Expanding globally and marketing to the "next generation customer" are Wal-Mart Stores Inc.'s long-term goals, its CEO told shareholders Friday, but the company also needs to fix slumping domestic sales.
Wal-Mart President and CEO Mike Duke outlined a five-point program at Wal-Mart's annual meeting to help the company sell more on the Internet at home and abroad while keeping its costs and prices low.
"Our next-generation customer will include millions who are striving to join the emerging global middle class," Duke said. "They're connected to the world through smartphones and social media. They're in charge of when they shop and how they shop, and they know who has the lowest prices."
Offering consistent low prices will win the trust and loyalty of those customers, Duke said.
Duke pledged that Wal-Mart will continue to grow through also opening new stores and acquiring other retailers. This week, Wal-Mart won approval for its $2.4 billion purchase of a majority share in South African retailer Massmart.
But Duke said the world's largest retailer will also win new customers in Chicago and New York, where Wal-Mart has struggled to win approval to build stores.
Wal-Mart is working to increase its sales presence on the Internet, particularly in China and the U.S., an effort that Duke says must extend to all countries in which the company operates.
"We can combine our stores, our systems and our logistics expertise into one continuous channel to drive growth and serve the next generation customer around the world," Duke said. "We will play to win in this area also."
Duke also promised the company would to do more to develop diverse management and keep striving for higher sustainability goals, which he said customers want to see.
"We are right in the sweet spot of the next generation customer. But to succeed, we must also be the best at how we run our business," Duke said, adding that turning around the U.S. business "remains the greatest priority for me and the entire Walmart U.S. team."
The company also unveiled a $15 billion share repurchase program Friday.
The buyback will replace a previous $15 billion repurchase plan begun a year ago. The company bought back 244 million shares worth $12.9 billion under that program.
"This reflects the strong financial performance of your corporation," Charles Holley, Wal-Mart's executive vice prsident and chief financial officer, said in an address to shareholders and associates packed in a University of Arkansa arena about 30 miles from its Bentonville headquarters.
The news comes after the company increased in March its dividend in its current 2012 fiscal year from $1.21 to $1.46 per share, an increase of 21 percent that returned $1.3 billion to shareholders.
The shareholders' meeting maintained the tradition of being part pep rally, part business, with actor Will Smith serving as master of ceremonies. The 2011 "American Idol" winner, Scotty McCreary, also appeared.
About 16,000 people packed the arena, including Wal-Mart employees from 15 countries.
Wal-Mart's international sales are sizzling and much of the meeting focused on the happy topic of overseas growth. But the company is still trying to reverse a two-year sales slump at home, with no clear sign of when that will happen.
"We made a lot of progress over the last 11 months," said Bill Simon, president and CEO of Wal-Mart's U.S. business in an address to shareholders. "We have the right plan."
He noted that two-thirds of the business has seen gains in a key measure of sales, most of which is coming from groceries.
But he cautioned, "You certainly can't predict the weather and the economy."
Simon also said it would take more time to straighten out the mistakes Wal-Mart made on pricing and selection more than two years ago. The company has been racing to restock thousands of items it culled as part of its overzealous bid to clean up its stores two years ago. It's also gone back to its "Everyday Low Price" roots.
Wal-Mart is also battling increasing threats from competitors, particularly online rivals like Amazon.com and dollar stores, which have expanded their assortments and become more competitive on price.
Wal-Mart's low-income shoppers have also seen their financial problems shift. A year ago, they were worried about losing their jobs. Now, rising gas prices and other household costs are squeezing their budgets and making it tough to stretch their remaining dollars to the next payday.
Thursday's reports on May sales from major retailers, including rival Target Corp., provided more evidence that inflationary pressures are causing shoppers to pull back on discretionary items like clothing and home goods.
On Thursday, Simon told a media gathering that low-income shoppers are going through a "prolonged malaise." Such financial woes could stall Wal-Mart's campaign to turn its U.S. business around.
Wal-Mart's fears have deep repercussions, because it's a bellwether of consumer spending and accounts for nearly 10 percent of all nonautomotive retail dollars spent in the U.S.
Shares of Wal-Mart have tracked closer to its profits than its domestic sales this past year, and its robust international business, fueled by Mexico, China and Chile, has propped up revenue and profits. In the U.S., revenue at stores open at least a year has had eight straight quarters of declines.
Walmart stores account for 62 percent of the company's revenue, which reached $418 billion in its latest fiscal year ended Jan. 31; international makes up 26 percent.
The company's overall revenue is also getting a lift from its improving Sam's Club division, which has enjoyed five straight quarters of improving gains in stores open at least a year. Sam's Club has benefited from better quality merchandise, from higher grade sirloin steak to trendier fashion labels.
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