Walmart Sales Fell 2% in the Fourth Quarter

Wal-Mart Stores Inc. (WMT ), the world's largest retailer, reported that sales fell 2% in the fourth quarter compared to the same period last year. More bad news is on the way. Walmart also forecast a "challenging" first quarter.

All of the big guns at Walmart offered their reasons for the decline. Deflation in the price of groceries, which account for 40% of sales, was one factor. Price discounts in electronics and flat screen TVs were also cited.

Tom Schoewe, chief financial officer, said customer traffic had fallen and, among other things, cited the remodeling of Walmart stores under Project Impact.

The retailer reported adjusted earnings of $4.5 billion or $1.17 per diluted share. Full-year sales increased 4.6% to $112 billion. International sales surpassed $100 billion.

Mike Duke, chief executive, said sales had exceed expectations for the fourth quarter. It ended the year with inventory down 7.8%. He expects the first quarter to be "challenging."

For the current fiscal year, the company expects diluted earnings per share to come in at $3.90 to $4.00. First quarter earnings per share are expected to be between $0.81 to $0.85.

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China Probes Exporters as Walmart Withdraws Bracelets

China is investigating jewelry exporters as Wal-Mart Stores Inc. and Claire’s Stores Inc. withdrew bracelets and pendants on concerns they may contain the toxic metal cadmium.

The U.S. Consumer Product Safety Commission yesterday said it will develop standards to regulate toxic metals in children’s products. Some Chinese manufacturers use cadmium, a carcinogenic heavy metal, to make charm bracelets and shiny pendants sold in the U.S. because they are banned from using lead, the Associated Press reported Jan. 11.

Shantou Menshy Toys & Crafts Co., a toymaker based in Guangdong, southern China, said cadmium usually exists in toy cars’ paint. “Our key concern is not whether there is cadmium or not in our products, but whether it is over the limit set by countries,” sales manager Marco Guo said in Hong Kong today. About 60 to 70 percent of the closely held company’s products are exported to Europe and the U.S., he said.

Health Hazards

Walmart, the world’s biggest retailer, said Jan. 11 it’s withdrawn jewelry amid concerns they may contain cadmium. Claire’s, the largest U.S. retailer of costume jewelry for teenagers, said it is pulling a bracelet linked to the news report.

The products are the latest Chinese-made goods linked to health hazards after Mattel Inc. recalled toys in 2007, melamine-tainted milk was blamed for the deaths of six babies in 2008 and drywall made in China was linked to health complaints last year.

Brief inhalation of high concentrations of cadmium may cause lung disease, according to the website of the Agency for Toxic Substances and Disease Registry. Swallowing high doses of the metal can cause abdominal cramps and irritate the small intestine, it said.

Children can get low-level exposure to cadmium by sucking or biting on tainted goods without having to swallow them, the AP reported. Some of the items it tested were bought at Walmart or Claire’s stores, it said.

‘Abundance of Caution’

“While we have no reason to believe that this product is unsafe, out of an abundance of caution, we are taking this action,” Claire’s, which has about 3,000 stores in North America and Europe, said in a statement on its Web site. Claire’s is owned by private-equity firm Apollo Management LP.

Mattel, the world’s biggest toymaker, in 2007 recalled more than 21 million China-made toys because of design flaws or paint with too much lead. In 2008, melamine-tainted milk was blamed for the deaths of six babies and ailments in about 300,000 children in China.

Last year, drywall made in China and imported into the U.S. was linked to corrosion of metal and wires in homes and may also be harming people’s health, according to a report by the product safety commission.

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Walmart to Evaluate Products Based on Sustainability

After a Walmart store manager in North Carolina sent an e-mail to upper management asking why all the lights in the vending machines in break rooms needed to be on, Walmart unplugged the lights behind the panel and is saving $1.4 million.

It's suggestions like that that Walmart looks to its 2.4 million employees and more than 100,000 suppliers to bring forward as part of its overall sustainability initiatives that the company has been working on for more than five years, Matt Kistler, the senior vice president of sustainability at Walmart Stores said Monday at the NRF Conference in New York City.

Under a new initiative, Walmart is developing a sustainability index tool that allows it to evaluate the products that it buys and sells by looking at the life cycle of the products—from the raw materials to distribution and sales to how consumers use the products to end of life—answering questions like, is the product easier to recycle? The products will be graded and scored based on the findings.

To accomplish this, top suppliers are being asked to answer 15 basic questions around energy, natural resources and societal impact. The data will then be analyzed with help from colleges and universities who will provide the findings to suppliers. Finally, a long term, and Walmart's most ambitious effort, is to allow consumers to start evaluating products on sustainability.

Walmart began its sustainability initiative more than five years ago around three large goals: energy, wastes and products bought and sold. Underneath those goals, it now has 37 additional commitments around sustainability.

Along the way, the company has increased its use of solar power, asked manufacturers to reduce packaging by 5% and worked on innovations in supply chain management. Early on Walmart wanted to understand what its footprint truly was and determined that only 8% of its total footprint was in its direct control. The other 92% was in the supply chain, which is why it focuses a large part of its sustainability efforts there.

Walmart asked its own employees to participate, with now more than 600,000 personally committing to achieve one initiative in their own lives, such as quitting smoking or eating more healthful foods.

"From a business context, as associates become more aware they start looking for opportunities to come forward," Kistler said. (Thus, the suggestion to turn off lights in vending machines).

Kistler displayed an image before the audience of a Walmart tractor-trailer as a symbol of what the company is doing companywide. Walmart reduced the size of the gas tanks, installed side skirts to make the trucks more aerodynamic and developed new technologies to reduce idling. It is testing a new hybrid truck. And because of the reduction in packaging, in 2008, 150 million more packages were delivered by driving 900 million fewer miles. The goal was to double the efficiency of the fleet, which is 38% more efficient today.

He outlined three criteria all companies must develop to have a successful sustainability program: buy in at senior level management; set goals—on overly aspirational/one attainable; and get started.

"You want to search for game changing opportunities within your own company, but don't miss the small things as well," Kistler said. "Small things do add up, they can propel you and get you started."

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WalMart Stores Inc. (WMT) Vice Chairman Wright Eduardo Castro sells 17,000 Shares

Vice Chairman of WalMart Stores Inc. (WMT) Wright Eduardo Castro sells 17,000 shares of WMT on 12/29/2009 at an average price of $54.06 a share.

Wal-Mart Stores, Inc. is the world's largest retailer. They are engaged in the operation of mass merchandising stores, which serve their customers primarily through the operation of three segments, which are the Wal-Mart Stores segment, the SAM'S Club segment and the International segment. Walmart Stores Inc. has a market cap of $209.43 billion; its shares were traded at around $54.3 with a P/E ratio of 15.4 and P/S ratio of 0.5. The dividend yield of Walmart Stores Inc. stocks is 2%. Walmart Stores Inc. had an annual average earning growth of 13.3% over the past 10 years.

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