From Business Week Online:

The political advertisements include a number of actors talking sarcastically about Harold Ford Jr., the Democratic candidate from Tennessee. The one who has stirred up all the controversy, though, is a bare-shouldered blonde who says she met Ford at a Playboy party and closes the clip by winking and whispering, "Harold, call me."

The ad is taking aim at an African American bidding to become the first black senator from Tennessee since Reconstruction, and it has set off a firestorm of debate, particularly among those who says it's a racist attempt to stoke fears of black men pursuing white women. Those who have taken heat for the ads include Ford's opponent, Bob Corker; the Republican National Committee, which paid for the ads; and Terry Nelson, the Republican strategist who created the ads.

One of the most surprising targets of criticism, however, has been Wal-Mart (WMT). The retailer didn't have any hand in the ads attacking Ford. However, Wal-Mart did have Nelson on its payroll as a consultant, as part of the company's growing effort to burnish its own image. Shortly after the Ford ads aired, Reverend Jesse Jackson came out attacking Wal-Mart and demanded that the company sever its relations with Nelson. Two days later, Nelson bowed to the pressure and submitted a letter ending his relationship to the company.

It's been that kind of year for Wal-Mart...

The Bentonville (Ark.)-based company has been pushing hard to improve its public image, at a time when its financial fortunes increasingly depend on it. It's come under heavy fire from workers and politicians, for everything from the low wages it pays workers to the small retailers it pushes out of business. That dark reputation has resulted in communities around the country taking on Wal-Mart, by trying to halt construction of new stores or forcing it to pay higher wages and benefits.

At the same time, the company is scraping for every dollar of sales it can get. On Oct. 30, Wal-Mart reported that estimated same-store sales for October rose a slim 0.5%, the smallest such increase in nearly six years (see BusinessWeek.com, 10/30/06, "Wal-Mart's 'Comps' Creep Lower"). Slow sales have resulted in Wal-Mart's stock going sideways for five years, a harsh situation for investors long accustomed to outsized returns.

Wal-Mart has a "reputation crisis," says Gerald Baron, founder and president of AudienceCentral, a public information emergency response group and author of Now Is Too Late 2: Survival in an Era of Instant News. "Wal-Mart understands that the situation they are in is a real threat to their future."

Image Incongruity

But Wal-Mart's efforts to improve its public image have been floundering. Besides the company ending its relationship with Nelson, it's had to backtrack on several fronts. In August, Andrew Young, the first African American U.S. ambassador to the U.N., resigned his position as head of the company-backed group Working Families for Wal-Mart, after making anti-Semitic and anti-Korean comments. Then, in October, a folksy blog called "Wal-Marting Across America" drew fire. The blog focused on happy Wal-Mart workers, but the couple writing it hadn't disclosed that the expenses and the writing were paid for with Wal-Mart money. That same month, independent filmmaker Ron Galloway, who had made movies in support of the company, reversed course and resigned from the board of Working Families for Wal-Mart.

The contrast between how critics see Wal-Mart and how the company sees itself couldn't be more stark. While opponents say the retailer hurts workers by paying them low wages and benefits, Wal-Mart execs see themselves as champions of the middle class, making products affordable by pushing suppliers to offer goods at lower prices. In a presentation to Wall Street analysts on Oct. 24, Leslie Dach, the company's newly appointed executive vice-president of corporate affairs and government relations, said that the media, local governments, and lawmakers in the capital "see us in a better way than they did a year ago." He added: "Our favorables are at 70%-numbers that any politician would covet in an election cycle."

Countless Consultants Still, the world's largest retailer recognizes that it has something of an image problem. In the last year, it has hired some of the best-known political and public relations consultants to improve its public face. It also just cut the ties to its ad agency of 32 years, in an effort to remake its image into a hip retailer that is also kind and considerate to employees.

Wal-Mart won't disclose how much it is spending on these efforts, although they certainly don't come cheap. For instance, the company hired Dach in August by offering $3 million in stock, as well as options on 168,805 shares that vest over the next five years. The company hasn't disclosed the salary or bonus for Dach, who was vice-chairman at PR firm Edelman and a former media advisor to President Bill Clinton. Wal-Mart referred questions about Dach to its public filings and declined to elaborate.

Among the other people that Wal-Mart has hired as either consultants or employees are Michael Deaver, former adviser to President Ronald Reagan; Democratic strategist Charles Baker; Jonathan Adashek, a strategist for John Kerry; Taylor Gross, who has handled President George W. Bush's communications; and the controversial Nelson, who was the political director for President Bush's campaign in 2004. Wal-Mart didn't return several calls seeking comment about its relationship with Nelson.

Good PR

Is Hard to Find Many of Wal-Mart's political consultants came on board after Wal-Mart hired PR giant Edelman last year. Edelman has been a controversial force in Wal-Mart's image-boosting efforts. Last December, the firm formed the advocacy group Working Families for Wal-Mart, paid for solely by Wal-Mart, to counter criticism from the union-funded groups Wal-Mart Watch and WakeUpWalMart.com. The Working Families group has been at the center of several notable maelstroms swirling around Wal-Mart.

An early disappointment was the high-profile appointment of Young, as head of Working Families for Wal-Mart. He resigned barely six months into the job, after saying in an interview that Jewish, Korean, and Arab store owners had been ripping off urban communities for years.

The Working Families group also hired the couple who published the "Wal-Marting Across America" blog. They were known only as Jim and Laura, and they drove cross-country in an RV to capture the stories of people they met in Wal-Mart parking lots. BusinessWeek.com first revealed that the Working Families group was paying for the RV, the gas, and the blog writings (see BusinessWeek.com, 10/8/06, "Wal-Mart's Jim and Laura: The Real Story").

The effort became notorious in the blogging community, where writers took Wal-Mart to task for tarnishing the reputation of blogs (see BusinessWeek.com, 10/17/06, "Wal-Mart vs. the Blogosphere"). When the Wal-Marting blog was exposed, a Wal-Mart spokesman said, "It was a Working Families for Wal-Mart initiative, and we didn't have anything to do with it." Edelman's CEO issued a mea culpa and took full responsibility for the mess.

Losing Support

How much of Wal-Mart's problem is style and how much substance? The answer is unclear at this point. However, at least some consumers are no longer shopping at the company's stores because of its reputation. According to a study by the consulting firm McKinsey & Co. for Wal-Mart, 2% to 8% of the company's customers have stopped shopping there, "because of negative press they have heard." Reputation is even more important as the company pushes upscale, trying to sell everything from organic food to high-end apparel, through its Metro 7 line. So far these initiatives have failed to ignite sales as much as the retailer hoped.

Expansion plans have been scaled back. In late October, Tom Schoewe, Wal-Mart's chief financial officer, told analysts that the company will see its capital spending grow 2% to 4% in fiscal 2008. That is down from the 15% and 20% growth this year.

Even some former supporters wonder whether Wal-Mart has to change its ways. Filmmaker Galloway appeared on several TV shows praising the retailer after making the movie: "Why Wal-Mart Works: And Why That Makes Some People Crazy." But he had a change of heart this year, after meeting with a Wal-Mart employee who had been featured in his film and is now upset because of the company's recently announced wage caps (see BusinessWeek.com, 8/11/06, "The Flip Side of Wal-Mart's Pay Hikes"). "This lady was distraught because she would never get a raise at Wal-Mart," he says. "I think that profiting on the backs of long-term employees isn't right."

Wal-Mart finally confirmed that it was replacing its two main advertising agencies with two new teams. The move came after a lengthy search process and a string of bad press for Wal-Mart, including stories on Wal-Mart being forced to pay a $78 million verdict for illegally making employees work through their breaks, dismal sales for October, a top consultant being fired for producing a racist TV ad, and workers in Florida walking out of work to protest unfair schedule and policy changes.

Unfortunately for Wal-Mart, the problem isn't its advertising. The problem is its message. Because, while the American people and political leaders are calling for Wal-Mart to change, Wal-Mart continues to treat its employees poorly, violate child labor laws, shut down small businesses and negatively impact communities by shipping U.S. jobs overseas.

All the new ad agencies in the world can’t cover up those issues, nor the public's growing awareness of them.

Wal-Mart just announced its same-store sales for the month of October. Despite predictions of 2-4% growth, Wal-Mart's same-store sales hit a six-year low at 0.5%. This just a few days after Wal-Mart executives told analysts they would be below predictions but likely at 1% growth.

Marketwatch reports on the sales news:

Despite an upbeat forecast for October, Wal-Mart Stores Inc. notched the slowest gain in same-store sales in years, the retail giant reported Saturday.

Wal-Mart Stores, Inc. said sales at established U.S. stores rose an estimated 0.5%, far off the 2-to-4% gain the company originally forecast for October.

On Oct. 23, company executives pared back their rosy outlook, saying that October same-store sales would be closer to September's figure of 1.3%.

The 0.5% same-store sales figure for October is the weakest since the 0.3% rise posted in December 2000, according to the Wall Street Journal.

Wal-Mart executives blamed the weak October figure on weakness in sales of women's apparel, as well as disruption to sales from remodeling efforts at almost half of its U.S. stores.

From the New York Times:

After infuriating Canada’s ambassador to the United States and offending black voters in Tennessee, a Republican television commercial mocking Representative Harold E. Ford has become a political liability for an unlikely third party: Wal-Mart.

Under pressure from black leaders and union groups, the nation’s largest retailer said last night that it had cut ties with a prominent Republican strategist who helped create the provocative advertisement.

The strategist, Terry Nelson, was hired by Wal-Mart in 2005 to help burnish the company’s image after a wave of attacks from organized labor and liberal groups.

Since Mr. Nelson’s affiliation with the Ford commercial became public this week, Jesse Jackson has demanded that Wal-Mart fire him and a union group has threatened to run advertisements in Tennessee linking the company to the commercial.

In the commercial, actors in mock interviews speak sarcastically about Mr. Ford and his candidacy for the Senate seat in Tennessee. In a scene that black leaders say has racial overtones, a white actress says she met Mr. Ford, who is black, at a “Playboy party.” “Harold, call me,” she says coyly.

The letter signed by Mr. Jackson, and distributed by the union-backed group WakeUpWal-Mart.com, stated, “If Wal-Mart is truly interested in changing for the better, we implore you to send a message to all Americans, especially African-Americans, that Wal-Mart will not do business with consultants who use race as a political tool to divide our nation.”

Wal-Mart, in a statement, said that Mr. Nelson’s Washington consulting firm, Crosslink Strategy Group, had “sent a letter to Wal-Mart ending its working relationship with our company. We believe this is the right course of action.”

A person familiar with the letter said it made clear that the decision to end the relationship was based on requests from Wal-Mart. The person, who was not authorized to speak publicly, did so on the condition of anonymity.

Mr. Nelson did not return several phone and e-mail messages.

Wal-Mart’s relationship with Mr. Nelson threatened to set back the retailer’s extensive efforts to reach out to African-Americans, who represent a large portion of both its employees and customers.

Over the past year, chief executive H. Lee Scott Jr. has met with members of the Congressional Black Caucus and appeared on the radio show of the civil rights leader Al Sharpton.

Mr. Nelson has worked for a wide variety of Republican leaders, including President Bush and Senator John McCain of Arizona. As a partner in the Washington consulting firm Crosslink Strategy, Mr. Nelson also consults for corporations like Wal-Mart.

Over the past year, Mr. Nelson has helped recruit Wal-Mart’s suppliers to join an advocacy group that trumpets its accomplishments and has overseen a program to register the company’s employees to vote in next week’s elections, in part as a reaction to Democratic attacks against the retailer.

From the Associated Press:

A union group and the Rev. Jesse Jackson demanded Thursday that Wal-Mart fire a Republican consultant connected to a Senate campaign ad that critics call racist.

Veteran Republican strategist Terry Nelson is the head of an outside group that created the Tennessee ad for the Republican National Committee. Nelson is also one of two political consultants - the other is a Democrat - that Wal-Mart hired last month to help get information to its more than 1.3 million U.S. employees in its first companywide voter registration drive.

Union-funded WakeUpWalMart.com and Jackson, in a joint statement, said Wal-Mart must fire Nelson to show it does not tolerate racism.

Wal-Mart declined to respond.

"This has nothing to do with Wal-Mart, so it would be absurd for us to comment on it," Wal-Mart spokesman Dave Tovar said.

A message seeking comment was left Thursday at Nelson's office.

The ad targeted Democratic candidate Harold Ford Jr. in a way that critics - including the NAACP - called racist sexual innuendo about a black man and white woman.

In the ad, a white woman with blond hair and bare shoulders looks into the camera and whispers, "Harold, call me," then winks. It doesn't mention that Ford is black.

The RNC, which paid for the ad, denied it had racial subtext. Party Chairman Ken Mehlman said it was produced by an independent organization.

Nelson, the RNC's deputy chief of staff in 2002 and the Bush campaign's political director in 2004, is the head of that group, RNC spokesman Danny Diaz said.

Jackson and the union group said the Bentonville, Ark.-based retailer must prove that it can live up to its stated goals of promoting diversity. In the past year, Wal-Mart says it has expanded targets for increasing diversity in the work force, doing business with more minority and women-owned companies and putting money into programs for minority small businesses and job creation programs.

"If Wal-Mart is truly interested in changing for the better, we implore you to send a message to all Americans, especially African-Americans, that Wal-Mart will not do business with consultants who use race as a political tool to divide our nation," WakeUpWalMart wrote in a letter faxed to Chief Executive Lee Scott.

"Wal-Mart will determine what it will do based on how they view the gravity of the situation. It will be a reflection of their values," Jackson said.

The ad began a five-day run Friday, and the RNC said Wednesday the commercial would no longer air, although it was still seen in some Tennessee markets Thursday.

Today's Austin-American Statesman reports that Terry Nelson, president of Crosslink Strategy and a top consultant to Wal-Mart, was behind the racist TV ad attacking Tennessee U.S. Senate Candidate Harold Ford, Jr.

In response to this shocking development, we sent Wal-Mart’s CEO, Lee Scott, a personal letter calling on Wal-Mart to immediately condemn the ad and end its relationship with Republican operative and Wal-Mart consultant, Terry Nelson. Already, the racist television ad has been widely condemned by the NAACP and other civil rights leaders.

Reverend Jesse Jackson, Sr. and Congressman Jesse Jackson, Jr. also called on Wal-Mart to condemn the ad and dismiss Terry Nelson.

Reverend Jackson had this to say in response to the revelation today:

This is a reflection on Wal-Mart and the people that drive their right-wing, anti-worker family agenda. The same people that engage in race-baiting also support right to work laws that undermine working people...

In his role as a close and intimate advisor to Wal-Mart, Nelson created the strategy for Wal-Mart’s front group, Working Families for Wal-Mart, launched an unprecedented smear website, PaidCritics.com, to attack hard-working families, and directs Wal-Mart’s recently launched voter education program which targets any Democrat who calls on Wal-Mart to be a responsible corporation.

Read our entire press release, statements from Rev. Jess Jackson, Sr., Congressman Jesse Jackson, Jr., our letter to Lee Scott, and today’s article below the jump.

WAKEUPWALMART.COM CALLS ON WAL-MART TO DENOUNCE RACIST AD PRODUCED BY WAL-MART CONSULTANT TERRY NELSON

CIVIL RIGHTS LEADER REV. JESSE JACKSON SR. & REP. JESSE JACKSON JR. CALL ON WAL-MART TO CONDEMN AD AND DISMISS TERRY NELSON

GROUP SENDS LETTER TO WAL-MART CEO LEE SCOTT CALLING ON WAL-MART TO FIRE ITS REPUBLICAN OPERATIVE

Washington, D.C. - As reported today by the Austin-American Statesman, Terry Nelson, president of Crosslink Strategy and a consultant to Wal-Mart, was behind the racist TV ad attacking Tennessee U.S. Senate Candidate Harold Ford, Jr.

In response to this shocking development, WakeUpWalMart.com, America’s campaign to change Wal-Mart, sent Wal-Mart’s CEO, Lee Scott, a personal letter calling on Wal-Mart to immediately condemn the ad and end its relationship with Republican operative and Wal-Mart consultant, Terry Nelson, for his production of a racist TV ad. Already, the ad has been widely condemned by the NAACP and other civil rights leaders.

In his role as a close and intimate advisor to Wal-Mart, Nelson created the strategy for Wal-Mart’s front group, Working Families for Wal-Mart, launched an unprecedented smear website, PaidCritics.com, to attack Democrats and hard-working families, and directs Wal-Mart’s recently launched voter education program which targets any Democrat who calls on Wal-Mart to be a responsible corporation.

In the past, Nelson served as national political director for President Bush’s 2004 reelection and also runs the Republican National Committee’s independent expenditure unit which funded the racist ad.

The letter, which was faxed to Scott today, demands Scott “send a message to all Americans, especially African Americans, that Wal-Mart will not do business with consultants who use race as a political tool to divide our nation.” The letter goes on to ask Scott to end the company’s business relationship with Nelson and his firm, and to immediately undertake a review of the tactics and tools being employed by the many Republican operatives who work for Wal-Mart and its public relations firm Edelman.

Over the last few months, several high profile consultants and advisors to Wal-Mart, including former chairman to Working Families for Wal-Mart, Ambassador Andrew Young, have been condemned or forced to resign for racist and insensitive actions.

Statement by the Reverend Jesse Jackson, Sr.:

This is a reflection on Wal-Mart and the people that drive their right-wing, anti-worker family agenda. The same people that engage in race-baiting also support right to work laws that undermine working people.

Wal-Mart has the responsibility to dismiss Terry Nelson, with explanation, and apologize to Harold Ford Jr. Even though the Republican Party pulled the ad, if you throw ink on a suit, you leave a stain. They threw ink on Harold Ford, Jr. and many people believed it to be true, resulting in a negative impact.

If he did it, he must go and Wal-Mart owes a huge apology to the American people and to Harold Ford, Jr. Wal-Mart will determine what it will do based on how they view the gravity of the situation. It will be a reflection of their values -- will they coddle him or dismiss him?

Statement by Congressman Jesse Jackson, Jr.:

It has come to my attention that Terry Nelson is apparently the person behind the controversial Harold Ford, Jr., ad that has been running in the Tennessee senatorial race. In 2004, he was the political director for the Bush-Cheney re-election campaign and is now a key advisor to Senator John McCain. He also heads up the Wal-Mart front group "Working Families for Wal-Mart" and is in charge of their "Voter Education Program" for 1.3 million associates nation-wide. Currently he is leading the Republican National Committee's special unit responsible for independent campaign expenditures.

Nelson's work for Wal-Mart has included:
-Managing the company's astroturf operation that offered free coupons and a vacation to Atlanta Wal-Mart shoppers that signed his petition. [Cox News, 4/4/06]
-Pressuring Wal-Mart suppliers to contribute to "Working Families For Wal-Mart." [Retailing Today, Spring 2006]
-Designing Wal-Mart's controversial employee education campaign project. [Washington Post, 9/30/06]

I am calling on Wal-Mart and Senator John McCain to immediately end their relationship with Terry Nelson. The ad was so outrageous and offensive that it was even denounced by Rep. Ford's Republican opponent. Wal-Mart and Senator McCain should take a public position against the ad and severe their relationship with Terry Nelson.

Letter to Wal-Mart CEO Lee Scott from WakeUpWalMart.com:

Mr. Lee Scott
CEO
Wal-Mart, Inc.
Bentonville, AR

Dear Mr. Scott,

We are deeply shocked and outraged to learn that one of your key consultants, Terry Nelson, is the Republican operative behind the recently pulled racist ad which attacked Tennessee U.S. Senate Candidate Harold Ford, Jr.

In his role as a close and intimate advisor to Wal-Mart, you have paid Terry Nelson to use the same tactics he perfected under Karl Rove to defend Wal-Mart’s declining public image. For example, you have allowed Nelson to launch a smear website, paid for by Wal-Mart, which attacks Democrats (PaidCritics.com), create a controversial front group called Working Families for Wal-Mart, and formulate your recent voter education program.

In this day and age, it is disgusting that consultants like Terry Nelson still use race and racism to incite fears and hatred to divide voters. Even more disturbing, is the fact that you have entrusted Mr. Nelson to manage Wal-Mart’s own voter education program.

The truth is, the American people will not stomach such gutter-style politics and Wal-Mart will pay a price if it permits Mr. Nelson to continue on as a close advisor. If Wal-Mart is truly interested in changing for the better, we implore you to send a message to all Americans, especially African-Americans, that Wal-Mart will not do business with consultants who use race as a political tool to divide our nation.

Respectfully, we call on you and Wal-Mart to immediately end your business relationship with Terry Nelson and his firm, and to immediately undertake a review of the tactics and tools being employed by the many Republican operatives who work for Wal-Mart and its public relations firm Edelman.

In the end, we can only hope that Wal-Mart will send the right the message to all of America. That message should be that Wal-Mart will never, in any way, shape, or form, tolerate racism by one of its staff, consultants, or business partners.

We look forward to your response.

Sincerely,

Paul Blank, Campaign Director

CC: Congressional Black Caucus, NAACP

McCain Adviser Behind Anti-Ford Ad

By Julia Malone
Thursday, October 26, 2006

Terry Nelson, the political consultant responsible for a widely denounced TV ad against U.S. Senate candidate Harold Ford Jr., also serves as a senior adviser to Republican Sen. John McCain.

Nelson, who served as political director for President Bush’s 2004 re-election, runs the Republican National Committee’s independent expenditure unit, RNC spokesman Josh Holmes confirmed. The independent effort drew charges of racism with its ad featuring a bare-shouldered blond woman saying she had met Rep. Ford at a Playboy party.

Ford, a Tennessee Democrat, is running to become the first black senator elected from the South since Reconstruction. The ad drew fire from all sides, including from Ford’s Republican opponent, Bob Corker. RNC Chairman Ken Mehlman, who denied that the TV spot was racist, said that he had no control over the independent expenditure unit.

The Republican chairman announced Wednesday that the controversial ad was being pulled off the air. Nelson, a former deputy chief of staff at the RNC, now heads Crosslink Strategy, a Washington consulting firm.

His Website lists among his clients Wal-Mart Stores, Inc., Citizens Against Lawsuit Abuse and Senator McCain’s Straight Talk America Political Action Committee.

McCain’s Senate spokeswoman Melissa Shuffield confirmed that Nelson was an adviser to the PAC but said she had no immediate comment on the Ford ad. Craig Goldman, executive director of Straight Talk America, said Nelson’s role for McCain has been to advise the Arizona Republican where he should go to campaign for GOP candidates this year.

Nelson did not return a reporter’s call for comments on the anti-Ford ad.

Ron Galloway, who recently resigned his position on the steering committee of Working Families for Wal-Mart over the wage cap issue, has written a new entry atThe Huffington Post regarding the anti-worker practices of Wal-Mart.

Here are a few excerpts from Galloway's Huffington Post piece:

"...there is often a disconnect between the propellerhead nerds in Bentonville and the folks that actually work on the floor in the stores."

"Wal-Mart will tell you one reason for this new policy is to encourage long-term workers to move into management positions. This is utterly disingenuous."

From The Huffington Post:

I gave a keynote address last Friday at the University of Connecticut Law School's Wal-Mart Symposium where I began by asserting that “Wal-Mart is like the genius kid who lives in your neighborhood who heads into the woods and starts killing frogs.”

Wal-Mart has been on a bit of a PR roll lately.

From lowering the prices of generic drugs to cutting prices on toys, they have enacted policies of late that are by and large beneficial. I often tell audiences in talks that Wal-Mart is not a store, it is an I.T. company, and it is their logistical models, not management expertise, that are primarily responsible for the startling efficiencies that drive the stores.

However there is often a disconnect between the propellerhead nerds in Bentonville and the folks that actually work on the floor in the stores. The subtext of my film "Why Wal-Mart Works"; was that it was the common folk at Wal-Mart that make it work, not management or logistics. Last year on CNN's Lou Dobbs broadcast, I stated Wal-Mart's management sometimes acts like Inspector Clouseau. Recently, they proved me right.

Last August, Wal-Mart announced that they would “cap” wages for certain positions, such as a cashier, at a certain level that could not be exceeded, no matter how long you had worked there. So, for instance if you had been a cashier for 20 years and through annual raises worked your way to making $16/hour, you could be capped at $15/hour forever, with no hope again for a raise. Clearly this is a form of accelerated attrition, in which Wal-Mart hopes to replace those who have worked their way up to $15 with new workers willing to work at a starting wage of $8-10/hour.

Wal-Mart will tell you one reason for this new policy is to “encourage” long-term workers to move into management positions. This is utterly disingenuous. Let's move you 50 to 100 miles away from home, have you work twice as hard, for 50 cents more per hour. Thank you sir, may I have another? New hires at Wal-Mart are aware going in of these wage caps, so they are fully informed, but the long-term loyal workers have had the rug pulled out from under them by having these caps foisted on them.

Bentonville does not not get the fact that a lot of people are perfectly happy cashiering or stocking at Wal-Mart, and that is all they want to do. I believe most people in life are simply trying to make it through the day, do their jobs, think about their kids, and go home. The logistics/accounting magicians at Wal-Mart need to understand that a person is not a forklift, a palette, or a shelving unit. Wal-Mart's long-term employees are their first line of defense in giving the 5000 customers who enter a superstore a good shopping experience, i.e. a more Target/Costco type experience. People are additive to Wal-Mart (and their share price), especially the long-term employees. You can't enter loyalty and experience into a spreadsheet.

I became aware of this issue when a Wal-Mart employee from my film got wage-capped and called me. I frequently get calls from Wal-Mart employees relating their experiences, and have gotten more than a few about this issue, as well as Wal-Mart's sneaky scheduling and their childish directive that all employees call an 800 number to report in sick.

200 Wal-Mart employees in Florida recently staged a walkout. This has never happened before, and if they'll do it in Florida, you can be sure they'll do it in Michigan and California. 3 weeks ago I resigned from the steering committee of Working Families For Wal-Mart over the wage cap issue. Don't get me wrong. I still feel Wal-Mart is a great company and the largest non-governmental resource to the poor in this country. Millions of people need to shop at Wal-Mart.

I just wish Wal-Mart would value their long-term employees as much as they do their shoppers.

From the New York Times:

The chief executive of Wal-Mart Stores, H. Lee Scott Jr., said yesterday that the introduction of upscale products, like silk camisoles and 300-thread-count sheets, had proved “choppier than it should be” and that the company had “moved too far too fast” with fashionable clothing.

In wide-ranging remarks to Wall Street analysts yesterday, Mr. Scott also said that consumers had been reluctant to splurge at Wal-Mart even as gas prices have fallen, that the company would be “very aggressive” on toy prices this holiday season, and that the chain’s reputation with elected leaders has improved because of its environmental initiatives and $4 generic drug program.

Speaking at Wal-Mart’s analyst meeting, held in Teaneck, N.J., this year, Mr. Scott said he was unhappy with the chain’s performance in September, when sales at stores open at least a year rose only 1 percent, missing a company forecast.

At one point, he appeared to admonish executives for leaving the impression that the sales figure was acceptable. “If anyone caused you to believe we are comfortable with a 1 percent” sales increase, he said, “I want to apologize. We are not.”

Explaining the sluggish September results, Mr. Scott said shoppers had favored local stores when gas prices spiked and had not yet decided to switch back to Wal-Mart, though it generally offers lower prices.

“We have got to as a company reinforce that that customer needs to go to Wal-Mart, that the value creation is great enough to break the habit,” he said. “I think we clearly have the ability to say that.”

Mr. Scott said Wal-Mart would be able to drastically reduce the growth in its spending on new stores — from up to 20 percent this year to up to 4 percent next year — because of lower construction material costs and plans to build some smaller stores.

Wall Street cheered the lower expenses. After they were announced on Monday, Wal-Mart’s shares rose 5 percent, closing above $50 for the first time since December. Yesterday, shares rose 2 cents, to close at $51.30.

Mr. Scott hinted that Wal-Mart, which has already reduced prices on 100 popular toys this holiday season, could make even deeper cuts before Christmas. Recalling the 2003 holiday season, when Wal-Mart touched off a price war among retailers, he said, “I think you will see a very aggressive toy market at Wal-Mart.”

After withdrawing Wal-Mart from Germany and South Korea because of poor sales, Mr. Scott said he was determined to make the chain a success in Japan, where it has struggled. Joking with the head of the company’s international operations, Michael T. Duke, he said that if Wal-Mart failed in the country, “neither you nor I will be here.”

Mr. Scott offered the most detailed explanation to date of why apparel sales at Wal-Mart, a major focus under the new head of marketing, John Fleming, have proved disappointing.

“What we did was overload the fashion part,” he said, by introducing new trendy clothing lines like Metro 7, a Wal-Mart-designed brand, in too many stores too quickly. The solution is to carry “fashion basics” that are less intimidating to the company’s consumers, Mr. Scott said.

Wal-Mart, which has had a reputation for dowdy clothing, is trying to appeal to style-conscious consumers who buy at rival chains like Target, Kohl’s and J. C. Penney.

The entry into fashion has been closely watched by competitors and New York designers, who are anxious to see if the retailer, the world’s largest seller of food and laundry detergent, can master dresses.

While apparel sales have not met expectations, those of everyday products like socks and laundry detergent have surged. Mr. Scott said Wal-Mart has sold 675 million pairs of white socks in the past year.

From MSN Money:

Wal-Mart, the world's largest retailer, on Tuesday said it was not "comfortable" with a same-store sales rise of about 1 per cent and expects sales to improve as it cuts prices during the holiday season.

October sales at stores open at least a year are up about 1 per cent so far and are tracking below Wal-Mart's forecast for an increase of 2-4 per cent. Last month, same-store sales rose a paltry 1.3 per cent.

"We understand what is happening and do not accept it as inevitable or acceptable," Lee Scott, chief executive, said on Tuesday...

Click here for the rest of the article.

From the Associated Press:

Wal-Mart Stores Inc. will slow the pace of new store openings next year in what analysts called a nod to Wall Street calls for greater focus on rekindling faltering sales and earnings growth at its existing 6,700 stores worldwide.

Wal-Mart also told analysts Monday, the first day of its two-day investor meeting, that it would reduce the rise in capital spending next year, helped by a flattening in inflation of construction and land costs and by opening fewer new stores.

Wal-Mart said it remains committed to expansion. But analysts said the change was a step toward meeting Wall Street expectations that Wal-Mart, after years of rapid growth, now focus on improving sales and profitability at existing stores to revive a dormant share price.

The share price has hovered mostly below $50 since early 2001, and for five years failed to match 2001 highs over $60.

"It's somewhat of a shift. Is it a major earthquake shift? No. But it's the start of a shift where they could indeed move to capitalize on what has already been built," said retail analyst Don Gher from Coldstream Capital Management, which manages about $1 billion in assets, including Wal-Mart shares.

Fund manager Patricia Edwards said even a small move was a welcome step in the right direction.

"They need to focus on building the business they have instead of starting new ones," said Edwards, a portfolio manager and retail analyst at Wentworth Hauser & Violich, which manages $8.2 billion in assets and holds 51,000 Wal-Mart shares.

Bentonville, Ark.-based Wal-Mart has been expanding its retail space at 8 percent per year, but that number will be 7.5 percent next fiscal year, the company said. Its fiscal year runs through Jan. 31.

Wal-Mart expects to open 305 to 330 U.S. stores in fiscal 2008, which starts Feb. 1, compared to 332 to 340 this year. Wal-Mart International, operating in 13 countries in Latin America, Asia and Europe, will open between 320 and 330 new stores next year after 270 to 275 this year.

Wal-Mart remains committed to growth, but real estate projects "are now being subjected to a more rigorous prioritization process," Wal-Mart Vice Chairman John Menzer told analysts.

Wal-Mart sales at stores open at least a year, known as same-store sales, have been trailing those at smaller rivals such as Target Corp. Last month, same-store U.S. sales were up 1.3 percent at Wal-Mart and 6.7 percent at Target.

In response, Wal-Mart is remodeling about 1,800 of its roughly 2,000 Supercenters, which combine a discount store with a full grocery section, to make them more appealing by adding amenities such as wider aisles, faux wood floors, cleaner restrooms and trendier merchandise in electronics, apparel and home furnishings.

September sales were affected in part by disruption from those remodeling efforts, said Eduardo Castro-Wright, head of the Wal-Mart's U.S. stores.

Castro-Wright told analysts that same-store sales so far this month were running about 1 percent higher, saying remodeling and slower sales of women's apparel kept the number down.

Castro-Wright said the temporary disruptions were worthwhile because remodeled stores showed higher sales than before. The company plans to have 1,200 stores remodeled before the holiday shopping season starts next month and the other 600 next year.

Castro-Wright also noted he's confident that declining gasoline prices soon will lift sales, noting that consumers don't immediately react to a change in gasoline prices. He noted that Wal-Mart's customers didn't curtail their spending immediately following big jumps in gasoline prices.

Our latest press release:

WAKEUPWALMART.COM DELIVERS MESSAGE TO ANALYSTS AND HOLLYWOOD POWER BROKERS TODAY

WAKEUPWALMART.COM HOLDS RALLY/ DELIVERS MESSAGE TO ANALYSTS AT WAL-MART’S ANNUAL ANALYST MEETING IN NEW JERSEY

GROUP SENDS WEINSTEIN BROTHERS LETTER/CALLS ON THEM TO HELP ADDRESS WAL-MART’S RECORD OF NEGATIVE BUSINESS PRACTICES

Washington, DC. - WakeUpWalMart.com, America’s campaign to change Wal-Mart, will deliver messages to both analysts attending Wal-Mart’s annual analyst meeting in Teaneck, NJ, as well as Hollywood power brokers attending a Manhattan dinner tonight for Wal-Mart’s CEO Lee Scott sponsored by Bob and Harvey Weinstein.

At Wal-Mart’s analyst meeting, over 50 supporters of WakeUpWalMart.com held an early morning rally calling on Wal-Mart to “change now, change for the better.” As attendees arrived for the meeting, the group distributed an “open letter” to analysts, making clear that Wal-Mart’s right-wing agenda, exploitative business practices, and a declining public image pose both serious short-term and long-term risks to the company...

In the letter, WakeUpWalMart.com stressed that there was a better way for Wal-Mart to succeed, and that “together, we can help Wal-Mart expand into new markets, appeal to higher income customers and grow into an even more profitable business.”

“Wal-Mart’s message to Wall-Street analysts is ‘don’t worry, be happy,’ but the truth is that with a declining public image, sluggish sales, a rebellion by employees in its own store, and a growing grassroots movement to change the company, both Wal-Mart and Wall Street analysts have a lot to worry about.” said Paul Blank, campaign director for WakeUpWalMart.com.

Also, today WakeUpWalMart.com sent a letter to Bob and Harvey Weinstein calling on them to join our national campaign and pressure Wal-Mart CEO Lee Scott to stop the exploitation of 1.39 million employees, their families, and the American people. The group stressed to the Weinstein brothers not to let themselves be used “to greenwash a record of exploitation that is a national disgrace.” The letter makes it clear that Wal-Mart’s right-wing agenda, its financial support of right-wing candidates, and its real record of abuse and exploitation leave little to be honored. The group called on the Weinsteins’, long supporters of Democratic causes, to join the national movement to change Wal-Mart for the better.

Supporters of WakeUpWalMart.com will also hold a rally at 30 Rockerfeller Center in front of the Weinstein sponsored dinner being held tonight at the Rainbow Room at the Rockefeller Center.

Copies of both letters are below.

LETTER TO BOB AND HARVEY WEINSTEIN

October 23, 2006

Bob and Harvey Weinstein
The Weinstein Company
375 Greenwich Street
New York, NY 10014

Dear Bob & Harvey Weinstein,

As proud Democrats who have long supported progressive causes, we are deeply disappointed to learn that you will be hosting an “awards banquet” for Wal-Mart CEO Lee Scott. Wal-Mart’s record, in terms of how poorly it treats its 1.39 million employees, its negative effects on this nation, as well as the direct financial support to right wing Republican causes, is an affront to everything you believe in.

To be frank, Wal-Mart’s agenda and policies may be good for George Bush and the right-wing, but it is bad for Wal-Mart’s employees and America. In fact, Wal-Mart has even taken the unprecedented step of targeting Democrats - yes, Democrats - in this election. Why? Because real leaders, like Sen. John Kerry, Sen. John Edwards, Sen. Joe Biden, Sen. Evan Bayh, Gov. Tom Vilsack, Gov. Bill Richardson, and so many others, want better wages and more affordable health care for Wal-Mart workers. Sadly, Wal-Mart has not only chosen to personally attack these Democrats, but it is working with Bush/Cheney operatives, like Terry Nelson, to defeat them.

While we know for a fact that neither one of you support the Bush right-wing agenda, you must seriously ask yourselves why you are honoring a man and a company that is targeting Democrats for defeat?

Above all, we hope you will learn the cruel legacy of Wal-Mart’s mistreatment of its employees and its families. It is a litany of exploitation and abuses that rivals any Dickens novel. Here are just some of the facts we know Wal-Mart has hidden from you:

Wal-Mart and the Right Wing

• 80 percent of Wal-Mart’s political contributions have gone to George Bush and right-wing Republican candidates and groups.
• Wal-Mart has employed some of the most vicious right wing-operatives in American politics - the very people who have made a career out of personally and politically attacking Bill Clinton, Al Gore and John Kerry.

Wal-Mart and Wages

• The average Wal-Mart employee earns $2,200 below the poverty-level.
• All 1.39 million Wal-Mart employees now face a salary cap - meaning either today or at some point, employees who are already paid poverty-level wages will never receive a raise again for the rest of their lives.
• Wal-Mart is cutting over 200,000 full-time jobs and shifting these workers to even lower paid, part-time positions.

Wal-Mart and Health Care

• Wal-Mart fails to provide company health care coverage to 54% of its employees (that’s 775,000 families and children without company health care).
• 46% of Wal-Mart workers’ children are left uninsured or on public health care assistance.
• In 18 out of 19 states, where data has been released, Wal-Mart leads all employers with the greatest number of employees on public health care assistance.
• Wal-Mart will cost taxpayers an estimated $9.1 billion over the next 5 years because so many of its workers are forced onto public health care assistance.
• Just last month, Wal-Mart eliminated all of its low-deductible health care coverage plans for its employees; Wal-Mart now offers only catastrophic health care coverage and George Bush-inspired Health Care Savings Accounts.

Wal-Mart and Discrimination/Abuse

• Wal-Mart has broken child labor laws multiple times in the United States and abroad, including twice this year.
• Wal-Mart faces the largest gender discrimination lawsuit in U.S. history, affecting over 2 million former and current women workers who are suing the company for wage and promotion discrimination.
• Wal-Mart faces over 57 wage and hour lawsuits, including one in Pennsylvania where Wal-Mart was found guilty of denying workers rest breaks, costing them $78 million.
• Wal-Mart has lobbied, most recently in California, against legislation that would have made it illegal to lock employees in its stores and currently still locks employees in its stores.

Wal-Mart and National Security

• Wal-Mart lobbied against strengthening America’s port security.
• Wal-Mart is the single biggest factor in the loss of American manufacturing jobs, shipping millions of good paying, family supporting jobs to China.
• Wal-Mart continues to utilize sweatshop labor among its foreign suppliers, employing children and young adults in the most adverse conditions.

With respect to your award, although steps taken to improve the environment are always to be applauded, the facts are quite clear, and we know you must now agree, that Wal-Mart and Lee Scott must also clean up its act in how they treat its employees, their families, and the American people.

Most importantly, we would hope you would never let yourself be used by Wal-Mart, a company with over $11.2 billion in annual profits, to greenwash a record of exploitation that is a national disgrace.

Let us put it another way, would either one of you ever treat one of your employees or their families this way - of course not. So, why does Lee Scott treat his employees this way? It is a question we hope you will ask Lee Scott before honoring him with any award.

In the end, we are confident that as producers of such an important film, like Fahrenheit 9/11, that you will join with WakeUpWalMart.com and our over 281,000 supporters in telling Wal-Mart that it’s time to be responsible and that it’s time to change.

We look forward in the coming days for you to join with us in our movement to change Wal-Mart and change America for the better.

Sincerely,

Paul Blank
Campaign Director
WakeUpWalMart.com

LETTER TO WAL-MART ANALYSTS

ATTENTION WAL-MART ANALYSTS: WAL-MART’S DECLINING PUBLIC OPINION AND RIGHT-WING POLITICAL AGENDA THREATEN TO NEGATIVELY IMPACT ITS BUSINESS MODEL

Dear Analyst,

The national campaign to change Wal-Mart into a better, more responsible business is gaining unprecedented momentum across the entire country. Now, not only are we the fastest growing social movement in America, with over 281,000 grassroots supporters in all 50 states, but elected leaders, such as Sen. John Kerry, Sen. John Edwards, Sen. Evan Bayh and Sen. Joe Biden, are joining with us in calling on Wal-Mart to change.

Unfortunately, rather than heed the calls of the American public and these real leaders, Wal-Mart has chosen to defend the indefensible and, as a consequence, has suffered a huge blow to its public image. According to a recent Wall Street Journal/NBC poll, Wal-Mart’s favorability rating is now 45% favorable, 31% unfavorable, and 22% neutral (only a 14% spread between favorable and unfavorable). Compare that to Wal-Mart’s key competitor, Target, which, in the same poll, had a favorability rating of 51% favorable and only 10% unfavorable (a 41% spread between favorable and unfavorable).

The bottom line is this - despite selling to 90% of America’s consumers, a solid one-third of the American public now has a negative view of Wal-Mart. In other words, Wal-Mart is sitting on a huge ‘ticking time bomb’ as it faces the risk of unfavorable Wal-Mart shoppers deciding to change their behavior. And, unlike, other unfavorable retailers, such as the oil companies where people have no alternative (either they are going to drive or not drive, but if they drive they must buy gas), Wal-Mart has a number of similarly priced competitors with very different public opinion profiles.

In addition, to counter Wal-Mart’s declining image, the company, in an act of desperation, has hired a team of right-wing operatives whose tactics could prove to be disastrous for Wal-Mart. For example, in response to Democratic candidates calling on Wal-Mart to pay a better wage, provide more affordable health care and treat its employees with dignity and respect, Wal-Mart chose to attack those candidates and potentially alienate millions of Democratic voters, many of whom shop at Wal-Mart.

The truth is, no matter what Wal-Mart may claim, our campaign will not stop, rest or go away, until Wal-Mart changes. We hope, on behalf of Wal-Mart’s employees, Wal-Mart’s shareholders and the country, you will join with us in calling on Wal-Mart to change for the better. Together, we can help Wal-Mart expand into new markets, appeal to higher income customers and grow into an even more profitable business.

Thank you,

WakeUpWalMart.com

From the Wall Street Journal:

WASHINGTON -- When Wal-Mart Stores Inc. applied 15 months ago to get a banking license, it looked like a slam dunk.

The retailing giant applied for an industrial-bank charter in Utah -- the same type of permit the state had already given to many companies including Volkswagen AG, Pitney Bowes Inc. and even another big retailer, Target Corp. The Federal Deposit Insurance Corp., which insures deposits at banks, had blessed similar applications with nary a protest letter. To allay fears that it would compete with small banks, Wal-Mart promised not to open retail branches, saying it would use its bank to process card transactions.

Today, Wal-Mart's banking bid is on life support. The FDIC in July issued an unprecedented six-month moratorium on all applications for these specialized banks, freezing Wal-Mart's effort. Utah, which also must approve the application, has stayed mum. Powerful members of Congress are lining up to pass laws that would block Wal-Mart, or any nonfinancial company, from getting into the U.S. banking business.

That's bad news for the world's biggest retailer, which is already facing slowing growth in the U.S. and has stumbled in several overseas forays. It also affects 11 other companies that have applied for the type of permit Wal-Mart is seeking, including Home Depot Inc., Daimler Chrysler? AG and Ford Motor Credit, part of Ford Motor Co.

Wal-Mart's effort to open a bank has galvanized a broad coalition of opponents: large banks, small banks, the Federal Reserve, unions, grocers, real-estate agents and congressmen of both parties. Some in the coalition are mainly interested in dealing a blow to Wal-Mart. Others are worried about the trend of allowing commercial companies into banking, which they fear could undermine the soundness of the financial system. That argument has been around for years, but it generated little political heat until Wal-Mart came along -- illustrating the power of the company's name to transform stalemated policy debates.

Wal-Mart believes its intentions are being twisted by its foes. People who claim Wal-Mart intends to open branches and compete with hometown banks for deposits "are simply misinformed or just wrong," says a spokesman. The Bentonville, Ark., company also says its bank, by focusing on processing credit- and debit-card transactions, would cut costs and lead to savings for consumers. Currently Wal-Mart must pay fees to other banks to process transactions.

Despite overhauling its lobbying efforts in Washington, Wal-Mart continues to make rookie mistakes. It retained a headhunter to look for a senior financial executive, fueling fears that its banking ambitions were broader than it said. Wal-Mart says it was seeking someone for an employee-mortgage program. It initially asked to be exempt from the Community Reinvestment Act, which forces banks to reinvest in communities where it does business. That angered some Democrats. More recently, Wal-Mart's Mexican unit applied for a license to conduct retail banking there, again raising doubts among critics, although Wal-Mart notes that the Mexican bank couldn't open branches in the U.S.

"You can say that Wal-Mart is actually tone-deaf," says Diane Casey-Landry, president of America's Community Bankers, a trade group that has changed position on Wal-Mart over the past year and currently opposes its bank bid.

Banking Ambitions

Wal-Mart has been trying to get into banking since the late 1990s. It was thwarted in attempts to buy a savings-and-loan in Oklahoma and a bank in California. Since 1999 it has faced opposition to its banking ambitions from the United Food and Commercial Workers International Union, which has long sought to organize Wal-Mart workers, and the Independent Community Bankers of America. The two later joined with trade associations of grocers and convenience stores under the umbrella of the Sound Banking Coalition.

The unions have been active in battling Wal-Mart on a broad front, accusing it of underpaying workers and failing to buy American. That has turned the company into a lightning rod on national issues such as trade with China and the rising number of people without health insurance. Wal-Mart's defenders say that because of its size and prominence it is often criticized for doing the same things that smaller companies do without criticism.

Early last year, Wal-Mart started afresh by deciding to apply for a Utah charter to open an "industrial loan corporation." Despite the odd name, industrial loan corporations, or IL Cs?, are similar to regular banks. They can offer most of the same products and services nationwide, including consumer and business loans, mortgages and credit cards. They can take deposits. Under current law, they can set up new bank branches in 22 states.

IL Cs? began as niche financial players in the early 1900s, offering consumer credit to low-income workers. In recent years, IL Cs?, also called industrial banks, have proliferated in a few states, particularly Utah and California, and their assets have soared to about $155 billion. That is because they offer a way for nonfinancial companies such as Volkswagen and General Motors Corp. to own a bank without being subject to regulation as a bank holding company. These companies often use a bank to complement their main business: Home Depot, for example, wants an industrial bank to make home-improvement loans. Some of the biggest Utah-chartered IL Cs? are controlled by financial institutions that aren't banks, such as Merrill Lynch & Co.

Utah politicians consider industrial banks an engine of growth, providing more than 1,000 jobs and tax revenue. The state accounts for more than half of the nation's 61 IL Cs?. Utah's usury laws are more favorable to banks than laws elsewhere.

Former Sen. Jake Garn, a Utah Republican, helped create the modern ILC niche and said in April at an FDIC hearing that he asked Wal-Mart executives not to apply in his state. "I was afraid it would affect the whole industry," Mr. Garn said. "And it's even worse than I thought it would be.... They're causing exactly the trouble I thought they would."

Long before Wal-Mart's Utah application, the growth of IL Cs? worried some in Washington including the longtime chairman of the Federal Reserve, Alan Greenspan. They felt that problems at an ILC's parent company could spill over into the bank, and they feared that regulators lacked a way to examine the parent's soundness.

Wal-Mart disagrees. In a 50-page document submitted to the FDIC last week, the company said "ILC risks are no greater than other banks' risks" and contended that "no evidence supports differential treatment of 'commercial' affiliations."

Opponents of industrial banks at first thought Target's application for a Utah charter in early 2004 could revive interest in the issue, but "there didn't seem to be much alarm," says Camden Fine, president of the Independent Community Bankers of America. Target's application sailed through Utah regulators and the FDIC. The retailer has since used its Utah ILC to create the Target Business Card, a credit card that small businesses and others can use at Target stores.

Wal-Mart tried to forestall opposition to its Utah application. In February 2005, executives paid a visit to Mr. Fine's community-bank group, which fears that if the retailer were given an opening in banking, it would eventually go head-to-head with small banks and crush them.

Over pastries, the Wal-Mart delegation proposed a deal: If the bankers' group didn't oppose Wal-Mart's application for a Utah banking charter, the company would promise Congress in writing "never to get into retail banking," recalls Mr. Fine.

"If you file, we will oppose," Mr. Fine says he responded. He added that he simply didn't buy Wal-Mart's pledges. "As we say in Missouri, I was born at night but not last night," says Mr. Fine, a longtime banker in Jefferson City. Wal-Mart confirms the meeting took place and says it was also part of an effort to recruit more banks as tenants in Wal-Mart stores.

Pretty quickly, the bankers came to believe their suspicions were justified. Despite Wal-Mart's rhetoric that its banking ambitions were narrow, the company was circulating, via an executive-search firm, a job opening for a senior business-development executive in financial services. The search firm's email said the executive would have "direct contact with Lee Scott, the Chmn./CEO of Wal-Mart." The email quickly circulated through the banking industry. Wal-Mart says it was seeking an executive to manage a program that offers mortgages to store employees.

Powerful Ally

By late last year, Mr. Fine drew in a powerful ally: the American Bankers Association, which represents both large and small banks. On Nov. 7, 2005, Ed Yingling, the association's president, sent a "CEO alert" to 4,000 members vowing to fight for a law to bar nonfinancial firms, including Wal-Mart, from owning a bank. Wal-Mart's "reach and influence would be significant," Mr. Yingling wrote. "Now is the time to act."

Mr. Greenspan chimed in two months later, in one of his last official acts as Fed chairman. He wrote a long letter to Congress strongly opposing industrial banks owned by nonfinancial companies. He said these banks leave the financial system exposed to risk because financial regulators don't have oversight over the parent company. The FDIC, which regulates industrial banks, said before the current brouhaha that it had all the tools it needed to supervise these entities. Some scholars noted that Mr. Greenspan was defending the supervisory turf of the Fed, which oversees bank holding companies.

At the time Wal-Mart filed its Utah application in July 2005, the chairman of the FDIC was Donald Powell, who said publicly that Wal-Mart's application ought to be treated like any other. But in November 2005, Mr. Powell left the FDIC to help coordinate the cleanup of the Gulf Coast in the aftermath of Hurricane Katrina. The new temporary chairman -- a Democrat and former aide to Sen. Paul Sarbanes, a foe of commercial companies owning IL Cs? -- agreed to public hearings on the issue.

The hearings gave the Sound Banking Coalition -- the collection of Wal-Mart opponents -- a chance to roll out a big gun, former Rep. Thomas Bliley. He was co-author of landmark 1999 legislation that overturned the Depression-era Glass-Steagall Act and allowed banks, brokerages and insurance companies to enter each others' businesses. Mr. Bliley is now a lobbyist for the coalition. He argues that his legislation left a loophole by continuing to allow commercial companies to own industrial banks.

"This is not just about Wal-Mart," Mr. Bliley testified. "A showdown over fundamental principles of banking policy has been in the making for at least 20 years." He said Wal-Mart didn't measure up on many of the criteria used by the FDIC to judge applications, such as the needs of local communities and the "general character and fitness" of the applicant's management.

Meanwhile, liberal politicians on Capitol Hill took notice of Wal-Mart's desire to have its bank be exempt from the Community Reinvestment Act. "By seeking a CRA exemption, Wal-Mart reinforces its indifference to the economic health of local communities," Rep. Stephanie Tubbs-Jones, a Democrat from Ohio, wrote in early March to the FDIC. Under fire, Wal-Mart amended its application prior to the public hearings and said it would observe the act within Utah.

Unions used the hearings to retail a laundry list of Wal-Mart's perceived "character" flaws. "The largest gender-discrimination case in the nation's history, child-labor-law violations, paying fines to allow undocumented workers within their stores overnight, the list goes on and on," said Michael Wilson, international vice president of the UFCW union.

During a May "fly-in," 300 community bankers called on their individual members of Congress and urged them to press the FDIC for a moratorium that would delay Wal-Mart's application. Other groups worked Capitol Hill making the same case, and 98 members of Congress signed a June 8 letter to the FDIC asking for a moratorium.

They got it the next month, shortly after a new chairman, Sheila Bair, took over at the FDIC. Ms. Bair, a former Treasury Department official and professor at the University of Massachusetts Amherst's management school, says the moratorium made sense because "it's a very complex issue, from a legal standpoint, a policy standpoint, and a safety and soundness standpoint."

"I was like a giddy kid," says Mr. Fine about the news. "I thought the odds were very long."

It's uncertain what will happen after the moratorium expires in late January. Ms. Bair says she "wants to make decisions." The FDIC could issue a flat yes or no to Wal-Mart, or it could approve insurance for a narrow banking charter packed with restrictions. It could also extend the moratorium and wait for Congress to take up the issue. Wal-Mart says it is "committed to work constructively with the FDIC...to move forward with our application."

Rep. Barney Frank, a Massachusetts Democrat, has co-sponsored a bill with Republican Paul Gillmor of Ohio that would knock out Wal-Mart and other commercial companies from owning ILC banks, although existing owners could keep theirs. Mr. Frank hopes Congress will take up the legislation early next year but it faces a hurdle in Utah's Sen. Robert Bennett, a powerful member of the banking committee. Sen. Bennett says he has told Wal-Mart executives there is no "legal or moral reason" why the company ought to be denied a Utah ILC charter.

Recently, WakeUpWalMart.com participated in Scott Womack's podcast series entitled "No Respect."

The interview with WakeUpWalMart.com Campaign Director Paul Blank is the first in this podcast discussing Wal-Mart.

Click here to listen to the whole podcast.

From Online Media Daily:

PUBLIC RELATIONS FIRM EDELMAN, WHICH last week pledged to be more transparent in its involvement with client-related blogs, Thursday revealed it is behind two more 'flogs,' or fake blogs, created on behalf of Wal-Mart.

Until the new disclosures, both blogs appeared to have been created and contributed to by independent supporters of the big box retailer, an Edelman client.

One blog appears on the home page of Working Families for Wal-Mart, the allegedly grassroots advocacy group formed by Edelman last December, which is "committed to fostering open and honest dialogue...that conveys the positive contributions of Wal-Mart to working families." The second blog is on WFWM's subsidiary site Paid Critics.

The Paid Critics blog is devoted to "exposing" links between unions and other vested interests that are "smearing Wal-Mart" through the media. Until yesterday, blog entries on both WFWM and Paid Critics were uncredited. Thursday, bylines were added to blog posts "in response to comments and emails."

Last week, the travel blog "Wal-Marting Across America" was shut down following revelations that it was the work of two writers paid by WFWM.

As a result of the new transparency, every entry on the blogs is now credited to one of three contributors: Miranda, Brian or Kate. A click on these single monikers reveals biographies of Edelman employees Miranda Gill, Brian McNeill and Kate Marshall, whose clients include Working Families for Wal-Mart, the sites say.

While noting that he was speaking in generalities and not to this specific situation, Dave Balter, president of the Boston word-of-mouth marketing firm BzzAgent, said: "Even if you're doing the right thing but you know you're going to deceive people, you have to do everything to make sure it's completely transparent, and any tactic that crosses that line you're doing a disservice to the brand [and] the consumer."

The spokesperson for WFWM, Edelman employee Donna Lewis-Johnson, said the company was now being completely transparent. She said WFWM is a client of Edelman separate from its Wal-Mart account, but could not confirm that WFWM pays Edelman for its work. She said Edelman's employees make up some but not all of the WFWM staff. She said that Wal-Mart accepts funding from Wal-Mart, but did not know how much.

In a May New York Times article about WFWM, a member of the group's steering committee, Martha Montoya, said she was not aware of any financing that group received outside of Wal-Mart.

A spokesperson for Wal-Mart referred all questions to WFWM.

One observer questioned whether once a flog becomes transparent, its original purpose is rendered moot.

"Once you make this kind of revelation, you need to question whether [the strategy] is even effective anymore," said Virginia Miracle, director of word-of-mouth marketing for Brains on Fire, in Greenville, SC. "This is a very difficult time. As the media has exploded, the ethical guidelines have not been growing at the same rate."

Another critic called the situation "ridiculous," and pointed out the innate contradiction and paradoxical dilemma Edelman is facing.

"Doesn't anybody at Edelman see the irony behind having their own paid critics writing Wal-Mart's Paid Critics blog?" asks Sean Carton, a blogger, author of eight books about technology and the Internet, and chief strategy officer for Baltimore interactive consultancy idfive. "This was a brilliant idea, in its way, but it was evil and they got caught. It was old media thinking in the new media world, and you can't get away with that [stuff] anymore."

Today, we announced the launch of our 2006 voter education initiative, targeting both consumers and Wal-Mart associates in multiple battleground states. The campaign consists of TV ads, direct mail, robo calls, door-hangers and canvassing.

Here are some excerpts from this morning's press release:

In response to Wal-Mart’s announcement that it will attack Democratic candidates who joined with WakeUpWalMart.com to fight for a better America, WakeUpWalMart.com is launching a major new voter education campaign to highlight Wal-Mart’s continued support for a right wing agenda that is wrong for America.

The 2006 WakeUpWalMart.com Voter Education Initiative will officially launch on Monday, October 23rd, and will continue for 15 straight days leading up to Election Day on November 7th. The goal of the group’s voter education initiative is, in key battleground states, to educate consumers, voters, and Wal-Mart associates about how Wal-Mart’s support for a dangerous political and public policy agenda has hurt Wal-Mart’s own employees, hard-working families, and taken America in the wrong direction. In addition, the campaign will highlight Wal-Mart’s financial and public support for George Bush and right wing politicians.

Consumers and Wal-Mart associates deserve to know the truth about Wal-Mart's agenda: lowering wages, cutting health care, shipping American jobs to Communist China, and even lobbying Congress against increased port security.

You can read more about the campaign at www.TurnTheFrownUpsideDown.com.

Our entire press release is included below the fold.

WAKEUPWALMART.COM LAUNCHES MAJOR NEW VOTER EDUCATION CAMPAIGN IN MULTIPLE BATTLEGROUND STATES

THE CAMPAIGN WILL HIGHLIGHT WAL-MART’S RIGHT WING AGENDA AND TARGETS BOTH CONSUMERS AND WAL-MART ASSOCIATES

NEW BUSH/WAL-MART TV AD CAMPAIGN - 30 SEC AD ENDS WITH TAGLINE “WAL-MART: GOOD FOR GEORGE BUSH, BAD FOR AMERICA” (to see ad go to http://www.turnthefrownupsidedown.com/features/video.html)

Washington D.C. - In response to Wal-Mart’s announcement that it will attack Democratic candidates who joined with WakeUpWalMart.com to fight for a better America, WakeUpWalMart.com is launching a major new voter education campaign to highlight Wal-Mart’s continued support for a right wing agenda that is wrong for America. The voter education campaign, consisting of TV ads, direct mail, robo calls, door-hangers and canvassing, and in-store actions, will target both consumers and Wal-Mart associates in multiple battleground states.

The 2006 WakeUpWalMart.com Voter Education Initiative will officially launch on Monday, October 23rd, and will continue for 15 straight days leading up to Election Day on November 7th. The goal of the group’s voter education initiative is, in key battleground states, to educate consumers, voters, and Wal-Mart associates about how Wal-Mart’s support for a dangerous political and public policy agenda has hurt Wal-Mart’s own employees, hard-working families, and taken America in the wrong direction. In addition, the campaign will highlight Wal-Mart’s financial and public support for George Bush and right wing politicians.

“Wal-Mart’s decision to declare war on Democrats who are calling on the company to pay a better wage, provide affordable health care, and treat its employees with dignity and respect is a disgrace, and shows just how right-wing Wal-Mart has become. The bottom line is while Wal-Mart’s dangerous right-wing agenda may be good for George Bush, it is bad for Wal-Mart’s employees and bad for America,” said Paul Blank, campaign director for WakeUpWalMart.com.

To maximize the effect of WakeUpWalMart.com’s 2006 voter education initiative, the effort will be divided into two separate multimedia and on-the-ground campaigns. The first campaign will be focused solely on educating consumers and constituency groups, like women, African-Americans and Hispanics, who are adversely affected by Wal-Mart’s agenda. The second campaign will be focused exclusively on Wal-Mart’s own Associates, and will educate Associates on how Wal-Mart’s political agenda hurts its employees.

As part of the consumer campaign, the group will launch a new voter education website, www.TurnTheFrownUpsideDown.com. On the website, voters will be able to sign a pledge to put “America’s Families First,” register to vote, learn more about Wal-Mart’s right wing agenda, watch the group’s latest TV ads, mobilize and recruit new supporters, download campaign materials, and even sign up for an email reminder, called the “Election Day Wake Up Call,” to remind them to vote against Wal-Mart’s right wing agenda.

In addition, WakeUpWalMart.com will begin airing two 30-second TV ads in at least 7 battleground states (i.e. NV, PA, OH, MI, MD, MN, WI) conduct over 140,000 household visits (i.e. door knocks) in at least 10 battleground states (OH, MI, PA, CA, NJ, RI, NV, MN), and conduct over 250,000 phone calls targeting African American and Hispanic households.

As part of the Wal-Mart Associate voter education program, the group will launch an unprecedented series of store and community actions in over 30 states, including all targeted battlegrounds (i.e. NY, MO, MN, CO, CA, IA, PA, MD, WA, AZ, NJ, KY, SD, RI, CT, TX, IN, NV, OH, IL, MI, WI, MA, AK, GA, AR, NC, AL, HI, NM and Puerto Rico). In total, supporters of WakeUpWalMart.com plan to distribute a special Wal-Mart Associate Voter Education card to over 100,000 Wal-Mart Associates in public locations and at over 600 Wal-Mart stores beginning on Monday, October 23rd, 2006. The group will also run an “Open Letter to Wal-Mart Associates” advertisement in a series of community newspapers in targeted battleground states. The letter will educate Wal-Mart’s employees about Wal-Mart’s anti-worker agenda, ask them to learn the truth about Wal-Mart’s plan to attack Democratic leaders who are calling on Wal-Mart to be a better company that treats its employees with dignity and respect, and inform Associates on how they and their co-workers can join together to change Wal-Mart and America.

Materials for each campaign, including the TV-ads, door hanger, 2006 Wal-Mart Associate Voter Education Card, and the Open Letter to Wal-Mart Associates are available to be viewed at www.turnthefrownupsidedown.com and www.WalMartWorkersofAmerica.com.

From the Associated Press:

BENTONVILLE, Ark. -- The voting power of Wal-Mart's huge U.S. work force has become the latest target in the retailer's battle with union critics as labor activists launch a drive to reach Wal-Mart workers ahead of midterm elections next month.

The union campaign, to be announced Thursday, comes after Wal-Mart entered the political fray this summer with a letter to workers in Iowa naming politicians who had attacked the company. It says it will issue similar letters in the future.

Wal-Mart also launched a first company-wide effort last month to get its more than 1.3 million workers to register to vote.

Both sides are not endorsing any specific candidates and both say they are being nonpartisan.

Analysts said Wal-Mart is making a public point of encouraging workers to vote and of naming critical politicians to dissuade candidates, mainly Democrats, from backing an increasingly organized union campaign for changes including better wages and benefits.

"Wal-Mart is signaling to all their enemies, 'We have almost 1.5 million workers who like us,'" said Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass.

WakeUpWalMart.com, a group started last year by the United Food and Commercial Workers union to pressure Wal-Mart to change, said it will start a media and on-the-ground campaign Monday in multiple states that will claim Wal-Mart backs "right-wing" policies that hurt workers.

Wal-Mart denied that claim. Spokesman Dave Tovar said its efforts to register voters and inform workers about what candidates are saying are entirely nonpartisan.

The union campaign will run for 15 days until the Nov. 7 midterm elections. It will be targeted at Wal-Mart workers and shoppers, said Chris Kofinis, spokesman for WakeUpWalMart.

Activists plan to hand out "voter education cards" to workers at 600 of Wal-Mart's roughly 4,000 U.S. stores. The cards have a picture of Chief Executive Lee Scott next to a quote from an interview on CBS News in which he said, "I don't know specifically what a living wage is."

Scott went on in that interview to say Wal-Mart's average wage was over $10 an hour.

The cards urge Wal-Mart workers to back candidates who support higher wages, affordable health care and protecting American jobs. It does not name specific candidates but claims that "Wal-Mart's Politicians Fight Against You" by opposing a living wage and affordable health care and shipping American jobs to China.

The campaign plans to air two 30-second television ads in at least seven states, conduct more than 140,000 household visits in at least 10 states and hold store and community actions in over 30 states.

"Wal-Mart's decision to declare war on Democrats who are calling on the company to pay a better wage, provide affordable health care, and treat its employees with dignity and respect is a disgrace, and shows just how right-wing Wal-Mart has become," said Paul Blank, campaign director for WakeUpWalMart.com.

Wal-Mart's Tovar denied the company is targeting Democrats.

Wal-Mart said efforts it started in Iowa in August were simply aimed at letting employees, which it calls associates, know when their company was under attack by politicians.

"It's about things that we as a company feel it's important for our associates to know, whether those are elected officials who are criticizing the company or making misstatements about the company or also people who are praising the company," Tovar said.

Wal-Mart sent a letter to its 18,000 Iowa employees accusing several potential presidential candidates of directing "misguided attacks" against the retailer's wages and benefits at rallies hosted by WakeUpWalMart.

"We would never suggest to you how to vote, but we have an obligation to tell you when politicians are saying something about your company that isn't true," the letter read.

The letter named four Democrats who are all potential 2008 Democratic contenders: U.S. Sens. Evan Bayh of Indiana and Joseph Biden of Delaware, and Govs. Bill Richardson of New Mexico and Tom Vilsack of Iowa.

Wal-Mart's political action committee has changed its level of support for GOP candidates. Republicans received 71 percent of $1.06 million that the Wal-Mart PAC and employees contributed to federal candidates and parties in this election cycle, compared with 98 percent for Republicans in 1996, according to the Center for Responsive Politics.

Tovar said any future letters would be in the style and tone of the Iowa one.

So far, the Iowa letter is the only one. Wal-Mart said in August it would send similar communications to workers in South Carolina and Nevada. But Tovar said Wednesday it never did so because it decided there was no reason to. He said he could not elaborate.

He declined to say if any letters would be going out before the midterm elections or which politicians might be targeted.

"We're committed to communicating to our associates when there's an important issue and when we need to. That's going to be our approach going forward and it goes beyond Election Day in a couple weeks and it's part of an ongoing process," Tovar said.

Corporate ethics consultant Alice Peterson of Chicago-based Syrus Global said Wal-Mart was well within its rights to inform employees about issues that it believes could hurt it.

"Anything that encourages participation in the voting process is very, very positive," Peterson said.

From the Wall Street Journal:

Romano Pontes, a longtime apparel supplier to Wal-Mart Stores Inc., vividly remembers the advice the company's legendary founder Sam Walton imparted to him the only time they met.

"'If you believe in a point, scream it as loud as you can to whomever will listen to you,'" Mr. Pontes recalls of the 1992 meeting to discuss how to improve the discount retailer's apparel offerings.

This spring, Mr. Pontes put Sam Walton's advice to the test and risked losing Wal-Mart, his biggest and most lucrative client, in the process.

Small Business editor Gwendolyn Bounds2 talks about some key strategies for a small business to stand up to a retail behemoth like Wal-Mart.Mr. Ponte and a Wal-Mart buyer had a disagreement over a shipment of apparel that wasn't selling. The buyer insisted that Mr. Ponte take the garments back, which would mean sustaining a financial hit in the short run. But the alternative was to refuse and potentially take a much bigger financial hit in the long run -- the loss of a big account.

Making a Case

With Mr. Walton's words still echoing in his head, Mr. Pontes says he decided to fight for what he thought was right. He thinks small-business owners who work with big corporations frequently are afraid to stick up for themselves, fearing they will ruin the relationship. He says that not giving in doesn't have to kill a business relationship. It can even strengthen it.

"You have to speak your mind, but you have to say it nicely," says Mr. Pontes, 46 years old. "I never said, 'I want to sue you.' I just made my case."

Mr. Pontes's company, Global Vision Inc., is one of 61,000 U.S. suppliers to Wal-Mart, which is known in the industry for being a tough taskmaster. The company says it doesn't know how many supplier relationships end each year and how many new vendors they bring on board.

Each supplier has a different vendor agreement with Wal-Mart, according to company spokeswoman Amy Wyatt. Some contracts may specify that unsold products will be returned. It depends on the type of product and supplier.

Shouldn't vendors always have agreements like that in writing?

"Not always," says Ms. Wyatt. "We believe it's best to have an open and transparent relationship with our vendors and have the ability to work things out. Situations are not always clear cut."

What is clear is that many small suppliers to retail behemoths don't think they can fight back for fear they will lose the account. Mr. Pontes's strategy was to take his case as high up the chain of command as possible and to make sure Wal-Mart knew there were competitors that were interested in the same goods he was providing to Wal-Mart.

Mr. Pontes makes his living buying excess inventory of name-brand clothing and accessories -- Ray Ban sunglasses, Polo Ralph Lauren shirts, Calvin Klein jeans -- made by U.S. manufacturers. He, in turn, sells them to discount retailers based in Latin America, Europe and Asia.

Branded manufacturers, he says, want to unload their excess product, but risk diluting their brand equity if they sell it to discounters in the U.S. Overseas retailers are hungry for hot American labels at low prices but don't have direct contacts for them. Mr. Pontes says he offers both a solution.

About 30% of the time he gets manufacturers to make special orders for a particular retailer, a way for the manufacturer to use excess fabric.

Mr. Pontes's disagreement with Wal-Mart began last fall, when a buyer for the company's Sam's Club 9 outlets in Puerto Rico called Mr. Pontes with a request. She wanted about 4,000 Ocean Pacific cargo pants in a special cut. Mr. Pontes delivered the order, but within a few months the buyer said they weren't selling well. Mr. Pontes says he told them he would try to resell the clothes to stores in another nearby country, but before he could do so, he adds, Wal-Mart shipped the merchandise back to his La Jolla, Calif., warehouse and deducted the purchase price from what it owed his company.

Wal-Mart disputes this, saying Mr. Pontes agreed to take the pants back, according to Ms. Wyatt.

This was the first time in Global Vision's 20-year relationship with Wal-Mart, Mr. Pontes says, that he was asked to take back his wares. The accompanying paperwork, he adds, claimed the reason for its return was that the merchandise was defective.

Not in Contract

Although Global Vision's contract with companies doesn't spell out the policy for merchandise that doesn't sell, Mr. Pontes says he had an unspoken agreement that "we would work things out."

In the past, for instance, the retailer might mark the product down to sell it more quickly. In return, Mr. Pontes would sell the company's next order at a discount to partially offset the retailer's loss or diminished profit from the earlier order. But first, he would always try to find another buyer, frequently in another country.

Wal-Mart declines to discuss the specifics of Global Vision's contract, but Ms. Wyatt says that, in general, "if a customer is not responding to a certain product, as a rule we go back to the suppliers and determine a course of action to get it out of inventory. Sometimes it goes back to the supplier, sometimes we take the loss."

Had Mr. Pontes taken the order back, he would only have lost about $12,000 -- a small amount, he admits, for a company that has about $15 million in revenue a year and six employees. But Mr. Pontes says he didn't want to set a dangerous precedent. "It was the principle," he adds.

To straighten out the situation, Mr. Pontes says, he started with two members of the buying team, who claimed Mr. Pontes had authorized the goods to be returned. Neither side would relent, so Mr. Pontes then made his case to a senior executive in the finance department in Wal-Mart's Bentonville, Ark., headquarters. This time, Mr. Pontes said that he would produce documentation that the merchandise wasn't defective and challenged the company to prove that it was.

Mr. Pontes says he also strongly hinted that he wasn't going to deliver Sam's Club's next order for its Puerto Rico stores and then contacted his warehouse employees and told them to stop shipment of pending Wal-Mart orders to stores in about three or four countries.

A conference call was set up between Mr. Pontes and a general-merchandise manager. But two hours before the scheduled call, Mr. Pontes says he canceled and sent an email instead, claiming he had stopped shipments on Wal-Mart orders to locations around the world. He added that other buyers in Puerto Rico were interested in buying Wal-Mart's 1,296-piece order of T-shirts and board shorts by Quicksilver, a trendy teen brand.

Less than two hours later, Wal-Mart emailed back, saying it would pay for the original Ocean Pacific order and wanted it shipped back to Puerto Rico.

Business Partners

Wal-Mart says it was committed to working with Mr. Pontes and finding a "viable" solution to the problem. "Our suppliers are our business partners and we benefit from an open and transparent relationship with our suppliers," Ms. Wyatt says. "Whether they are small businesses or multinational corporations, they have the ability to use what we call our open-door policy. And they can do it all the way to the CEO."

Says Mr. Pontes: "You have to have courage and guts, elevate it as high as you can. If you leave it at the buyer's level, they'll bury you. I went four levels higher than whoever is in charge of our accounting."

"I was proud of myself," Mr. Pontes adds. "I did not destroy the relationship. In fact, they want me to sell them more. I just landed a big account with Sam's for Mexico."

There is more evidence today that Wal-Mart's generic drug plan in Florida is just a grab for headlines and greater pharmacy marketshare, rather than something that will really help people pay for health care. A Merril Lynch analyst said in a newsletter today that the company's limited drug selection under the program included mainly drugs of low utility or impact on consumers.

Analyst Tom Gallucci told FDA News that Wal-Mart "appears to continue to be cherry-picking low-priced and fairly immaterial generics." In an example, Gallucci noted that Wal-Mart's plan included a generic cholesterol drug that represented only a tiny share of all the cholesterol drugs prescribed, and that even then Wal-Mart only offered it at a single dosage, which was "the least prescribed dosage of this drug."

From the New York Times:

In a rare demonstration, more than 100 Wal-Mart employees rallied yesterday at a store in Hialeah Gardens, Fla., a Miami suburb. They were protesting a new policy on employee absences as well as efforts at the store to cut workers' hours.

Henry Gonzalez, the garden department manager at the store, said, ''People were unhappy that they were going to cut all of our hours, and some people in my department were even being cut back to just six hours a week. How is someone supposed to pay the bills on that?''

Officials at Wal-Mart headquarters said the protest, which lasted for more than an hour, was spurred largely by the store manager's plan to reduce payroll by cutting most workers' hours to 35 hours a week from 40. During the protest many workers chanted, ''Forty hours, forty hours.''

Wal-Mart officials said the top manager at the store had violated company policy by reducing hours across the board, instead of doing it the usual way by reducing hours here and there to take into account the needs of particular departments and shifts.

David Tovar, a Wal-Mart spokesman, said the company had corrected the store manager's mistake and had restored the workers to their former number of hours. ''We have taken appropriate action to make sure this doesn't happen again,'' he said. The demonstration occurred as Wal-Mart Stores, the nation's largest retailer, has adopted several policies that are upsetting many workers, like wage caps, the use of more part-time workers and scheduling more employees to work nights and weekends. Wal-Mart has also introduced a new policy on absences that calls for disciplining employees with numerous unexcused days off.

''We continue to focus on improving the customer shopping experience by staffing our employees appropriately,'' Mr. Tovar said. In a
letter to the manager, employees complained about schedule changes.

''They are also telling us, the associates, that our schedules will be drastically changed,'' the employees, known as associates at Wal-Mart, wrote. ''We will no longer have fixed/consistent days off. But the bigger problem is that our hours won't be consistent either. This is extremely unjust because there is no consistency whatsoever in our schedules.''

Wal-Mart says it gives workers three weeks' notice of their schedule to help them plan ahead.

Chris Kofinis, a spokesman for Wake Up Wal-Mart, a union-backed group that is pressuring the retailer to improve its pay, said his group had no role in organizing yesterday's protest. ''This demonstration resulted from a snowballing of concerns about all the new policies that Wal-Mart is forcing on its workers to try to increase profits,'' Mr. Kofinis said.

The employees' letter voiced concern about the company's month-old policy on absences and sicknesses. Under it, employees must first call a toll-free number at Wal-Mart's headquarters in Arkansas before being transferred to the employee's store to tell managers about the absence.

Under the policy, workers with three unexcused absences in a six-month period are admonished by a manager, while those with seven unexcused absences over six months face dismissal.

One of the protesters, Dionisia Salazar, who works in the deli at the store, said many workers were unhappy with the policy. ''If the school calls and says, 'Your son is sick,' if you have to leave to pick him up, that will be an unexcused absence,'' she said. ''I'm very worried about that.''

John Simley, another Wal-Mart spokesman, said workers had misunderstood the policy. He said it helped workers because calling a toll-free number at headquarters would help ensure that company officials knew employees tried to inform managers of their absence.

Our latest press release:

Today, over 200 Wal-Mart employees, at the Hialeah Gardens, Florida Wal-Mart store (near Miami), self-organized the first-ever large scale employee protest at a Wal-Mart store.

According to Wal-Mart workers who contacted WakeUpWalMart.com, over 250 Wal-Mart Associates are currently outside the store protesting the negative effects of Wal-Mart's open availability policy, hours being cut, scheduling changes, and a new, punitive attendance policy. These Wal-Mart employees say they have had enough of executives in Bentonville, Arkansas ignoring their concerns, and they are willing to take to the street to counter Wal-Mart’s changes which are pushing out hard-working, loyal Wal-Mart employees.

The following statement is attributable to Paul Blank, campaign director for WakeUpWalMart.com:

“For too long, Wal-Mart has ignored the serious workplace concerns of over 1.39 million Wal-Mart Associates. Since the beginning of this year, Wal-Mart has essentially declared war on its employees by cutting hours, reducing the number of full-time workers, imposing salary caps, instituting an open availability policy, cutting health care benefits, and even instituting a new, punitive attendance policy. Wal-Mart’s changes negatively impact its workers and are all a sinister attempt to push out loyal employees who Wal-Mart believes cost them to much. It is wrong and it must stop."

"As we can all see from this incredible protest in Hialeah, Florida, Wal-Mart workers, having been pushed to the point of no return, are standing up to Wal-Mart executives and fighting back. Contrary to Wal-Mart’s heartless changes, employees are not commodities or products on the shelf and they deserve to be treated with dignity and respect. These employees are hard-working people with real families and they deserve our support.

Once again, we call on Wal-Mart to realize that there is a better path. The American people, Wal-Mart Associates, and elected leaders are demanding that Wal-Mart end its war on its workers and change into a more responsible employer. In the end, Wal-Mart should not doubt for a moment that this is just the beginning of workers speaking out and their calls will continue to get louder. We can only hope for Wal-Mart's sake and its employees, that Wal-Mart hears these calls for change and does what is right.”

From Dow Jones:

In a rare display of public protest by workers at Wal-Mart Stores Inc., employees gathered outside a store in a Miami suburb Monday to protest recent changes in the company's labor practices.

Chanting "We want 40 hours!" and "We want respect!," workers at a Wal-Mart supercenter in Hialeah, Fla., complained that the world's largest retailer has been cutting back on full-time hours, capping wages and forcing them to work increasingly irregular schedules while imposing stiffer penalties on workers who fail to show up for oddball shifts.

Wal-Mart officials weren't immediately able to comment. Workers interviewed by telephone Monday said about 150 to 200 employees had gathered outside the store at 2814 Hialeah Gardens at 9 a.m. The workers said they weren't blocking entrances to the store, which one said employed a total of more than 900, and that it was operating Monday despite the protest.

"This company is not what it used to be anymore," said 27-year-old Yahima Morales, a department manager in health and beauty aids who has worked at the store for the past four years. "We've been working hard for this company, and there's no respect for us."

Rick Smith, executive director at the Florida-based Wal-Mart Workers Association, said he had no knowledge of the Monday rally in Hialeah.

Over the past month, however, "activity has picked up dramatically," as the organization has been adding new members, he said. A popular tactic in recent weeks has been for Wal-Mart workers to circulate petitions in support of co-workers whose hours are changed, Smith said.

"There's been much, much more up-front activity at the stores - not to the point of a big rally outside, but we kind of knew this was going to pop up somewhere," Smith said.

Spokesmen at two union-backed groups based in Washington - Wal-Mart Watch and WakeUpWalMart.com - also said they hadn't played any role in the Florida protest. Chris Kofinis, a spokesman for the latter organization, said that while he recently has helped stage political rallies across the U.S. to protest Wal-Mart's labor practices, he isn't aware of an instance where Wal-Mart workers organized a local protest on their own.

"We did not tell them to do this," Kofinis said. "They just called us to tell us about it, and what they were doing and why."

Workers at the Hialeah store said they have been in contact with other
stores nearby about staging protests at other locations, but that many still fear for their jobs. Morales said irregular work hours are especially difficult for employees who have children, go to school, or who are elderly.

Wal-Mart has said that its new labor-scheduling policies are designed to better match work schedules with customer traffic, and that it strives to post schedule changes weeks in advance. But workers say it frequently doesn't work out that way, and complain that stricter rules have been imposed for missing shifts.

"One day you come in in the morning, the next day at night, then it's a mixed shift, then it changes the next week again," said department manager Guillermo Vasquez. "You can't have a normal life."

On Saturday, The Wall Street Journal reported that Wal-Mart has enacted a new attendance policy that penalizes workers for multiple unexcused absences and requires them to call an 800 number whenever they get sick.

From the Wall Street Journal:

Critics Say Plan Is Designed To Pare Unhealthy Workers; 1-800 Number for Sick Days

Wal-Mart Stores Inc. has enacted a new attendance policy that penalizes workers for multiple unexcused absences and requires them to call an 800 number whenever they get sick, changes critics say are part of a bigger effort to nudge out unhealthy and long-tenured employees...

The policy change comes at a time when some of Wal-Mart's 1.3 million U.S. workers are riled by fears that the retailer wants to cut costs by attracting healthier employees and a greater percentage of part-time workers. Some employees and Wal-Mart critics decry the new policy as a way for Wal-Mart to discourage unhealthy employees by tracking sick-time use more closely, setting stricter guidelines for authorization and making the process of applying for sick leave more onerous.

"I guess they're just trying to see how many people they can get rid of," said Ramiro Gonzalez, a 49-year-old full-time worker in the produce section of a Wal-Mart in El Paso, Texas. "They're trying to make ways that you can mess it up so they can let you go, especially if you're a full-timer."

Wal-Mart's concerns about its soaring health-insurance costs came to light last year, when an internal memorandum authored by a top Wal-Mart official was leaked. The memo offered numerous suggestions for corralling benefits costs by luring healthier workers.

The new policy "just sends another terrible message that this company looks at its workers as a commodity," said Chris Kofinis, spokesman for Wal-Mart critic WakeUpWalMart.com.

From Reuters:

PHILADELPHIA, Oct 13 (Reuters) - A Pennsylvania jury said on Friday that Wal-Mart Stores Inc., the world's largest retailer, must pay $78.47 million in damages to current and former Pennsylvania employees for forcing them to work "off the clock" or during rest breaks.

The following statement is attributable to Chris Kofinis, Communications Director for WakeUpWalMart.com:

“We are pleased, today, that Wal-Mart’s employees, who were needlessly exploited in Pennsylvania, won justice. But, the real question is how many fines, guilty verdicts, and jury awards will it take for Wal-Mart to finally wake up and realize that it’s time to change into a more responsible employer.

With 57 similar lawsuits, in 40 states, Wal-Mart must immediately end its exploitative business practices. This jury award confirms that the American people will not tolerate corporate irresponsibility and are demanding, both through the courts and our lawmakers, that Wal-Mart become a better employer that treats its 1.39 million workers with dignity, respect, and fairness.”