Wal-Mart Stores Inc announced a $15 billion share repurchase and emphasized a recent dividend rise to hearten shareholders who have seen the stock lag as its U.S. sales remain in a prolonged slump.

Wal-Mart is looking for sales everywhere consumers shop -- in large and small stores, online and on mobile phones, and in international markets such as Africa -- since the company has suffered two years of declining sales at existing U.S. stores.

Fixing the U.S. business is still Wal-Mart's greatest priority, Chief Executive Mike Duke said at Friday's annual meeting, which doubles as celebrity-infused pep rally for about 14,000 employees and was hosted this year by actor Will Smith.

Shoppers come into Walmart stores for food and other basics, but then buy little else, said U.S. CEO Bill Simon, who has seen his chain lose bargain-seeking customers to even cheaper dollar stores.

The customer is very, very stressed, Simon told reporters.

The low and middle-income shoppers who visit Walmart stores are feeling the impact of higher gasoline and food prices. While the company is trying to work with suppliers to keep a lid on its prices, some items, such as jeans, are now more expensive after a commodities rally pushed up costs in 2010.

Wal-Mart keeps opening supercenters, which are the growth engine in the United States, and is just starting to test small Walmart Express stores -- modeled after smaller stores operated outside the United States -- in rural and urban areas from Gentry, Arkansas, to Chicago.

Wal-Mart is likely to run out of space for U.S. supercenters in the next decade and is being smart by opening smaller U.S. stores and making a bigger international push, said Natalie Berg, global research director for retail research firm Planet Retail.

Still, as Duke noted, same-store sales account for about 98 percent of total sales in the United States, so fixing the slump at existing stores is crucial.

Friday's U.S. employment report is going to make Wal-Mart's job in its home market even more difficult. The U.S. jobless rate rose to 9.1 percent from 9 percent; economists had expected a drop to 8.9 percent.

We don't think people should be buying into the stock now, said Edward Jones analyst Matt Arnold.

But if an investor already owned the stock, he could hold onto it and wait for the economy to improve enough to give Wal-Mart's core customer a chance to recover, he added.

Wal-Mart shares rose 13 cents to $53.68.

For a Wal-Mart performance graphic, click here: http://r.reuters.com/cyn89r


The $15 billion share buyback, disclosed at the retailer's annual meeting on Friday, replaces an identical one announced a year ago, of which about $13 billion has been used. The new buyback amount equals roughly 8 percent of the company's market capitalization of $189 billion.

Wal-Mart shares have underperformed the larger market. Through Thursday, the stock was up 6.3 percent since the 2010 annual meeting, well below the 23.3 percent increase in the Standard & Poor's 500 index <.SPX> over the same period.

Wal-Mart is about 10 times the size it was when founder Sam Walton passed away in 1992. Its shares have more than tripled.

Walton's family, including current Chairman Rob Walton, owns about 48 percent of Wal-Mart stock and its stake will increase as Wal-Mart buys back shares. Wal-Mart said it would keep its board independent, even if the family gained majority ownership.

While business at the smaller international and Sam's Club units has largely hummed along, Wal-Mart is still recovering from missteps, such as removing some items from its U.S. discount stores and focusing on short-term deals rather than everyday low prices. It has been bringing back items, first in food and other consumables, and has gone back to emphasizing low prices to more effectively compete with dollar stores.

The big question is whether such strategies will work.

Over time, if the lower-income consumer comes back, that's a powerful tide that should move the stock higher, Arnold said.

Wal-Mart's annual meeting is attended by investors and Wall Street analysts, but is largely a staged showcase to energize the company's employees, known as associates.

Associates came from across the United States, Canada, China and other countries to attend the meeting. They packed hotels and even stayed in dormitories at the University of Arkansas.

Chinese associates lined up at Wal-Mart's home office in nearby Bentonville this week just to take a picture with a wall mural that shows Mr. Sam, founder Sam Walton.

Also joining the fray this year were Massmart Holdings Ltd employees, now that Wal-Mart's purchase of a majority stake in the South African chain has been approved.

While vuvuzelas played from the South African contingent, the biggest noise came from thousands who cheered when Smith, who called himself Will-Mart, was introduced as the emcee.

American Idol winner Scotty McCreery and singer Alicia Keys also performed. The band Black Eyed Peas closed out the meeting by playing a few of their hits. Singer Fergie also took a moment to thank Wal-Mart for still selling albums, or CDs.

(Additional reporting by Brad Dorfman; editing by Gerald E. McCormick and Andre Grenon)