement parts in a store," he said.

Packed Meeting

McMillon made his remarks at the meeting, which drew 14,000 Walmart workers around the world to the University of Arkansas's Bud Walton arena in Fayetteville, Arkansas. Typical of past Walmart's shareholders' meetings, the event was packed with celebrity entertainment. Actor Harry Connick Jr. served as the master of ceremonies and at one point said he was going off script to sing "A Closer Walk with Thee." And the event included musical acts by Pharrell Williams and Robin Thicke.

Despite the festivities, the company is under scrutiny on all fronts. Revenue at established Walmart stores in the U.S. has declined for five consecutive quarters. The number of customers has also fallen six quarters in a row at the division, which accounts for 60 percent of the company's total sales.

As with many other retail chains that cater to working-class Americans, Walmart is a victim of an uneven economic recovery that has benefited well-heeled shoppers more than those in the lower-income rungs. Moreover, shoppers are increasingly looking for lower prices at online rivals such as Amazon.com (AMZN) and at small stores such as dollar chains and pharmacies.

As a result, Walmart is accelerating its expansion of smaller store formats and pushing online grocery services. It's also adding services catering to the needs of its low income shoppers, such as its new money transfer service.

At the same time, Walmart is still battling labor-backed critics who argue that its workers' wages are too skimpy. The issue came up amid the festivities Friday when worker Charmaine Givens-Thomas introduced a shareholder proposal for an independent chairman.

"Something is wrong when the richest family in America pays hundreds of thousands of workers so little that they cannot survive without public assistance," she said.

Walmart also is facing tough ethical questions overseas as it continues to confront concerns over how it handled bribery allegations that surfaced in April 2012 at its Mexican unit. The company is being pressured to increase its oversight of factories abroad following a building collapse in April 2013 in Bangladesh that killed more than 1,100 garment workers. Walmart wasn't using any of the factories in the building at the time of the collapse, but it is the second-largest retail buyer of clothing in Bangladesh.

Among the proposals by shareholders was a call for an independent chairman that doesn't serve as an executive at Walmart, a move that was backed by Institutional Shareholder Services but failed in a preliminary tally of votes. Walmart has said ISS's request for disclosure of "specific findings" in regard to possible violations of the Foreign Corrupt Practices Act, which prohibits companies from bribing foreign officials, is "contrary to the best interests of the company" because such a disclosure could interfere with the ongoing investigations.

ISS also recommended that shareholders vote against the re-election of board members, citing the failure of the board to provide more information to shareholders about specific findings of the investigation into bribery outside of the United States. All 14 directors were re-elected.

Meanwhile, Walmart named Greg Penner to the new position of vice chairman, signaling that succession planning on the board could be in the works.


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drpmindmender

Walmart won't change until enough people refuse to shop there, regardless of the reason.

June 06 2014 at 10:14 AM Report abuse rate up rate down Reply