Wal-Mart Says 'Go Slow'

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If Ryan Seacrest asked each year's American Idol winner the first thing they would do after winning the contest, the answer would be "I'm going to Bentonville, Ark., to sing at Wal-Mart's annual shareholder meeting!"

Following in the steps of previous winners, recently crowned Idol Jordin Sparks (who said she shops at Wal-Mart) gave her first performance since winning before a cheering crowd of thousands of Wal-Mart employees and shareholders gathered at the Bud Walton arena at the University of Arkansas in Fayetteville.

Based in the northwest corner of the state, the Wal-Mart annual shareholder meeting mixed corporate presentations with pep rally enthusiasm and pop star entertainment. Jennifer Lopez sang. Stars from "High School Musical" danced. Acrobats twirled, bounced and flipped in circles above the arena.

The comedian Sinbad, serving as emcee, often skewered his hosts, joking that he was fired 35 seconds after getting hired as a trainee because he took a break. The comment came a day after Wal-Mart employees filed a class-action against Wal-Mart Stores Inc., alleging the retailer deprived them of rest and meal breaks while forcing them to work "off the clock."

Sinbad also complained about Wal-Mart shoppers asking incessant questions such as how long one-hour photo development would take.

"You should have to pass a test to come in [to a Wal-Mart store]," he told thousands of Wal-Mart employees who laughed and applauded loudly. "You can't read, you can't come in."

Fewer Stores

Joking and singing aside, the company used the meeting to announce a significant change to the number of SuperCenters it plans to open this year and in the future.

The company said it would now open 190 to 200 Wal-Mart SuperCenters in 2007, down from the originally planned number of 265 to 270 stores.

The nation's largest retailer had been on track to grow around 8 percent this year. This reduction in stores will slow growth to around 4 percent for the year, according to one analyst.

In the subsequent years, Wal-Mart plans to open 170 SuperCenters annually. Tom Schoewe, Wal-Mart's chief financial officer, stressed that was still be a significant number, equaling an additional 20 million square feet a year.

The company's aggressive expansion has been a partial factor in the drop in sales at stores opened for more than a year -- comp store sales -- as shoppers have turned away from older stores to shop at newer ones. This "cannibalization," as it is called, has hurt the retailer.

In April, Wal-Mart comp store sales decline by 3.5 percent, its worst showing since the company started publishing the figures 27 years ago. For the first quarter, however, the company reported it earned $2.83 billion, an increase of 8 percent compared to the previous year.

While the nation's largest retailer has pursued an aggressive expansion strategy over the past several years, Schoewe said the announced slowdown was "an evolution in the company's strategy."

Wal-Mart will now focus on increasing sales at existing stores and increase its stock repurchase program from $10 billion to $15 billion, news that shareholders will be pleased to hear.

Fewer Stores, but Higher Stock Price?

Wall Street liked what it heard. The company's stock shot up 4 percent immediately after the announcement, leading Goldman Sachs retail analyst Adrianne Shapira to exclaim "Finally."

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