Wal-Mart Stores Inc's
Let me be clear, and people ask me about this all the time, our customers will stay with us when this economy turns around. And when they have more discretionary spending, they'll stay with Wal-Mart. I promise you that, newly installed CEO Mike Duke told the more than 16,000 people gathered for the retailer's annual meeting.
We are building long-term loyalty to Wal-Mart.
Wal-Mart has grabbed share during the economic downturn as frugal shoppers seek its low prices. Its shares rose 18 percent last year as investors sought a safe haven from the financial crisis.
But the shares have fallen about 10 percent this year as investors seek better returns with more discretionary retailers that might benefit when good times return.
Duke, in his first annual meeting since taking the helm of the discount behemoth on February 1, was adamant that Wal-Mart can retain its new shoppers once good times return.
It is renovating its U.S. stores, decluttering shelves, widening aisles and adding skylights to appeal to higher-income shoppers who are coming through its doors. It has improved its offering of name-brand items, adding Apple
The improvements we've made, they are permanent and they are sustainable. We are not going back, Duke said.
He said the economic crisis caused a fundamental shift in consumer attitudes and a new normal has emerged in which shoppers want to save money and are getting smarter about saving.
BUYING BACK STOCK
Wal-Mart Chief Financial Officer Tom Schoewe said the retailer has approved a new $15 billion share repurchase plan to replace its old $15 billion plan, under which $3.4 billion was still remaining.
Your balance sheet today is stronger than a year ago, Schoewe told the thousands of Wal-Mart employees in attendance at the meeting. How many companies ... could make that statement?
The retailer did not provide a time frame in which it would buy back the shares.
Wal-Mart used its annual meeting to congratulate itself for getting its U.S. business back on track. Its sales growth had been eclipsed by competitors during the housing market boom as flush shoppers choose to spend their dollars elsewhere.
We have outperformed the competition again and again, every single month for five consecutive quarters now. We have reported better comparable sales growth than the market, said Eduardo Castro-Wright, vice chairman in charge of the retailer's U.S. operations.
Winning feels good, doesn't it?
Castro-Wright said after the meeting that Wal-Mart will see more sales gains as it remodels its U.S. discount stores under its Project Impact program. Those that have been renovated have seen sales rise compared with locations that have not been upgraded with a cleaner, sleeker look, he said.
But Wal-Mart is not immune to the economy. Castro-Wright said it is not accelerating the test of its convenience-sized grocery stores, called Marketside, that it opened in October.
While gas prices remain below year-ago levels, which is bringing more shoppers into its stores, Castro-Wright said he did not know where the tipping point would be when rising unemployment erases some of the benefit it is getting from lower fuel prices.
The Labor Department said on Friday that employers cut 345,000 jobs in May -- substantially less than analysts had forecast -- but the U.S. unemployment rate hit 9.4 percent, its highest since 1983.
Wal-Mart shares rose 20 cents to close at $51.07.
(Reporting by Nicole Maestri, editing by Dave Zimmerman, Bernard Orr).