Wal-Mart Stores Inc.'s CEO told shareholders Friday that the company is positioning itself for 20 years of worldwide growth and that it plans to hire a half-million employees over the next five years.
But the recession is continuing to vex the world's largest retailer as consumers keep a tight grip on their money.
"There is business opportunity in the world, but the world is changing fast in big, disruptive, complex ways," CEO Mike Duke told shareholders packed into a University of Arkansas, about 30 miles from its Bentonville headquarters.
The company also unveiled a new $15 billion stock buyback. But it was short on specifics on how it will improve weak sales at its U.S. Walmart stores as the rest of the retail industry, including its key competitor Target Corp., has started to heat up.
A year ago, Wal-Mart was in the sweet spot of the Great Recession. As shoppers traded down to cheaper stores, Wal-Mart gained market share and saw big sales gains. But now Wal-Mart is struggling to hold onto customers. Its cash-strapped shoppers are looking elsewhere — such as dollar stores and local grocery chains — for even better deals than Wal-Mart offers. And some better-off customers, feeling more flush again, are heading back to the mall or Target.
In Q&A with reporters after the meeting, Vice Chairman Eduardo Castro-Wright said stores in areas with high unemployment have the worst numbers while stores in low unemployment areas are thriving.
Last fall, when gasoline prices spiked in October and November, Castro-Wright said customer visits dropped.
‘Back to basics’
Duke said Wal-Mart's global performance shows that there has been a worldwide recession for the last 18 months. He stopped short of saying conditions would get worse but didn't predict improvement.
"I still sense a great deal of pressure on our customer base," Duke said, adding that company studies show Wal-Mart shoppers are most worried about their income and keeping their jobs.
Accompanying the drop was an increase in how much customers spend. Shoppers still went to Wal-Mart to stock up but mid-week "fill-in" trips fell off, he said.
Amid a celebrity-laden extravaganza featuring Mariah Carey and Jamie Foxx, executives said the company needs to solve problems with its merchandise mix and reverse a decline in customer traffic.
But the company put a lot more emphasis on its bottom line and how it's been able to increase expenses slower than revenue for two straight quarters. It also will push to think globally. Its international business now accounts for 25 percent of its business and is its fastest-growing segment.
Duke told reporters that the company will grow by adding both large-format stores and smaller ones, in the U.S. and abroad.
The smaller stores won't be limited to urban markets, Duke said, noting that those stores could be a destination for shoppers making "fill-in" trips for basics.
Castro-Wright said groceries account for about 60 percent of sales and clothing is a small portion of its general merchandise sales.
"We are going back to basics in many ways," Castro-Wright said. A pair of Wrangler jeans is "as trendy as it gets," he said.
Focus on stock price
Some analysts were looking for less glitz and more details about how it would improve its U.S. business and boost its stock price. "This had less meat," said Brian Sozzi, an analyst with Wall Street Strategies. "They've cut costs. They've cut inventory. But something isn't working. What else can they do to get traffic up?"
Wal-Mart shares are trading less than $2 higher than during last June's shareholder meeting. They closed Thursday at $51.72, down almost 5 percent from where they closed the first day of trading this year.
Wal-Mart shares slipped more than $1.05, or 2 percent, to $50.67 in afternoon trading Friday.
Duke focused on long-term issues, saying he wants to expand Wal-Mart's influence in social issues and "become a truly global company."
Duke also said the company, the target of a class-action lawsuit alleging gender bias, is committed to training women "everywhere in our company and at all levels of our company."
The lawsuit, with more than 1 million potential members, accuses Wal-Mart of discriminating against women in hiring and promotions. The New York Times reported Friday that Wal-Mart had hired a prominent law firm more than six years before the largest sex discrimination lawsuit in history was filed to examine its vulnerability. The firm's report found widespread disparities in pay and promotion, the Times reported.
Duke also said the company must further tighten its expenses to keep its hallmark low prices lower than the competition.
"Wal-Mart must widen the gap here. We will win on price leadership, and we will win big," he said.
AP Business Writer Anne D'Innocenzio in New York contributed to this story.