From Forbes.com:

Merrill Lynch has given Wal-Mart investors yet another reason to stop smiling.

On Thursday, the firm's long-suffering shares fell 2.0%, or 87 cents, to close at $43.32 after Merrill downgraded the world’s largest retailer to “sell.”

Merrill analyst Virginia Genereux cut her rating on the Bentonville, Ark.-based company from “neutral” due to concerns that profit margins are eroding at its stores in the United States.

In her report, Genereux said she anticipates margin erosion in the company's U.S. division is set to continue, and may even increase, due to years of weakening same-store sales and poor expense management...

In early May Forbes.com listed Wal-Mart's Chief Executive Officer H. Lee Scott as one of the five most overpaid bosses, with a six-year average compensation of $9.1 million, despite the company's stock being down 16% over the last five years.

Click here for the full article.

From the Milwaukee Journal Sentinel:

Paying rent to itself cuts millions off Wal-Mart's tax bill

Madison - Wal-Mart Stores Inc. has avoided millions of dollars in state taxes by paying rent on 87 Wisconsin properties in a way that the state Department of Revenue calls an "abuse and distortion of income."

As a result, state tax auditors say, Wal-Mart owes more than $17.7 million in back corporate income taxes, interest and penalties for 1998, 1999 and 2000. More could be due for later years.

Revenue Department lawyer Mark Zimmer argues that the world's largest retailer is not paying its fair share of taxes that support public schools, local police and fire departments and the highways it uses to transport what it sells in Wisconsin.

As a result, Wal-Mart shifts the burden of paying for those services "to individuals and small businesses who are unable to set up such elaborate mechanisms," Zimmer told the Tax Appeals Commission, which is considering the matter.

The charges are unusually aggressive for the state's tax-collection agency, and the case is being closely watched by tax professionals. Legislators, too, have become involved; some want to change state law to end the technique Wal-Mart is using.

Wal-Mart says it has not done anything wrong but is merely taking advantage of an overlap of state and federal tax laws: To reduce its taxes and costs, it sets up one subsidiary to run its stores and another subsidiary to own its real estate. The operating subsidiary pays rent to the real estate subsidiary and takes a tax deduction for the rent, even though that money eventually ends up in the corporation's own pocket.

"Anything Wal-Mart can do to lawfully lower its costs allows the company to pass it along through lower prices," said company spokesman John Simley. "This is a lawful (tax) structure in Wisconsin."

Wal-Mart paid $26.2 million in state and local Wisconsin taxes, including property, state income and unemployment taxes and licenses and fees, in the last year, Simley said.

He declined to break down the $26.2 million by type of taxes. But City of Milwaukee records say the company will pay $1.2 million in property taxes on its five stores in the city this year. In Madison, the company will pay $151,654 in property taxes on four properties.

Simley said Wal-Mart also collected $187.2 million in sales taxes for the State of Wisconsin last year - or 4.5% of all yearly sales tax collections in the state.

Caught up in the budget
The Tax Appeals Commission case is part of the Capitol impasse over the next state budget.

In their version of the state budget, Democrats who control the state Senate outlawed the tax-lowering technique used by Wal-Mart.

The sponsor of that change, Sen. Russ Decker (D-Schofield), said Wal-Mart and others who use the deduction are "scamming the system, and we ought to plug the loophole."

Wal-Mart is the "poster child" for corporations that don't pay their fair share of taxes, Senate Majority Leader Judy Robson (D-Beloit) said at Thursday's meeting of the special legislative committee trying to negotiate a compromise state budget.

"There are many taxes that we pay in Wisconsin," Simley said.

Other companies use a similar technique, he said, although Wal-Mart is the only company fighting the state about it before the Tax Appeals Commission. In other states, companies including AutoZone Inc. of Memphis, Tenn., have fought similar cases.

A representative of Kohl's Corp., Menomonee Falls, which owns department stores across the nation, said it does not use the tactic. A Sears spokesman said it also does not use the strategy.

Wal-Mart's use of the technique also is part of a larger Capitol debate over whether Wisconsin should modify its entire corporate income tax system by instituting "combined reporting." Under that system, all related companies file one income tax return. Now, all companies doing business in Wisconsin file their own returns, even if two or more of them are owned by a single parent company.

It is only because of this separate reporting status that the technique used by Wal-Mart works.

Decker and Senate Democrats have proposed combined reporting as part of the budget talks. But Gov. Jim Doyle, also a Democrat, opposes it, as does the Republican-dominated Assembly.

Doyle won't make a decision on whether to sign into law Decker's proposal to outlaw the Wal-Mart technique until he knows whether it is part of the final budget passed by the Legislature, said Doyle aide Matt Canter.

If that change becomes law, Simley said he did not know what it would mean for Wal-Mart's prices, expansion plans or employment in Wisconsin.

Wal-Mart is Wisconsin's largest private employer, with 28,920 workers. The average hourly wage of Wal-Mart's full-time workers in Wisconsin is $10.91, Simley said.

How it works
Many states are trying to crack down on the technique used by Wal-Mart, commonly called a "captive REIT," or real estate investment trust.

"In effect, Wal-Mart pays rent to itself and takes a deduction for doing so," according to the Revenue Department claim.

Here's how it works:

Wal-Mart sets up two subsidiaries - a company to run its stores, and another entity, called a real estate investment trust, to own the real estate they sit on.

The operating company pays rent to the REIT, taking the rent as a deduction and thus lowering its profits taxed by Wisconsin.

The REIT in turn pays the rent as part of a dividend to the parent company. The dividend is tax-free under state and federal law.

The state Revenue Department contended that the company is organized that way merely to avoid taxes and therefore disallowed the deduction, resulting in the multimillion-dollar dispute.

Simley said that although the structure does save taxes, there are other reasons to be organized that way, including letting specialists in real estate manage the properties while other managers actually run the stores.

States have usually lost their attacks on the REIT strategy elsewhere, said Michael Martens, a lawyer and certified public accountant. He is managing director of the UHY accounting firm in Boston and an expert in the cases.

Wisconsin officials declined to say how their case might differ from those in other states. They noted that decisions of the Tax Appeals Commission can be reviewed by the courts. Both sides expect that to happen in this case.

Richard Pomp, a professor at the University of Connecticut Law School and an expert in state tax law, said he is surprised by Wisconsin's challenge of Wal-Mart over the REIT deduction. The solution, he said, is not a petition to the Tax Appeals Commission but rather legislation to require combined reporting.

"For a state to not have combined reporting, and then to complain about strategies that are facilitated by a lack of combined reporting, is somewhat disingenuous," he said.

Decker, the sponsor of Wisconsin's combined-reporting legislation, said the state should be doing whatever is necessary to collect its fair share of taxes from Wal-Mart.

"It's just a fairness issue," he said. "Go down on Main Street - these businesses are being economically disadvantaged to these big corporations."

Martens said the increasing number of challenges to captive REITs is a sign of the times.

"Everyone is being a little more conscious about how things appear, and states want you to pass the 'red face test,' " he added. "Can you explain what you are doing and do it without a red face?"

Without issuing a public announcement, Wal-Mart pulled two brands of dog treats from its shelves after receiving complaints from customers with sickened pets. The treats were manufactured in China.

From the AP:

LITTLE ROCK -- Wal-Mart Stores Inc. quietly stopped selling two brands of dog treats in July, after customers voiced concerns that the Chinese products may have caused their pets to fall ill, but no recall has been announced, a company spokeswoman confirmed.

The world's largest retailer started pulling Chicken Jerky Strips from Import-Pingyang Pet Product Co. and Chicken Jerky from Shanghai Bestro Trading on July 26, spokeswoman Deisha Galberth said late Monday.

Wal-Mart's action follows a massive pet food recall in March, when retailers began pulling products made in China that included the chemical melamine - a contaminant that's a byproduct of several pesticides.

Galberth said she did not know what the specific customer complaints were about the dog treats, nor when the testing would be complete.

Galberth said she did not immediately know if the treats were sold at every Wal-Mart store.

Read the entire AP article

From Reuters:

CHICAGO (Reuters) - A union-backed group ramped up its efforts against Wal-Mart Stores Inc. on Thursday with a new commercial and a letter from the president of the American Federation of Teachers asking the retailer's chief executive to change some labor practices.

Wake Up Wal Mart?.com, which calls itself "America's Campaign to Change Wal-Mart," also added four staffers a few weeks after two left to join U.S. Democratic presidential candidate John Edwards' campaign staff. The new workers all worked on Democratic campaigns in the past.

Groups such as Wake Up Wal Mart?.com have begun various grass-roots campaigns to draw attention to what they say are poverty-level wages, inadequate health care benefits and other issues with the world's largest retailer.

The advertising campaign, called "Send Wal-Mart Back to School," highlights issues such as taxpayers dealing with the burden of Wal-Mart employees' health care costs. A television commercial is set to air on Thursday in 26 U.S. markets including Boston and Las Vegas, the group said.

Wake Up Wal Mart?.com will also ask shoppers to sign a pledge promising not to buy school supplies at Wal-Mart this year unless the company agrees to pay a living wage, end discrimination against women, not stand for any illegal child labor and provide employees with more affordable health care.

That move comes after Wal-Mart in late July slashed prices on back-to-school merchandise such as pencils, pens and notebooks by 10 to 50 percent to try to reignite sales.

"We know it's tough right now and Americans are looking to us to provide the best value on back-to-school shopping lists," a Wal-Mart spokesman said.

Wal-Mart reported a lower-than-expected quarterly profit on Tuesday and cut its earnings forecast as economic pressures such as higher fuel prices leave shoppers with less to spend.

The letter from American Federation of Teachers President Edward Mc Elroy? asks CEO Lee Scott to address evidence of "illegal child labor, violating wage and hour laws, paying poverty-level wages, discriminating against women, and shifting the burden of employee health care to taxpayers."

A Wal-Mart spokesman said the company creates thousands of jobs each year, many in areas in need of opportunity.

"Our associates choose to work at Wal-Mart because they know we offer real career opportunities and provide competitive pay and affordable health care," the spokesman said.

The new Wake Up Wal Mart?.com staffers named on Thursday are Deputy Campaign Director Meghan Scott and Senior Advisers Nick Baldick, Richie Ross and Jeremy Van Ess.

The announcement comes a day after Wal-Mart issued a report outlining its impact on factory working conditions and the lives of factory workers. Wal-Mart said it audited 8,873 factories in 2006, 15 percent more than it looked at in 2005.

Children across the country are preparing to go back to school.

It's time for us to send Wal-Mart back to school, too.

For years, Wal-Mart has earned failing grades for its treatment of American workers, children, and taxpayers.

Wal-Mart earns an "F" for paying poverty-level wages. Wal-Mart earns an "F" for breaking child labor laws, again and again, right here in America. And Wal-Mart earns an "F" for pushing its health care costs onto taxpayers.

Please write a letter to the editor to tell your community about Wal-Mart's failing grades.

Wal-Mart costs taxpayers billions of dollars because Wal-Mart fails to provide affordable health care to its workers. Fewer than half of Wal-Mart's workers are covered by the company's health care plan. Wal-Mart cost taxpayers an estimated $1.37 billion in 2005 in public health care and may cost taxpayers $9.1 billion from 2006 to 2011.

Every tax dollar that goes to Wal-Mart is a tax dollar that could otherwise go to our schools. It is money that could be used to buy textbooks, repair buildings, and help children learn.

Shouldn't our tax dollars go to schools, not Wal-Mart?

Please write a letter to the editor and help send Wal-Mart back to school.

Wal-Mart's failing report card is a disgrace. Wal-Mart's corporate irresponsibility is wrong, it is un-American, and it must stop. With over $12 billion in profits last year, Wal-Mart can afford to do the right thing.

With over 381,000 WakeUpWalMart.com supporters in all 50 states, we have the power to change Wal-Mart and change America for the better.

But changing America begins with you.

This school year, let's make sure Wal-Mart learns its lessons.

Write your local newspaper today.

From Reuters

LOS ANGELES (Reuters) - Wal-Mart Stores Inc. has agreed to pay more than $3.9 million to about 50,000 current and former employees in California who were underpaid overtime and other wages, the state's labor commissioner said on Tuesday.

The world's largest retailer also agreed to pay $198,900 in civil penalties to the state, Labor Commissioner Angela Bradstreet said in a statement.

In 2005, Wal-Mart voluntarily notified the labor commissioner that errors in its payroll processes had led to underpayment of overtime and other wages. It pledged to correct the problem and pay affected workers all they owed.

"This is a matter we discovered and reported ... and the situation has been corrected," said Wal-Mart spokesman John Simley. "Everyone who was owed money is being paid with interest and we have added safeguards so that these errors don't happen again."

The payment errors affected all of Wal-Mart's California workers from February 1, 2002 through January 19, 2007.

Many of the affected employees have already received checks for overtime and interest, and remaining payments will be issued within 45 days, the commissioner's statement said.

Bradstreet said Wal-Mart had "set a positive example for other employers who may be out of compliance because it illustrates how they can work with us to properly compensate workers as well as meet legal requirements."

(Reporting by Nichola Groom and Brad Dorfman)

Today, Wal-Mart reported a disappointing second-quarter profit that fell short of expectations, and lowered its earnings forecast, causing the stock to fall the most in five years.

In response, Laura Tatum, spokeswoman for WakeUpWalMart.com, issued the following statement:

"Once again, it is clear that Wal-Mart's public image woes pose a serious threat to the company’s success.

Wal-Mart and CEO Lee Scott thought the American people wouldn’t listen to the truth about Wal-Mart’s immoral business practices. Lee Scott was wrong. Even Wal-Mart’s former advertising agency, GSD&M, warned in an internal memo, leaked this year, that reputation was the #1 challenge facing the company.

On issue after issue, from health care to child labor, Wal-Mart has proven itself to be out-of-step with the American people.

As America’s largest private employer, Wal-Mart’s stubborn refusal to change its irresponsible business practices hurts its workers, their families, our nation… and Wal-Mart’s own profits.

Wal-Mart is now at a serious crossroads. Wal-Mart can choose to continue down a path of empty publicity stunts that further alienate the American public and result in sluggish profits. Or, Wal-Mart can choose to embrace a new path where the company makes substantive changes and becomes a responsible employer that provides affordable health care, pays a living wage, and protects American jobs.

For Wal-Mart's sake, and the sake of our country, Wal-Mart must wake up and change into a responsible and moral employer."

From CNNMoney

Wal-Mart has already increased its price "rollbacks" by more than 20 percent this year over last year, but the discount giant is still struggling to get its mostly lower-income consumers to shop a little bit more at its stores.

Worse, the discounter warned Tuesday that the problem is spreading beyond its U.S. stores to some of its international markets, including Mexico and Canada.

"We need to improve our underlying performance while we compete with a difficult macro-economic environment in many markets, including the U.S., Mexico and Canada," Wal-Mart Chief Financial Officer Tom Schoewe said in a pre-recorded call to discuss the company's second-quarter results.

Wal-Mart's (Charts, Fortune 500) predicament rattled investors, especially since Wal-Mart's status as the world's largest retailer also makes it a proxy for the health of the consumer.

Its shares slumped more than 4 percent in pre-market trading Tuesday.

For its second quarter, the company posted profits of 76 cents a share, meeting analysts' forecasts on sales that were slightly below what Wall Street was expecting. Sales in the quarter rose 8.8 percent to $91.99 billion versus expectations of sales to reach $92.6 billion.

By another measure, sales at Wal-Mart stores open at least a year, a key gauge of retail performance known as same-store sales, rose 1.9 percent in the quarter.

More importantly, Wal-Mart warned on its full-year profit, saying it now expects profits to be $3.05 to $3.13, down from its earlier guidance of $3.15 to $3.23 a share.

Analysts had expected the retailer to log a profit of $3.15 for the full year.

"This was a challenging quarter. Our underlying performance was not what we had expected of ourselves," Wal-Mart CEO Lee Scott said during the call.

He added that Wal-Mart's merchandise "overall was not where it needs to be."

Although Wal-Mart's grocery, pharmacy and entertainment products sold well during the quarter, which also marked the start of the important back-to-school shopping period, the retailer is still struggling will soft sales in clothing and home-related products.

The back-to-school period is typically the second most-important selling season for retailers after the holiday gift-buying months of November and December.

During the quarter, Wal-Mart slashed prices on thousands of school-related products on hoped of spurring sales and grabbing a bigger chunk of the estimated $18.4 billion dollars that Americans will spend on school products.

Still, Scott said Wal-Mart's core paycheck-to-paycheck consumers were too constrained by economic pressures.

"Their top economic concerns are increased cost of living and gas prices and many [of our] customers don't have much money left at the end of the month," Scott said. "We understand the dynamics of our customers and what needs to be done to drive more momentum in the third quarter."

"The one thing that isn't changing is our mission," Scott said. "We will deliver great products at low prices."

Eduardo Castro-Wright, CEO of Wal-Mart Stores U.S.A, echoed Scott's concerns.

"Higher energy, gas and interest rates are all stretching [our customers'] paychecks," Castro-Wright said. The one bright spot, he added, was electronics.

He said Wal-Mart's recent efforts to beef up its offerings of name-brand electronics was paying off. "Our electronics sales were above plan and ahead of last year," he said. "We're also happy with sales of our Dell PCs which we introduced to Wal-Mart and Sam's Club last month."

From The Detroit Free Press

Shoppers watch curiously as the college students, carrying signs made from flimsy cardboard, bounded from school buses that had just pulled up in front of Wal-Mart.

It was 12:27 p.m. Saturday as the group walked calmly toward Van Dyke, on the edge of the Warren store's property.

"Hey, hey, ho, ho," they yelled. "Sweatshop labor's got to go!"

About 125 members of United Students Against Sweatshops -- a group made up of students from colleges across the country -- protested for the rights of workers at a factory in the Dominican Republic. The factory makes Hanes clothing, which Wal-Mart sells.

The students were in town this weekend for a conference.

Workers' rights is an important issue everywhere, including the United States, said Neil Sardana, 25, a University of Michigan graduate student studying public policy.

"For us to have strong working conditions, we have to fight for strong working conditions in thousands of communities throughout the world," he said.

At 12:28 p.m., the first honk came from a passerby.

"Nobody should be exposed to working conditions that impinge on a human being's right to dignity, respect and a decent wage," said Tim Hillman, 30, a University of Colorado student.

It was 12:40 p.m. when they marched past the store, passing out informational flyers to shoppers, chanting: "Hey get off it, people before profit."

Within minutes, store managers were out front, asking what was going on.

Protesters gave them flyers, too.

By 1 p.m., a manager was on the phone with the company's media relations department.

By 2:40 p.m., Wal-Mart responded to inquiries from the Free Press in an e-mail.

Wal-Mart is "helping to improve the lives of workers by making sure supplier factories making products sold in Wal-Mart comply with the labor laws and standards of the country where they are located," wrote Kevin Gardner, senior manager of International Corporate Affairs.

None of this, however, makes any difference to Wal-Mart shopper Sheryl Baker.

"I love Wal-Mart," the Detroiter said, folding up a flyer. "Everybody's got something they want to protest."

From SE Texas Record

A former Wal-Mart employee, Andi Bailey, believes her testimony in a slip-and-fall case led to her termination. She is now seeking $1 million in damages from her former employer.

As a witness in a personal injury case against Wal-Mart, Bailey alleges she was told to lie under oath and commit perjury. Bailey claims she called Wal-Mart maintenance about a substance on the floor, but before they could respond, someone slipped and became injured.

According to the lawsuit, Wal-Mart's attorney told Bailey to say she did not call maintenance before the incident.

Calling in sick on May 11 and May 14 because her child was ill, Bailey states she was given permission to miss work. When she returned to work 10 days later, she was fired. The complaint states Bailey was terminated for missing work without permission.

Andi Bailey believes she was fired for telling the truth.
She seeks damages in excess of $1 million for lost wages, mental anguish, embarrassment and humiliation.

The wrongful termination suit was brought against her former employer of four years, Wal-Mart, on July 31 in federal court in the Eastern District of Texas.

Plaintiff is represented by Charles Clark of Tyler.
U.S. District Judge T. John Ward will preside.

Wal-Mart has not responded to the allegations.

From the Times Herald-Record

Wal-Mart and Verizon have sued the Town of Thompson, seeking a reduction of their assessments that would take more than $225,000 in tax revenue away from the town, county and school districts.

If the companies are successful, other taxpayers would have to cover the funding gap.

Wal-Mart wants to cut its assessed value by more than half, from about $13.5 million to $6.5 million. Town officials say this is the first time the retailer has challenged its assessment since opening a 200,000-square-foot Wal-Mart Supercenter on Route 42 in 1999.

About $195,000 of tax revenue would be taken away from the town, county and Monticello School District if the Arkansas-based retailer wins its challenge.

"The Town Board busted its butt and bent over backwards to bring Wal-Mart here and support them," said Bill Rieber, Thompson's deputy supervisor. "I think the assessment is fair, and I resent the fact they are challenging it, especially to the extent they are doing it."

Wal-Mart did not return calls for comment.

Town assessor Nora Hughson wonders how the retailer came up with $6.5 million as its fair assessed value. Wal-Mart claims its market value should be $12 million, not the $18 million currently stamped on its property. But even then, its assessment would be $8.9 million using the town equalization rate.

"Where they got $6.5 million is beyond me," Hughson said.

This isn't the first squabble between Thompson and Wal-Mart. In 2004, Town Supervisor Tony Cellini threatened to shut the store down because its floors were filthy and garbage was strewn throughout the building and in the parking lot.

Verizon, the national telephone titan, already received $1.2 million off its assessment this year after a hearing with Thompson's Board of Assessment Review. Now, the utility is suing Thompson for an additional $1.1 million reduction on the value of its telephone poles and lines.

"We don't agree with the assessment, and we're just seeking to be treated fairly and equitably," said Heather Wilner, spokeswoman for Verizon.

Verizon requested similar assessment cuts last year in Bethel, Callicoon and Cochecton, Hughson said.

Assessments in the Town of Thompson have been challenged several times since the town did a revaluation in 2004, but town officials say the discrepancies until now have been for a few thousand dollars, mostly on homes and smaller businesses.

"Usually the challenged amount isn't so large," Rieber said.

From The News & Observer

Wal-Mart workers win class-action status About 100,000 complaints in S.C. similar, judge decides

The Associated Press

WALTERBORO, S.C. - Wal-Mart must face a class-action by South Carolina employees claiming the company forced them to work through breaks and off the clock, a judge ruled.
Current and former hourly workers from July 31, 1999, forward can sue in a single case, Judge Perry M. Buckner III in Walterboro, said. The group of about 100,000 workers is large enough and their claims similar enough to allow a class-action lawsuit, Buckner said.

"Plaintiffs' claims are typical, irrespective of varying fact patterns underlying individual claims, because they allege that they were not paid for work performed off-the-clock and were denied rest and meal breaks," Buckner wrote.

Wal-Mart faces at least 70 U.S. wage-and-hour suits by employees claiming it failed to pay for all hours worked. The South Carolina decision is the fourth since May 1 allowing similar group lawsuits. The company won a ruling in New York in June denying the status to a suit there.

"Even more courts around the country have found that cases like this are not properly suited for class treatment," said Wal-Mart spokesman John Simley. Wal-Mart doesn't have a scorecard on which cases have been denied class status because the suits are in different stages of litigation, he said.

Wal-Mart may appeal the South Carolina ruling, he said. "We are disappointed with the court's decision and are reviewing our options," Simley said.

The class-action status allows all the workers' claims to be decided in one case, increasing pressure on the company to settle, and lets workers who couldn't afford to sue on their own share in any payment for damages.

"There isn't enough money per person to make it worth the cost" of pursuing a suit individually, workers' attorney Rodney Bridgers said. "Now they're going to be able to prosecute their case for lost wages."

The workers will ask Buckner for a trial in 2008, he said.

The South Carolina workers, who filed the suit in 2001, claim "Wal-Mart, through understaffing, does not allow employees to have meal or rest breaks that they've earned," Bridgers said.

Wal-Mart also forces its employees to work without pay before and after shifts, Bridgers said. "According to Wal-Mart's own records, they're operating cash registers and other electronic devices while they're off the clock."

From Community Press

More than 225 people packed the Burlington Elementary gym on Aug. 1 for a Boone County Planning Commission public hearing regarding a proposed Wal-Mart Supercenter at the corner of U.S. 42 and Weaver Road.

Wal-Mart wants to build the 184,000-square-foot Supercenter on 35 acres of land. Accompanying the store would be two 8,000-square-foot "quality restaurants", a 3,000-square-foot fast-food restaurant, and a 10,000-square-foot retail center.

The land, currently zoned industrial, needs a commercial zoning change before the project can proceed.

Cindy Hodson, spokesperson for the Boone County Residents for Responsible Growth, was on hand with a group of people displaying anti-Wal-Mart signs. The group has collected 4,000 Boone County signatures opposing Wal-Mart since early June.

"We oppose the rezoning," Hodson said. "The zoning is not consistent with the 2005 Boone County Comprehensive Plan concerning traffic, economic development and fiscal responsibility."

Ronald Hendricks of Florence echoed Hodson's sentiments.

"There is already a traffic jam on that road everyday," Hendricks said. "This store would bring more cars and people. What are you going to do with them when you can't handle the situation you have already got?"

Robert Matko, a traffic engineer hired by Wal-Mart, was on hand to present traffic study findings.

"Wal-Mart is prepared to spend $1.5 million on roadway improvements to make sure they mitigate the impact of the development," Matko said. "These improvements will maintain or even improve existing road conditions."

Some road changes Wal-Mart would like to make include adding right-hand turn lanes, interconnecting traffic signals, and adding traffic signals on side streets.

A few residents even supported Wal-Mart's proposal.

"We've got pile of junk where the old warehouse was," Marvin Hennemann, of Florence, said. "The payroll taxes coming into the city will help keep our taxes down."

Henneman went on to say that the unified development would be appropriate for the land it sits on.

The Planning Commission's zone change committee will discuss the plan Aug. 15 at 5 p.m.

From Reuters

NEW DELHI/MUMBAI (Reuters) - Wal-Mart Stores Inc. and Bharti Enterprises signed a much-delayed agreement on Monday that gives the world's largest retailer a foothold in the fast-growing but highly controlled Indian market.

The equal joint venture, Bharti Wal-Mart Private Ltd., is for cash-and-carry, or wholesale, and back-end supply chain management, the companies said in a statement.

"We are pleased to be a partner in developing this sector which is set to become a significant engine of India's economic growth," Bharti Chairman Sunil Mittal said.

India's retail industry, valued at nearly $350 billion, is forecast to double in size by 2015, with modern retail's share of that also quickly increasing from about 3 percent now.

India allows foreign single-brand retailers to take up to 51 percent in a joint venture with a local firm, while multiple-brand retailers like Wal-Mart are limited to cash-and-carry, or wholesale, and franchise deals.

Opening up the fragmented industry, which is dominated by family-run shops, has triggered political concerns and protests by small shop owners who fear massive job losses.

Bharti Wal-Mart will open 10 to 15 cash-and-carry facilities over seven years, employing about 5,000 people. A typical store would occupy 50,000-100,000 sq. ft., dwarfing an average Indian store of about 200 sq. ft.

The first of the stores, which will sell groceries, consumer appliances and fruits and vegetables to retailers and small businesses, is slated to open in North India by the end of 2008.

Bharti will also separately own and manage a chain of retail stores, for which Wal-Mart will provide technical support. The Bharti Retail unit could also buy from the wholesale venture.

Wal-Mart would be a "natural choice" for a partner when India lifts restrictions on foreign direct investment in the sector, Bharti Retail Managing Director Rajan Mittal said, adding they had the option of using the Wal-Mart name for the retail stores.

Bharti has previously said its retail arm would spend $2.5 billion by 2015 to build multiple-format retail stores across India, including hypermarkets and supermarkets and occupy about 10 million sq. ft. of space and employ nearly 60,000 people.

LOCAL SUPPLIERS

Bharti first announced plans for a joint venture in November last year, and Wal-Mart said in February it could partner Bharti on supply chain logistics and technology support.

In June, Mittal told Reuters India's limits on foreign direct investment in retail had slowed signing the deal with Wal-Mart.
A visit by senior Wal-Mart officials to India in February sparked protests from shop owners. An organization of traders, hawkers, farmers and trade unions has called for protests against what it calls the "corporate hijack of retail and backdoor entry of Wal-Mart."

Retailers like Tesco and Carrefour have put their India plans on hold until regulation is clarified, amid growing concerns India could delay moves to lift restrictions.

Wal-Mart said on Monday it would source local products from local suppliers. Wal-Mart has sourced products including textiles and jewellery from India since 2001, and sourced goods worth more than $600 million directly from Indian suppliers in 2006.

"One of the key reasons for Wal-Mart's international success is that in every location where we operate, we are local," said Raj Jain, country president for Wal-Mart's India operations.

"We source local products from local suppliers that appeal to local tastes, needs and fashions," he said.

Wal-Mart's move into India comes after the U.S. giant quit South Korea and as it struggles in Japan, and analysts say India will not be a cakewalk.

"Already, there are too many players coming in all at once, especially in the bigger cities, all targeting the same base of consumers," said Hemant Patel, an analyst at Enam Securities.
"There is no customer loyalty, either. An Indian consumer knows a Reliance or a Pantaloon better than Wal-Mart," he said, referring to top listed retailer Pantaloon Retail , which plans to expand to 30 million sq. ft. by 2010/11.

India's Reliance Industries Ltd. , the Tata group, the RPG group and the Aditya Birla Group are also expanding their retail business, a move that analysts say will further limit opportunities for foreign retailers who delay their entry.

From The Lake County Leader

Arguments for and against one of the most divisive issues of 2006 will be heard in district court next week, when attorneys on both sides of the Wal-Mart supercenter issue will present their cases at the first major hearing since a lawsuit was filed last summer.

Lake County First, a coalition of citizens opposed to the proposed supercenter, filed suit last year, claiming that the Polson City Council violated the city's own growth policy and master development plan when it approved a zoning request made by Wal-Mart officials in June, 2006. Since then, both sides have filed briefs and responses, and will have their day in court on Friday, Aug. 10 at 11 a.m. in front of Livingston judge Nels Swandal.

Swandal will come to Polson to oversee the hearing after local judges recused themselves, and both sides hope this is the first major step towards resolving the issue. The plaintiffs are seeking to have the city council's decision overturned, and have the land revert back to its original zoning designation for residential use only.

At the heart of the matter is whether the Polson City Council violated its own growth policy and master development plan, and state law, in granting a zoning change -- by a vote of 4-2 -- which paved the way for Wal-Mart to go ahead with plans to develop a 29-acre plot southeast of town. That land had previously been designated for low-density residential use, but the Polson council approved a request to zone it for highway commercial use, and Wal-Mart foes say that goes against what's best for the community as a whole.

At the June 29, 2006, meeting, the Polson council also approved a subdivision request and agreed to annex the property into the city, but the zone change is at the heart of the lawsuit. Earlier last year, the city/county planning board voted to deny the zone request, but that board could only provide a recommendation to the city council.

City attorney James Raymond said the city council acted within their legal authority in granting the request, even if many of the people who showed up at the June 29 meeting spoke out against the supercenter.

"The court's review is limited to the decision the council made following the public hearing," Raymond said. "We believe the city council was acting within its rights in making that decision."

However, Lake County First plaintiff Greg Hertz and seven other plaintiffs feel that the decision amounted to illegal "spot zoning" -- approving a zoning request that just benefits one specific entity.

"The city council did not even discuss it really at the public hearing. They didn't give much rhyme or reason for why they made the zone change, and that leads to discussion of 'spot zoning.' It seems they made the change to only benefit one party -- Wal-Mart," Hertz said.

Hertz, who manages Super 1 Foods, is the first to admit he has a direct financial stake in preventing a supercenter from opening, but he also cites community aesthetics, infrastructure, traffic and other factors for why a supercenter shouldn't exist here. And he's not alone -- a majority of the people who showed up at the June 29 meeting spoke out against the supercenter, too.

But Raymond said arguments about illegal spot zoning don't pass a standard, three-pronged test.

"All zoning is essentially spot zoning. Spot zoning is not illegal, but there is illegal spot zoning. There is a test to determine whether spot zoning is illegal, and this decision doesn't meet that criteria," Raymond said.

Raymond agreed that spot zoning is illegal if it benefits one specific small group of people, but noted that the supercenter could benefit an entire community, not just Wal-Mart. He also said another criteria of illegal spot zoning is that there's no similar zoning nearby, but that land is zoned for commercial use just across the street from the proposed site, and down the road where Safeway and the current Wal-Mart store is located.

The proposed supercenter would be about three times the size of the current building, but Wal-Mart officials noted at the meeting that they've gone out of their way to try to make it aesthetically pleasing, including using a store design that is more in keeping with rural settings, reducing the amount and location of lights to try to eliminate light pollution, and utilizing landscaping that reduces noise that might bother nearby residents.

Almost all of the plaintiffs live near the proposed supercenter site, and have argued that the store would negatively impact their property values. In addition to Hertz, the plaintiffs include Meredith and Donald Pollack, Marian Rosa, Peter Stone, Dick Molenda, and Stanley and Dorothy Petersen.

From The New York Times

Mattel, the maker of Barbie dolls and Hot Wheels cars, is recalling nearly one million toys in the United States today because the products are covered in lead paint.

According to Mattel, all the toys were made by a contract manufacturer in China.

The recall, the second biggest this year involving toys, covers 83 products made from April 19 to July 6. Many of them feature Sesame Street and Nickelodeon characters — including the Elmo Tub Sub, the Dora the Explorer Backpack, and the Giggle Gabber, a toy shaped like Elmo or Cookie Monster that toddlers shake to hear giggles and funny noises.

Mattel says it prevented more than two-thirds of the 967,000 affected toys from reaching consumers by stopping the products in its distribution centers and contacting retailers, like Wal-Mart, Target and Toys ‘R’ Us, late last week. But more than 300,000 of the tainted toys have been bought by consumers in the United States. According to the Consumer Product Safety Commission, the toys may have a date code from 109-7LF to 187-7LF on the product or packaging.

A complete list can be found at nytimes.com, mattel.com or cpsc.gov. Mattel is hardly the first manufacturer to encounter a breakdown in the Chinese production chain. In recent months, factories in China have been sources of poisonous pet food sold in stores in the United States, dangerous car tires, and lead paint on the popular Thomas & Friends wooden toys.

The Chinese government has said it is working to improve its product regulations, even as members of Congress have called for legislation requiring more inspections of imports from China.

This is Mattel’s 17th recall in 10 years. Most recently, an infant swing made by its Fisher-Price division was taken off the market because of a risk children could be trapped in its moving parts. And in its largest consumer action involving toy safety, in 1998, the company recalled more than 10 million Power Wheels cars.

Speaking of the new recall, Nancy A. Nord, acting Consumer Product Safety Commission chairwoman, said in a statement, “These recalled toys have accessible lead in the paint, and parents should not hesitate in taking them away from children.”

The statement said that the commission had stated an investigation and that “ensuring that Chinese made toys are safe for U.S. consumers is one of my highest priorities and is the subject of vital talks currently in place between C.P.S.C. and the Chinese government.”

Earlier this summer, RC 2?, the maker of Thomas trains, recalled 1.5 million trains and accessories because a Chinese supplier had coated them in lead paint. At that time, consumer safety experts and toy industry analysts said that Mattel was unlikely to face such a problem.

“There are companies that live up to their obligations to the government as well as to consumers, and they are one of them,” Julie Vallese, a spokeswoman for the Consumer Product Safety Commission, said of Mattel in mid-July.

But Mattel’s safety checks — which include independent audits of facilities and ownership of many of its own factories in China — did not prevent the chain of events that led to today’s recall.

In early July, according to Mattel executives, one of the European retailers that sells Mattel toys discovered the lead on some products. On July 6, Mattel stopped operations at the factory that produced the toys and initiated an investigation.

On July 18, Mattel took a reporter for The New York Times on a tour of a factory in Guanyao, China, and of Mattel’s toy safety lab in Shenzhen. At that time, Mattel executives say, it was unclear whether Mattel was facing a widespread lead paint problem, or if the European case was an anomaly.

Last Thursday, the same day The Times ran an article about Mattel’s toy safety procedures, the company’s executives say they received conclusive data that persuaded them to recall the 83 products. Then, the company contacted retailers who stocked the toys.

“This is a vendor plant with whom we’ve worked for 15 years; this isn’t somebody that just started making toys for us,” Robert A. Eckert, the chief executive of Mattel, said in an interview. “They understand our regulations, they understand our program, and something went wrong. That hurts.”

Mattel requires the factories it contracts with to use paint and other materials provided by certified suppliers. Mattel executives said they did not know if the contract manufacturer substituted paint from a noncertified supplier or if a certified supplier caused the problem.

Mr. Eckert said Mattel was considering various ways to overcome the problem, including reducing the amount of toys it makes through contract factories. About 50 percent of Mattel’s revenue comes from toys made in 11 factories it owns and operates. That is a high share for the toy industry.

But the other half comes from toys that it outsources to up to 50 manufacturers in China. Those toys tend to be short-term products that feature characters from movies and television shows rather than Barbie dolls or other Mattel brands.

In light of the recalls, Nickelodeon — which owns the characters Dora the Explorer and Diego — has decided to introduce a third-party monitor to check up on all of the companies that make toys under its brands, including Mattel.

Sesame Workshop, the nonprofit organization behind the “Sesame Street” program, is considering adding third-party testing, Gary E. Knell, president and chief executive of Sesame Workshop, said in a statement.

This summer, the Toy Industry Association has been working with the Consumer Product Safety Commission on new regulations to require more stringent safety checks. Carter Keithley, president of the association, said the federal government needed to help the industry block China from using lead paint.

“We don’t have lead paint in this country any more, and they shouldn’t either,” Mr. Keithley said of China. “If there was no lead paint, then we wouldn’t have this problem.”

Thomas G. Rawski, an economics professor at the University of Pittsburgh, who has visited factories in China regularly since 1975, though not toy factories, said companies there are trying to check product quality, but more improvements are needed.

“The mechanisms for preventing this stuff don’t leap out of a tree,” Mr. Rawski said. “They have to be built up carefully, and I think it’s very clear this process of building is going on in China right now. That means there are lots of things happening that in an ideal world shouldn’t be happening, including things that wouldn’t happen in Japan or the U.S.”

From Newsweek:

Wal-Mart prides itself on cutting costs at home and abroad, and its Mexican operations are no exception. That approach has helped the Arkansas-based retail giant set a track record of spectacular success in the 16 years since it entered Mexico as a partner of the country’s then-leading retail-store chain. But some of the company’s practices have aroused concern among some officials and nongovernmental organizations (NGOs) that Wal-Mart is taking advantage of local customs to pinch pennies at a time when its Mexican operations have never been more profitable.

Wal-Mart is Mexico’s largest private-sector employer in the nation today, with nearly 150,000 local residents on its payroll. An additional 19,000 youngsters between the ages of 14 and 16 work after school in hundreds of Wal-Mart stores, mostly as grocery baggers, throughout Mexico—and none of them receives a red cent in wages or fringe benefits. The company doesn’t try to conceal this practice: its 62 Superama supermarkets display blue signs with white letters that tell shoppers: OUR VOLUNTEER PACKERS COLLECT NO SALARY, ONLY THE GRATUITY THAT YOU GIVE THEM. SUPERAMA THANKS YOU FOR YOUR UNDERSTANDING. The use of unsalaried youths is legal in Mexico because the kids are said to be “volunteering” their services to Wal-Mart and are therefore not subject to the requirements and regulations that would otherwise apply under the country’s labor laws. But some officials south of the U.S. border nonetheless view the practice as regrettable, if not downright exploitative. “These kids should receive a salary,” says Labor Undersecretary Patricia Espinosa Torres. “If you ask me, I don’t think these kids should be working, but there are cultural and social circumstances [in Mexico] rooted in poverty and scarcity.”

In a country where nearly half of the population scrapes by on less than $4 a day, any income source is welcome in millions of households, even if it hinges on the goodwill of a tipping customer. And Wal-Mart did not invent the bagger program that, as a written statement from the company notes, pre-dates the firm’s arrival in Mexico, nor is it alone within the country’s retail sector in benefiting from the toil of unpaid adolescents. But in Mexico City, for example, the 4,300 teenagers who work in Wal-Mart’s retail stores free of charge dwarf similar numbers laboring unpaid for Mexican competitors like Comercial Mexicana (715) and Gigante (427). Although Wal-Mart’s worldwide code of ethics expressly forbids any “associate” from working without compensation, the company’s Mexican subsidiary asserts that the grocery baggers “cannot be considered workers.” The Mexico City government’s top labor official dismisses that contention as so much corporate hogwash. “To my mind, that is not an accurate description because the bagger is providing a service on the store’s premises that benefits the company by serving the customer better,” argues Federal District Labor Secretary Benito Mirón Lince. “In economic terms, Wal-Mart does have the capability to pay the minimum wage [of less than $5 a day], and this represents an injustice.”

Certainly, Wal-Mart’s bottom line is healthy. Wal-Mart de Mexico reported net earnings of $1.148 billion in 2006 and $280 million in profits in the second quarter of this year, a 7 percent increase in real terms over the same period last year. Buoyed by the handsome bottom-line results of the preceding 12 months, Wal-Mart de Mexico Chief Executive Eduardo Solórzano announced plans in February to add 125 new stores and restaurants to its existing network of 893 retail establishments during the course of 2007. That ambitious expansion plan will represent new investment totaling nearly a billion dollars, according to company spokesmen.

And in its defense, Wal-Mart says it fully complies with a 1999 agreement covering the teenaged baggers that the Mexico City municipal government negotiated with the Supermarkets and Department Stores Association of Mexico. The company also says it goes beyond the obligations of that accord, awarding bonuses twice a year to baggers who maintain high grades in school and also providing accident insurance that covers the kids not only when they are on duty, but also when they are en route between home and workplace. The company’s written statement cited a study conducted by the Mexican government and a U.N. agency that found that teenagers participating in the baggers’ program were less likely to use illegal drugs than peers who panhandled or hawked merchandise on city streets.

Wal-Mart says the bagger program was designed “in accordance with the International Labor Organization’s (ILO) guidelines.” That’s questionable: Article 2 of the ILO’s Convention 138 specifically prohibits the employment of 14-year-old children. (When asked by NEWSWEEK specifically about this clause, a Wal-Mart spokesman said in a written response: "With respect to your questions about the ILO, I repeat that we subscribe to an agreement signed between the Supermarkets and Department Stores Association of Mexico and Mexican labor officials. I suggest you share your doubts with Mexican authorities as to whether the [1999] accord [with the Mexico City municipal government] is in line with ILO guidelines.") A study conducted by three student researchers at the Autonomous University of Mexico documented violations of the 1999 agreement at a Wal-Mart Supercenter store in southern Mexico City. These included inadequate training and forcing youngsters to work a double shift, thereby exceeding the six-hour limit per day established by the accord. Then again, things could be a lot worse. In February 2005, Wal-Mart agreed to pay the U.S. Labor Department $135,540 in civil money penalties to settle charges of 24 child-labor violations. Some of the accusations involved minors who operated forklifts, chain saws and other potentially dangerous equipment. Stuffing groceries into plastic bags would seem considerably less hazardous.