There is a fascinating article in the New York Times today on a confidential report for Wal-Mart detailing the many problems the company is having as it tries to "move upscale." As WakeUpWalMart.com's Communications Director Chris Kofinis notes later in the article, “Wal-Mart needs to realize that improving its public image and its business reputation demands they stop ignoring the fact that the American people care about values, not just value.” From The New York Times: Low prices, it turns out, can be bad for business. A confidential report prepared for senior executives at Wal-Mart Stores concludes, in stark terms, that the chain’s traditional strengths — its reputation for discounts, its all-in-one shopping format and its enormous selection — “work against us” as it tries to move upscale. As a result, the report says, the chain “is not seen as a smart choice” for clothing, home décor, electronics, prescriptions and groceries, categories the retailer has identified as priorities as it tries to turn around its slipping store sales, a decline likely to be emphasized Friday during Wal-Mart’s shareholder meeting. “The Wal-Mart brand,” the report says, “was not built to inspire people while they shop, hold their hand while they make a high-risk decision or show them how to pull things together.” The document, prepared in October 2006 by the company’s former advertising agency and based on interviews with scores of consumers, offers a candid, wide-ranging explanation for why Wal-Mart, the No. 1 seller of everything from laundry detergent to underwear, has stumbled badly when it comes to higher-end merchandise like silk camisoles and shag accent rugs. The report contends, for example, that “our low prices actually suggest low quality” for products like high-definition televisions. And it says that Target, with its designer-inspired clothing and furniture, feels “like the ‘new and improved,’ while Wal-Mart often feels like the ‘old and outdated.’ ” A copy of the 55-page report, written by GSD&M Advertising, was provided to The New York Times by WakeUpWalMart.com, a union-financed group highly critical of the retailer. The group said that a person outside of Wal-Mart gave it the report.

From Bloomberg: Wal-Mart Stores Inc., defending against dozens of wage suits and the biggest discrimination complaint on record, faces pressure to settle with fired marketing chief Julie Roehm after she said executives violated company policy. Roehm, 36, said last month that she wants company executives deposed, including Chief Executive Officer H. Lee Scott and a technician fired for allegedly conducting unauthorized surveillance for the company, the world's largest retailer. Last week, Roehm accused Scott, 58, and other executives in court papers of accepting discounts and gifts from a vendor. ``Given all the other litigation, Wal-Mart might want to settle,'' said Carl Tobias, a law professor at the University of Richmond in Virginia. Other lawyers said future court filings may contain more allegations. ``Wal-Mart needs to consider the cost, in dollars and to its reputation,'' Tobias said. Wal-Mart spokesman John Simley declined to comment. Roehm's attorneys Sam Morgan and John Schaefer didn't return calls for comment yesterday. Wal-Mart fired Roehm without saying why in December and dropped the advertising agency she'd selected. Roehm then sued the Bentonville, Arkansas, retailer for breach of contract and fraud. Wal-Mart countersued in March, accusing Roehm of taking gifts from DraftFCB, the agency she had hired, and of having an affair with a subordinate. Roehm has asked for an unspecified amount of damages, plus punitive damages. Wal-Mart said in court papers that Roehm wants at least $1.5 million in salary and other payments. Roehm's suit, filed in a Port Huron, Michigan, federal court, is one of more than 250 complaints by employees in federal courts since January 2005. Other lawsuits include allegations of bias and violations of wage-and-hour regulations.

From the AP via the Chicago Tribune: NEW YORK -- Wal-Mart Chief Executive Lee Scott violated the company's ethics policy and accepted trips and received discounts on yachts and jewelry from a vendor, according to documents filed by a marketing executive fired by Wal-Mart in December. In her latest court filing aimed at the world's largest retailer, former marketing executive Julie Roehm also attacked other senior executives for accepting trips, concert tickets and other gifts from vendors. Roehm is suing the company over her firing and challenging Wal-Mart's charges that she accepted gifts from vendors and had an affair with a subordinate. In the documents filed Thursday in the U.S. District Court in Detroit, Roehm contends that CEO Scott and his wife frequently used private airplanes provided by entrepreneur Irwin Jacobs to travel to their residences in Longboat Key, Fla., and Las Vegas. Through his relationship with Jacobs, Scott was able to purchase a large pink diamond for his wife at a preferential price, she claims. Scott, Roehm argued, maintained a relationship with Jacobs that goes "beyond a business relationship." Jacobs owns a number of companies including Genmar Holdings Inc., a builder of recreational boats, and Jacobs Trading Co., which buys unsold merchandise from Wal-Mart Stores Inc.

From the AP via BusinessWeek:Rhode Island's state treasurer has asked federal regulators to investigate whether Wal-Mart Stores Inc. violated securities laws by not disclosing that the son of the retailer's chief executive works for a company that does business with Wal-Mart. Wal-Mart said there is no requirement under the law for a disclosure and no conflict of interest. Mona Williams, Wal-Mart's vice president of corporate communications, said the question is a "non-issue." In a letter made public Thursday, Rhode Island General Treasurer Frank T. Caprio asked the U.S. Securities and Exchange Commission to investigate Wal-Mart. Rhode Island's state employee pension fund has substantial holdings in Wal-Mart shares through index funds that group large corporations, he said. Caprio said Eric S. Scott, son of Wal-Mart Chief Executive Lee Scott, works for Jacobs Trading Co., which buys unsold furniture from big retailers like Wal-Mart and resells it to smaller discount stores. Caprio said Eric Scott "staffs" the Jacobs Trading office in Bentonville, Ark., where Wal-Mart is based. Caprio argued that SEC rules require publicly traded companies to tell investors if an immediate family member of an executive has a "material interest" in another business's dealings with that company. Wal-Mart has not made that disclosure, Caprio alleged.

From a Chicago Tribune editorial:If Wal-Mart were a country, it would be China's eighth-largest trading partner, according to an article in Asia Times Online. So it comes as no surprise that Wal-Mart, along with a host of foreign companies that do business in China, has expressed strong consternation about a new labor law likely to be passed by the National People's Congress in June. First proposed in December 2005, the law would provide Chinese workers with basic rights and protections covering issues such as the length of probationary contracts for new workers, firing protocols, severance pay and non-compete clauses. According to some Western companies, the law will make it too expensive for them to do business in China. Chinese labor leaders say the law is necessary to curb widespread abuses such as failing to pay workers in a timely fashion. Especially hard-hit are migrant workers who come to industrial zones from remote provinces, they say.

From the AP via the Akron Beacon Journal:CHICAGO - The wife of Democratic presidential candidate Barack Obama resigned Tuesday from the board of a food supplier for retail giant Wal-Mart Stores Inc., a target of criticism by the Illinois senator. Michelle Obama cited the increased demands of his campaign for leaving the board of Westchester, Ill.-based TreeHouse Foods Inc. Her position had raised questions because Obama has praised a union-led effort to change working conditions at Wal-Mart... Obama and other Democratic presidential contenders have been critical of Wal-Mart, which has taken heat over employees' wages and benefits. Some cities have passed, or tried to pass, laws upping the amount big retailers would have to pay. The Arkansas-based company has defended its wages. One of Barack Obama's chief Democratic rivals, fellow Sen. Hillary Rodham Clinton, once served on Wal-Mart's board but since has become a critic of its business practices. Democratic presidential contender John Edwards also has criticized the retail chain. Last year, before Barack Obama declared his candidacy for president, the Illinois senator courted the union-backed group WakeUpWalMart.com. "This is a much broader issue than Wal-Mart but I think the battle to engage Wal-Mart and force them to examine their own corporate values and what their policies and approaches are to their workers and how they are going to be good corporate citizens, I think, is absolutely vital," Obama said at the time. WakeUpWalMart.com spokesman Chris Kofinis said Tuesday night that "many companies do business with Wal-Mart, but what truly matters is whether our leaders stay silent on Wal-Mart's negative effect on America's working families." "Sen. Obama has not stayed silent and should be applauded for that," Kofinis said.

From the Associated Press: WASHINGTON — Legislation barring commercial companies like Wal-Mart and Home Depot from owning a special sort of bank overwhelmingly cleared the House on Monday. The bill, which passed 371-16, would prohibit nonfinancial companies from setting up or owning so-called industrial loan companies, federally insured institutions that can issue credit cards, make loans and take deposits. The industrial loan companies, or ILCs, have been proliferating in recent years: there are now 58 with a total of about $200 billion in assets. Thirty-one are based in Utah, one of only seven states that grant charters for such banks. Critics say the growth of the industrial banks dangerously blurs the line between banking and commerce, concentrating assets in the hands of a few big companies, stifling competition and hurting consumers. Those who think retailers and other commercial enterprises should be allowed to own ILCs say they could help reduce fees and costs for consumers and provide much-needed competition. The application to federal regulators of Wal-Mart Stores Inc., the world’s largest retailer, to establish an ILC stirred a storm of protest from banks, unions, lawmakers, and consumer and community organizations. In January, the Federal Deposit Insurance Corp. extended for one year a moratorium on considering nonfinancial companies’ applications to establish or acquire industrial banks, and Wal-Mart withdrew its bid in mid-March.

From the New York Times:In 1986, Sam Walton, the founder of Wal-Mart, had a problem. He was under growing pressure from shareholders — and his wife, Helen — to appoint a woman to the company’s 15-member board of directors. So Mr. Walton turned to a young lawyer who just happened to be married to the governor of Arkansas, where Wal-Mart is based: Hillary Rodham Clinton. Mrs. Clinton’s six-year tenure as a director of Wal-Mart, the nation’s largest company, remains a little known chapter in her closely scrutinized career. And it is little known for a reason. Mrs. Clinton rarely, if ever, discusses it, leaving her board membership out of her speeches and off her campaign Web site. Fellow board members and company executives, who have not spoken publicly about her role at Wal-Mart, say Mrs. Clinton used her position to champion personal causes, like the need for more women in management and a comprehensive environmental program, despite being Wal-Mart’s only female director, the youngest and arguably the least experienced in business. On other topics, like Wal-Mart’s vehement anti-unionism, for example, she was largely silent, they said.

From The Huffington Post: Human Rights Watch researchers don't normally spend their days listening to forty-something Americans talk about their former bosses, but that's what I was doing in March 2005, investigating how Wal-Mart violates its workers' right to form and join trade unions. So, on a warm spring day in Kingman, Arizona, I listened as a former Wal-Mart worker casually explained how the company had required him to take surveillance cameras supposedly set up to catch shoplifters and shift them to spy on union supporters and union activity at his store as part of a larger plan to squash a union drive. Over the past two years, I traveled all over the country talking to Wal-Mart workers past and present and scoured hundreds of pages of documents from legal cases against the company for a report, published May 1, Discounting Rights: Wal-Mart's Violation of US Workers' Right to Freedom of Association. And I learned that Wal-Mart is a poster child for what is wrong with the US labor law system.

From the Arkansas Democrat-Gazette: A federal judge in Little Rock on Wednesday granted class-action status to a lawsuit accusing Wal-Mart of using racially discriminatory practices in hiring over-the-road truck drivers. The class will include all black applicants living in the continental United States who were denied driving jobs since Sept. 22, 2001, and all blacks who contend they were deterred or thwarted from applying for driving jobs as a result of Wal-Mart’s policies and practices. U. S. District Judge Bill Wilson Jr. said in a 43-page order that the group of plaintiffs — expected to number below 10, 000 — can seek back pay and a declaration that Wal-Mart’s policies and practices were racially discriminatory and thereby unconstitutional. Wilson said that if any plaintiffs want to seek punitive damages, they will have to do so in separately filed lawsuits after a trial on the class-action case. Hank Bates of Little Rock, an attorney who twice argued for class-action status on behalf of the truckers, said Wednesday, shortly after the ruling was issued electronically, “I haven’t had the chance to read it yet, but I think we’re very pleased.” Bates said he and other plaintiffs’ attorneys at the John W. Walker and Welch & Kitchens firms have not yet determined how many people the class might include but said it will be “in the thousands, somewhere in the single-digit thousands.”

From the Associated Press:BENTONVILLE, Ark. — Wal-Mart Stores Inc. warned Tuesday that its profits in the current quarter could fall short of expectations after reporting an 8 percent gain in first-quarter earnings amid cost-cutting and strength in its warehouse clubs and international businesses. The company continued to struggle with its namesake discount business. The tepid outlook from Wal-Mart _ considered a barometer for the retail industry _ could serve as a warning bell that rising gasoline prices and a weakening housing market will continue to eat away at consumer spending in the coming months. The announcement came as Home Depot Inc. reported a 29.5 percent drop in first-quarter profits on a slight increase in sales.

From News 8 in Austin: Members of the neighborhood group Responsible Growth for Northcross are upset about a letter Wal-mart sent to the City of Austin last Friday. Monday the group got together to respond to the letter which they see as an outright threat. "It was completely unnecessary and it's rude," member Jason Meeker said. The letter outlines the agreement between Wal-mart and the city of Austin on the size of the new store. Those new plans are to downgrade from the original 225,000 square foot plan to a little more than 186,000 square feet. "We expected Wal-mart to come back with a size reduction. It was surprising for them to come back with a threat in the letter that announced their size reduction," Meeker said. Wal-mart says they plan to go through with the voluntary reduction, unless a third party takes legal action. "In that event, we may be forced to re-evaluate the voluntary items in the term sheet," Wal-mart's letter said. The neighborhood group interprets that to be a threat. Responsible Growth for Northcross wants a public apology from Wal-mart CEO Lee Scott and want him to visit with neighbors in person. Wal-mart issued a statement that says the letter was not meant as a threat, but the company says further changes may be required if the group takes legal action.

From the Associated Press:Investors will be closely watching whether Wal-Mart Stores Inc. meets its earnings forecast Tuesday after the world's largest retailer reported its worst decline in one-month sales at established stores in April. April was a bad sales month for most retailers because of a mix of factors including cold weather. But Wal-Mart's report last week of a 3.5 percent decline at stores open at least a year, an industry benchmark called same-store sales, was the worst since the Bentonville, Ark.-based retailer started reporting the numbers in 1980. Some analysts, including at Banc of America Securities and Wachovia Securities, responded by trimming their estimates of the profit Wal-Mart will report Tuesday for the first quarter of its fiscal year, which began in February. Others said it may be a close call. "Given the revenue shortfall (in April), if they make the earnings number on Tuesday, it'll be by the hair of their chiney-chin-chin," said Patricia Edwards, a portfolio manager and retail analyst at Wentworth, Hauser & Violich in Seattle, which manages $9.6 billion in assets and holds about 42,000 Wal-Mart shares.

The growing momentum is evident by the list of impressive women and community leaders that have signed on to the Mother's Day letter to Lee Scott. Leaders around the country are calling on Wal-Mart to address its mistreatment of women. National Council of Women’s Organizations Kimberly Otis Executive Director National Organization for Women Kim Gandy President CODEPINK: Women for Peace Gael Murphy Executive Committee National Congress of Black Women Dr. E. Faye Williams National Chair Feminist Majority Foundation Eleanor Smeal President National Committee on Pay Equity Michele Leber Chair Wider Opportunities for Women Joan Kuriansky, Esq. Executive Director National Women’s Conference Mal Johnson Co-Chair Women’s International League for Peace and Freedom, United States Section Mary Day Kent Executive Director International Women’s Democracy Center Barbara Anne Ferris President Coalition of Labor Union Women Marsha Zakowski President Black Women United for Action Sheila B. Coates President National Women’s Political Caucus Clare Giesen Executive Director Veteran Feminists of America Ginny Watkins Secretary Dolores Huerta Foundation Dolores Huerta President

Read our press release and learn how 14 leading women's groups signed the Wal-Mart Mother's Day Challenge. Sign the Mother's Day pledge here. From the Dow Jones Newswire: Leading women's groups called on Wal-Mart Stores Inc. to improve wages, benefits and working conditions for female employees, and a union-backed critic urged shoppers to avoid the world's largest retailer this weekend while searching for Mother's Day gifts. In a Friday letter to Wal-Mart President and Chief Executive Lee Scott, 14 women's groups claiming to represent more than 10 million women criticized the company's treatment of employees who are working mothers. The retailer has come under fire for labor-scheduling policies rolled out this year that critics say require employees, including working mothers, to be available throughout the week at the whim of a store manager. "These mothers are invisible, representing mere numbers on a balance sheet whose hours, wages and benefits can be cut without thought or consideration," the letter stated. " Wal-Mart's new attendance policy punishes mothers who need to take a day off to care for a sick child." The letter was part of a "Mother's Day Campaign" by WakeUpWalMart.com, a critic backed by the United Food and Commercial Workers International Union. WakeUpWalMart.com also on Friday launched a "Million Moms Call," a phone-message blast that calls on shoppers to avoid Wal-Mart when buying Mother's Day gifts this weekend. "Every good son and daughter knows that moms like to wake up to Wal-Mart on their special day," Wal-Mart spokesman David Tovar said in a written statement. "And with a bouquet of one dozen freshly cut roses for $12.86, it's no wonder we'll be America's first choice for Mother's Day again this year." WakeUpWalMart.com's phone message mentions a class-action lawsuit pending against Wal-Mart, which charges the retailer with gender discrimination on behalf of more than two million female employees. Wal-Mart has appealed the class-action status of the suit, which could result in billions of dollars in sex-discrimination damage claims. In an April report, Wal-Mart said women made up 61% of its employees in 2006, while 40% of its managers were women. About 75% of the company's store-level sales clerks last year were women, according to the report. Groups that signed the Friday letter include the National Council of Women's Organizations, the National Organization for Women, Codepink, the National Congress of Black Women and the National Committee on Pay Equity.

From The Hill: Members of the Senate Banking Committee yesterday unveiled legislation to bar companies like Wal-Mart from setting up banks, following steps in the House to make permanent a one-year moratorium on any new so-called industrial loan companies (ILCs). Introduced by Sens. Sherrod Brown (D-Ohio), Tim Johnson (D-S.D.) and Wayne Allard (R-Colo.), the legislation also would limit the growth of existing ILCs and beef up the power of the Federal Deposit Insurance Corporation (FDIC) to regulate them. “Industrial loan company assets have skyrocketed over the last 20 years … Once again, it is time for Congress to act to restore the separation between banking and commerce,” Brown said at a press conference to trumpet the legislation. Allard said the legislation would close “one additional loophole” that allowed banking and commerce to mix. The senators predicted their legislation would attract broad support among the members of the Banking Committee. But a spokeswoman for Sen. Bob Bennett (R-Utah), a committee member, yesterday reiterated the senator’s opposition to legislation curbing ILCs, the bulk of which are chartered in Utah. “This bill is a non-starter for Senator Bennett,” she wrote in an e-mail. “He believes strongly that the ILC industry fills a necessary niche in the marketplace and has done so with safety and soundness.” Wal-Mart provoked a public outcry in 2005 when it took steps to set up a banking arm. The FDIC was flooded with thousands of comments, prompting the bank regulator to impose a six-month ban on any new ILC applications in 2006. Then, 107 members of Congress wrote a letter requesting the FDIC to extend the moratorium by one year. It is now set to expire in January 2008.

From The Wall Street Journal: DALLAS -- Wal-Mart Stores Inc. posted its worst monthly same-store sales results in at least 28 years, tallying a 3.5% decline in April due to this year's early Easter as well as generally challenging economic conditions for consumers. Wal-Mart's 3.5% drop in the four-week period ending May 4 at U.S. stores fell below its earlier forecast of "flat" sales to a 2% decline. In a recorded phone message Thursday, Wal-Mart blamed bad weather last month in most U.S. regions and the early Easter on April 8, which pushed many Easter sales into March. Same-store sales measure sales gains or losses at stores open for at least a year. They are a key indicator of the returns a retailer reaps on the capital it spends, and thus an influence on its profitability. Most publicly traded U.S. retailers are reporting their April results Thursday. Wal-Mart's chief financial officer had warned a month ago that the retailer's earlier guidance for earnings per share of 68 cents to 71 cents for its latest quarter would be "a challenge" to achieve given what the company foresaw as a difficult April. The retailer didn't provide an update. It did, however, predict a sales gain for this month of 1% to 2%. Wal-Mart will report its results for its first quarter ended April 30 on Tuesday. For the first quarter, Wal-Mart, Bentonville, Ark., reported a preliminary sales tally of $85.4 billion. Its 3.5% decline in same-store sales was comprised of a 4.6% decline at its flagship U.S. Division -- which includes its more than 3,200 supercenters, discount stores and Neighborhood Markets -- and a 2% gain by its Sam's Club division. Technically, Wal-Mart's 3.5% April decline ranks as Wal-Mart's worst monthly showing in the 28 years it has reported such figures, handily outpacing the previous worst 0.6% decline in April 1996. In a broader context, the result was pulled down by scheduling quirks in addition to Wal-Mart's increasing difficulty in topping its own year-ago numbers.

This from The Cornucopia Institute: CORNUCOPIA, WI: Consumer fraud investigators in the state of Wisconsin released their findings this week after a three-month long investigation into allegations that Wal-Mart stores throughout the state of Wisconsin had misled consumers by misidentifying conventional food items as organic. In a letter to Wal-Mart Stores, Inc., based in Bentonville, Arkansas, the Wisconsin Department of Agriculture, Trade and Consumer Protection stated they’d found numerous instances of conventional food products improperly labeled as organic by the retail chain. Specifically, Wisconsin authorities told Wal-Mart’s legal counsel that “use of the term ‘Wal-Mart Organics’ in combination with reference to a specific non-organic product may be considered to be a misrepresentation and therefore a violation” of Wisconsin state statutes. The Cornucopia Institute, a governmental and corporate organic industry watchdog, had filed complaints with Wisconsin regulators and the USDA after finding numerous incidents of fraudulent organic labeling in Wal-Mart stores in five states from Texas to Minnesota. Although Wisconsin regulators opted to send only a formal warning concerning the retail giant’s organic marketing practices they said that they had reached an agreement with the company under which steps would be taken to prevent future organic food misrepresentations. Wisconsin officials also said they would be continuing their surveillance of the company’s stores. “This finding is a victory for consumers who care about the integrity of organic food and farming” said Mark Kastel, Codirector of The Cornucopia Institute. “Wal-Mart cannot be allowed to sell organic food ‘on the cheap’ because they lack the commitment to recruit qualified management or are unwilling to properly train their store personnel,” Kastel added. “Such practices place ethical retailers, their suppliers, and organic farmers at a competitive disadvantage.” The Cornucopia web page contains a photo gallery of conventional food products that were both priced and labeled with Wal-Mart’s unique in-store point of purchase signage as organic foods. The photos were gathered during an investigation by Cornucopia of Wal-Mart’s organic practices. View the photo gallery here and continue reading the story below the fold.

On Tuesday, May 8, Wal-Mart workers Charmaine Givens and Cynthia Murray were ejected from the Hilton New York after attempting to meet with Wal-Mart CEO Lee Scott to discuss his company's refusal to provide affordable and comprehensive health care to 735,000 Wal-Mart workers and their children who have no company health care. Wal-Mart's health care hypocrisy drew a stern rebuke from several hundred labor and community activists outside the hotel who formed a "Picket Line for America's Working Families." Demonstrators, led by WakeUpWalMart.com, have denounced Wal-Mart's involvement in the coalition as a "publicity stunt" by the retail giant. Video of the Wal-Mart protestors can be viewed at: http://youtube.com/watch?v=0Sj23XB_0XQ Note: The woman speaking in the video is Wal-Mart worker Cynthia Murray

Yesterday, the "Better Health Care Together" coalition, led by Wal-Mart and the Service Employees International Union, held a second forum in New York City. From the Associated Press article:If there was little dissent in the meeting, it was likely because dissenters, including about 300 people organized by WakeUpWalMart.com, were kept outside. Chris Kofinis, a spokesman for the group backed by the United Food and Commercial Workers union, said it was ironic that Wal-Mart was one of the coalition leaders when less than half of its employees are covered under the company's health plan. Kofinis said the world's largest retailer needed to start leading by example and provide a more affordable health plan for its workers... Two uninsured employees _ Cynthia Murray of Hyattsville, Md., and Charmaine Givens of Evergreen Park, Ill. _ were barred by security from delivering a grievance letter to Scott at the meeting. Both Murray and Givens say they do not have health insurance because Wal-Mart's plan is too expensive with yearly deductibles of $1,000 for an individual and $3,000 for a family. Kofinis, who called the meeting a publicity stunt meant to deflect attention from the company's health care program, said the average Wal-Mart employee makes about $17,000 per year. At least one representative for WakeUpWalMart.com was escorted out of the meeting by security for handing out copies of the letter to the media.