Expanding globally and marketing to the next generation customer are Wal-Mart's long-term goals, its CEO told shareholders Friday, but the company also needs to fix slumping U.S. sales.
Wal-Mart President and CEO Mike Duke outlined a five-point program at the company's annual meeting to help the company sell more on the Internet at home and abroad while keeping costs and prices low.
He commented that their next-generation customer will include millions who are striving to join the emerging global middle class. 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.
Duke said the company has five priorities:
• Grow by adding customers, opening new stores and acquiring other retailers.
• Keep costs low and pass the savings on to customers.
• Build a global Internet business.
• Develop talent, including a greater focus on women and minorities.
• Expand the company sustainability effort.
Wal-Mart's approval this week for its $2.4 billion purchase of a majority share in a South Africian retailer is a major step in its international strategy.
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 presence on the Internet, particularly in China and the U.S., an effort Duke says must extend to all countries in which the company operates.
Duke commented they can combine their stores, their systems and their logistics expertise into one continuous channel to drive growth and serve the next generation customer around the world. They 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.
They are right in the sweet spot of the next generation customer. But to succeed, they must also be the best at how they run their business, and turning around the U.S. business remains the greatest priority for CEO and the entire Walmart U.S. team.
The company also announced 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 the corporation. The news comes after the company in March increased its stock dividend in its current 2012 fiscal year from $1.21 to $1.46 per share, an increase of 21% that returned $1.3 billion to shareholders.
The shareholder 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 when that will happen.
They made a lot of progress over the last 11 months, and they believe they have the right plan.
It is also noted that two-thirds of the business has seen gains in a key measure of sales, most of which is coming from groceries.
But Wal-Mart leaders cautioned, "You certainly can't predict the weather and the economy." They also said it would take more time to straighten out mistakes Wal-Mart made on pricing and selection more than two years ago.
The company has been racing to restock thousands of items it pulled 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 the source of 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.
Thursday's reports on May sales from major retailers, including rival Target, provided more evidence that rising prices for gas and other goods are causing shoppers to pull back on discretionary items like clothing and home goods.
On Thursday, Wal-Mart commented 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% 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 seen eight quarters of decline.
Wal-Mart stores account for 62% of the company's revenue, which reached $418 billion in its fiscal year ended Jan. 31; international makes up 26%.
The company's overall revenue is also getting a lift from its improving Sam’s Club division, which has enjoyed five quarters of gains in stores open at least a year. Sam's Club has benefited from better quality merchandise.
