From Business Week

On June 19, Cynthia Haddad and her husband, Bill, walked across Wendell Avenue from the Berkshire Superior Court to the public library in Pittsfield, Mass., to talk. There they waited as a jury in the Park Square courthouse deliberated over the lawsuit Haddad had filed against her former employer Wal-Mart Stores for gender discrimination and defamation. As they exited the library hand-in-hand, the sun shone, filling Haddad with an impending sense of closure. "It was the first day of the rest of our lives no matter what the verdict," says the 45-year-old mother of four. "My story was told and I did the fight. My life would go on after that."

Shortly thereafter, Haddad was in tears. The jury awarded her nearly $2 million in punitive and compensatory damages. "It vindicated me," says Haddad. "It started to bring life back into me. Someone listened."

Under Fire

The dispute was over why Haddad had been dismissed by Wal-Mart, after more than 10 years as a pharmacist with the company. Haddad believed she was fired from the Pittsfield store in retaliation for her complaints about being paid less than male pharmacy managers and about the disappearance of controlled drugs from the pharmacy. Wal-Mart contended that Haddad was dismissed for violating company policies and failing to secure the pharmacy. The company also argued that Haddad wasn't entitled to the same pay as the other pharmacy managers, who were in fact male, because she wasn't actually a manager.

Wal-Mart is likely to appeal, and the verdict may be overturned. Spokesman John Simley says the company stands by its decision to terminate Haddad based on violations of company policy and by its contention that Haddad's sex played no role in her treatment. "The facts in this case indicate that Ms. Haddad's termination had absolutely nothing to do with her gender," says Simley. He declined to go into specifics.

Of course, even if Wal-Mart loses, $2 million is barely a blip on the radar for a company that took in more than $355 billion in revenues in its most recent fiscal year. Still, Haddad's victory comes at a difficult time for Wal-Mart, with the company struggling to defend its reputation on a number of fronts. Wal-Mart has come under fire for the wages and benefits that it provides workers and for its impact on small, local retailers. Investors have been unhappy with its stagnant stock (see BusinessWeek.com, 4/30/07, "Wal-Mart's Midlife Crisis"). And it's become a favorite target among the Democratic Presidential candidates, including Barack Obama and John Edwards (see BusinessWeek.com, 11/16/06, "Can Barack Wake Up Wal-Mart").

Potential Impact

Haddad's success may also have ramifications beyond her particular case. Wal-Mart is facing a separate lawsuit, a massive class action over gender discrimination, and one of the lead attorneys in that case says that Haddad's victory may give him the opportunity to broaden his case. The case, Dukes v. Wal-Mart Stores, charges the company with a pattern of gender discrimination in promotion, pay, training, and job assignment on behalf of 1.5 million to 2 million women who have worked at Wal-Mart's retail stores and wholesale clubs since 1998. Joseph Sellers, co-lead counsel for the case, says he may now look at whether to expand the case to include female pharmacists, who are not currently part of the class action. "This case might reflect the tip of the iceberg," he says.

In addition to the Dukes class action, there are more than 75 legal proceedings pending against the company, according to filings with the Securities & Exchange Commission. The majority pertain to complaints about wages and off-the-clock work.

Haddad is an example of how one employee, backed by a team of dogged attorneys, pulled out a legal victory against the giant retailer. She benefited from having a long track record at the company, complete with strong employee evaluations over many years. Even more important, her lawyers, Richard Fradette and David Belfort, were able to track down key witnesses who could put Haddad's treatment in context, especially male pharmacists who formerly or currently worked at Wal-Mart and who had faced markedly different treatment.

When Haddad started working at Wal-Mart in 1993, it was the realization of a life-long dream. She had wanted to become a pharmacist ever since she had developed a crush in the eighth grade on one of the pharmacists in her hometown. She worked for the company on quite good terms for the next 10 years.

Pizza and Popsicles

But in 2003, Haddad complained about not receiving the same level of bonuses and pay as other pharmacy managers, who were male. She says she had agreed to serve as a pharmacy manager on a temporary basis, but ended up staying in the position for 13 months. Haddad eventually received her bonuses in two installments. Wal-Mart says that because Haddad was not officially a pharmacy manager, she was not entitled to the extra $1 per hour that such managers receive.

It was in April, 2004, that Haddad was terminated and escorted from her Wal-Mart store. According to trial materials, Haddad was dismissed for "failure to secure the pharmacy, leaving a technician alone in the pharmacy." Haddad says the statement refers to a technician's theft of a medicine for treating ulcers, called Prevacid, that took place while she was on duty 18 months before.

Haddad was devastated by the circumstances of her firing. She felt that being accused of involvement with drug theft would damage her reputation as a pharmacist and hurt her ability to get another job. She says that she refused to leave her house alone for six months. The accusation is the key reason she charged Wal-Mart with defamation. "It destroyed a lot of relationships," Haddad says. "You know how you say 'pizza' in the beginning and it comes out 'popsicles'? That's what happened to me."

Expert Testimony

In June of this year, Haddad got her day in court. To counter Wal-Mart's claim that Haddad was fired for failing to secure the pharmacy, attorneys Belfort and Fradette had tracked down male pharmacists from the store who had also been on duty when thefts occurred. Pharmacist Richard Blackbird, who replaced Haddad as pharmacy manager and has since left Wal-Mart, said he was never disciplined for a technician's theft of Vicodin that took place under his watch. He also said the technician left voluntarily rather than being fired.

In a sworn affidavit, Blackbird blamed thefts in the pharmacy on instability caused by the high turnover of district managers, "a circumstance that contributed to creating an environment that enabled the pharmacy technicians to steal and forge prescriptions."

To bolster their case, Haddad's attorneys called Harold Sparr, a pharmacist for 52 years and former president of the Massachusetts Board of Registration in Pharmacy, to testify. "This is not unusual for this to happen," Sparr tells BusinessWeek about drug thefts at pharmacies. "Massachusetts regulation allows the technician to remain in the pharmacy when the pharmacist is gone. Any technician, I don't care where it is in the country, can steal medicine if their incentive is to do that."

Julie Moore, a human resources expert who studied Wal-Mart's Pharmacy Operations Manual, testified that the company failed to communicate and enforce its policies equally or update employees on policy changes.

Fradette and Belfort also called in economics and psychology experts and pointed to Haddad's performance evaluations, in which several supervisors praised her as "a huge asset to the department" and "a very reliable pharmacist" who has "done a great job keeping the department together," according to trial exhibits.
Breaking the Chain

Wal-Mart, in its response, took issue with a number of the claims by Haddad's lawyers. The company, in court filings, denied that Haddad received "excellent reviews throughout her employment." It also denied that the termination had anything to do with Haddad's complaints, and stuck to its contention that Haddad was terminated for violating company policy by leaving a technician alone in the pharmacy.

"We are an equal opportunity employer," says Simley. "We have strict policies against discrimination. We promote diversity at all ranks and at every level."

If the ruling stands, Haddad will be entitled to $1 million in punitive damages, $95,000 in back pay, $733,307 in front pay, and $125,000 for emotional distress. The jury found Wal-Mart guilty of defamation, but did not award Haddad any money for that charge. Separately, her attorneys plan to seek legal fees from Wal-Mart.

Haddad says she brought the case to clear her name, rather than for the money. "The hard part is I have four children and each one of them has children in their class whose parents are pharmacists," says Haddad. "Now I'm just getting phone calls from people who haven't spoken to me."

Haddad, whose husband is also a pharmacist, now works at the independent Lenox Village Integrative Pharmacy in Lenox, Mass. "Kind of leery of chains," she explains with a smile.

From WTVF in Nasville, TN

NASHVILLE, Tenn.- A new national ad campaign by a Washington-based group claims it isn't patriotic to shop at the nation's largest retailer.

The controversial ad by Wake Up Wal-Mart suggests that Wal-Mart imports so many goods from China, it's costing hundreds of thousands of American jobs. The group also makes a strong claim about Wal-Mart and terrorism.

This is not a new claim. But in the group's new ad, a narrator said, "This is Afghanistan. China ships weapons to the terrorists in Afghanistan, weapons the terrorists use to attack out troops. So, before you think about shopping at Wal-Mart think about that."

The ad seems to make the statement that shopping at Wal-Mart means consumers are funding terrorism.

"No, that's not what the ad is about," said Wake-Up Wal-Mart spokesman Paul Blank.

Blank almost downplays the retailer's connection to terrorism in the ad.

Blank said bringing up a terrorism angle isn't a scare tactic.

"We're not making the direct connection between Wal-Mart and the terrorists in Afghanistan," Blank said. "What we are saying is, because Wal-Mart has this cozy relationship with China, American jobs are going overseas."

Several companies import goods from China so why does the Washington-based group single out Wal-Mart?

"It's not like any other company," Blank said "Wal-Mart is the No. 1 importer of Chinese goods in America. If Wal-Mart was its own country, it would be China's sixth largest trading partner."

In a statement, Wal-Mart officials said, "This ad is simply ridiculous. We are actually embarrassed for them. We find it absurd that they are wasting millions of dollars in union member dues in a sophomoric attempt at an issue ad for political gain. It is also offensive to our men and women currently serving in the military."

The union Wal-Mart officials are referring to is the United Food and Commercial Workers Union, which is also behind the ad. They represent more than 1 million workers nationwide.

The ads will run in the Midwest, in Nashville and in other southern cities over the next few days.

From NJ.com:

By Daniel Massey

Tuesday June 26, 2007, 2:34 PM

Chanting "equal pay for equal work," dozens of local activists gathered on the steps of Newark City Hall this afternoon as part of a national effort to cast the fight to improve Wal-Mart wages and benefits as a struggle for civil rights.

"We didn't march in 1963, we didn't sit in in Alabama and Mississippi to still be discriminated against today," said Larry Hamm, chairman of the People's Organization for Progress.

The protesters - spurred by a class action suit alleging Wal-Mart discriminated against women, and another charging African-American truck drivers were denied jobs - said their goal is to get the retail giant to help improve the lives of America's workers.

"They set the trend for what happens in the rest of the country," said Charles Hall Jr., president of RWDSU Local 108, UFCW, which represents 7,000 supermarket, department store and municipal workers in Essex County. "They need to set the standard by doing the right thing. If they do the right thing, it trickles down."

Organizers said the rally was one of 25 that took place across the country as part of a national day of action coordinated by the group Wake Up Wal-Mart.com. Wal-Mart is the nation's largest private employer of African Americans, Hispanics and women, according to the group.

With its majority African-American population, Newark is the perfect place to equate the campaign to improve wages at Wal-Mart with civil rights, protesters said.

"You'd think in the 21st century we'd be beyond these issues," said city Councilman Donald Payne Jr. "But we have to fight the way we used to do in the old days."

Our latest press release:

NEW STUDY SHOWS WAL-MART HAS HELPED SHIP NEARLY 200,000 AMERICAN JOBS TO CHINA

Washington, DC - Today, WakeUpWalMart.com, America’s campaign to change Wal-Mart, released its first animated TV-ad exposing how Wal-Mart’s close relationship with China hurts America. The ad comes on the heels of a newly published report which, for the first time, estimates how many American jobs have been lost because Wal-Mart is the #1 importer of Chinese goods.

In today’s report, entitled “The Wal-Mart Effect,” the prestigious Economic Policy Institute estimates America has lost nearly 200,000 jobs due to Wal-Mart’s trade with China alone. In addition, the report estimates that every new Wal-Mart store costs America approximately 77 good-paying, middle class jobs.

WakeUpWalMart.com’s new animated TV-ad, entitled “Lesson #1,” begins airing this Wednesday, June 27th and is part of a new July 4th media campaign calling on Americans to think about what happens to our economy and American jobs when we shop at Wal-Mart and to “be a patriot” this July 4th. The new ad starts with an image of a chalkboard and the announcer stating “this is Wal-Mart,” as Wal-Mart is drawn, and “this is China,” as China as drawn. Then, just as a teacher would draw with chalk on the chalkboard, the ad goes on to show how “most of the goods on Wal-Mart’s shelves come from China…So when you shop at Wal-Mart… your money, and a lot of American jobs, go to China.”

The most powerful part of the animated spot is when, using a drawing of China and Afghanistan, the ad calls into question why Wal-Mart would do business with China when it was just revealed that China is selling arms to the terrorists in Afghanistan. As the ad states, “China ships weapons to the terrorists in Afghanistan…Weapons the terrorists use to attack our troops.” Given Wal-Mart’s cozy relationship with China and, separately, China’s support of terrorists, the ad ends with the stirring line, “So before you shop at Wal-Mart think about that. This July 4th….Be a patriot…Go to www.WakeUpWalMart.com and learn the truth about what Wal-Mart is doing.”

“It’s very simple. Wal-Mart and China not only cost America good paying jobs, but helping to strengthen China which then slaps America in the face by directly supporting terrorists in Afghanistan is wrong. The American people need to think about that,” said Paul Blank, campaign director for WakeUpWalMart.com.

The animated TV-ad is the newest spot to be released by WakeUpWalMart.com as part of its $1 million “Summer Southern Blitz” TV-ad campaign. The 3-month “Summer Southern Blitz” campaign will, through a series of hard-hitting new ads and grassroots actions, focus entirely on how Wal-Mart, as the #1 importer of Chinese goods, has helped to strengthen China’s economy at the expense of America.

The new ad will air in over 30 media markets including Alabama, Arkansas, Georgia, Florida, New Hampshire, Iowa, Louisiana, North Carolina, and Missouri.

The ad can be viewed, as of today, at WakeUpWalMart.com and YouTube.com.

The new Economic Policy Institute report is available at www.epi.org.

Script: "Lesson #1"

This is Wal-Mart.
This is China.

Most of the goods on Wal-Mart's shelves come from China.
So when you shop at Wal-Mart your money and a lot of American jobs go to China.

This is Afghanistan. China ships weapons to the terrorists in Afghanistan.
Weapons the terrorists use to attack our troops.

So before you shop at Wal-Mart, think about that.

From Reuters

NEW YORK (Reuters) - The New York City Comptroller on Tuesday demanded to inspect some Wal-Mart Stores Inc. records dating from 2002 to determine whether the retailer performed illegal surveillance on shareholders who submitted proxy petitions.

In a letter to Wal-Mart Corporate Secretary Thomas Hyde dated June 21, Comptroller William Thompson said he has "a credible basis to believe that certain employees, directors or agents of Wal-Mart have improperly expended corporate assets in connection with conducting surveillance, investigations or 'threat assessments' of proponents of shareholder proposals."

The comptroller, who is the investment advisor for New York City's pension funds, said he wants to inspect and copy all books and records referring to the proponent of any shareholder proposal submitted to Wal-Mart between 2002 and the present.

As noted in Thompson's letter, news of the alleged surveillance was first reported on April 4 by the Wall Street Journal. On April 20, Wal-Mart sent shareholders a letter saying it had conducted a "lengthy internal investigation" and denied the surveillance had occurred, Thompson recounted.

However, Wal-Mart's letter included an internal email from January which stated: "Typically, we send this list (of shareholder proposals) in advance so that someone ... can do some preliminary background work on the potential threat assessment for the annual shareholders' meeting," Comptroller Thompson said.

Thompson said the New York funds, which together hold about 7.6 million shares of the world's largest retailer, wish to inform other shareholders of any information about Wal-Mart's surveillance efforts, to communicate with Wal-Mart directors on such efforts, and to consider whether to submit shareholder proposals about the issues raised by those efforts.

A Wal-Mart spokeswoman was not immediately available to comment.

From Fortune Magazine:

NEW YORK (FORTUNE) -- Wal-Mart, the world's largest retailer, has decided to curb its support of gay, lesbian, bisexual and transgender (GLBT) organizations after conservative Christian groups threatened a boycott, and after some of its own employees expressed disapproval.

The move comes a year after Wal-Mart (Charts, Fortune 500) had put on a gay-friendly smile. The company joined the National Gay and Lesbian Chamber of Commerce. It sponsored the annual convention of Out & Equal, a group that promotes gay rights in the workplace, and sold gay-themed jewelry in stores.

"We are not currently planning corporate-level contributions to GLBT groups," said Mona Williams, the company's senior vice president of corporate communications. Individual stores can still donate to gay groups.

By way of explanation, Ms. Williams cited a policy adopted last fall saying that Wal-Mart would not make corporate contributions "to support or oppose highly controversial issues" unless they directly relate to the company's ability to serve its customers.

How significant is the pullback? Williams says it does not signal any less support for its GLBT employees or for Wal-Mart Pride, a network of gay employees at the company. She's an executive sponsor of the group, which was sanctioned in 2005. "We certainly don't feel that it's a retrenchment," she said.

Others can't help but see it that way. After Wal-Mart explained its decision to a meeting of about 50 Pride members, one contacted FORTUNE to express disappointment.

"I thought the company was moving in the right direction," this employee wrote in an email. "But last week changed everything. Pulling funding from GLBT organizations is a slap in the face to gay employees and it sends a very clear message. Diversity within Wal-Mart is only partially inclusive." "They're catering to their conservative base," the employee added, in a phone conversation.
Interestingly, gay-rights groups were more understanding. Selisse Berry, the executive director of Out & Equal, said: "Wal-Mart continues to engage on the issue of worker equality, and we will support them in that...This is a marathon, not a sprint, and so long as Wal-Mart keeps its doors open, we hope to give them encouragement." Wal-Mart had donated $60,000 to Out & Equal.
The Human Rights Campaign, America's largest gay-rights group, also says it will continue to work closely with Wal-Mart. "With a company as large as Wal-Mart, it's not going to happen as fast as many of us would like," says Daryl Herrschaft, who oversees the HRC's workplace project.

Wal-Mart supported the gay chamber, an organization of more than 24,000 gay- and lesbian-owned businesses, for the first time last year. (Other corporate backers include IBM, Wells Fargo, Motorola and American Express.) The chamber's president, Justin Nelson, did not return a call seeking comment.

Several sources told FORTUNE that Wal-Mart now intends to work harder to educate its own employees about GLBT issues - something it had been advised to do before aligning itself publicly with gay-rights groups.

Last year, when anti-gay groups picketed stores, store managers weren't prepared to explain the company's position. Leaders of Wal-Mart Pride say most of its members work in and around the company's Bentonville headquarters, so they have been unable to muster allies in the field.

On June 9, Wal-Mart Pride members made a presentation to more than 500 employees at one of the company's Saturday morning meetings, which are used to rally the company around business goals. "The presentation was warmly received," Williams said.

Still, some members of the group had hoped that Wal-Mart would by now have taken a major step towards workplace equality by offering health care benefits to the domestic partners of its GLBT employees. More than half of FORTUNE 500 companies do so.

The lesson here may be that it's hard to find a middle ground when it comes to gay rights in the workplace. A company either believes in workplace equality for all, and is willing to stand up and say so, or it doesn't.

It's pretty clear where Wal-Mart stands.

From wral.com

Roanoke Rapids — A disabled veteran from Halifax County said he was twice denied access to an electronic wheelchair at a Wal-Mart in Roanoke Rapids recently.

Thomas Young lost his leg to diabetes six months ago. He has been adjusting to life without it. Simple things like shopping at Wal-Mart can be difficult, Young said, but nothing prepared him for what happened at the store Sunday.

Young’s grandson, Zach Shumaker, said when he went to retrieve the cart and bring it to his grandfather, store officials told him it was against store policy.

Young said his wife then called the store manager, who apologized and said that was just not true. The manager said Young could come back anytime and get a cart.

After the apology, Young and his grandson returned to Wal-Mart the next day. When Shumaker tried again to take the cart to his grandfather, store officials told him he was not able to get the cart past the pylons, Young said.

A Wal-Mart spokesperson said the scooters are there to help people like Young, but the rule is that they can leave the store only if accompanied by store personnel. Company officials said they are looking into why that didn’t happen in this case.

“I thought they should have made at least the manager come out to the truck and talk to me while I was still sitting in the vehicle,” Young said. “It would have made it much easier to swallow.”

Young said he is writing a letter to Wal-Mart's corporate headquarters, but said he has no intentions of filing a lawsuit.

The company apologized again Thursday and said it’s their goal to provide a motorized cart for everyone who needs one.

From Reuters

NEW YORK (Reuters) - Wal-Mart Stores Inc. said on Wednesday it will open 1,000 financial services centers in its stores and roll out a prepaid Visa debit card nationwide in a major push to sell more financial services to its lower-income shoppers.

The world's largest retailer said the expansion will help it reach the 73 million Americans who do not have bank accounts or access to credit cards, and are largely ignored by banks.

"I think in the financial industry this is a game-changer for the market that people aren't serving," said Jane Thompson, president of Wal-Mart financial services, at the Reuters Consumer and Retail Summit in New York.

The moves come three months after Wal-Mart withdrew an application with U.S. bank regulators to operate a specialty bank after it faced immense opposition. Instead, it said it would focus on launching new financial services in its stores.

Thompson told the Reuters Summit that the retailer hopes to announce two new products before the year is over and has about four products "in the hopper."

She said it was too early to decide whether Wal-Mart will offer mortgages and home equity lines of credit, but she said Wal-Mart is exploring ways to partner with a bank to link a savings account to the prepaid Visa card.

"We're working on it," she said, although the efforts are "very early."

MORE MONEYCENTERS
Wal-Mart said it will double the current number of Wal-Mart Money Centers? in its stores to 450 by the end of this year and will open 1,000 centers by the end of 2008 -- meaning it will have a center in one-fourth of its U.S. stores.

The centers offer consumers services like check cashing, money orders, bill payment and money transfers.

"We'll keep adding them," she told a conference call with reporters. "I know 1,000 is not all we'll have."

The retailer is also rolling out the Wal-Mart Money Card?, a reloadable prepaid Visa, that it is launching nationally with GE Money and Green Dot.

The card will be introduced to roughly 1,300 Wal-Mart stores by the end of June and will be available at most Wal-Mart stores by year's end. Consumers will be able to put money on the card and then use it at other stores, gas stations or anywhere a Visa would be accepted.
The card came out of a pilot program Wal-Mart tested in the fall under the name Wal-Mart Prepaid Visa Card. But Thompson said the retailer would probably link more financial services to the card and did not want to be confined by having the word "prepaid" in its name.
She also said Wal-Mart has left the "door open" to working with other networks, like Master Card? (MA.N: Quote, Profile, Research) or Discover, for future cards.

REPEAT CUSTOMERS
Thompson said the retailer does not see the services, like the prepaid card, as a means to attract new customers to its stores.
Instead, she expects them to bring Wal-Mart's current customers into its store more frequently and have them spend more money while they are there, she told the Reuters Summit.

Wal-Mart is working to improve its U.S. same-store sales, which last fiscal year rang up their smallest gain since the retailer began reporting such figures in 1980.

It has also said this year could be a challenging one as its base of lower-income shoppers feel the pinch from rising gasoline prices.
Thompson said the financial services division, which it started about five years ago, is a profitable one, and she expects growth of 30 percent to 40 percent year over year.

She also said the retailer does not plan to resubmit a bank application with the Federal Deposit Insurance Corp. following its decision in March to withdraw its application.

"It's really not on our list," she told the Reuters Summit.
Wal-Mart had insisted it wanted to use the specialty bank to save money by processing credit-card and check transactions internally. But consumer groups and banks protested, fearing the retailer would eventually provide other retail banking services, leading to the demise of community banks.

"It's so much better to be out there launching products to our customers that add value," Thompson said. "I'm personally glad to have it behind me. We learned a lot. We still think we would have been a good bank owner."

From BerkshireEagle.com:

PITTSFIELD — A Berkshire Superior Court jury yesterday concluded that Wal-Mart had discriminated against a female pharmacist, paying her less than her male colleagues and firing her when she complained.

The jury awarded Cynthia Haddad almost $2 million as compensation for lost and future wages and to punish Wal-Mart's behavior. The verdict followed roughly eight hours of deliberations that capped a two-week trial.

"It sends a message that you can't treat people poorly because of who they are," said David Belfort, one of Haddad's attorneys. "The verdict makes it clear that the jury felt that not only was there misconduct, but it ought to be punished."

As the verdict was read, Haddad began crying, and her cries became near sobs as she hugged her legal team and family outside the courtroom.

"I can sleep tonight," she was heard to say.

Wal-Mart's attorneys quickly left the courtroom and could not be reached for comment yesterday.

Haddad's lawsuit stemmed from her dismissal in April 2004 from the Wal-Mart pharmacy in Pittsfield, where she had worked for more than 10 years.

Wal-Mart said it fired her because she left the pharmacy unattended and allowed a technician to use her computer security code to issue prescriptions during her absence. While Haddad was away, Wal-Mart alleged, a prescription for Plavix, an anti-clotting drug given to cardiac patients, was filled.

Haddad and her legal team said that charge was a trumped-up excuse, and that the fraudulent prescription had been filled 18 months earlier, without Haddad's knowledge. They said Haddad was really fired because she demanded to be paid as well as her male counterparts, including a bonus given to pharmacy managers. The company consented and paid the bonus, but she was fired two weeks later.

The plaintiff's legal team of Belfort and Richard Fradette argued that Wal-Mart had never fired anyone else for the charge of "failure to secure the pharmacy." And they said more severe infractions by male pharmacists went unpunished.

"Wal-Mart took a 10-year employee with 10 years of the highest level of professional reviews available and, in 45 minutes, fired her for no legitimate reason," Fradette said. "At the same time, it tolerated violations of policies by male pharmacists with no punishment."

Wal-Mart argued that Haddad was not really a pharmacy manager and was paid appropriately for her work. While she may have carried the manager's title, Wal-Mart said, she did not perform a manager's duties.

The jury appears to have rejected Wal-Mart's defense completely and found for Haddad on every count.

The jury of eight women and four men ruled that Haddad was owed $1,767 in compensation for lost wages because of unequal pay. And it ordered Wal-Mart to pay $95,000 in damages for improper termination of employment.

For emotional distress, the jury ordered Wal-Mart to pay Haddad $125,000 and $17,700 in financial damages.

The jurors ruled that Haddad was owed $733,000 in wages that she would have earned over the course of her career had she not been fired.

And the biggest penalty was assessed in the form of punitive damages of $1 million, a sum meant to punish Wal-Mart for the discrimination.

"What the jury saw is that, if Wal-Mart will treat a well-educated, professional woman with such reckless disregard, can you imagine how they treat other women in the work force?" Fradette said.

From The Christian Science Monitor

Drop by just about any big city in the South, and you're likely to come across a Wal-Mart store. Or two. Or 10. But they're harder to find in California, and municipal leaders across the state want to keep it that way.

At particular issue in the Golden State: Wal-Mart's efforts to open "superstores" in cities both big and small.

Here in San Diego – which already has "regular" Wal-Marts – the City Council is expected to ban Wal-Mart "superstores" within city limits, a move that would override last week's mayoral veto. Urged on by unions, supermarkets, and small businesses, other cities and towns across the state are giving Wal-Mart a frostier reception than ever before. The California Supreme Court backed up such a stance earlier this month, saying that cities and counties can place restrictions on what sort of stores can open in their communities.

Wal-Mart "has become some sort of capitalistic symbol," sighs Scott Alevy, an official with the San Diego Regional Chamber of Commerce, which supports the retailer's expansion plans in the city.

Elsewhere in the country, as Wal-Mart continues to move beyond its rural and Southern roots, Wal-Mart has recently faced challenges to its expansion plans in several cities – including Chicago; Tucson, Ariz.; and Spokane, Wash.

Is it the beginning of the end of Wal-Mart's astonishing growth? Its critics hope so. But even as some cities and towns pull away the welcome mat, Wal-Mart is both surviving and thriving.

Indeed, in California alone, Wal-Mart already has 27 "superstores" – many of them in cities, and with two opening just last week. The stores, typically about 185,000 square feet, feature full-size grocery stores.

Still, in some instances, Wal-Mart has clearly felt threatened, and several recent cases in California have shown it's willing to fight community opposition.

In Long Beach, the fifth-largest city in the state, Wal-Mart reportedly spent $270,000 on a successful petition drive to put a measure on the ballot in 2008 that would allow big retailers to sell groceries. City leaders banned such sales last year. The city currently has several "regular" Wal-Marts.

According to the Los Angeles Times, Wal-Mart spent another $300,000 to support two imperiled pro-Wal-Mart council members in the L.A. suburb of Rosemead.

In the northern California town of Turlock, a ban sparked a Wal-Mart appeal to the California Supreme Court, which in 2006 declined to take any action.

In perhaps the most striking brouhaha of all, the tiny Bay Area city of Hercules is wrapped up in a court battle as it tries to take over a plot of land by eminent domain to keep it out of Wal-Mart's hands.

And in San Diego, an expensive fight looms, despite the city's business-friendly reputation.

Wal-Mart is "just so darned convenient, and stuff's so cheap," says Kris Nelson, owner of Bluestocking Books, a small independent bookstore. "There's nothing wrong with that, but the problem is when we pay for our goods to be cheaper and from elsewhere, our local economy doesn't get anything back."

Wal-Mart also comes under fire because of its opposition to unionization efforts and its treatment of employees.

However, not every big retailer is seen as bad news. "There's a reason there's not a Target Watch," says Nu Wexler of the national watchdog group Wal-Mart Watch. In fact, a loophole in the proposed San Diego restrictions allows membership stores like Costco to open huge stores while Wal-Mart cannot.

For its part, Wal-Mart says it's been unfairly vilified. The company touts its pay (which it says is $10.68 an hour on average for full-time workers in the San Diego area) and its health benefits (which it says are better than those at local grocery chains).

And, of course, there are those famous discount prices. According to Milwaukee supermarket consultant David Livingston, Wal-Mart's grocery prices undercut their competition by 15 percent.

Low grocery prices "help people live better lives," says Wal-Mart spokesman Aaron Rios.

If the San Diego City Council overrides Mayor Jerry Sanders's veto, Wal-Mart is expected to challenge the ban by launching a petition drive to put the issue on the ballot. The fight over a ballot measure would be "nasty," predicts Mr. Alevy

Consumers, he says, should be able to choose a store for any reason, whether "it's located close to them, or it carries the brands they want, or they like the way it's set up, or they have good help, or, perish the thought, they have lower prices."

There is one recent indication that Wal-Mart is having struggles. According to reports, the chain announced last week that it will slow down the rollout of US superstores, opening 190 to 200 during the current fiscal year instead of 265 to 270.

However, "what their opponents sometimes fail to realize is that Wal-Mart is still growing at a significant pace every year," Mr. Livingston says. "If they get a little negative press, they could care less."

From AP via Myrtle Beach Online:

Shoppers at Wal-Mart stores across America are loading carts with merchandise and strolling out without paying. Employees also are helping themselves to goods they haven't paid for.

The world's largest retailer is saying little about these kinds of thefts, but its recent public disclosures that it is experiencing an increase in so-called shrinkage at its U.S. stores suggests that inventory losses due to shoplifting, employee theft, paperwork errors and supplier fraud could be worsening.

The hit is likely to rise to more than $3 billion this year for Wal-Mart Stores Inc., which generated sales of $348.6 billion last year, according to retail consultant Burt Flickinger III.

Flickinger and other analysts say the increase in theft may be tied to Wal-Mart's highly publicized decision last year to no longer prosecute minor cases of shoplifting in order to focus on organized shoplifting rings. Former employees also say staffing levels, including security personnel, have been reduced, making it easier for theft to occur. And a union-backed group critical of the retailer's personnel policies contends general worker discontent is playing a role.

Wal-Mart declined to offer any explanations for the rise in losses but denied it has cut security staff and said employee morale is rising rather than falling.

Although Wal-Mart declined to reveal its shrinkage rate, analysts suspect Wal-Mart - which for years had a theft loss rate that was half that of its peers - is getting closer to the industrywide average. Theft is a big problem for all retailers, costing them $41.6 billion last year, according to a joint study released Tuesday by the National Retail Federation and the University of Florida.The study found that the shrinkage rate as a percentage of sales ticked upward slightly to 1.61 percent of sales in 2006 from 1.60 percent in 2005.

Whatever the cause, such theft - which late founder Sam Walton once called one of retailers' top profit killers - adds one more challenge when Wal-Mart is already struggling with sluggish sales at its established stores due to an overall economic slowdown as well as its own stumbles in its home and apparel merchandising strategies.

Eduardo Castro-Wright, president and CEO of Wal-Mart's U.S. store division, briefly acknowledged the theft problem in a mid-May conference call with analysts. He cited shrinkage as well as increased markdowns and higher inventory for dragging down first-quarter profit margins.

"We are concerned about shrinkage and are investigating the cause and are taking steps to correct it," Castro-Wright said. Company officials won't comment on those countermeasures.

The company also said in a June 1 filing with federal securities regulators that the gross profit margin for its Wal-Mart Stores segment fell by 0.1 percentage points in the first quarter due in part to "higher inventory shrinkage."

John Simley, a Wal-Mart spokesman, declined to elaborate. He would say only that the company's theft losses as a percentage of sales is "better than our industry peer groups."

Analysts say it's significant that the company has publicly disclosed that theft is becoming a problem. "It is getting to the point of being material," said Richard Hastings, vice president and senior retail sector analyst at Bernard Sands. Securities regulations require companies to alert shareholders to significant corporate developments that could affect the value of their holdings.

The industry's shrinkage rate has been generally declining since the mid-1990s as retailers have been investing in new technology such as closed circuit TVs, according to Richard Hollinger, professor of criminology at the University of Florida.

About 47 percent of the dollars lost came from employee theft, while shoplifting accounted for about 32 percent, according to the National Retail Federation report. Administrative errors account for 14 percent, while supplier fraud accounts for 4 percent. The remaining 3 percent is unaccounted for.

In one of the more brazen employee thefts, a man wearing dark clothing and a ski mask entered a Port Clinton, Ohio, Wal-Mart store last January at midnight unnoticed by employees and stole $45,000 from the store safe. The store's night manager, Dana Walker, 30, was later arrested for the crime. He became a suspect because he knew the combination to the safe, police said.

The company's vociferous critic WakeUpWalMart.com, funded by the United Food and Commercial Workers which have been for years tried to organize the retailer's workers, publicized the company's decision last year to relax its zero-tolerance policy on shoplifting. The new policy seeks prosecutions of first-time offenders only if they are between ages 18 to 65 and steal at least $25 worth of merchandise.

That change may have emboldened some folks to shoplift, said Mark Doyle, president of Jack L. Hayes International, a retail consultancy on loss prevention.

WakeUpWalMart.com and some former employees said Wal-Mart may also have been trying to appease complaints by some police departments that its stores tied up police with too many shoplifting calls. Wal-Mart has denied that.

Wal-Mart also may have been spooked by worries about lawsuits from wrongful death, unlawful imprisonment and other legal issues related to aggressively chasing down shoplifters.

In March, Wal-Mart agreed to pay $750,000 to the family of a suspected shoplifter who suffocated to death as loss prevention workers held him down in a parking lot outside a store in Atascocita, Texas. The shoplifter died in August 2005 in a parking lot, according to published reports.

The change in policy came at the same time the company began using more part-time workersand shifting security personnel, analysts and critics say.

That has left the discount chain without an experienced and loyal staff to monitor what's strolling out its back and front doors, analysts and some former employees supplied by WakeUpWalMart.com said.

"The business is being run by bean counters. I am shocked at the Spartan level of staffing," said Flickinger, managing director of Strategic Resources Group.

He added, "There are also morale issues. Workers feel that the company is taking care of itself."

While Wal-Mart denies that it has cut anti-theft jobs overall, it said it has adjusted staffing to put more personnel in stores in high-crime areas and fewer in stores with less trouble.

Corporate Accountability International is sponsoring a "Corporate Hall of Shame" contest and, considering Wal-Mart's unaffordable health care, poverty-level wages, anti-family policies, and discrimination, just to name a few main concerns... I think we all know which candidate is most deserving!

Click here to check it out, and vote to induct Wal-Mart into the "Corporate Hall of Shame."

Take a moment to vote now, and then spread the word!

From News4Jax.com

A controversial commercial recently hit airwaves, charging Wal-Mart with being un-American by importing goods from China and thereby weakening the American economy.

The new commercial began airing Wednesday on Channel 4 and other stations, telling viewers it is un-American to shop at Wal-Mart.

The ad states, "Wal-Mart was an American company but something has changed," and "Wal-Mart drives American companies to shut down plants."

The United Food and Commercial Workers International Union is the group responsible for the commercial.

"Unfortunately, Wal-Mart is leading our country in the wrong direction," said Chris Kofinis of the UFCW communications department.

The commercial asks the public to "Tell Wal-Mart it's time to be American again."

Channel 4's Emily Pantelides took the controversial commercial to the people of Jacksonville to get the city's reaction.

Several people said they liked the commercial, calling it appealing and hard hitting.
However, others disagreed, saying Wal-Mart should be "cut some slack."

"I love Wal-Mart," one woman told Channel 4. "I spend every day at Wal-Mart."

She said the commercial would not change her Wal-Mart habits.

Wal-Mart responded to the commercial with the following statement:
"We're not surprised that the UFCW is spending more hard-earned union member dues on another publicity stunt to further their politically motivated agenda ... Today, we are a global company and it is necessary to source globally to ensure we meet the needs and wants of our customers."

The final decision remains in the hands of the people -- is Wal-Mart helping by keeping prices low or turning its back on America?

From The Houston Chronicle

SPRINGFIELD, Mo. — Wal-Mart Stores Inc. won one and lost two as state courts in Missouri, New York and New Mexico split on whether worker lawsuits over alleged unpaid wages should be granted class-action status.

Tuesday, appeals courts in Missouri and New Mexico rejected Wal-Mart's bid to derail class-action lawsuits by workers in those states who claimed they were forced by company policy to work after clocking out and during meal and rest breaks.

In New York, a state trial court ruled in the opposite way, denying class certification for a similar lawsuit. It sided with Wal-Mart's argument that each worker's claim should be handled individually.

Wal-Mart has faced class-action lawsuits alleging unpaid work in several states. Wal-Mart workers in Pennsylvania won a $78.5 million judgment last year for working off the clock and through breaks and a $172 million verdict in a California case. The company is appealing both. Wal-Mart settled a Colorado suit over unpaid wages for $50 million.

Wal-Mart spokesman John Simley said the world's largest retailer is disappointed by the Missouri and New Mexico rulings but that the New York decision follows what he called a growing number of decisions in other states. Simley was not able to provide a number of cases where class-action status was denied.

"We are exploring our options for an appeal" in Missouri and New Mexico, Simley said.

Wal-Mart's lawyers have argued in cases like these that any unpaid work was a matter of individual circumstances that must be tried case-by-case.

Missouri's Western District Court of Appeals rejected that argument and sent the case back with some procedural modifications to the Jackson County Circuit Court.

New Mexico's Court of Appeals also upheld a lower court decision granting class-action status in a case filed by two workers from Wal-Mart and Sam's Club stores.

Five former workers at Wal-Mart and Sam's Club stores in Missouri alleged in their suit, first filed in 2002, that company policy forced them to work without pay after clocking out and during meal and rest breaks. The circuit court granted class-action status in 2005, covering what plaintiff's lawyers estimated are about 200,000 current and former Wal-Mart workers in the state.

Steve Long, a lead attorney for the Missouri plaintiffs, said he was "very pleased".

"The overall story is that the case will proceed now as a class-action," Long told The Associated Press.

Long said he hoped the case can go to trial in summer 2008.

In New York, the supreme court said the lawsuit was too broad in arguing that all Wal-Mart workers in the state since 1996 were potentially harmed and should be part of a class numbering around 200,000. It said claims of unpaid work would need to be examined individually.

Attorneys for the two Wal-Mart workers named in the New York lawsuit did not immediately return phone calls for comment.

From BusinessWeek:

An employee who scrupulously followed the company's own ethics guidelines may find herself out of a job

The very first day that Chalace Epley Lowry started working at Wal-Mart Stores (WMT) as an administrative assistant in the communications department, on Jan. 2 of this year, she went through a day-long orientation with a heavy emphasis on ethics. "We were told that even if we see something that has the appearance of something unethical we should report it," says Lowry. Now, two weeks after filing a complaint against a more senior executive, the 50-year-old mother of two finds herself looking for another job.

Lowry is the first to admit that she didn't know whether the Wal-Mart executive had done anything wrong. Mona Williams, the vice-president for corporate communications, had asked Lowry to photocopy some papers related to stocks. When Lowry found out a few days later that Wal-Mart was planning a $15 billion stock buyback, she worried that Williams might have traded on insider information by exercising her stock options. "In all honesty, Mona's transactions could all have been aboveboard," she says, "but I acted in good faith, just pointing out that there might have been some wrongdoing."

Wal-Mart says Lowry is simply confused. The company says she mistook a deferred compensation form for an options exercise request and that Williams did nothing wrong. "The Ethics Office determined the same day the complaint was filed that the document that created Ms. Lowery's [sic] concerns had nothing to do with stock trading and that there was no violation of Wal-Mart's ethics policy," said David Tovar, a Wal-Mart spokesman, in a statement. (Wal-Mart spells the name "Lowery" throughout its communications, although her name, as she told BusinessWeek repeatedly, is in fact spelled Lowry.)

In dispute, however, are the circumstances that led to Lowry's looking for a new job.

Soon after Lowry filed the complaint, her identity was disclosed to Williams. Wal-Mart says Lowry agreed to disclosure, but Lowry says she was never given a choice. Lowry said it was impossible to remain in the department since Williams was effectively her boss, so she asked to be transferred. Wal-Mart has said that Lowry now has 60 to 90 days to look for a job within the company, but she may not get one. If she can't find another Wal-Mart job in 90 days, human resources officials have told her that they would have to discuss "next steps."

Tarnished Image

For Wal-Mart's own communications department to be dealing with an issue like this is particularly poignant. Williams and the department have been the key people trying to protect Wal-Mart's reputation over several difficult years. The company has come under scathing attacks for its workplace practices from union-backed groups WakeUpWalmart.com and Wal-Mart Watch, as well as from several politicians including Presidential hopefuls Senator Barack Obama (D-Ill.) and former Senator John Edwards (see BusinessWeek.com, 11/16/06, "Can Barack Wake Up Wal-Mart?"). Wal-Mart has also taken heat from shareholders as its stock price has stagnated (see BusinessWeek.com4/30/07, "Wal-Mart's Midlife Crisis").

Most recently, the issue of ethics at Wal-Mart has been in the spotlight because of the firing of a high-profile marketing executive, Julie Roehm (see BusinessWeek.com, 2/12/07, "My Year at Wal-Mart"). Wal-Mart says that the company dismissed Roehm because she violated the company's code of ethics by accepting gifts from vendors and because she had an affair with a subordinate. In a lawsuit against the company, Roehm has denied those charges and alleged that other top Wal-Mart executives have received gifts from vendors. She says in her suit that Chief Executive H. Lee Scott Jr. accepted trips and discounts on yachts and jewelry from billionaire Irwin Jacobs, who owns a company that buys surplus items from Wal-Mart. Wal-Mart has denied those charges, and Jacobs has filed claims against Roehm for defamation.

Taking Its Toll

All of this has also led to something of a consumer backlash: Some people won't shop at Wal-Mart because they don't want to support a company that they perceive as unfair to workers or bad for the economy. As early as 2004, a confidential report prepared by consulting firm McKinsey & Co. found that 2% to 8% of the company's customers have stopped shopping there "because of negative press they have heard." Another document, prepared in October, 2006, by Wal-Mart's former advertising agency GSD&M Advertising, found that the segment of Americans who say the chain is their No. 1 destination for discount shopping fell from 75% two years ago to 67%. The ad agency suggests that besides competition, Wal-Mart's image could account for this drop-off. The report also says that Wal-Mart's rating as a company that consumers trust and respect has "steadily declined" in the last two years.

This has all been difficult for a company with a long, proud history, dating back to the retailer's founding in Arkansas in 1962. Wal-Mart prides itself on having one of the strictest and most stringent ethics policies in the industry. Buyers are not allowed to accept even a cup of coffee from their suppliers. And its 1.3 million employees are encouraged to report any ethics violations that they might suspect or see.

Name Dropping

But Lowry's story may prove a cautionary tale for workers at Wal-Mart, and beyond. She had been on the job only a few months when she saw the documents that fueled her concerns. With the words from her initiation class still ringing in her ears, she decided to tell her direct supervisor, Sarah Clark, a senior director in the communications department. Clark encouraged her to report the issue to the company's ethics office. So on May 25, Lowry filed a complaint.

Within days, Williams knew that it was Lowry who had raised questions about her ethics. Wal-Mart says that's because Lowry agreed to make her name public. "Ms. Williams was informed after the Global Ethics Office concluded their review and after Ms. Lowery [sic] agreed that it was appropriate to inform and discuss the matter with Ms. Williams," said Tovar in his statement. However, Lowry says her supervisor made it seem like it was required. "It was phrased to me like it was part of the complaint process to tell Mona that I had filed a complaint," she says. "I didn't know I had a choice."

"Disheartened"

Wal-Mart says that Lowry was given the option of staying in her current position. "In spite of the fact that Ms. Lowery was not treated any differently after making her report and was in fact praised for bringing her concerns to her supervisor's attention, Ms. Lowery [sic] indicated that she was uncomfortable continuing in her current position and asked to be transferred," said Tovar in his statement.

Lowry says that a human resources officer she met soon after her identity was disclosed brought up issues related to team dynamics and alleged that she didn't get along with co-workers. Given the timing of the comments, Lowry says she grew even more uncomfortable in the communications department. She says she had an outstanding evaluation in her last job performance review in March, scoring 4.5 out of a possible 5 in the rating scale.

Today, Lowry feels "totally disheartened" by the way the ethics complaint was handled. She was just trying to do what was right. Now she hopes something good comes from the episode. "My experience was not what I perceived the ethics line or open-door policy to be, and I would think twice before going that route again," she says.

From The Wall Street Journal via Indystar.com

After years of decline brought on by fighting Wal-Mart Stores on price, the nation's grocery chains are on the mend.

They're winning back shoppers by sharpening their differences with Wal-Mart's price- obsessed supercenters, stressing less hectic stores with exotic or difficult-to-match products and greater convenience.

Last year, sales at supermarkets open at least a year rose 4 percent, the biggest increase in five years, according to retail consultants TNS Retail Forward. While the gains are still modest, the supermarkets got more good news last week when Wal-Mart announced it would cut back on new supercenter openings for several years.

Earlier this decade, the hidebound supermarket business was expected to fall before Wal-Mart's aggressive supercenter rollout and the rise of membership clubs like Costco Wholesale Corp. and high-end specialty chains like Whole Foods Market.

Many chains did collapse -- 26 filed for bankruptcy this decade, unable to match the falling prices of their better-run rivals -- and a wave of consolidation swept the business.

But the survivors rallied by redesigning stores, introducing a more relaxed shopping experience and marrying low-priced staples with higher-margin breads, meats and wine. Now, the stronger chains like Kroger Co. and SuperValu are taking market share from weaker, often regional, grocers.

Supermarkets have begun to attract new investment from those sensing a sustainable edge. Hedge fund Cerberus Capital Management recently joined two retailers in acquiring Albertson's, a Boise, Idaho, chain, and Britain's Tesco is expected to begin rolling out 100 U.S. stores in the Southwest later this year.

Great Atlantic & Pacific Tea Co., once a symbol of the big chains' decline, recently acquired rival Pathmark Stores for $700 million.
Last year, buyout fund Sun Capital Partners bought Indianapolis-based Marsh Supermarkets.

Many of the chains still are learning to sidestep Wal-Mart. They are cutting back on drugs and health and beauty products, which are Wal-Mart strengths, to stress fresh produce, higher-quality meat and easy-to-prepare foods. Subdued lighting and high-end selections also help distinguish them.

Supermarkets now understand "they can't put cookie-cutter stores out there anymore," says Sandra J. Skrovan, a senior vice president at TNS Retail Forward.

Scott Frondorf, a Green Township, Ohio, software executive, and his wife now do more of their food shopping at a local Kroger store that offers expanded produce and "boutique-like" seafood, cheese and wine. The couple still shops occasionally at a huge warehouse market, but "momentum is definitely in the Kroger direction," he said.

David B. Dillon, Kroger's chief executive, estimates that the Cincinnati-based chain gained share last year in 26 of the 32 areas where it competes directly against Wal-Mart supercenters.

From Star Tribune:

When financier Irwin Jacobs struck up a friendship about 10 years ago with Wal-Mart CEO Lee Scott, he had no idea the relationship would draw national scrutiny and potentially damage his business.

Yet there he was, rifling through a pile of papers in his office in Plymouth this week, defending himself in an interview against accusations that he gave favors and gifts to Scott and his family in return for business.

"Look here," he said, pulling out a receipt from Lee Scott's wife, Linda Scott. "This is a $29 receipt ... for some spices we sold them. They don't take nothin' for free."

Jacobs maintains that his friendship with Scott was just that -- a friendship -- and never crossed the line into unethical behavior by giving gifts or favors in return for business. Last week, Jacobs sued former Wal-Mart marketing executive Julie Roehm for defamation after she claimed in a court filing last month that Scott bought yachts and a "large pink diamond" from Jacobs at preferential prices, as well as rides on a private plane.

While the courts are likely to resolve the truth of the matter, the public allegations and war of words underscore the risks that suppliers and retailers take when they become friendly. As Wal-Mart states in its 25-page internal ethics statement, "The appearance of a conflict may be just as damaging to Wal-Mart's reputation as an actual conflict."

Most large retailers have strict rules that govern their relationships with suppliers. But Wal-Mart is among the most stringent. Buyers at the Bentonville, Ark.-based retailer aren't allowed to accept free meals, supplier-paid trips or tickets to sporting events, among other items. To prevent cozy relationships with suppliers, Wal-Mart rotates its buyers frequently among different departments.

One reason is that Wal-Mart is constantly under close scrutiny from labor unions, consumer advocates and even presidential candidates.

Which is why some retail observers are baffled by Scott's close relationship with Jacobs. Nothing unethical may have taken place between the two executives, but in an environment when Wal-Mart employees can't even accept a free cookie from a vendor, some critics question why Scott was so close to a major vendor.

"If you're the CEO of Wal-Mart, you're a target," said Howard Davidowitz, chairman of Davidowitz & Associates, a retail investment banking and consulting firm in New York. "Everyone is after you. So you want to be super-careful not to give your opponents the slightest ammunition."

A 'large pink diamond'

In her court filing, Roehm accused the company of a double standard, detailing alleged instances when top executives received gifts from suppliers while firing her for alleged conflicts of interest. Wal-Mart said it fired Roehm because she had an affair with an employee, Sean Womack, and took gifts from an advertising firm, Draft-FCB, that was vying for a large advertising account with the retailer.

Roehm claimed in the lawsuit that Jacobs offered "a number of yachts" to Scott, as well as a "large pink diamond" to Scott's wife. Both were offered at "preferential prices," the lawsuit said. She also claimed that Scott accepted free trips on "private airplanes provided by Mr. Jacobs," which were used by Scott and his wife to travel to their residences in Longboat Key, Fla., and Las Vegas.

In addition, Roehm charged that Scott's son, Eric Scott, "created the appearance of conflict" by going to work for Jacobs Trading, which is owned by Jacobs and sells unsold Wal-Mart merchandise, among other products.

Wal-Mart declined to make Scott available, and Roehm's attorney, Sam Morgan, declined to comment beyond the lawsuit or allow his client to be interviewed.

Within a day after her lawsuit was filed, Roehm's accusations were printed in the national press and were echoed on television stations across the country. Critics of the giant retailer claimed that Scott had broken the retailer's own ethics rules.

Jacobs, for his part, wasted little time going on the offensive.

Though traveling in Turkey meeting with suppliers at the time the allegations arose, he fielded calls from the Financial Times, CNBC, the Wall Street Journal and others. "I didn't want people to think I was running away from it, because Irwin Jacobs never has," he said.

Jacobs said the accusations made by Roehm are untrue. Jacobs said he doesn't own any private planes, and he didn't know about the diamond ring until Roehm's accusations appeared in the national media.

"My wife called me and said, 'I'm really upset at you,' " he said. "I asked her why and she said, 'Because you gave a diamond ring to Linda [Scott] and not to me.' We thought it was an absurd joke."

The $404,652.24 boat

As for the "yachts," Jacobs said one of his companies actually sold Scott three fishing boats -- all at market prices. Scott purchased a 39-foot Wellcraft boat for $404,652.24, as well as a used, 29-foot coastal fishing boat for $75,000, according to receipts shown by Jacobs.

Both purchases were made at a Sarasota, Fla., factory of one of Jacobs' 14 boat companies, Wellcraft Marine Corp. The factory is about 15 minutes from Lee Scott's residence in Longboat Key. At the time of the purchases, Eric Scott worked at the Wellcraft factory in Sarasota; but Jacobs insists Lee Scott didn't call him about the boat purchases or take advantage of a discount that could be available through his son.

Jacobs said the accusations of preferential deals could affect his business. Jacobs said he was made aware of one instance in which a competitor of his company, Jacobs Trading, was urging his clients to switch business. The competitor, which Jacobs declined to identify, suggested that the only reason Jacobs was successful was that he offered favors in return for business, he said.

Even if he had offered Scott a gift, the executive never would have accepted it, he said. Jacobs said that once, Scott insisted on paying $12 for a promotional hat offered to him by an employee at one of his boat companies. "Scott told me, 'Thanks, but I don't intend to get fired over a $12 hat.' "

From The Independent (UK):

Thousands of Wal-Mart customers are being offered refunds after the world's largest retailer admitted that it had been selling fake Fendi handbags and wallets.

Fendi's owner, LVMH, is also receiving an undisclosed amount of compensation, as part of the settlement of a Manhattan lawsuit that had threatened to embarrass the retailer and highlight once again the widespread problem of counterfeit luxury goods.

In some Las Vegas branches of Sam's Club, Wal-Mart's warehouse chain, customers snapped up handbags that normally cost $925 (£468) for as little as $295, and loaded up on $360 wallets that were selling for little more than $200.

It turned out that the bargains were too good to be true.

Fendi said that Wal-Mart had failed to check that its supplier was a genuine reseller of the company's merchandise, and had therefore shown "a reckless disregard or wilful blindness as to whether these items bear counterfeits of Fendi's registered trademarks".

Handbags, shoulder bags, purses, wallets, scarves and keychains were all among the knock-off ranges on sale at Sam's Club warehouses and on its website. Fendi estimated that sales had run into millions of dollars before the goods were finally taken off the shelves. The lawsuit had demanded an unspecified sum in damages.

Doug McMillon, Sam's Club chief executive, said he would not disclose the scale of the payment to Fendi, and that both sides were happy to put the issue behind them. "We have programmes in place to protect the intellectual property rights of others," he said. "However, during this litigation, Fendi provided us information that the 12 types of bags and wallets specifically listed in its complaint were not genuine. We accept this information."

Wal-Mart's Sam's Club prides itself on a pile-'em-high, sell-'em-cheap philosophy aimed at driving down prices for ordinary Americans. It is not the first time that it has been in trouble over fake goods. In 1999, Wal-Mart agreed to pay Tommy Hilfiger $6.4m to settle federal charges after being found to have sold counterfeit Hilfiger socks and t-shirts on its website and in Sam's Club stores, in contravention of an earlier injunction.

The trade in counterfeit goods is now a giant global business. Sam's Club is believed to have bought the fake Fendi goods from a supplier of considerable size. The company said it was no longer doing business with it.

From ABC News:

Did Wal-Mart's CEO, Lee Scott, receive a pink diamond and boats at discount price?

Was the hiring of Scott's son by a Minnesota businessman a violation of the retailer's stringent ethics code?

Did a fired Wal-Mart executive who has made these claims carry on an illicit affair with a subordinate while feasting on fine food and drink at a swanky New York restaurant hosted by a company seeking business with Wal-Mart?

These are all questions being posed in a series of lawsuits and countersuits in what is quickly turning into a distracting sideshow for the world's largest retailer.

So far, there are two suits and counting.

The latest legal shot came last week when Irwin Jacobs, the Minnesota businessman alleged to have arranged discounts on the diamond and the boats for Scott, sued those who had made the allegations, saying that he had been defamed.

Jacobs told ABC News that those who had made the allegations "are going to pay the price for it."

"The fact that I even have to answer [questions] is an embarrassment and outrageous to me," Jacobs said.

The Drama Begins

What can now be described as a soap opera started in December when Wal-Mart suddenly fired Julie Roehm who had been the senior vice president for marketing communications. Roehm had been hired to shake up and revitalize the company's advertising and during her short, 10-month tenure oversaw the selection of a new advertising agency, the firm Draft FCB.

At the time of her firing, the company also terminated her colleague Sean Womack, canceled the contract with Draft FCB and awarded the reportedly $580 million account to the Martin Agency, based in Richmond, Va.

Wal-Mart gave no official explanation for the firings at the time, but reports surfaced that Roehm was having an affair with Womack, a subordinate, in addition to accepting free meals and drinks from Draft FCB.

Roehm sued Wal-Mart in January for wrongful termination and breach of contract.

Wal-Mart quickly fired back. The retailer alleged that Roehm and Womack, both of whom are married, were romantically involved. To support its claim, Wal-Mart presented an e-mail it had obtained from Womack's wife.

In the e-mail, purportedly from Roehm to Womack, Roehm wrote, "I think about us together all the time. Little moments like watching your face when you kiss me."

Roehm fired back in May, accusing Scott, the company's CEO, of receiving discounts on jewelry and yachts. Additionally, she accused other executives at the world's largest retailer of accepting free gifts like tickets to an Eagles concert valued at $300. Her legal grenade landed just in time for Wal-Mart's annual shareholder's meeting in Bentonville, Ark.

Roehm also used the filing to deny the affair and said the racy e-mail was taken out of context. She also denied violating any gift policy as she believed the advertising agency was going to bill Wal-Mart for her share of the "small, White Castle-sized burgers" she accepted at the dinner.

Undernegotiating and Overpaying

Wal-Mart has vehemently denied the most recent accusations from Roehm.

Talking to reporters at the meeting last week, Thomas D. Hyde, Wal-Mart's corporate secretary, said, "Mr. Scott did not and has not committed ethical violations."

"Wal-Mart's ethical standards are equal to or more stringent than those of more retailers," Hyde said, noting that in his view Scott "undernegotiates and overpays and leaves too much on the table when he buys things. He knows he lives in a fishbowl."

As for the employment of Scott's son at a company owned by Jacobs, the businessman said that the boards of both companies had approved the hiring, as long as Eric Scott did not conduct any business with his father's company.

"Here you've got a person that is no doubt desperate and doing desperate things," Jacobs told ABC News. "What she claims is totally outrageous. It's sinful."

Now Jacobs, the billionaire businessman whom Roehm accused of supplying the pink diamond for Scott's wife, of hiring Scott's son and of providing Scott with a reduced-price boat, has filed a lawsuit against Roehm and her lawyers.

"All I was asking for was a retraction," he said. "Somebody screwed up. Fix it."

The lawsuit seeks damages and lawyer fees.

Jacobs said that he had done nothing wrong and denied every accusation Roehm had made.

Are There Other Players?

Jacobs suggested that the case went beyond Roehm and that parties opposed to Wal-Mart -- he didn't say who -- were using her.

"I don't think it's about Wal-Mart. I think somebody else is driving Julie Roehm with thoughts and ideas about what they can do to hurt Wal-Mart. There's something more here. It's just my instincts," he said.

Roehm did not return a call to her cell phone.

One of Roehm's lawyers named in the suit, B. Andrew Rifkin, said he couldn't comment on the specific details of the case.

But he said that "if courts [started] allowing definition suits to occur for everything lawyers said in pleadings, then no one would ever be able to plead a case."

"It's not surprising that in this type of case somebody would attempt to pursue something like this," Rifkin said. "Frankly, you see these a lot when the big guys try to beat up on the little guys."

At last year's annual shareholder meeting, Roehm oversaw the creation of a 1½-hour-long musical celebrating the retailer, which culminated in a ballad entitled "My Life Began the Day That I Met Sam," a reference to company founder Sam Walton.

The drama this year will now be played out in court.

From MarketWatch:

Wal-Mart Stores Inc. on Thursday posted a modest gain in May same-store sales, narrowly missing Wall Street estimates, battered by weakness in its apparel and home merchandise.

The world's largest retailer has been struggling over several months with anemic sales at stores open longer than a year, the industry's growth measure known as same-store sales.

The company also said rising gas prices have hurt its core shopper since the beginning of the year. Including gas, same-store sales rose 1.3%, and excluding gas sales, Wal-Mart's May same-store sales rose 1.1%.

Analysts, on average, had expected same-store sales to rise 1.4%, according to Thomson Financial.

Shares were down nearly 1% at $50.28 in morning trading.

Total U.S. sales for the four weeks ended June 1 rose 7.7% to $28.26 billion. The company expects same-store sales for the June five-week reporting period to be between flat and 2%.

The Bentonville, Ark.-based retailer said its apparel and home sales continue to be soft, but it expects to see U.S. improvement in these categories beginning in the third quarter, but more significant progress is anticipated during the fourth quarter.

For the May four-week period, sales at the Wal-Mart Stores segment were stronger in grocery than general merchandise, the company said. Perishables had a solid performance for the period, driven by strong same-store sales in bread and dairy.

Sales of live plants and lawn and garden items were above plan, Wal-Mart said, as customers focused on outdoor planting and landscaping.

In April, Wal-Mart's sales got slammed by cold weather, a shift of the Easter holiday into March from April, and a slow down in customer traffic as its core shoppers juggled higher costs on energy and commodities.

The results in April were far worse than expected, marking the lowest in 28 years, sending the price of the stock on a downward curve for most of the month.

Wal-Mart executives said last week that they would slow down the rate of new-store growth and were launching a $15 billion stock buyback program.

The top managers believe fewer new stores will help sales at existing stores, thereby improving same-store sales results.

"Wal-Mart U.S. continues to focus on its plan to improve comparable store sales," said Tom Schoewe, Wal-Mart's chief financial officer. "We are pleased with how strong sales were at Sam's Club during the four-week May reporting period."

By division, Wal-Mart Stores same-store sales rose 0.3%, and sales at its warehouse club unit Sam's Club rose 5.4%.

Sam's Club results were helped by sales to small businesses. Food related categories, particularly in the perishable area, performed well. Outdoor furniture and grill sales were softer than expected.

Beginning in mid-June, Wal-Mart and Sam's Club will sell Dell Inc. desktop computers in its stores and clubs across the U.S., Puerto Rico and Canada. Sam's Clubs will carry a notebook computer as well.

Internationally, the company saw strength in Argentina, Brazil, China, and the United Kingdom.

From Bloomberg via AZcentral.com:

Wal-Mart Stores Inc., the largest U.S. importer, should drop its resistance to more stringent scanning of containers entering U.S. ports that's necessary to reduce the risk of terrorism, a New York City congressman said.

"Wal-Mart is the leading lobbyist who's opposed us," Rep. Jerrold Nadler, a Democrat who wants all containers scanned for bombs and other dangerous materials, said today. "The real issue is, they don't want to spend the money."

Wal-Mart, which has no stores in New York City, and other retailers have balked at the complexity of the proposed program, which could require an additional 2,000 inspectors at each high-volume port and delay transit times, the Arlington, Virginia-based Retail Industry Leaders Association has said.

"While we conceptually support the idea of 100 percent scanning with radiation and imaging equipment, it is our understanding that the technology is not yet ready for worldwide deployment," Wal-Mart spokesman David Tovar said today via e-mail. "This is the determination made by the Department of Homeland Security, not Wal-Mart."

Nadler last year sponsored a bill that would bar all cargo not scanned and sealed from entering the U.S. The measure was later incorporated into a bill with other security recommendations that passed the House of Representatives in January.

Nadler, who spoke at a press conference along a Hudson River esplanade in Lower Manhattan, said under current procedures only about 6 percent of all cargo containers entering U.S. ports are scanned, leaving plenty of potential security holes.

The cost of each additional contained scanned would be about $15, he said, and the technology is being successfully deployed in Hong Kong. It's not clear who would pay for the program.

Largest Importer

Wal-Mart, the world's biggest retailer, is the largest importer in the U.S., according to the Journal of Commerce, bringing 715,000 shipping-container units into the U.S.

Wake-Up Wal-Mart, a group funded by the United Food and Commercial Workers union that has pressed the retailer to boost wages and benefits, recently sponsored a television advertising campaign attacking the retailer for not supporting screening of all U.S. containers with the slogan, "Wal-Mart First, America's Security Second."

Presidential candidates and senators Hillary Clinton and Barack Obama have also called for Wal-Mart to support scanning of all containers entering the U.S.

Fifteen Minutes

Scanning all the additional cargo would add up to 15 minutes transit time for each container, said Al Thompson, vice president of global supply chain policy at the RILA trade group.

"It's got to be evaluated in the real world fully before you can mandate it in the global supply chain," he said today.

A yearlong pilot program is in place to scan and analyze data from all cargo in three lower-volume ports in Pakistan, Honduras and the U.K., Thompson said. Later this year, it will roll out to three more, in Singapore, South Korea and Oman, to determine whether it is possible to scan all containers at busier locations, he said.

Wal-Mart is participating in the program, Tovar said.

Shares of Wal-Mart fell 69 cents, or 1.4 percent, to $50.52 at 4:29 p.m. in composite trading on the New York Stock Exchange.

Check out this wonderful new website from Good Jobs First - http://walmartsubsidywatch.org/

Here is their press release:

Wal-Mart Stores Inc., which is often accused of growing at the expense of smaller retailers, continues to benefit enormously from state and local government economic development subsidies, including 39 deals worth more than $200 million in just the past three years. This according to Good Jobs First, a non-profit research group which today issued an update of its landmark 2004 report Shopping for Subsidies, which found more than $1 billion in subsidies for Wal-Mart facilities.

Details of the 39 new deals, combined with more than 240 deals from the 2004 report, are available on a new searchable website called Wal-Mart Subsidy Watch (http://www.walmartsubsidywatch.org/). The original 2004 Shopping for Subsidies report and other Good Jobs First material can be found at http://www.goodjobsfirst.org/.

"What we said in 2004 still holds true today: Wal-Mart presents itself as an entrepreneurial success story, yet it routinely gets big tax breaks, free land, cash grants and other forms of taxpayer assistance," said Philip Mattera, research director of Good Jobs First.

"That a company with a predatory business model and a poverty-wage labor policy can even qualify for job subsidies suggests many public officials still don't get it," said Greg LeRoy, executive director of Good Jobs First. "When they sit down at the table with Wal-Mart, the prize at stake is not a new Wal- Mart; the prize is access to more market share."

The new subsidy deals benefit 30 stores and 9 distribution centers in 15 states. The stores accounted for $190 million of the $220 million total, an average of $6 million per store. The distribution centers accounted for $30 million, an average of $3 million per facility. The distribution center amount is understated, because several warehouses will enjoy enterprise zone benefits, the value of which cannot be estimated before the centers open and begin hiring.

The state with the most new deals was Illinois with 9. It was followed by Florida and Missouri with 4 each; Arizona, California and Kansas with 3 each; and Colorado, Indiana, Louisiana and Ohio with 2 each. Alabama, Maryland, Minnesota, Texas and Wyoming each had one recent deal. Illinois also accounts for the most deals in the entire Wal-Mart Subsidy Watch database with 38.

From The New York Sun:

Rep. Jerrold Nadler will lead a push today to convince retail giant Wal-Mart to abandon its opposition to scanning 100% of port container that enter the country.

Mr. Nadler, who his scheduled to appear in Lower Manhattan today with union leaders and representatives from the anti- Wal-Mart group WakeUpWalMart, is one of 30 members of Congress supporting the initiative.

In March, the coalition, which included Senators Clinton, Obama, and Schumer, called on the CEO of Wal-Mart, H. Lee Scott, to help shore up "what is one of our most glaring national homeland security weaknesses."

The effort is part of a national grassroots campaign spearheaded by WakeUpWalmart to convince the company, which is among the top container importers, to stop lobbying against 100% scanning. A representative from Wal-Mart could not be reached last night.

P.S. In case you're wondering, as I was, what a "solon" is, check out this definition. It is a "wise lawgiver" or "legislator."

From The Buffalo News:

Next time you shop at Wal-Mart in Amherst, Lockport or anywhere else in the area, chances are good — about 1 in 10 — you will run into a man or woman on Medicaid or some other public health care program.

They’re the ones greeting you at the door or working the cash register.

By Wal-Mart’s own admission, more than half of its workers either go without health insurance or get it through another source.

And of those, about 1 in 5 receives benefits from Medicaid, Medicare, the military or other state programs funded by taxpayers.

How Wal-Mart’s health care policies affect Western New York and the rest of the state is difficult to quantify, although one labor-backed group says New York State taxpayers pay $61 million a year to finance health care for Wal-Mart employees.

Critics point to the 19 states that track large employers — New York is not among them — and say the percentage of Wal-Mart employees on public health care programs is closer to 13 percent.

In 18 of those states, they say, Wal- Mart tops the list of companies with the largest number of employees covered by government health insurance.

If the company’s local and statewide trends mirror the nation, at least 3,600 of Wal-Mart’s New York employees are insured by taxpayer-funded health care programs.

It also would mean that about 350 are in Western New York — and that’s using Wal-Mart’s more conservative figure of 10 percent, not the 13 percent that critics cite.

The chain’s 12 local stores — stretching from Fredonia to Albion — employ about 3,500 people, making Wal-Mart one of the region’s largest private employers.

“This is just one of the multitude of ways the public subsidizes Wal-Mart’s strategy for holding down prices,” said Allison K. Duwe, executive director of the Coalition for Economic Justice in Buffalo. “We should be outraged because we’re subsidizing the richest company in the world.”

Acknowledging flaws

Wal-Mart said that it is impossible to know how many of its employees here or across the state are on public assistance because insurance trends vary from state to state, depending on eligibility requirements.

It is also important to note that a number of retail giants, companies such as Target, Home Depot and Mc- Donald’s, are often near the top of those same state-by-state watchdog lists.

Wal-Mart has acknowledged some of its flaws, most notably the 10 percent of its work force without any health insurance.

In addition, a leaked internal memo in 2005 revealed that 46 percent of the children of Wal-Mart’s 1.3 million employees remain uninsured or on Medicaid.

That same year, the company introduced a new, lower-cost health insurance program that last year produced an 8 percent growth in company-covered employees.

“The bottom line is that we’ve increased eligibility and affordability, leading to more and more people coming off public assistance,” said Steven V. Restivo, Wal-Mart’s director of corporate affairs for the Northeast Region.

Public debate over Wal-Mart the corporate citizen, which has gone on for years, gained new life last month when Sen. Hillary Rodham Clinton, DN. Y., lashed out at her old ally during a debate of Democratic presidential candidates in South Carolina.

Clinton, a member of Wal-Mart’s board of directors when she was first lady of Arkansas, the retailer’s home state, was surprisingly tough in her response to a question about the chain.

“Sen. Clinton,” asked NBC News anchor Brian Williams, “is Wal-Mart a good thing or a bad thing for the United States of America?”

“Well, it’s a mixed blessing,” Clinton responded. “How so?” Williams asked.

Clinton went on to explain that when the company started, it brought much-needed goods into the rural areas of states such as Arkansas.

“But as they grew much bigger,” Clinton added, “they have raised serious questions about the responsibility of corporations and how they need to be a leader when it comes to providing health care and having safe working conditions and not discriminating on the basis of sex or race or any other category.”

While Clinton’s comments were viewed as a slap in the face to America’s retail leader, she is simply the latest in a string of politicians at all levels of government to criticize Wal-Mart’s employee pay and fringe benefits.

Trying to instill shame

A number of states, from Alabama to Wisconsin, have taken to publicizing the names of big companies with a large number of employees on Medicaid or other forms of public assistance. Wal-Mart usually tops those lists.

State officials say the lists are their way of trying to shame their larger, wealthier employers into improving health care benefits.

Wake Up Wal-Mart, a labor-backed group in Washington, D.C., took that strategy a step further and applied the Wal-Mart trends in the 19 states that track the retailer to those states that do not.

In New York, Wal-Mart’s reliance on Medicaid and other state programs costs taxpayers $61 million a year, the group said.

“They pay poorly in every state, and their health care is poor in every state,” said Chris Kofinis, a Wake Up Wal- Mart spokesman.

Kofinis said the group’s estimates have proven to be conservative.

“In Arizona, we estimated the cost to be about $2 million,” he said. “In the end, the real cost was well over $10 million.”

Massachusetts released a report in February that found 6,070 Wal-Mart employees and dependents on Medicaid or other state programs.

It also estimated the cost to taxpayers at $7.2 million a year.

Unlike Massachusetts, New York does not track the health insurance practices of large employers, although a current bill in the Assembly would require that type of monitoring by the state.

The absence of good reliable information about Wal-Mart’s impact on New York was noted in a 2005 study by New York University’s Brennan Center for Justice.

The center, like Wake Up Wal- Mart, relied instead on data and information from other states to offer a Wal-Mart report card of sorts.

One of its researchers, Annette Bernhardt, deputy director of the center’s poverty program, later wrote an opinion article that criticized the chain’s efforts at health care reform.

“The good news is that the country’s biggest low-wage employer is responding to a groundswell of voices who are exposing a very real crisis, three decades in the making,” Bernhardt wrote. “The bad news is that Wal-Mart clearly has no interest in making anything except cosmetic changes.”

Some states, most notably Maryland, have tried to force Wal-Mart’s hand by adopting laws that require large employers to pay more for employee health care.

Setting goal of 2012

In Maryland’s case, the “Wal-Mart law” was struck down by a federal court, which said that it violated federal laws.

“Not only will these bills fail to control the soaring cost of health care, they will cost jobs and slow economic growth,” Restivo, the Wal-Mart spokesman, said in an e-mail interview. “Sadly, legislatures that pass these bills and impose arbitrary mandates on large employers are making their states unfriendly for business.”

Wal-Mart’s preference has been to push for national health care reform as part of the Better Health Care Together partnership.

The labor-management coalition, launched three months ago, is dedicated to achieving a new, improved American health care system by 2012. The coalition includes Wal-Mart, AT&T, the Communications Workers of America and the Service Employees International Union.

“Americans are desperate for solutions to this country’s health care crisis, and our coalition is a key and growing forum for meeting that need,” Wal-Mart Chief Executive Officer H. Lee Scott Jr. said in a news release. “Clearly we are building broad-based momentum for getting something done about our broken health care system.”

From The New York Times:

The world’s largest retailer is slowing down. Again.

After decades of staggering growth, which blanketed suburban America with thousands of its giant stores, Wal-Mart will reduce the number of new supercenters to be opened this year by nearly 30 percent, or roughly 75 stores, the company said here Friday during its annual shareholder meeting.

The store pullback, the second in less than six months, may be the biggest in the company’s 45-year history, and suggests that Wal-Mart is reaching a turning point.

Once seemingly invulnerable, Wal-Mart has begun to stumble, with sales gains at individual stores falling to their lowest levels in decades in 2006. Opening new stores at the rate of one a day has not helped; they have taken attention (and resources) away from aging outlets in need of renovations and at times have snatched sales from nearby older stores.

Rather than relying heavily on new Wal-Marts, executives are now more focused on squeezing sales and profits out of older ones.

The announcement, combined with the company’s decision to increase its share buyback, impressed investors, who sent shares of Wal-Mart up $1.87, or almost 4 percent, to $49.47.

By cutting back its expansion, Wal-Mart is following the advice that analysts have given the company for years: focus on obtaining the best possible return on investments, not just on growth for its own sake.

This year, rather than opening 265 to 270 stores, as Wal-Mart had previously planned, it will open 190 to 200, which will produce enormous cost savings.

For the next three years after that, Wal-Mart plans to open 170 supercenters a year — well below its average. Executives at the shareholder meeting strongly defended H. Lee Scott Jr., the chief executive of Wal-Mart, against charges that he had an improper business relationship with a vendor. The company also disclosed an increase in its stock buyback program and claimed early success in efforts to fix a wide range of problems in United States stores.

Reacting to allegations by Julie Roehm, a fired former advertising executive, that Mr. Scott bought boats and a diamond ring from vendors at discounted rates, Thomas D. Hyde, Wal-Mart’s corporate secretary, said, “Mr. Scott did not and has not committed ethical violations.”

“Wal-Mart’s ethical standards are equal to or more stringent than those of more retailers,” he added. “In my opinion,” he said, Mr. Scott “undernegotiates and overpays and leaves too much on the table when he buys things. He knows he lives in a fishbowl.”

In another nod to Wall Street, Thomas M. Schoewe, the chief financial officer, said Wal-Mart would buy back $15 billion worth of stock. Wal-Mart’s last buyback program was $10 billion. The move is expected to bolster earnings per share and, eventually, the stock price, which has languished for much of the year.

Wall Street has begun to balk at the number of new stores Wal-Mart opens every year because the retailer’s capital expenses have grown, on average, 19 percent a year over the last decade, faster than its sales and profit growth.

Last fall, to assuage investors, Wal-Mart said it would reduce the increase in new store space this year by less than 1 percent and choose locations for new stores more carefully. Most people thought that cut would be the last for the year.

But after a closer examination, Wal-Mart chose to chop again. Mr. Schoewe said the company was “committed to providing better returns.”

“The message you are hearing today,” he told shareholders, “is that we have found a real nice balance between appropriate return and the growth of your great company.”

Mr. Schoewe called the reductions a “moderation” and emphasized that Wal-Mart would still add 20 million square feet of new store space this year. “We are committed to growth,” he said.

But the cutback is significant because each Wal-Mart supercenter can book sales of $100 million a year, and the giant stores have propelled much of Wal-Mart’s growth — an increase of more than 13 percent a year, on average, in the last decade.

Wal-Mart remains the dominant retailer in the United States. In 2006, it earned $11.28 billion, with sales of $345 billion.

But sales at stores open at least a year often increased only 1 percent to 2 percent a month throughout the second half of 2006, well below the growth rate at Wal-Mart’s rival, Target, unsettling investors.

Fashionable clothing and home décor did not sell and higher fuel costs harmed Wal-Mart’s working-class customers.

Renovations to older stores have bolstered sales, but Mr. Scott said Wal-Mart must improve its merchandise and store operations — particularly the wait times at cash registers.

The “economic environment is tough for our customers but we just have to work our way through these difficulties,” he said. “We will prevail.”

Our latest press release:

Today, Wal-Mart held its annual shareholders meeting. In response, WakeUpWalMart.com issued the following statement attributable to Paul Blank, campaign director for WakeUpWalMart.com:

“Wal-Mart and Lee Scott are living in a dangerous state of denial. The past year has been a total disaster for Wal-Mart. Not only did the company have its worst annual same store sales growth in 27 years, but Wal-Mart failed to execute almost all of its stated objectives for the year, including being denied a bank in the face of unprecedented opposition, a fashion disaster, and an inability to expand into new markets and new demographics.

Most importantly, it is outrageous that Lee Scott would get up on stage and talk about what Wal-Mart is doing on health care when more than half of Wal-Mart’s employees, over 735,000 employees, have no company health care. Lee Scott needs to face the brutal reality that Wal-Mart creates for its workers, their families, and the country. Wal-Mart leaves 53 percent of its workers without company health care, it pays poverty-level wages leaving hundreds of thousands ofWal-Mart workers and their families in the face of financial disaster, faces over 76 wage and hour lawsuits, and has chosen to turn its back on Sam Walton’s commitment to ‘Buy American' when, today, Wal-Mart buys from anywhere but America and is now China’s #1 trading partner.

As Wal-Mart’s own advertising firm (GSD&M) argued, the #1 business problem facing Wal-Mart today is reputation. And, Wal-Mart’s reputation is at an all-time low. What Wal-Mart has failed to understand is that ‘values matter’ to consumers, not just value. The American people are increasingly turning their back on Wal-Mart because the company doesn't reflect America’s values or their own.

Despite Lee Scott’s claim that our campaign “is not working and is not going to work,” the facts, whether Wal-Mart wants to believe them or not, are as plain as can be.

* According to Wal-Mart’s own survey, 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)

* A majority of American believe Wal-Mart should face government regulation for its failure to provide affordable health care and pension security to its employees. (Wall St. Journal/NBC poll, 2006)

* The country is divided on whether or not Wal-Mart is good or bad for America. According to a L.A. Times/Bloomberg poll 38% of Americans said Wal-Mart is good, while 31% of Americans said Wal-Mart is bad. (LA Times/Bloomberg 9/2006)

* Overall, Wal-Mart’s public image ran