Wal-Mart profits fall as it ramps investment to fight Amazon

NEW YORK - Walmart updated investors Thursday on its latest new gadgets and time-saving pickup options to lure shoppers to stores and away from arch-rival Amazon.

The good news? The company's array of investments in e-commerce, store beautification, low prices and higher employee pay are indeed driving up store traffic.

The bad news? Profits are down.

Walmart US, the biggest division at Wal-Mart Stores, scored a 1.8 percent rise in comparable sales in the second quarter compared with the year-ago period, its 12th straight quarter with positive sales in the closely-watched benchmark.

Revenues rose 2.1 percent to $123.4 billion.

But net income fell 23.2 percent to $2.9 billion. Factors included more aggressive spending on e-commerce and low price investments, as well as costs of $788 million connected to a one-time debt payment.

Executives expressed confidence in Wal-Mart's strategy and highlighted an especially strong performance in the US grocery business, which experienced the biggest jump in five years, in part due to price inflation in meat and produce.

Wal-Mart holds the biggest share of the US grocery market of any retailer, with its network of nearly 4,700 stores that the company says are located within 10 miles of about 90 percent of the US population

But Wal-Mart is girding for a more direct head-to-head battle with Amazon with the tech giant's impending purchase of Whole Foods Market.

"Amazon are a really strong competitor," said Wal-Mart US chief executive Greg Foran in a conference call with reporters. "We've got a good strategy. I'm comfortable with what we're doing."

"Obviously we're keeping an eye on what a strong competitor is doing," he added.

New tech-oriented initiatives include the expansion of a program that lets consumers pick up online orders to more than 900 locations, up from 670 in the prior quarter.

Consumers are also able to reorder their most frequent purchases with a few quick clicks and can utilize automated "pickup towers" to receive goods after scanning in a barcode.

Shares of Wal-Mart fell on the report, ending down 1.6 percent at $79.70.

Although the earnings bested analyst expectations, investors were "a bit disappointed" with some of Wal-Mart's third-quarter profit forecast, said a note from Briefing.com

But the decline also reflected a pullback after Wal-Mart gained 11 percent over the last month, Briefing.com added.

"We note the decline in net income, but believe that some short term erosion is necessary as the business invests in its future," said Neil Saunders, managing director at GlobalData Retail.

"In our view, Walmart is a demonstration that traditional businesses can survive and thrive in this era of retail if they are prepared to adapt and evolve."

source: news.abs-cbn.com

Pinoy Walmart workers join rally seeking $15-an-hour wage

MILPITAS, California. – Thousands of Walmart workers and their union protested in front of 1,600 Walmart stores across the nation to demand a $15 an hour wage, full-time work, and better working conditions.

Filipinos joined more than 400 workers and their union who rallied in front of the Milpitas Walmart.

“They gave you more work and then less hours,” said Eddie Daguioan, a Filipino who has been employed by the company for eight years. “And then we got associates here 15 years who are still part-time. That hurts.”

Maria Sumagaysan said she has been overlooked and passed up for promotions by workers with less experience.

“The more you ask them, the more they take your hours, which is not fair,” said Samugaysan. “What is it all about? Is it discrimination? Favoritism or what? I challenge them. Look at my personal file. Look at my evaluation. I’m not perfect but I think I try my best to work hard for Walmart.”

Sumagaysan and disgruntled Filipino Walmart workers say want to represent those who are afraid to speak up.

“There are too many members in my store but they were afraid to stand up,” said Sumagaysan, who has been with the company for 15-years. “They are afraid to stand up because they are afraid to lose their jobs. That’s why they are not here. I’m standing up for the Filipino workers.”

“We stand up for them to give them courage and more of them are coming to join our Walmart association,” said Eddie Daguioan.

Walmart released a statement on their website regarding the Black Friday protests.

The biggest American employer states that the demonstrators were mainly composed of paid union demonstrators who do not represent actual Walmart workers.

Walmart management adds that the company will not be distracted by protests and will continue to provide their associates with opportunities for job growth.

While the $15 minimum wage is set to take effect in cities like Seattle and now San Francisco, protesters say they will continue to protest until changes come.

“Until the end,” added Daguioan. “I’m going to do it every time. We need it.”

Protesters did not want to stop anyone from shopping at Walmart, but they did speak with many customers during their march to inform them why they are protesting, and to bring more awareness to their cause.

Read more from Balitang America:

source: www.abs-cbnnews.com

Honey, can you pick up a tablet at the grocery store?

BARCELONA - Originally derided as a pricey niche product for geeks, tablet computers have become so common that supermarkets are now selling their own brands, pushing out low-cost rivals.

The shifting nature of the market underscores how millions of people are choosing simpler devices to surf the web, send emails and shop, putting pressure on traditional PC companies.

And since Apple pioneered the tablet in early 2010, the gadgets now available at the lower end of the market are becoming commodity items that non-technology companies can order from Asian contractors using common components.

"Reference designs for tablets and smartphones from companies like Qualcomm have drastically reduced barriers to entry and increased commoditization pressure in the hardware industry," said Sameer Singh, Hyderabad-based tech analyst.

"This opens the door for not only players that can survive on low margins, but also for companies that use hardware as a channel for something else."

Tesco in Britain and Walmart in the United States, are selling their own branded tablets pitched at customers unwilling to pay $400 or more for an Apple or Samsung product.

Grocers like Tesco and France's Carrefour are not only trying to cash in on booming tablet sales, but also to nudge people to buy everything from films to groceries from their online stores, pushed through their devices, a lesson learned from Amazon and Google.

Traditional computer makers including Asus, Acer, HP, Lenovo, Dell, Sony, LG will continue to be squeezed, said Gartner analyst Tracy Tsai.

They account for only 10% of the market today, far behind Apple and Samsung with 60% and also smaller than the 20% share held by white label tablet makers who manufacture for others, such as Archos. Amazon and Google hold the other 10%.

"Some of them will pull out from the market of tablets altogether," Tsai predicted.

The price for tablets running Google's Android software ranged from $99 to $299 in 2013, providing an estimated 15% to 25% gross margin to hardware vendors, but when prices need to be cut to meet the competition the margin could drop.

Lessons learned

Amazon, which sells its Kindle Fire tablet at cost or even at a loss, ties people to its site to buy music, books or films rather than them buying Apple's iTunes or going to Carrefour and Tesco.

"If you get a tablet into someone's hand, it is almost a digital shop window," said Ben Wood, analyst at CCS Insight.

"The retailers are realizing: 'Crikey, we need this to be part of a much bigger strategy to make sure that Amazon does not eat us alive.'"

Carrefour is also selling smartphones and a smartwatch starting at 149 euros, in addition to four tablets, while a Pakistani bakery chain called Gourmet poached a former Samsung executive to help it sell smartphones starting at $15.

Tesco shifted more than 400,000 of its Hudl tablets, priced at 119 pounds ($200) in little over three months after a September launch.

"We saw an opportunity in the market for a lower priced but highly spec-ed tablet," said Michael Comish, who heads Tesco's digital strategy and operations.

"We were certainly pleasantly surprised by consumer demand," he said, adding that Tesco was selling as many Hudls as it could produce in the autumn.

Carrefour's mobile phone, dubbed the Smart, launched at Christmas and was among the store's top-five selling products in recent months, said Jose Zdziech, sales director for technology products.

Big retailers have been here before. In the past many worked with manufacturers in Asia and elsewhere who produced everything from clothing to refrigerators that the retailers then sold under their own brands. Carrefour and Tesco, the world's second and third-biggest retailers, then turned to that network of manufacturers to make gadgets.

Tesco's Comish said they designed the Hudl to drive people to purchase films, music, and now books from blinkbox, a video-on-demand provider Tesco bought in 2011. The company spent a lot of time on the user interface, he said, to make it easy to get to Tesco services, without forcing customers to use them.

Carrefour's Zdziech said the retailer would continue to sell Apple and Samsung products since its own products were not aimed at the high-end. But Carrefour has dropped some competing tablets and phones from lower-end manufacturers he declined to name. "We had to make some choices so as to better showcase our own branded products," he said. ($1 = 0.6011 British Pounds)

source: www.abs-cbnnews.com

Wal-Mart to open new store in West Covina

Retail giant Wal-Mart Stores Inc. announced plans to open a new 120,000-square-foot store in West Covina.

The store, which is expected to open this year, will slide into a space once occupied by Mervyns at the Eastland Center shopping area.

"When you look around at the surrounding area, local residents are always looking for affordable shopping options," Steven Restivo, Wal-Mart's director of community affairs, told the San Gabriel Valley Tribune. "We think our store can be part of the solution for West Covina residents."

The announcement brought both praise and opposition from local residents, some of whom have announced at City Council meetings their plans to protest and boycott the store when it opens, the newspaper said. Because the Eastland shopping center is zoned for commercial retail, city officials say the local government and residents cannot prevent the store from opening.

The retailer also has been quickly expanding its grocery-oriented Neighborhood Markets. One smaller-format supermarket opened in Huntington Beach at the end of last year. Another planned for downtown Los Angeles' Chinatown neighborhood has incurred fierce opposition from some residents and workers advocacy groups.

But West Covina Mayor Mike Touhey said the new Wal-Mart store will bring much needed jobs.

"The job growth is good because we lost a similar amount of jobs when Mervyns closed in late 2008," Touhey told the Tribune.

source: latimes.com

Wal-Mart may pay millions to resolve Mexican bribery allegations

Wal-Mart is looking into allegations that it engaged in a multiyear bribery campaign in Mexico. It could pay hundreds of millions of dollars in legal expenses and penalties to resolve the allegations.




Wal-Mart Stores Inc. could end up paying hundreds of millions of dollars in legal expenses and penalties to resolve allegations of widespread bribery by officials with its Mexican subsidiary, experts in foreign corruption law said.

The world's largest retailer said it was in the midst of a "worldwide review of our anti-corruption program" and had increased efforts to prevent corruption in Mexico. The Bentonville, Ark., company is looking into allegations that it engaged in a multiyear bribery campaign to build its business.

The allegations come at a time when the Justice Department has been cracking down on foreign corruption. The agency filed some two dozen cases against U.S. companies in 2010, compared with none a decade earlier.

"You have an incredible amount of legal challenges that are going to take part as a result of these failures," said James Post, a business management professor at Boston University. "The board of directors should bring in an outside firm to launch a full investigation. They have to open up the record on everything that's happened here."

He said Wal-Mart also faces shareholder lawsuits, along with criminal charges and potential action by the Securities and Exchange Commission.

Wal-Mart's Mexican subsidiary might have paid $24 million in bribes in order to speed the approval of new stores in Mexico, according to a report from the New York Times. Wal-Mart operates more than 2,000 locations in Mexico, its largest foreign presence.

Investigations of foreign corruption by U.S. companies typically last two to four years and could cost tens of millions of dollars in legal expenses, said Michael Koehler, a Butler University professor.

The bribery allegations "will be used against the company by activists and companies when it attempts to open stores in the U.S. and abroad, and could make it more difficult to attract management talent in international markets," BMO Capital Markets analyst Wayne Hood said.

Wal-Mart shares fell $2.91, or 4.7%, to $59.54 on Monday. Analysts said they fear that the investigation could become a distraction to the company and hamper foreign expansion.

The Foreign Corrupt Practices Act was enacted in 1977 after a series of investigations by the SEC, and hundreds of U.S. companies acknowledged making questionable or illegal payments to foreign government officials and politicians.

Enforcement of the law has become such a concern to business that the U.S. Chamber of Commerce has lobbied for changes. It says that the law is vague and might discourage business.

In Mexico, where Wal-Mart's subsidiary also owns a vast network of supermarkets, family restaurants and clothing stores, the bribery allegations have led to local media coverage and pushed shares down 12% on the Mexican stock market.

Mexican regulators reacted cautiously to the allegations. In Washington for meetings, Finance Secretary Jose Antonio Meade said the government lacked sufficient evidence to move against the firm yet.

Luis Tellez, head of the stock market in Mexico, defended Wal-Mart's performance. He said the retailer has met the market's financial reporting requirements and boosted the Mexican economy by creating jobs.

"Without doubt it has generated wealth in terms of work, wages for its employees and in terms of giving Mexican consumers shopping opportunities at low prices," Tellez said.

The allegations are sure to provide fuel for Wal-Mart detractors south of the border, where the rapid spread of U.S.-style big-box stores threatens traditional, small-time vendors. Critics have also questioned the value of the jobs created by Wal-Mart, saying most of those positions are poorly paid.

Few Mexicans, though, were likely to be shocked at charges that a company had paid bribes.

Mexico has one of the highest corruption indexes among the world's big economies, and greasing the palms of officials is routinely viewed as another cost of doing business by even the most humble street vendor.

source: latimes.com