Wal-Mart shines in weak economy

FAYETTEVILLE, Ark. - Wal-Mart Stores Inc. officials, bolstered by a rebounding stock price and improved image, told shareholders yesterday that their renewed focus on price and better merchandise is winning over customers whom they expect to keep when the economy improves.

"When the economy turns around, those customers will have no reason to go anywhere else," Eduardo Castro-Wright, president and chief executive of Wal-Mart's U.S. division, told a group of reporters after the annual meeting.

Still, Wal-Mart wants to play a larger role in addressing the financial challenges Americans face, store officials said. The retailer also is striving for greater environmental sustainability and lower health costs through its discount drug program for customers.

"We have the best global footprint to serve millions worldwide who will want to lift themselves up into the middle class," H. Lee Scott, the president and chief execuitve of Wal-Mart, said. He said the company, which has changed its practices, is in a much better position to work with either presidential candidate to effect change.

"In the months ahead, the candidates are going to pay very close attention to voters who care the most about pocketbook issues. The fact is those are Wal-Mart customers," Scott told investors.

He acknowledged to investors that the company, which had been under attack on a variety of issues from labor infractions to lack of environmental awareness, had found itself playing catch-up at a time when "people's expectations of us and of corporations in general changed."

"We can never let that happen again," Scott said. "Not only must we never fall behind . . . we must always push ourselves to stay ahead."

Now, looking at an almost 20 percent rise in company stock in the last year, shareholders have much to cheer.

Shares, which had been in the doldrums for several years, are trading close to the top of the company's 52-week range after Wal-Mart refined the "save money, live better" campaign, begun last year, as the economy hit the brakes. They closed down $1.43 yesterday at $58.37 on a day when the whole market tumbled.

Wal-Mart has benefited as Americans, squeezed by higher gasoline and food costs, tighter credit and a slumping housing market, try to shop at cheaper stores. The company, which had been bruised by unrelenting attacks from union-backed groups, has seen criticism diminish.

On Thursday, the retailer posted a better-than-expected 3.9 percent gain in same-store sales for May.

The figure for sales at stores open at least a year are considered a key indicator of a retailer's health. The solid increase, boosted in part by the government stimulus checks being mailed out to Americans, followed the company's almost 7 percent profit gain for the first quarter.

Wal-Mart, whose sales slowed in recent years after a zigzag course between upscale and discount merchandise, is refocusing on price while finding the right mix of merchandise and marketing.