From our latest press release:

Bentonville, AR – WakeUpWalMart.com, America’s campaign to change Wal-Mart, announced today that it will launch one of the most dramatic new phases of its 2-year old campaign to make Wal-Mart a more responsible employer and company by specifically targeting, for the first time, the company’s core customers – Southerners and Conservative Republicans.

The new strategic initiative by WakeUpWalMart.com, which is outlined in a strategy memo entitled “Winning Over Wal-Mart’s Core Customers,” comes in response to Wal-Mart’s recent announcements that the company is shifting its business and marketing strategy, once again, to get “back to the basics” or back to its core customers.

As part of this new strategic effort to expand the WakeUpWalMart.com campaign and win over Wal-Mart’s core customers, the group announced it will begin a million dollar “Summer Southern Blitz” TV-ad campaign. The 3-month “Summer Southern Blitz” campaign will help educate Southerners and Conservative Republicans, through a series of TV ads and grassroots actions, about how Wal-Mart’s record proves that Wal-Mart’s values are neither Southern nor Republican values.

Download the PDF or read the entire strategy memo after the jump.

WUWM Strategy Philosophy: American Values vs. Wal-Mart’s Values

From the outset, the strategic rationale behind the WakeUpWalMart.com (WUWM) campaign was the belief that America’s consumers, much like voters, intrinsically care about whether or not a company reflects their values. This “Values Matter” argument is the basic strategic philosophy of the WUWM campaign.

"…we do not want our customers to have to make the choice between value and values, saving money or shopping responsibly."
-GSD&M, Wal-Mart Positioning Report, Wal-Mart’s Advertising Agency 1987-2007

The significance of the “Values Matter” rationale has been consistently reinforced by internal research (i.e. a series of internal public opinion polls and focus groups conducted by WUWM throughout 2005, 2006, & 2007) showing that all types of Wal-Mart consumers, when presented with the choice, care more about their values than Wal-Mart’s intrinsic EDLP value. In fact, it is safe to say nearly every demographic group of Wal-Mart’s consumers will change their shopping behavior, to some degree, in order to avoid what is best described as the “Wal-Mart Values Conflict.”

Launching a New Strategic Focus: Winning Over Wal-Mart’s Core Customers

Since the launch of the campaign in April 2005, WUWM has pursued a multi-phased media and grassroots strategy with the goal of educating consumers about the negative effects of Wal-Mart’s business practices. During the initial phases of the WUWM campaign, the message was targeted to expose these “Wal-Mart value conflicts” among specific populations – including progressives, Democrats, women, and upper-middle class shoppers. As a result, the message focused on highlighting the facts about Wal-Mart’s record which mattered most to these target populations (such as poor wages, unaffordable health care, salary caps, and the gender discrimination lawsuit).

Our initial strategy made sense given Wal-Mart’s efforts over the last two years to try and expand its business into new demographic, socio-economic and geographic markets that, in particular, had been dominated by Target. In order to break into these markets, Wal-Mart put together a very expensive public relations strategy to try and upgrade its stores and its image. To date, in part because of our successful strategy, nearly all of Wal-Mart’s efforts to remake the company and break into new markets have ended in failure. In fact, Wal-Mart has pulled one of its fashion lines from its stores, ended its participation in Fashion Week, and has seemingly abandoned its efforts to get into NYC. Most importantly, while Wal-Mart focused its efforts, time and merchandise on its failed attempt to change and reach new customers, Wal-Mart suffered its worst annual same-store sales growth in 27 years.

Faced with sluggish sales growth and an inability to overcome its image problems and expand its market base, Wal-Mart has essentially abandoned its plans to become ‘Target’ and, instead, has said it would like to get ‘Back to the Basics’ and focus on its core customers. Therefore, as a complement to our strategy of focusing on our original target populations of Democrats, women, and upper middle class shoppers, it is now time for WUWM to launch a new phase of the campaign to specifically target Wal-Mart’s core customers (i.e. Southerners, Republicans, & low income earners).

The overall goal of this new strategic effort is twofold: (A) win over Wal-Mart’s core customers to our campaign; and, (B) continue to build pressure on Wal-Mart to pursue real changes that substantively improve the lives of its workers and their families, as well as the health and welfare of the nation. In order to achieve these goals, WUWM will launch a series of coordinated paid media and grassroots campaigns/actions targeting both Wal-Mart’s Southern Core Shopper and conservative Republicans. The ads and the actions will seek to educate these core Wal-Mart groups about the ‘Wal-Mart facts’ that will disturb them the most. The ad campaigns will specifically target southern media markets, as well as specific TV and radio shows with many Republican & Southern conservative viewers/listeners.

The first initiative we will launch as part of this new strategic phase of the campaign will be the WUWM 2007 “Summer Southern Blitz.”

2007 Summer Blitz, Phase 1: China & Wal-Mart vs. America

According to WUWM’s internal research and message testing, Wal-Mart’s longest-term core customer, the Southerner, is deeply concerned with whether a company reflects his/her Southern values. One of the Southern values we have identified to have special importance is the “love of country,” “patriotism,” and the belief that all Americans must “sacrifice to make this nation stronger.” Overall, the message which we have determined to have particular resonance with this group of Wal-Mart consumers is best described as “Patriotic Shopping.”

Among Wal-Mart’s many business practices which elicit particularly strong negative reactions from these “Patriotic Shoppers” is the fact that Wal-Mart has a close and intensifying relationship with Communist China. “Patriotic Shoppers” are increasingly concerned about Wal-Mart’s explicit role in shipping American jobs overseas, the growing U.S.-China trade deficit, and the understanding that companies, like Wal-Mart, are helping China get stronger at the expense of American jobs and America’s national security.

Aside from China, another issue with “special” sensitivity for both Southern Conservatives and Republicans is Wal-Mart’s role in opposing 100% scanning of port security containers, thereby leaving the country vulnerable to terrorist attack. Wal-Mart’s core customers are shocked to learn that Wal-Mart, and its lobbying association, Retail Industry Leaders Association (RILA), oppose 100% scanning of port containers over concern that improved security measures would “slow” down Wal-Mart’s imports.

Therefore, as phase 1 of the 2007 Summer Southern Blitz, WUWM will launch a new paid media and grassroots campaign in early June to expose how Wal-Mart’s close relationship with China is needlessly hurting America.

In the first of these TV spots, entitled “It’s Just Not American,” WUWM will emphasize Wal-Mart’s radical departure from Sam Walton’s vision and emphasis on “buying American” to a policy that can best be described as “buying anywhere but America.” The TV ad can be viewed at WakeUpWalMart.com beginning May 31, 2007.

2007 Summer Southern Blitz: Phase 2: Targeting Conservative Republicans

In the summer of 2006, WakeUpWalMart.com launched a series of campaigns, including a 19-state, 35-city, 35-day national bus tour, to educate Americans, in particular Democrats, about how Wal-Mart’s values are not American values or Democratic values. Beginning in early July 2007, WakeUpWalMart.com will launch a series of coordinated paid media and grassroots actions that will target Republican consumers and specifically challenge Republicans to stop ignoring Wal-Mart’s negative effect on issues that are at the core of the Republican base (i.e. Wal-Mart’s role in - Outsourcing of Jobs, Trade Deficits, China’s Growing Power, Port Security, and Abuse of Taxpayers).

Details of the new initiative entitled, “Think Wal-Mart Reflects Republican Values? Think Again” will be made available in early July 2007.

Summary

The 2007 Summer Blitz represents a dramatic new phase of the WUWM campaign. Since the campaign’s inception in April 2005, this is the first series of coordinated campaigns with the expressed goal of targeting Wal-Mart’s core consumers – Southerners and conservative Republicans.

While Wal-Mart may discount this new phase in the WUWM campaign, recent statistics suggest that Wal-Mart ignores this “Values Conflict” at its own peril. In fact, contrary to Wal-Mart’s public pronouncements, publicly available statistics support the central fact argued by WUWM and GSD&M that “Values do Matter”:

• 14% percent of Wal-Mart’s shoppers are now “Conscientious Objectors” (Wal-Mart Segmentation Study)

• 67% cite Wal-Mart as the discount store they shop at most often – a decline over the past two years when the score hovered in the mid-seventies range (GSD&M, Fall 2006)

• A majority of liberal Democrats have an unfavorable opinion of Wal-Mart (Pew Research)

• Overall, Wal-Mart’s public image ranks near the bottom, with Exxon and Halliburton, among major corporations surveyed (Pew Research)

• Traffic Declines at Wal-Mart stores (WMT Sales & Earnings Releases)

• Slowest annual same store sales growth in 27 years

• Largest monthly same store sales decline in 28 years

In sum, we believe that this new phase of the WUWM campaign will prove critical in continuing to build the grassroots pressure that will finally force Wal-Mart to adopt a series of changes making them not only a better employer, but also a better company.

Appendix: Phases of WUWM Campaign

Strategic Phases of WUWM Campaign – April 2005 to Summer 2007

• Phase 1: Launch Grassroots Campaign
o Begin to Introduce Wal-Mart’s Record to American Public
o Build Multi-State Grassroots Campaign

• Phase 2: Roll-out New Mini-Campaign Strategy
o Incorporate traditional campaign elements (field, political, research, paid media, and internet) with a targeted message during select calendar periods (e.g. 2005 Back-to-School Campaign)
o Launch multi-week Holiday Campaign

• Phase 3: Refine, Focus, & Target WUWM Message
o Utilize specific WMT facts & Message to Target Specific Wal-Mart consumers
o Focus Initial energies on “Most Winnable” Demographics
 E.g. Democrats, Upper-Middle Class Shoppers, and Women

• Phase 4: Rollout Wal-Mart, the Political Issue
o Introduce why Wal-Mart is Political Issue
o Stage Nationwide political bus tour
o Hold preliminary presidential campaign events
o Roll-Out 2006 Mid-term voter education campaign
o Target message to Democrats, Independents, women

• Phase 5: Winning Over Wal-Mart’s Core Consumers
o Introduce new groups to the Wal-Mart issue
o Target Southerners and conservative Republicans
o Roll-out new China/Wal-Mart vs. America media campaign in June 2007
o Roll-out conservative Republican campaign in July 2007

Here is the latest story in the growing ethics scandal involving Wal-Mart CEO Lee Scott. As the article later states, "Supplying a diamond ring for a chief executive's wife would appear an unusual order for The Aaron Group, which on its Web site describes itself as a "maker of popular priced" jewelry."

From The Wall Street Journal:

Wal-Mart Stores Inc. Chief Executive H. Lee Scott, who recently was accused by a fired marketing executive of accepting sweetheart deals from suppliers, purchased a diamond ring from a Wal-Mart vendor, according to that vendor's officials.

Mr. Scott purchased the ring for his wife in April 2003 from The Aaron Group, a wholesale supplier of jewelry to Wal-Mart, said Robert Kempler, president of the New York-based company. Mr. Kempler declined to discuss the terms of the diamond sale other than to say Mr. Scott hadn't received preferential pricing.

Wal-Mart's famously strict ethics code prohibits employees from receiving anything free from suppliers. Last week, Julie Roehm, a former Wal-Mart marketing executive who was fired in December for allegedly violating the retailer's ethics rules, claimed in a federal court filing that Mr. Scott obtained "a number of yachts" and "a large pink diamond" at preferential prices.

The lawsuit didn't identify the specifics of the diamond sale, other than to say that Mr. Scott had purchased the stone through a relationship with Irwin Jacobs, a financier who has numerous business relationships with Wal-Mart. It isn't clear whether the diamond ring purchased from The Aaron Group is the same one referred to in Ms. Roehm's suit.

Mr. Kempler said he'd never heard of Mr. Jacobs, and he said everything about the transaction was "above board." Mr. Jacobs called the allegations without any substance and has denied knowing anything about any diamond purchase by the Wal-Mart CEO.

A Wal-Mart spokeswoman declined to comment specifically on the diamond purchase or Wal-Mart's policies on employee purchases from suppliers. Mr. Scott "is subject to the same ethics policy as any other associate and has not violated either the spirit or the letter of Wal-Mart's ethical standards," the spokeswoman said. She characterized the allegations in Ms. Roehm's court filing as "old news. No facts have been presented to back them up."

Charles Elson, Director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said Mr. Scott shouldn't have been doing business with any vendor, even if the deal was in accordance with Wal-Mart's ethics rules. "Someone at that level, at that paygrade, should avoid dealing with the company vendors," Mr. Elson said. "It sends the absolute wrong signal to the rest of the organization, particularly one that prides itself on its relationships with vendors."

Wal-Mart's code of ethics prohibits employees from requesting or encouraging gifts from suppliers, including "free goods...personal services or favors" or "kickbacks in the form of money or merchandise." It doesn't specifically bar employees from purchasing goods from suppliers, but it does advise more broadly: "Do not have social or other relationships with suppliers, if such relationships would create the appearance of impropriety or give the perception that business influence is being exerted."

In court filings, Bentonville, Ark., Wal-Mart previously had accused Ms. Roehm of having an improper personal relationship with a subordinate and improperly accepting gifts from suppliers, including liquor and lavish dinners. She has denied accepting gifts and insisted suppliers were told to bill the company for any meals. In the increasingly bitter fight, Ms. Roehm has accused the company of a double standard, detailing instances in which other top executives supposedly received favors from suppliers.

Supplying a diamond ring for a chief executive's wife would appear an unusual order for The Aaron Group, which on its Web site describes itself as a "maker of popular priced" jewelry. The company says its "target focus is the middle market consumer" with retail jewelry from $29.99 to $999. Among its retailing partners it says, are Wal-Mart and its Sam's Club unit; JC Penney Co.; and Kohl's Corp.

There is a fascinating article in the New York Times today on a confidential report for Wal-Mart detailing the many problems the company is having as it tries to "move upscale." The conclusion...the number one problem facing Wal-Mart is its REPUTATION.

As WakeUpWalMart.com's Communications Director, Chris Kofinis, notes later in the article,

“Wal-Mart needs to realize that improving its public image and its business reputation demands they stop ignoring the fact that the American people care about values, not just value.”

Follow the link to download the entire "Wal-Mart Positioning Report."

From The New York Times:

Low prices, it turns out, can be bad for business.

A confidential report prepared for senior executives at Wal-Mart Stores concludes, in stark terms, that the chain’s traditional strengths — its reputation for discounts, its all-in-one shopping format and its enormous selection — “work against us” as it tries to move upscale.

As a result, the report says, the chain “is not seen as a smart choice” for clothing, home décor, electronics, prescriptions and groceries, categories the retailer has identified as priorities as it tries to turn around its slipping store sales, a decline likely to be emphasized Friday during Wal-Mart’s shareholder meeting.

“The Wal-Mart brand,” the report says, “was not built to inspire people while they shop, hold their hand while they make a high-risk decision or show them how to pull things together.”

The document, prepared in October 2006 by the company’s former advertising agency and based on interviews with scores of consumers, offers a candid, wide-ranging explanation for why Wal-Mart, the No. 1 seller of everything from laundry detergent to underwear, has stumbled badly when it comes to higher-end merchandise like silk camisoles and shag accent rugs.

The report contends, for example, that “our low prices actually suggest low quality” for products like high-definition televisions. And it says that Target, with its designer-inspired clothing and furniture, feels “like the ‘new and improved,’ while Wal-Mart often feels like the ‘old and outdated.’ ”

A copy of the 55-page report, written by GSD&M Advertising, was provided to The New York Times by WakeUpWalMart.com, a union-financed group highly critical of the retailer. The group said that a person outside of Wal-Mart gave it the report.

GSD&M, which has worked with Wal-Mart since 1974, submitted the report as part of an elaborate campaign to remain Wal-Mart’s ad agency after the retailer said that it might choose a replacement last year. Ultimately, Wal-Mart chose other firms.

Nick Agarwal, a spokesman for Wal-Mart, said that the seven-month-old report was “out of date and, in some areas, it is just plain wrong.” Sales in the chain’s pharmacy, electronics and grocery departments, for instance, are very strong, he said. GSD&M, a division of the Omnicom Group based in Austin, Tex., declined to comment.

Its report is at times prescient. As Wal-Mart’s clothing and home furnishing businesses have struggled, sales at stores open for at least a year fell to the lowest levels in decades over the last 12 months, well below those of Target. The figures are not expected to improve much over the next year, unsettling investors.

The GSD&M document offers a rare glimpse of the concerns that are buffeting Wal-Mart’s retailing empire, from its flagging corporate reputation to the “near catastrophic” economic pressures faced by its working-class consumers.

Wal-Mart attracts 138 million shoppers a week, a staggering figure unmatched in American retailing, but the portion of Americans who say the chain is their No. 1 destination for discount shopping has fallen from about 75 percent two years ago to 67 percent today, according to the report.

No specific explanation for the drop-off is provided, but Wal-Mart’s ad agency suggested a combination of factors, like stiff competition and public relations troubles. Those troubles have included a sex discrimination lawsuit filed on behalf of 1.6 million female current and former employees and firings of top executives, like the former vice chairman Thomas M. Coughlin, for stealing company funds.

Wal-Mart’s rating as a company that consumers trust and respect “steadily declined” over the last two years, the report said, as labor groups and elected leaders criticized its wages, benefits and practices. “While corporate respect may not be a highly rated driver of store choice,” it said, “this intangible quality cannot be underestimated.”

Wal-Mart has said that its own analysis has found that just 0.04 percent of customers have stopped shopping at Wal-Mart because of its reputation.

Chris Kofinis, director of communications at WakeUpWalMart.com, said, “Wal-Mart needs to realize that improving its public image and its business reputation demands they stop ignoring the fact that the American people care about values, not just value.”

The report by GSD&M also says several big-box rivals are meeting shoppers’ needs better than Wal-Mart. Best Buy, for example, provides “information and knowledge” to help buy electronics, the report says. Kohl’s provides “a wide selection of brand-name apparel” displayed “in a stylish environment that inspires browsing,” it says. And Bed, Bath & Beyond has “great displays that provide ideas on how to pull looks together,” it adds.

The economy is not helping matters, the report says. After living through the “decade of affluence” in the 1990s, Americans may now be entering the “decade of retreat” as real wages remain flat, fuel prices spike and consumer debt reaches all-time highs, it says, adding, “We have a crisis in the making for America’s working and middle classes.”

A significant portion of the report portrays Wal-Mart positively. In interviews, shoppers said the chain saves them money, time and stress, which suggests that the retailer’s low-price heritage is “as relevant today as it ever was.” Asked by GSD&M to describe Wal-Mart as if it were a person, some consumers compared it to a handyman, a grandmother and Uncle Sam. The report also asserts that “for most people and for most shopping occasions, Wal-Mart is the smart choice.”

The bulk of the report, however, examines the challenges facing Wal-Mart as it tries to transform itself from a chain focused on basic household items sold at low prices into one known for style.

Wal-Mart’s 200,000-square-foot stores, brightly lighted, minimally decorated and teeming with signs for price rollbacks, have served the chain well for much of the last 40 years.

But now, as Wal-Mart experiments with contemporary clothing, flat-screen televisions and nine-layer lasagna, that format has become a hindrance. To a shopper who wants to purchase a single dress for an evening out or a DVD player to watch a movie, “Wal-Mart’s one-stop shopping format becomes a time-consuming irrelevant obstacle,” the report says.

That environment is conducive to “zero-time” shopping, in which a customer spends just a few seconds thinking about a product, like a new bottle of dishwashing soap. “But people don’t buy electronics, home décor and apparel in zero time,” the report says.

“They shop for them,” it continues. “Those are slow-time shopping trips that require, unique, slow-time environments that provide a level of service, a sense of style and an array of ideas that inspires shopping.”

Wal-Mart’s advertising agency recommended a series of solutions, though the company has so far not adopted most of them. For electronics, it suggested creating a no-hassle, no-questions-asked returns policy that would make people feel more comfortable buying expensive televisions and stereo systems.

From Bloomberg:

Wal-Mart Stores Inc., defending against dozens of wage suits and the biggest discrimination complaint on record, faces pressure to settle with fired marketing chief Julie Roehm after she said executives violated company policy.

Roehm, 36, said last month that she wants company executives deposed, including Chief Executive Officer H. Lee Scott and a technician fired for allegedly conducting unauthorized surveillance for the company, the world's largest retailer. Last week, Roehm accused Scott, 58, and other executives in court papers of accepting discounts and gifts from a vendor.

``Given all the other litigation, Wal-Mart might want to settle,'' said Carl Tobias, a law professor at the University of Richmond in Virginia. Other lawyers said future court filings may contain more allegations. ``Wal-Mart needs to consider the cost, in dollars and to its reputation,'' Tobias said.

Wal-Mart spokesman John Simley declined to comment. Roehm's attorneys Sam Morgan and John Schaefer didn't return calls for comment yesterday.

Wal-Mart fired Roehm without saying why in December and dropped the advertising agency she'd selected. Roehm then sued the Bentonville, Arkansas, retailer for breach of contract and fraud. Wal-Mart countersued in March, accusing Roehm of taking gifts from DraftFCB, the agency she had hired, and of having an affair with a subordinate.

Roehm has asked for an unspecified amount of damages, plus punitive damages. Wal-Mart said in court papers that Roehm wants at least $1.5 million in salary and other payments.

Roehm's suit, filed in a Port Huron, Michigan, federal court, is one of more than 250 complaints by employees in federal courts since January 2005. Other lawsuits include allegations of bias and violations of wage-and-hour regulations.

Millions in Damages

Since December 2005, juries in Pennsylvania and California have awarded Wal-Mart workers a total of $251 million in pay and damages over claims the company broke wage laws.

The company faces a trial in Minnesota in September by hourly workers in a class-action lawsuit. The case is among more than 70 alleging Wal-Mart failed to pay employees for the hours they worked or didn't compensate them properly for overtime.

Wal-Mart is already under pressure from investors led by the New York City comptroller, who is demanding a vote at Wal- Mart's next shareholder meeting that would force a review of its treatment of workers.

Further attention will probably hurt Wal-Mart, said Cyrus Mehri of Mehri & Skalet in Washington, who represents employees in workers' rights litigation.

``The company is in a fishbowl,'' Mehri said.

`At a Disadvantage'

``Wal-Mart is already at a disadvantage in the eye of the all-important consumer and potential shareholder base because their reputation isn't squeaky clean,'' said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich, whose $9.6 billion in assets include Wal-Mart shares. ``The best outcome they could possibly achieve would be for this situation to just go away.''

Roehm's lawyers said in court papers last month they intend to depose ``any and all current or former employees and/or agents of Wal-Mart Stores Inc.,'' including Scott, Raul Vazquez, CEO of walmart.com, and Bruce Gabbard, a Wal-Mart technician fired this year on allegations of unauthorized surveillance of people including employees, critics and shareholders.

In papers last week, Roehm accused executives of accepting free plane travel and concert tickets. Scott, she charged, received discounts on yachts and a pink diamond from companies owned by Irwin Jacobs, which do business with Wal-Mart.

One Jacobs company, Plymouth, Minnesota-based Jacobs Trading Co., buys and sells leftover merchandise from stores including Wal-Mart. It employs Scott's son Eric as a consultant.

Hiring Complications

Jacobs and Simley previously denied Roehm's claims.

Wal-Mart should consider the effect the suit will have on recruiting top managers, Tobias said.

``This kind of litigation would complicate Wal-Mart's ability to hire top-line executives,'' Tobias said. ``Especially if they thought they would be fired after a short period on the job and then be accused of improper behavior.''

David Berg, a Houston attorney, argues the company shouldn't settle the lawsuit immediately -- perhaps not at all - - because settling now makes the company ``look guilty as charged.''

``You don't do it with a gun at your head,'' he said. Roehm's lawyers may find weaknesses in their own case, making them likely to settle for less, Berg said.

`A Pox'

Wal-Mart may win at trial if its claims against Roehm are true, even if her allegations are valid, Berg said. A jury is likely to say, ``a pox on both your houses,'' he said.

Wal-Mart, which has denied any discrimination or violation of overtime laws, is fighting the class-action wage cases. It settled some employee lawsuits. It's appealing the Pennsylvania and California verdicts.

The company is also defending a case brought on behalf of two million female workers who say Wal-Mart denied them equal pay and promotions. Simley has said the company will fight Roehm in court.

``Both sides are playing hardball in this litigation,'' Tobias said. ``Wal-Mart conducts much litigation that way.''

The case is Roehm v. Wal-Mart Stores Inc., 07-CV-10168, U.S. District Court, Eastern District of Michigan (Port Huron).

From the AP via the Chicago Tribune:

NEW YORK -- Wal-Mart Chief Executive Lee Scott violated the company's ethics policy and accepted trips and received discounts on yachts and jewelry from a vendor, according to documents filed by a marketing executive fired by Wal-Mart in December.

In her latest court filing aimed at the world's largest retailer, former marketing executive Julie Roehm also attacked other senior executives for accepting trips, concert tickets and other gifts from vendors.

Roehm is suing the company over her firing and challenging Wal-Mart's charges that she accepted gifts from vendors and had an affair with a subordinate.

In the documents filed Thursday in the U.S. District Court in Detroit, Roehm contends that CEO Scott and his wife frequently used private airplanes provided by entrepreneur Irwin Jacobs to travel to their residences in Longboat Key, Fla., and Las Vegas. Through his relationship with Jacobs, Scott was able to purchase a large pink diamond for his wife at a preferential price, she claims.

Scott, Roehm argued, maintained a relationship with Jacobs that goes "beyond a business relationship."

Jacobs owns a number of companies including Genmar Holdings Inc., a builder of recreational boats, and Jacobs Trading Co., which buys unsold merchandise from Wal-Mart Stores Inc.

Wal-Mart spokesman John Simley dismissed Roehm's charges, saying "This lawsuit is about Julie Roehm and her misconduct. Her document shows how weak her case is."

He continued: "We will address these issues in court. The allegations of impropriety involving our CEO Lee Scott are untrue."

In a telephone interview with The Associated Press, Jacobs called Roehm's attacks untrue and "outrageous" and vowed that if Roehm declines to retract her statement, he will sue her and her lawyer.

Roehm's lawyer Sam Morgan said he plans to depose Jacobs and will be subpoenaing records from all of Jacobs' businesses.

Wal-Mart's ethics policy -- considered the strictest among all retailers -- forbids company officials from accepting gifts or gratuities from vendors and those that are seeking to do business. Suppliers, who meet with buyers in stark rooms at the no-frills headquarters in Bentonville, Ark., aren't even allowed to pay for executives' bottled water.

Roehm's filing follows a move by Rhode Island's state treasurer, publicized Thursday, to ask the Securities and Exchange Commission to investigate whether Wal-Mart violated securities laws by not disclosing that Scott's son Eric works for Jacobs Trading. Wal-Mart has maintained there is no requirement under the law for a disclosure and no conflict of interest. Mona Williams, Wal-Mart's spokeswoman, told The Associated Press on Thursday that the question is a "non-issue."

Rhode Island's state employee pension fund has substantial holdings in Wal-Mart shares through index funds that group large corporations.

Peter Kerwin, a spokesman for the state treasurer's office, said on Friday that the move was instigated by reports from the local union chapters.

Jacobs confirmed that Scott's son, a former buyer at Wal-Mart, runs a consulting company that does work for Jacobs Trading, a business dealing that was approved by Wal-Mart's attorneys. But he stressed that Scott's son cannot call on Wal-Mart. Jacobs flatly denied all of Roehm's charges, including Roehm's claims that he gave Scott a discount on a diamond.

"If he owns a diamond ring, he didn't get it from me," said Jacobs, noting that none of his businesses have anything to do with diamonds. As for airfare, Jacobs vowed that he doesn't own a plane, and never chartered a plane for Scott and his wife.

From the AP via BusinessWeek:

Rhode Island's state treasurer has asked federal regulators to investigate whether Wal-Mart Stores Inc. violated securities laws by not disclosing that the son of the retailer's chief executive works for a company that does business with Wal-Mart.

Wal-Mart said there is no requirement under the law for a disclosure and no conflict of interest. Mona Williams, Wal-Mart's vice president of corporate communications, said the question is a "non-issue."

In a letter made public Thursday, Rhode Island General Treasurer Frank T. Caprio asked the U.S. Securities and Exchange Commission to investigate Wal-Mart. Rhode Island's state employee pension fund has substantial holdings in Wal-Mart shares through index funds that group large corporations, he said.

Caprio said Eric S. Scott, son of Wal-Mart Chief Executive Lee Scott, works for Jacobs Trading Co., which buys unsold furniture from big retailers like Wal-Mart and resells it to smaller discount stores. Caprio said Eric Scott "staffs" the Jacobs Trading office in Bentonville, Ark., where Wal-Mart is based.

Caprio argued that SEC rules require publicly traded companies to tell investors if an immediate family member of an executive has a "material interest" in another business's dealings with that company.

Wal-Mart has not made that disclosure, Caprio alleged.

Williams said the term "material interest" is narrowly defined under the law and might apply, for example, if Eric Scott was an executive or officer of Jacobs Trading. "But he is not," she said.

"There are rules for what you should disclose and we follow all of them. This does not fall into any of those categories," Williams said.

Wal-Mart's attorneys have looked at the matter and found no basis for disclosure, she added.

Jacobs Trading told The Associated Press that Eric Scott works for the company but is not an employee.

"He does some work for us. I can't say more than that," said Dave Engel, chief financial officer of Plymouth, Minn.-based Jacobs Trading.

Williams said Eric Scott does not influence Jacobs Trading's business with Wal-Mart or deal with Wal-Mart for Jacobs.

"This particular question came up a couple of years ago and a thorough review by our audit department found there was absolutely no conflict with our ethics policy. This was also shared at that time with the chair of our board audit committee," Williams said.

According to Caprio's letter, Jacobs Trading has contracted as recently as last year to resell Wal-Mart's unsold furniture.

Engel declined to comment on Jacobs' business.

Williams confirmed that Jacobs is a Wal-Mart vendor but said the fact that the CEO's son works for a vendor is not a violation of the company's code of ethics.

The ethics code bars Wal-Mart employees from soliciting jobs for immediate family members from suppliers. It does not bar family members of Wal-Mart employees from working for vendors, Williams said.

"If you live in northwest Arkansas, almost everything you do touches Wal-Mart or its suppliers in some way. If they (family members) couldn't work for suppliers, there'd be no place they could work. The key is that they cannot be involved in the Wal-Mart business (of that supplier)," Williams said.

From a Chicago Tribune editorial:

If Wal-Mart were a country, it would be China's eighth-largest trading partner, according to an article in Asia Times Online. So it comes as no surprise that Wal-Mart, along with a host of foreign companies that do business in China, has expressed strong consternation about a new labor law likely to be passed by the National People's Congress in June.

First proposed in December 2005, the law would provide Chinese workers with basic rights and protections covering issues such as the length of probationary contracts for new workers, firing protocols, severance pay and non-compete clauses. According to some Western companies, the law will make it too expensive for them to do business in China.

Chinese labor leaders say the law is necessary to curb widespread abuses such as failing to pay workers in a timely fashion. Especially hard-hit are migrant workers who come to industrial zones from remote provinces, they say.

This is a law for China, but it has become something of a tussle between U.S. businesses and U.S. labor unions. No surprise there. U.S. labor would like to reduce the advantages that employers have in setting up shop in China and moving U.S. jobs there. Business doesn't want to lose the cost advantages it has found in using Chinese workers.

The most welcome development is that Chinese workers have had any say at all in the discussion on the proposed law. In March 2006, the People's Congress issued a draft of it for public comment -- the only time in recent memory that has happened. Lawmakers received 191,849 comments. According to China Daily, only the 1954 draft constitution received more feedback.

To state the obvious, this is a good thing.

Americans -- both in the government and the business community -- have long argued that increased liberalization of China's economic policies would have the beneficial corollary of leading to a more democratic state. "American business plays an important role as a catalyst for positive social change by promoting human welfare and the principles of free enterprise," the American Chamber of Commerce in Hong Kong says.

Chinese Premier Wen Jiabao said in a December 2003 speech at Harvard, "If no effective measures are taken to protect the fundamental rights of our massive labor force, and in particular the farmer workers coming to the cities, they may end up a miserable plight. ..."

This is probably a law that firms operating in China can live with. Pushback from American and European companies during the draft comment period has led the People's Congress to scale back some worker protections and severely circumscribe unions.

Business leaders continue to agitate for more concessions. But in the long run, they're likely to bet that, even without more changes in the law, a predictable labor market and a more democratic China will continue to pay high dividends.

From the AP via the Akron Beacon Journal:

CHICAGO - The wife of Democratic presidential candidate Barack Obama resigned Tuesday from the board of a food supplier for retail giant Wal-Mart Stores Inc., a target of criticism by the Illinois senator.

Michelle Obama cited the increased demands of his campaign for leaving the board of Westchester, Ill.-based TreeHouse Foods Inc. Her position had raised questions because Obama has praised a union-led effort to change working conditions at Wal-Mart...

Obama and other Democratic presidential contenders have been critical of Wal-Mart, which has taken heat over employees' wages and benefits. Some cities have passed, or tried to pass, laws upping the amount big retailers would have to pay. The Arkansas-based company has defended its wages.

One of Barack Obama's chief Democratic rivals, fellow Sen. Hillary Rodham Clinton, once served on Wal-Mart's board but since has become a critic of its business practices. Democratic presidential contender John Edwards also has criticized the retail chain.

Last year, before Barack Obama declared his candidacy for president, the Illinois senator courted the union-backed group WakeUpWalMart.com.

"This is a much broader issue than Wal-Mart but I think the battle to engage Wal-Mart and force them to examine their own corporate values and what their policies and approaches are to their workers and how they are going to be good corporate citizens, I think, is absolutely vital," Obama said at the time.

WakeUpWalMart.com spokesman Chris Kofinis said Tuesday night that "many companies do business with Wal-Mart, but what truly matters is whether our leaders stay silent on Wal-Mart's negative effect on America's working families."

"Sen. Obama has not stayed silent and should be applauded for that," Kofinis said.

From the Associated Press:

WASHINGTON — Legislation barring commercial companies like Wal-Mart and Home Depot from owning a special sort of bank overwhelmingly cleared the House on Monday.

The bill, which passed 371-16, would prohibit nonfinancial companies from setting up or owning so-called industrial loan companies, federally insured institutions that can issue credit cards, make loans and take deposits.

The industrial loan companies, or ILCs, have been proliferating in recent years: there are now 58 with a total of about $200 billion in assets. Thirty-one are based in Utah, one of only seven states that grant charters for such banks.

Critics say the growth of the industrial banks dangerously blurs the line between banking and commerce, concentrating assets in the hands of a few big companies, stifling competition and hurting consumers.

Those who think retailers and other commercial enterprises should be allowed to own ILCs say they could help reduce fees and costs for consumers and provide much-needed competition.

The application to federal regulators of Wal-Mart Stores Inc., the world’s largest retailer, to establish an ILC stirred a storm of protest from banks, unions, lawmakers, and consumer and community organizations. In January, the Federal Deposit Insurance Corp. extended for one year a moratorium on considering nonfinancial companies’ applications to establish or acquire industrial banks, and Wal-Mart withdrew its bid in mid-March.

FDIC Chairman Sheila Bair called House passage of the bill “another critical step in moving the process forward.”

“It is my hope that the Senate can find a consensus approach as well, to remove the cloud of uncertainty over the ILC charter and allow the ILC industry to continue as a strong, safe and sound component of the banking sector,” Bair said in a statement.

Proponents of the legislation say it is needed to close a loophole in banking regulation. Current laws prohibit the mixing of banking and commerce, but an exception is made for the ILCs, allowing commercial companies to own a federally insured bank.

Bill sponsor Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, cited a wave of applications for ILCs in recent years by large commercial companies.

“We believe that that does not really reflect what Congress intended,” he said in floor debate before the vote.

The bill would restrict the banking charters to companies with at least 85 percent of their business in financial services. Frank has said he would consider allowing some exceptions when the legislation is negotiated with the Senate, a move that could benefit automakers.

Similar legislation also passed the House overwhelmingly last year, but it has stalled in the Senate. It faces opposition from Sen. Robert Bennett, a Utah Republican and member of the Senate Banking Committee.

Bennett believes that the banks “fill a niche in the marketplace and have done so in a safe and sound way,” his spokeswoman said recently.

Sen. Chris Dodd, D-Conn., the banking panel’s chairman, said Monday he will continue to work with committee members “in a thoughtful, deliberative manner to resolve outstanding issues regarding the ownership and regulation of industrial loan companies.”

From the New York Times:

In 1986, Sam Walton, the founder of Wal-Mart, had a problem. He was under growing pressure from shareholders — and his wife, Helen — to appoint a woman to the company’s 15-member board of directors.

So Mr. Walton turned to a young lawyer who just happened to be married to the governor of Arkansas, where Wal-Mart is based: Hillary Rodham Clinton.

Mrs. Clinton’s six-year tenure as a director of Wal-Mart, the nation’s largest company, remains a little known chapter in her closely scrutinized career. And it is little known for a reason. Mrs. Clinton rarely, if ever, discusses it, leaving her board membership out of her speeches and off her campaign Web site.

Fellow board members and company executives, who have not spoken publicly about her role at Wal-Mart, say Mrs. Clinton used her position to champion personal causes, like the need for more women in management and a comprehensive environmental program, despite being Wal-Mart’s only female director, the youngest and arguably the least experienced in business. On other topics, like Wal-Mart’s vehement anti-unionism, for example, she was largely silent, they said.

Her years on the Wal-Mart board, from 1986 to 1992, gave her an unusual tutorial in the ways of American business — a credential that could serve as an antidote to Republican efforts to portray her as an enemy of free markets and an advocate for big government.

But that education came via a company that the Democratic Party — and its major ally, organized labor — has held up as a model of what is wrong with American business, with both groups accusing it of offering unaffordable health insurance and mistreating its workers.

So rather than promote her board membership, Mrs. Clinton is now running from it, even returning a $5,000 campaign donation from the giant discount chain in 2005, citing “serious differences” with its practices. But disentangling herself from the company is harder than it may seem.

Despite her criticism, Mrs. Clinton maintains close ties to Wal-Mart executives through the Democratic Party and the tightly knit Arkansas business community. Her husband, former President Bill Clinton, speaks frequently to Wal-Mart’s current chief executive, H. Lee Scott Jr., about issues like health care and even played host to Mr. Scott at the Clintons’ home in New York last July for a private dinner.

And several months ago, Mrs. Clinton helped broker a secret meeting between a top Wal-Mart executive and former Democratic operative, Leslie Dach, and leaders of the retailer’s longtime adversary at the United Food and Commercial Workers union, according to several people briefed on the matter, who spoke on condition of anonymity because they were not authorized to do so publicly.

The goal of the meeting was to tamp down the rancor between the company and the union, which has set up a group, WakeUpWalMart.com, that has harshly criticized the chain and leaked embarrassing internal documents to the news media, though an accord has not yet been reached.

Mrs. Clinton declined to be interviewed for this article. In a statement, her spokesman said, “Wal-Mart is now one of the country’s largest employers, and Mrs. Clinton still believes it is important to try to influence the decisions they make because they can affect so many people.”

In Mrs. Clinton’s complex relationship with Wal-Mart, there are echoes of the familiar themes that have defined much of her career: the trailblazing woman unafraid of challenging the men around her; the idealist pushing for complicated, at times expensive, reforms; and the political pragmatist, willing to accept policies she did not agree with to achieve her ends.

“Did Hillary like all of Wal-Mart practices? No,” said Garry Mauro, a longtime friend and supporter of the Clintons who sat on the Wal-Mart Environmental Advisory Board with Mrs. Clinton in the late 1980s and worked with her on George McGovern’s 1972 presidential campaign.

“But,” Mr. Mauro added, “was Wal-Mart a better company, with better practices, because Hillary was on the board? Yes.”

Mrs. Clinton was not Mr. Walton’s first choice for a woman on the board. That honor belonged to an executive at Nordstrom, the upscale department store. But Nordstrom opposed its employees sitting on a competitor’s board, so Wal-Mart turned instead to the 39-year-old Mrs. Clinton. They offered her about $15,000 a year for her time, generally four meetings a year.

She was a logical candidate: the wife of the governor, a Wal-Mart shareholder — with stock eventually worth nearly $100,000 — and a highly regarded lawyer at the Rose Law Firm, which had represented Wal-Mart in several cases.

But if her circumstances made her a natural choice for the board, her often liberal beliefs did not and she struggled to change the rigid, conservative culture at Wal-Mart, achieving modest results.

Early in her tenure, she pressed for information about the number of women in Wal-Mart’s management, worrying aloud that the company’s hiring practices might be discriminatory.

The data she received would have been troubling: by 1985, there was not a single woman among the company’s top 42 officers, according to “In Sam We Trust,” the 1998 book about Wal-Mart by Bob Ortega.

John E. Tate, who served as a director with Mrs. Clinton from 1988 to 1992, recalled that by her third board meeting Mrs. Clinton had announced “that you can expect me to push on issues for women. You know that. I have a reputation of trying to improve the status of women generally, and I will do it here.”

Mr. Walton appeared relieved to have a woman on the board to deflect criticism, telling shareholders during the annual meeting in 1987 that the company had a “strong-willed young lady on the board now who has already told the board it should do more to ensure the advancement of women.”

Still, the board’s discussions did not translate into significant progress. By the late 1990s, after Mrs. Clinton had left the board, Wal-Mart had added a second female director, but the number of women in senior management remained paltry, according to company records. (Today, 23 percent of Wal-Mart’s top 300 corporate officers are women, but the company is fighting a class-action lawsuit claiming sex discrimination filed on behalf of 1.6 million current and former female employees.)

Mrs. Clinton had greater success on environmental issues. At her request, Mr. Walton set up the environmental advisory group, which sent a series of recommendations to the company’s board.

When it came time to pick members, Mrs. Clinton, who led the advisory group, reached out to at least two colleagues from the McGovern presidential campaign — Mr. Mauro and Roy Spence, who headed an advertising firm in Texas that did extensive work for Wal-Mart.

Under her watch, the advisory group drew up elaborate plans. Consumers would bring in used motor oil and batteries for recycling. Suppliers would reduce the size of their packaging. And Wal-Mart would build stores with energy-saving features.

Wal-Mart executives put much of the program into place. In 1993, for example, they opened an experimental “eco-store” in Kansas, with skylights and wooden beams from forests that had not been clear cut.

One executive derided it as “Hillary’s store” because it was more expensive to build than the average Wal-Mart, but several of its features, like the skylights that cut energy bills by reducing the need for artificial lighting, were widely copied across the industry.

“We were on the leading edge of something that is being mandated now,” said Bill Fields, the head of merchandise at Wal-Mart in the early 1990s who worked closely with Mrs. Clinton on the environmental project.

For Wal-Mart, the largest employer in Arkansas, Mrs. Clinton’s presence had obvious advantages: on matters big and small, the company had the ear of the governor’s wife.

For Mrs. Clinton, being a director at Wal-Mart gave her access to several of the state’s most powerful business executives. In the early 1980s, for example, Mr. Walton was instrumental in building support for a corporate tax program, pushed by Mrs. Clinton, that financed a major education overhaul in Arkansas, a signal achievement of her husband’s governorship.

Though she was passionate about issues like gender and sustainability, Mrs. Clinton largely sat on the sidelines when it came to Wal-Mart and unions, board members said. Since its founding in 1962, Wal-Mart has fought unionization efforts at its stores and warehouses, employing hard-nosed tactics — like allegedly firing union supporters and spying on employees — that have become the subject of legal complaints against the company.

A special team at Wal-Mart handled those activities, but Mr. Walton was vocal in his opposition to unions. Indeed, he appointed the lawyer who oversaw the company’s union monitoring, Mr. Tate, to the board, where he served with Mrs. Clinton.

During their meetings and private conversations, Mrs. Clinton never voiced objections to Wal-Mart’s stance on unions, said Mr. Tate and John A. Cooper, another board member.

“She was not an outspoken person on labor, because I think she was smart enough to know that if she favored labor, she was the only one,” Mr. Tate said. “It would only lessen her own position on the board if she took that position.”

Mr. Tate, a prominent management lawyer who has helped stop union drives at many major companies, said he worked closely with Mr. Walton to convince workers that a union would be bad for the company, personally telling employees when he visited stores that “the only people who need unions are those who do not work hard.”

A spokesman for Mrs. Clinton said, “Wal-Mart workers should be able to unionize and bargain collectively.”

From The Huffington Post:

Human Rights Watch researchers don't normally spend their days listening to forty-something Americans talk about their former bosses, but that's what I was doing in March 2005, investigating how Wal-Mart violates its workers' right to form and join trade unions. So, on a warm spring day in Kingman, Arizona, I listened as a former Wal-Mart worker casually explained how the company had required him to take surveillance cameras supposedly set up to catch shoplifters and shift them to spy on union supporters and union activity at his store as part of a larger plan to squash a union drive.

Over the past two years, I traveled all over the country talking to Wal-Mart workers past and present and scoured hundreds of pages of documents from legal cases against the company for a report, published May 1, Discounting Rights: Wal-Mart's Violation of US Workers' Right to Freedom of Association. And I learned that Wal-Mart is a poster child for what is wrong with the US labor law system.

Wal-Mart is by no means the only US company to violate workers' rights, and it's rare that HRW focuses on a single company. (The only other example was a report on Enron before its collapse.) But Wal-Mart is the world's largest company, an industry leader. So, its treatment of its workers really matters.

The United States is legally obligated to uphold workers' right to organize (a fundamental human right) by the same international treaties) that guarantee rights like freedom of religion and ban practices like torture. But in practice, it falls far short of international standards, and Wal-Mart takes full advantage. Not only does the company deny its US workers' their right to form and join unions, but in many cases, it can do so without ever violating weak US labor laws.

Wal-Mart's anti-union playbook -- the "Manager's Toolbox" -- is sophisticated and disturbingly effective. Following this bible for thwarting unions, at the first sign of workers trying to organize, store managers call the Union Hotline at company headquarters in Bentonville, Ark. Wal-Mart usually responds quickly by sending out its Labor Relations Team to crush the union drive. Team members hold anti-union meetings with workers at which they recount a parade of horribles that go hand in hand with union formation, such as the possibility of lower wages, benefit loss, and sky-high dues.

They show anti-union videos depicting unions as outdated and their representatives as aggressive, harassing, and unsavory. Some of the videos, like the training video excerpted on our website, would be almost comical if they didn't have the pernicious effect of chilling workers' attempts to organize.

Workers don't have much chance to learn about the benefits of organizing. US law doesn't require employers to let workers hear both sides of the story so they can make an informed decision on union formation. With only Wal-Mart's relentless anti-union drumbeat echoing in their ears, many workers become convinced that unions are bad for them and for the company. Others are just too scared to defy their powerful employer's wishes.

Sadly, their fears are often justified. The company has occasionally illegally disciplined and fired union supporters. More often, it has resorted to subtle but equally effective and just as illegal tactics to defeat organizing. Wal-Mart has sent high-level managers to work alongside union supporters, eavesdropping on conversations and hampering union activity. The company has also called the police on union representatives leafleting outside its stores, snatched pro-union information from workers' hands and off break room tables, and banned talk about unions. The list goes on.

But even when the authorities find Wal-Mart guilty of illegal conduct, the company barely receives a slap on the wrist. US labor laws don't come with fines or punitive sanctions, so they do little to deter anti-union employers from breaking the law. Instead, in most cases, the laws simply require an employer to restore the status quo in the workplace -- just as it was before the illegal activity -- and post notices in-store promising not to violate the laws' flimsy rights protections yet again.

With such an uneven playing field, with aggressive one-sided anti-union campaigning and laws slanted decidedly against workers organizing, the chance of a fair election in which workers can freely choose whether to form a union is slim to none. Wal-Mart has more than 1.3 million US workers, and not one is represented by a union. In the United States as a whole, only roughly 12 percent of workers are union members.

But reform may be in sight. In March, the US House of Representatives passed the Employee Free Choice Act (EFCA). The bill is pending in the US Senate, but President George W. Bush has promised to veto the legislation if it reaches his desk.

The EFCA would help restore workplace democracy by requiring employers to recognize a union if a majority of workers signs cards demonstrating their desire to organize, rather than relying on an election process that can only be truly fair if an employer wants it to be. This "card check" recognition would eliminate the period leading up to union elections when companies like Wal-Mart mount hard-hitting, unbalanced campaigns to derail union formation and undermine workers' rights. The EFCA would also increase penalties for illegal activity, which should make employers think twice before breaking US labor laws.

The US Senate should pass the EFCA. And if President Bush truly believes in giving the hardworking poor a fair shake, he should sign it into law to help stop Wal-Mart's assault on rights and stop other companies from following its lead.

Not surprisingly, Wal-Mart opposes the EFCA. Wal-Mart also claims that it already respects its workers' right to "a free and fair unionization vote." But current and former Wal-Mart workers and managers, and reams of legal documents, tell a very different story.

Carol Pier, the senior labor rights and trade researcher at Human Rights Watch, is the author of Discounting Rights: Wal-Mart's Violations of US Workers' Rights to Freedom of Association.

From the Arkansas Democrat-Gazette:

A federal judge in Little Rock on Wednesday granted class-action status to a lawsuit accusing Wal-Mart of using racially discriminatory practices in hiring over-the-road truck drivers. The class will include all black applicants living in the continental United States who were denied driving jobs since Sept. 22, 2001, and all blacks who contend they were deterred or thwarted from applying for driving jobs as a result of Wal-Mart’s policies and practices.

U. S. District Judge Bill Wilson Jr. said in a 43-page order that the group of plaintiffs — expected to number below 10, 000 — can seek back pay and a declaration that Wal-Mart’s policies and practices were racially discriminatory and thereby unconstitutional.

Wilson said that if any plaintiffs want to seek punitive damages, they will have to do so in separately filed lawsuits after a trial on the class-action case.

Hank Bates of Little Rock, an attorney who twice argued for class-action status on behalf of the truckers, said Wednesday, shortly after the ruling was issued electronically, “I haven’t had the chance to read it yet, but I think we’re very pleased.”

Bates said he and other plaintiffs’ attorneys at the John W. Walker and Welch & Kitchens firms have not yet determined how many people the class might include but said it will be “in the thousands, somewhere in the single-digit thousands.”

He did not want to say how much money the lawsuit could end up costing Wal-Mart if the plaintiffs win their case and said a jury would have to determine the extent of any discrimination.

A Wal-Mart spokesman, John Simley, said, “We disagree with the district court’s decision and are considering an appeal. We believe that the case will be resolved in Wal-Mart’s favor once the merits of the case are addressed. It’s important to remember, the only question the district court decided concerned class-action status. This has nothing to do with the merits of the case or whether the allegations are true.”

The lawsuit was filed Sept. 22, 2004. The defendants are Wal-Mart Stores Inc. of Bentonville and Wal-Mart Transportation, LLC, a subsidiary. The lead plaintiffs are Daryal T. Nelson of Coldwater, Miss., and Tommy Armstrong of Woodruff County.

According to Wilson’s order, Wal-Mart’s transportation division includes about 8, 000 drivers in 47 field offices nationwide who deliver goods to Wal-Mart stores and Sam’s Clubs across the country. Nelson and Armstrong are both black men who applied at field offices but were not hired.

Wilson’s order says that under the “uniform corporate culture” that Wal-Mart fosters, the hiring process is identical at each of its offices. He said the process ensures that potential drivers are recruited almost exclusively by “word of mouth” from current drivers and are then screened further by a committee of drivers at each transportation office who are not guided by objective selection criteria.

“While Wal-Mart policy requires each driver screening committee to be 50 percent diverse, a review of all of Wal-Mart’s regional personnel manager audits reveals that no screening committee has a majority of African Americans and that a substantial percentage of the screening committees do not have any African American representation whatsoever,” Wilson said. He added that the plaintiffs have presented evidence of “subjective factors” used by committees and “anecdotal evidence of overt racism” among committee members.

From Jan. 1, 2000, through Sept. 29, 2005, while the American Trucking Association determined that about 15 percent of the nationwide truck-driver work force was black, Wal-Mart’s force was just 4 percent to 6 percent black, Wilson noted.

He also noted that in 1999 and in 2004, Wal-Mart’s driver-recruitment coordinators suggested publicizing job openings to the general trucking community, but the company made no changes.

From the Associated Press:

BENTONVILLE, Ark. — Wal-Mart Stores Inc. warned Tuesday that its profits in the current quarter could fall short of expectations after reporting an 8 percent gain in first-quarter earnings amid cost-cutting and strength in its warehouse clubs and international businesses. The company continued to struggle with its namesake discount business.

The tepid outlook from Wal-Mart _ considered a barometer for the retail industry _ could serve as a warning bell that rising gasoline prices and a weakening housing market will continue to eat away at consumer spending in the coming months. The announcement came as Home Depot Inc. reported a 29.5 percent drop in first-quarter profits on a slight increase in sales.

For its first quarter, Wal-Mart said it earned $2.83 billion, or 68 cents per share, compared with $2.62 billion, or 64 cents per share, in the previous year quarter.

Wal-Mart had revenue of $86.41 billion in the three months ending April 30, up from $79.67 billion in the year prior.

Analysts surveyed by Thomson Financial expected first-quarter earnings per share of 68 cents and revenues of $86.9 billion.

Wal-Mart's shares fell 14 cents to $47.70 in early trading Tuesday.

"Quite honestly, we're not satisfied with our overall performance, Wal-Mart President and Chief Executive Lee Scott said during a pre-recorded conference call.

Same-store sales rose 0.6 percent in the first quarter at Wal-Mart's U.S. stores, with its Sam's Club warehouse stores accounting for all of the gain. Wal-Mart's namesake stores slipped 0.1 percent in the quarter, while Sam's Club warehouse stores rose 4.7 percent. Same-store sales ,or sales at stores opened at least a year, is a key gauge of retailer health because it measures growth at established locations open at least a year rather than at newly opened ones.

For the current quarter, Wal-Mart projected same-store sales to be up a modest 1 percent to 2 percent.

Scott said the company can perform better.

"You will see us be more committed than ever to price leadership," Scott said. Sales and profits for the quarter were "not where we would have expected to be nor where we believe we should be."

Bright spots include Sam's Club, which now has seven consecutive quarters in which profits grew faster than sales, Scott said.

Wal-Mart's international division, the fastest growing part of the company, accounted for 23 percent of sales for the quarter.

The company reacted to inflation in Mexico by lowering prices of tortillas and other staples, which Scott said was an investment in customer loyalty.

In Great Britain, Scott said Wal-Mart's Asda chain added 1.5 million customers since mid-2005, half in stores that were already open.

Wal-Mart said it expects second-quarter profits to be within a range of 75 cents to 79 cents per share. Analysts surveyed by Thomson Financial expect a consensus 79 cents per share for the period.

From News 8 in Austin:

Members of the neighborhood group Responsible Growth for Northcross are upset about a letter Wal-mart sent to the City of Austin last Friday.

Monday the group got together to respond to the letter which they see as an outright threat.

"It was completely unnecessary and it's rude," member Jason Meeker said.

The letter outlines the agreement between Wal-mart and the city of Austin on the size of the new store.

Those new plans are to downgrade from the original 225,000 square foot plan to a little more than 186,000 square feet.

"We expected Wal-mart to come back with a size reduction. It was surprising for them to come back with a threat in the letter that announced their size reduction," Meeker said.

Wal-mart says they plan to go through with the voluntary reduction, unless a third party takes legal action.

"In that event, we may be forced to re-evaluate the voluntary items in the term sheet," Wal-mart's letter said.

The neighborhood group interprets that to be a threat.

Responsible Growth for Northcross wants a public apology from Wal-mart CEO Lee Scott and want him to visit with neighbors in person.

Wal-mart issued a statement that says the letter was not meant as a threat, but the company says further changes may be required if the group takes legal action.

From the Associated Press:

Investors will be closely watching whether Wal-Mart Stores Inc. meets its earnings forecast Tuesday after the world's largest retailer reported its worst decline in one-month sales at established stores in April.

April was a bad sales month for most retailers because of a mix of factors including cold weather. But Wal-Mart's report last week of a 3.5 percent decline at stores open at least a year, an industry benchmark called same-store sales, was the worst since the Bentonville, Ark.-based retailer started reporting the numbers in 1980.

Some analysts, including at Banc of America Securities and Wachovia Securities, responded by trimming their estimates of the profit Wal-Mart will report Tuesday for the first quarter of its fiscal year, which began in February. Others said it may be a close call.

"Given the revenue shortfall (in April), if they make the earnings number on Tuesday, it'll be by the hair of their chiney-chin-chin," said Patricia Edwards, a portfolio manager and retail analyst at Wentworth, Hauser & Violich in Seattle, which manages $9.6 billion in assets and holds about 42,000 Wal-Mart shares.

On average, analysts expect Wal-Mart to report earnings of 68 cents per share on sales of $87.08 billion, according to a survey by Thomson Financial.

April brought lower sales for many retailers including Wal-Mart's smaller rival Target Corp., where same-store sales fell 6.1 percent. But the decline at Wal-Mart, the world's largest retailer, was the company's second monthly negative since November and worse than Wal-Mart had forecast.

In the first quarter, Wal-Mart same-store sales rose just 0.7 percent while Target was up 4.3 percent from a year earlier.

Wal-Mart was hit in April from two sides: the economy and its own in-house troubles finding the right merchandise mix, said Richard Hastings, vice president and senior retail sector analyst at Bernard Sands.

With its broad range of products and its 4,000 stores and Sam's Clubs membership warehouses located in nearly every part of the country, Wal-Mart is more closely integrated with the overall economy than any other retailer, Hastings said.

Wal-Mart was hit by the overall economic trends of higher gas prices and falling home values that crimped consumer spending, especially among its lower income shoppers. It also suffered from a surprise event, the massive pet food recalls of recent weeks, which hurt what Hastings called Wal-Mart's significant dog and cat food sales.

"April was unusually unusual," Hastings said.

On top of the economic trends, a big challenge for Wal-Mart is turning around its fashion and home furnishings business amid increasing competition from department stores such as J.C. Penney to discounters such as Target.

Kohl's Corp. has recently struck exclusive agreements to carry Simply Vera _ a line of accessories, jewelry, footwear, clothing and other items _ by designer Vera Wang, clothing by fashion magazine ELLE and home goods by the Food Network. And in a recent shareholders' meeting, Chief Executive Larry Montgomery promised that the retailer would continue pairing with celebrities and high-end fashion designers in an attempt to boost sales by the billions as it adds hundreds of stores.

Union-backed critics, meanwhile, continue a two-year campaign of public pressure on Wal-Mart over what they claim are skimpy wages, poor health care benefits and other issues.

For Mother's Day, campaign group WakeUpWalMart.com released a letter from 14 national women's groups with over 10 million members urging Wal-Mart Chief Executive Lee Scott to provide better working conditions and more management opportunities to female employees.

Wal-Mart has denied a pattern of gender discrimination alleged in a class-action lawsuit pending in federal court in San Francisco.

Whether those publicity campaigns are driving shoppers away from Wal-Mart is a matter of debate. The union groups claim they are persuading people not to shop at Wal-Mart, while Wal-Mart says a poll it commissioned found virtually no impact.

A March report by Banc of America Securities said union campaigns are beginning to hurt Wal-Mart's operations, but said the degree of impact was difficult to quantify.

The growing momentum is evident by the list of impressive women and community leaders that have signed on to the Mother's Day letter to Lee Scott. Leaders around the country are calling on Wal-Mart to address its mistreatment of women.

National Council of Women’s Organizations
Kimberly Otis
Executive Director

National Organization for Women
Kim Gandy
President

CODEPINK: Women for Peace
Gael Murphy
Executive Committee

National Congress of Black Women
Dr. E. Faye Williams
National Chair

Feminist Majority Foundation
Eleanor Smeal
President

National Committee on Pay Equity
Michele Leber
Chair

Wider Opportunities for Women
Joan Kuriansky, Esq.
Executive Director

National Women’s Conference
Mal Johnson
Co-Chair

Women’s International League for Peace and Freedom, United States Section
Mary Day Kent
Executive Director

International Women’s Democracy Center
Barbara Anne Ferris
President

Coalition of Labor Union Women
Marsha Zakowski
President

Black Women United for Action
Sheila B. Coates
President

National Women’s Political Caucus
Clare Giesen
Executive Director

Veteran Feminists of America
Ginny Watkins
Secretary

Dolores Huerta Foundation
Dolores Huerta
President

The Institute for Labor Studies, University of Missouri - Kansas City Judy Ancel Director

Interfaith Worker Justice
Reverend Ronald Faust

John A. Sharp
Councilman
City of Kansas City, MO

Greater Kansas City AFL-CIO
Bridgette Williams
President

Sen Charlene Pesquiera
AZ Senate District 26

Sen Rebecca Rios
AZ Senate District 23

Rep Kyrsten Sinema
AZ House District 15

Rep Jackie Thrasher
AZ House District 10

Rep Lena Saradnik
AZ House District 26

Rep Theresa Ulmer
AZ House District 24

Rep Lynne Pancrazi
AZ House District 24

Reverend Trina Zelle
PCUSA

Rep Ann Kirkpatrick
AZ House District 2

Rep Martha Garcia
AZ House District 13

Sen Paula Aboud
AZ Senate District 28

Sen Debbie McCune Davis
AZ Senate District 14

Susan Bysiewicz
Connecticut Secretary of State

Sen Edith Prague
CT Senate District 19

Massachusetts Democratic Party
Stacey Monahan
Executive Director
Massachusetts Democratic Party

Mrs. Antonette C Pepe
Springfield School Committee Member
Springfield, MA

Clare Higgins
Mayor
Northampton, MA

Unitarian Universalist Society of Greater Springfield
Reverend Georganne Greene
Springfield, MA

Joe Dudzik
Alderman District 11
Milwaukee, WI

Sen Shirley Kitchen
PA Senate District 3

Rep Phyllis Mundy
PA House District 120

Sen Christine Tartagloine
PA Senate District 2

Rep Babette Josephs
PA House District 182

Rep Cherelle Parker
PA House District 200

Delegate Susan C. Lee
MD House District 16

Valerie Ervin
County Councilmember District 5
Montgomery County, MD

Duchy Trachtenberg
County Councilmember At Large
Montgomery County, MD

Delegate Jane Lawton
MD House District 18

Honorable Melinda Katz
Councilwoman
New York City, NY Council

Christine C. Quinn
Speaker
New York City, NY Council

Betsy Gotbaum
Public Advocate
New York City, NY

Sen Liz Krueger
NY Senate District 26

Sen Diane Savino
NY Senate District 23

Rep Elesha Gayman
IA House District 84

Beverly Strayhall
Vice Chair/Mom
Democratic Party of Scott County, IA

Sue Frembgen
Chair
Democratic Party of Scott County, IA

Caroline Vernon
Organizer/Mom
PACG (Progressive Action for the Common Good)

Read our press release and learn how 14 leading women's groups signed the Wal-Mart Mother's Day Challenge.

Sign the Mother's Day pledge here.

From the Dow Jones Newswire:

Leading women's groups called on Wal-Mart Stores Inc. to improve wages, benefits and working conditions for female employees, and a union-backed critic urged shoppers to avoid the world's largest retailer this weekend while searching for Mother's Day gifts.

In a Friday letter to Wal-Mart President and Chief Executive Lee Scott, 14 women's groups claiming to represent more than 10 million women criticized the company's treatment of employees who are working mothers. The retailer has come under fire for labor-scheduling policies rolled out this year that critics say require employees, including working mothers, to be available throughout the week at the whim of a store manager.

"These mothers are invisible, representing mere numbers on a balance sheet whose hours, wages and benefits can be cut without thought or consideration," the letter stated. " Wal-Mart's new attendance policy punishes mothers who need to take a day off to care for a sick child."

The letter was part of a "Mother's Day Campaign" by WakeUpWalMart.com, a critic backed by the United Food and Commercial Workers International Union. WakeUpWalMart.com also on Friday launched a "Million Moms Call," a phone-message blast that calls on shoppers to avoid Wal-Mart when buying Mother's Day gifts this weekend.

"Every good son and daughter knows that moms like to wake up to Wal-Mart on their special day," Wal-Mart spokesman David Tovar said in a written statement. "And with a bouquet of one dozen freshly cut roses for $12.86, it's no wonder we'll be America's first choice for Mother's Day again this year."

WakeUpWalMart.com's phone message mentions a class-action lawsuit pending against Wal-Mart, which charges the retailer with gender discrimination on behalf of more than two million female employees. Wal-Mart has appealed the class-action status of the suit, which could result in billions of dollars in sex-discrimination damage claims.

In an April report, Wal-Mart said women made up 61% of its employees in 2006, while 40% of its managers were women. About 75% of the company's store-level sales clerks last year were women, according to the report.

Groups that signed the Friday letter include the National Council of Women's Organizations, the National Organization for Women, Codepink, the National Congress of Black Women and the National Committee on Pay Equity.

From The Hill:

Members of the Senate Banking Committee yesterday unveiled legislation to bar companies like Wal-Mart from setting up banks, following steps in the House to make permanent a one-year moratorium on any new so-called industrial loan companies (ILCs).

Introduced by Sens. Sherrod Brown (D-Ohio), Tim Johnson (D-S.D.) and Wayne Allard (R-Colo.), the legislation also would limit the growth of existing ILCs and beef up the power of the Federal Deposit Insurance Corporation (FDIC) to regulate them.

“Industrial loan company assets have skyrocketed over the last 20 years … Once again, it is time for Congress to act to restore the separation between banking and commerce,” Brown said at a press conference to trumpet the legislation.

Allard said the legislation would close “one additional loophole” that allowed banking and commerce to mix. The senators predicted their legislation would attract broad support among the members of the Banking Committee.

But a spokeswoman for Sen. Bob Bennett (R-Utah), a committee member, yesterday reiterated the senator’s opposition to legislation curbing ILCs, the bulk of which are chartered in Utah.

“This bill is a non-starter for Senator Bennett,” she wrote in an e-mail. “He believes strongly that the ILC industry fills a necessary niche in the marketplace and has done so with safety and soundness.”

Wal-Mart provoked a public outcry in 2005 when it took steps to set up a banking arm. The FDIC was flooded with thousands of comments, prompting the bank regulator to impose a six-month ban on any new ILC applications in 2006. Then, 107 members of Congress wrote a letter requesting the FDIC to extend the moratorium by one year. It is now set to expire in January 2008.

FDIC Chairman Sheila C. Bair responded to the senators’ announcement: “As I’ve said, it is important that the public policy questions stemming from the ILC debate be settled by Congress, and I remain hopeful that this can be achieved this year.” Industrial banks have exploded in recent years, with ILC assets growing from less than $4 billion in 1987 to more than $140 billion in 2004. Dozens of large companies, from Target to American Express, operate them.

Critics, who include Federal Reserve Chairman Ben Bernanke and his predecessor, Alan Greenspan, regard ILCs as a dangerous loophole that extends the FDIC safety net to commercial companies.

Meanwhile, small retailers, community banks and unions have rallied against ILCs. A coalition of the National Grocers Association, the United Food and Commercial Workers International Union (UFCW), the Independent Community Bankers of America and the National Association of Convenience Stores has formed to push Congress to rein them in.

ILCs have the potential to concentrate too much economic power in the hands of retailing behemoths, UFCW Vice President Michael J. Wilson argued at yesterday’s press conference. “If a company like the size of Wal-Mart becomes a banker, in a lot of places we’re going to have a company town again,” he said.

Mom-and-pop stores in rural areas fear they no longer will be able to get credit on favorable terms if their bank is owned by a rival, the chief executive of a small West Virginia bank, William A. Loving, said.

A call to Wal-Mart’s government-relations office was not returned by press time.

The legislation is very similar to a House bill sponsored by Financial Services Chairman Barney Frank (D-Mass.) and Rep. Paul Gillmor (R-Ohio), the senators said. That bill passed the Financial Services panel on a voice vote on May 2. Frank said it could go to the floor in the next few weeks.

Both the House and Senate bills grandfather ILCs formed before Oct. 1, 2003 from restrictions on their activities, but bar them from being sold to commercial firms.

A potential sticking point between the House and Senate bills is the treatment of automakers that operate finance arms. Frank has hinted that the final House bill will exempt them.

Allard seemed firmly opposed to that possibility. “I hope we don’t get into exemptions. We’re trying to close the loophole, not expand it.”

From The Wall Street Journal:

DALLAS -- Wal-Mart Stores Inc. posted its worst monthly same-store sales results in at least 28 years, tallying a 3.5% decline in April due to this year's early Easter as well as generally challenging economic conditions for consumers.

Wal-Mart's 3.5% drop in the four-week period ending May 4 at U.S. stores fell below its earlier forecast of "flat" sales to a 2% decline. In a recorded phone message Thursday, Wal-Mart blamed bad weather last month in most U.S. regions and the early Easter on April 8, which pushed many Easter sales into March.

Same-store sales measure sales gains or losses at stores open for at least a year. They are a key indicator of the returns a retailer reaps on the capital it spends, and thus an influence on its profitability. Most publicly traded U.S. retailers are reporting their April results Thursday.

Wal-Mart's chief financial officer had warned a month ago that the retailer's earlier guidance for earnings per share of 68 cents to 71 cents for its latest quarter would be "a challenge" to achieve given what the company foresaw as a difficult April. The retailer didn't provide an update. It did, however, predict a sales gain for this month of 1% to 2%. Wal-Mart will report its results for its first quarter ended April 30 on Tuesday.

For the first quarter, Wal-Mart, Bentonville, Ark., reported a preliminary sales tally of $85.4 billion. Its 3.5% decline in same-store sales was comprised of a 4.6% decline at its flagship U.S. Division -- which includes its more than 3,200 supercenters, discount stores and Neighborhood Markets -- and a 2% gain by its Sam's Club division.

Technically, Wal-Mart's 3.5% April decline ranks as Wal-Mart's worst monthly showing in the 28 years it has reported such figures, handily outpacing the previous worst 0.6% decline in April 1996. In a broader context, the result was pulled down by scheduling quirks in addition to Wal-Mart's increasing difficulty in topping its own year-ago numbers.

Most U.S. retailers are reporting their monthly results a week later than usual this year due to a change in the National Retail Federation's calendar to account for a 53rd week last year. That resulted in retailers including the first week of April in their March results, which inflated the March tallies because March got the benefit of sales leading up to Easter, which fell on April 8. To wit, Wal-Mart posted a 4% gain for March to offset its 3.5% loss in April. Archrival Target Corp. notched a 12% gain for March and a 6.1% decline for April.

On a broader scale, Retail Metrics Inc., a market analysis firm in Swampscott, Mass., estimates that the 51 retailers it tracks will report an average gain of just 0.2% for April. That compares to a March gain of 6%.

Charles Grom, an analyst with JP Morgan Securities, found little upon which to build in Wal-Mart's latest monthly results. "While the Easter shift and unfavorable weather are to blame, the weakness in higher margin areas -- ala apparel and home [décor] -- are likely to take much longer to fix then the market is currently discounting, which could translate into continued ... shortfalls," he said.

Aside from scheduling changes, several economic factors likely hampered Wal-Mart and other retailers. Consumers did most of their tax-refund spending in March. Gasoline prices have risen 9% in the past month to $3.03 a gallon, further pinching cash-strapped consumers. "Housing market sluggishness has translated into much lower levels of mortgage equity withdrawal in 2006 and 2007 from what we saw in 2005," Retail Metrics President Ken Perkins said. Such withdrawals had been "a significant source of consumer spending."

Wal-Mart has cited additional factors in recent months. Its efforts to remodel sections of hundreds of stores this year have temporarily disrupted shoppers, spurring some to go elsewhere. And Wal-Mart still is suffering a hangover from its overly aggressive effort last year to broaden its base of customers to include more affluent shoppers. Specifically, it has labored early this year to sell at discounted prices piles of women's fashion apparel left over from last year's program.

Wal-Mart this year has opted to return its marketing and its merchandise to a focus on its roots: low prices on everyday items. Thus, if Wal-Mart isn't going to attract entire new classes of customers, it must fuel its sales gains by drawing more purchases out of the shoppers already visiting its stores routinely. Wal-Mart disclosed this morning that customer visits to its U.S. Division stores declined last month -- continuing a trend -- but the size of the average purchase shoppers made at its stores increased.

One new effort by Wal-Mart calls for making it easier for time-pressed customers to find what they need in Wal-Mart's stores. That primarily entails placing near the front of each store or within easy reach in its aisles the merchandise that store's clientele demonstrates it most often needs.

Case in point: The average Wal-Mart customer spends 21 minutes in the store per visit, but that customer finds only seven of the 10 items on his or her list, according to Chief Marketing Officer Stephen Quinn. The key to Wal-Mart's sales growth is making it easier for the customer to find that eighth and ninth item. "Making [the customer] productive in those 21 minutes is critically important," Mr. Quinn told the Bentonville/Bella Vista Chamber of Commerce on April 4.

It isn't working for Julia Russ, though. The 42-year-old federal contract administrator in Grand Prairie, Texas, visited a Wal-Mart in her city four times last month for groceries, pet supplies, toiletries and paper goods. But she often finds the store crowded and hectic. "The wait at checkout is getting longer all the time," Ms. Russ said. "I may lose patience and pay the difference for my time" to go elsewhere.

This from The Cornucopia Institute:

CORNUCOPIA, WI: Consumer fraud investigators in the state of Wisconsin released their findings this week after a three-month long investigation into allegations that Wal-Mart stores throughout the state of Wisconsin had misled consumers by misidentifying conventional food items as organic.

In a letter to Wal-Mart Stores, Inc., based in Bentonville, Arkansas, the Wisconsin Department of Agriculture, Trade and Consumer Protection stated they’d found numerous instances of conventional food products improperly labeled as organic by the retail chain. Specifically, Wisconsin authorities told Wal-Mart’s legal counsel that “use of the term ‘Wal-Mart Organics’ in combination with reference to a specific non-organic product may be considered to be a misrepresentation and therefore a violation” of Wisconsin state statutes.

The Cornucopia Institute, a governmental and corporate organic industry watchdog, had filed complaints with Wisconsin regulators and the USDA after finding numerous incidents of fraudulent organic labeling in Wal-Mart stores in five states from Texas to Minnesota.

Although Wisconsin regulators opted to send only a formal warning concerning the retail giant’s organic marketing practices they said that they had reached an agreement with the company under which steps would be taken to prevent future organic food misrepresentations. Wisconsin officials also said they would be continuing their surveillance of the company’s stores.

“This finding is a victory for consumers who care about the integrity of organic food and farming” said Mark Kastel, Codirector of The Cornucopia Institute. “Wal-Mart cannot be allowed to sell organic food ‘on the cheap’ because they lack the commitment to recruit qualified management or are unwilling to properly train their store personnel,” Kastel added. “Such practices place ethical retailers, their suppliers, and organic farmers at a competitive disadvantage.”

The Cornucopia web page contains a photo gallery of conventional food products that were both priced and labeled with Wal-Mart’s unique in-store point of purchase signage as organic foods. The photos were gathered during an investigation by Cornucopia of Wal-Mart’s organic practices.

View the photo gallery here and continue reading the story below the fold.

While Wisconsin regulators have completed their investigation, the USDA has yet to formally weigh in on the matter, despite being notified of the food fraud problem last November, two months before Wisconsin officials were contacted about the same situation.

“A six-month period without any federal enforcement action is absolutely inexcusable when the largest corporation in the country is accused of defrauding organic consumers,” Kastel stated. “Last November, we supplied photographic evidence and documentation to the USDA investigators who contacted us about our complaint. But their inaction, and our confirmation of ongoing violations in Wisconsin earlier this year, prompted us to forward these continuing problems to Wisconsin state regulatory authorities.”

The USDA’s National Organic Program has long been criticized as being too cozy with corporate agribusiness, understaffed and lacking strong management and effective organizational direction to protect and promote the organic industry. Two independent audits of the program, conducted by the American National Standards Institute and the USDA’s own Inspector General’s office, were harshly critical of the federal government’s oversight of the organic certification program.

“The State of Wisconsin should be applauded for doing the thorough research necessary to protect the interests of consumers,” Kastel said. “Their letter to Wal-Mart’s lawyers should serve as a warning to any retailer: if you are going to engage in organic commerce you better have management in place to oversee the integrity of your program,” added Kastel.

Cornucopia stated that spot checks of other major organic stores in the natural foods industry, especially the country’s consumer-owned cooperatives, indicated that retailers were investing in strong management oversight and employee training and had excellent records of assuring compliance with the federal organic laws and state consumer protection statutes. “Wal-Mart’s model of top-down management and investing as little as possible in wages and training for local employees just doesn’t work in organics,” Kastel said.

In early 2006, Wal-Mart made a media splash by stating that they would introduce 400 organic products at prices just 10% over the cost of conventional food. The pronouncement left many organic and retail industry observers questioning the feasibility of their initiative. The Cornucopia Institute subsequently published a report, Wal-Mart: The Nation’s Largest Grocer Rolls-Out Organic Products—Market Expansion or Market Delusion.

The report found that Wal-Mart was aiming to lower organic food prices by selling a “different kind of organic product” depending on cheap foreign imports from China, large factory dairy farms milking thousands of cows, and partnering with corporate agribusinesses lacking prior experience in organic production.

According to the Wall Street Journal and other authoritative business analysis, Wal-Mart’s organic initiative, as part of a larger integrated approach to attract upscale consumers, has been a failure and is causing the corporation to now reduce the number of organic food offerings.

“Although they might be pretty good at cutting prices and selling cheap widgets from China their expertise has not transferred well to organic food,” Kastel stated. “If they had applied their economy of scale and logistic prowess to organics it would have been good news for both organic consumers and farmers—undoubtedly resulting in improved availability and an expanded market. Instead they have discredited their organization and injured some in the organic industry along the way.”

In addition to Wal-Mart’s inappropriate and fraudulent signage/labeling of organic food products, studies by the University of Illinois as well as regulators in other states have found that Wal-Mart’s management control of signs indicating pricing are often inaccurate or deceptive.

On Tuesday, May 8, Wal-Mart workers Charmaine Givens and Cynthia Murray were ejected from the Hilton New York after attempting to meet with Wal-Mart CEO Lee Scott to discuss his company's refusal to provide affordable and comprehensive health care to 735,000 Wal-Mart workers and their children who have no company health care. Wal-Mart's health care hypocrisy drew a stern rebuke from several hundred labor and community activists outside the hotel who formed a "Picket Line for America's Working Families." Demonstrators, led by WakeUpWalMart.com, have denounced Wal-Mart's involvement in the coalition as a "publicity stunt" by the retail giant.

Video of the Wal-Mart protestors can be viewed at:
http://youtube.com/watch?v=0Sj23XB_0XQ

Note: The woman speaking in the video is Wal-Mart worker Cynthia Murray

Yesterday, the "Better Health Care Together" coalition, led by Wal-Mart and the Service Employees International Union, held a second forum in New York City.

From the Associated Press article:

If there was little dissent in the meeting, it was likely because dissenters, including about 300 people organized by WakeUpWalMart.com, were kept outside.

Chris Kofinis, a spokesman for the group backed by the United Food and Commercial Workers union, said it was ironic that Wal-Mart was one of the coalition leaders when less than half of its employees are covered under the company's health plan. Kofinis said the world's largest retailer needed to start leading by example and provide a more affordable health plan for its workers...

Two uninsured employees _ Cynthia Murray of Hyattsville, Md., and Charmaine Givens of Evergreen Park, Ill. _ were barred by security from delivering a grievance letter to Scott at the meeting. Both Murray and Givens say they do not have health insurance because Wal-Mart's plan is too expensive with yearly deductibles of $1,000 for an individual and $3,000 for a family.

Kofinis, who called the meeting a publicity stunt meant to deflect attention from the company's health care program, said the average Wal-Mart employee makes about $17,000 per year.

At least one representative for WakeUpWalMart.com was escorted out of the meeting by security for handing out copies of the letter to the media.

From KENS 5 News in San Antonio:

It's a David versus Goliath battle heating up in the Hill Country — a group of nuns from Boerne is taking a stand against Wal-Mart.

The corporate giant reportedly labeled the nuns a security threat after they raised questions about Wal-Mart's business practices.

Sister Susan Mika is part of the Benedectine Sisters, which is part of the Interfaith Center on Corporate Responsibility. The center has been questioning Wal-Mart's business practices for years.

"We've been raising questions with them for about 17 years, so it's not like they don't know it," Sister Mika said.

Now, the sisters find themselves on Wal-Mart's security threat list. Sister Mika said the group has been wrongly labeled.

"In no way have we ever been a threat to the company in that sense. We might be a threat in the kind of question that we're asking, but not a security threat," Sister Mika said.

The sisters have raised questions on wages, human rights, health care and the pay disparity between CEOs and workers. They believe that's why Wal-Mart has launched a surveillance operation on the small church group.

"We wanted to find out more about what was actually happening, and did they do any surveillance on us, either personally or as a community, and to let us know what that would be, and to apologize to us," Sister Mika said.

Calls from KENS 5 to a Wal-Mart spokesperson went unreturned.

The nuns say they want an apology and will continue to raise concerns and issues until someone launches an investigation into thousands of allegations against Wal-Mart.

Watch the video here.

From The New York Times:

Wal-Mart Stores, which used to closely guard information about its employee’s pay, disclosed yesterday for the first time its annual contributions to workers’ retirement accounts, profit sharing program and stock purchase plan.

The numbers are intended to round out the picture of how its work force, the nation’s largest, is compensated — and to combat criticism that the discount retail giant offers skimpy wages and benefits.

Wal-Mart said it gave $667 million to 815,629 hourly employees who participated in the company’s profit sharing and 401(k) retirement program — or, on average, $818 for each worker.

It spent $51.4 million on 706,389 hourly employees who participated in its