Takeaways from Walmart’s AnalystFest 2013, Part 2

More takeaways from last week’s analyst shindig:

The Organization United for Respect is having more of an impact than Walmart would like to admit

Despite however many times Walmart’s PR department directs its minions to say that protests by the Organization United for Respect at Walmart (OUR Walmart) are “publicity stunts” (which, incidentally, Walmart itself is familiar with), the worker organization’s clear impact on the company  was on display at the analyst meeting.

For example:

Since OUR Walmart’s inception, its members have called for better scheduling practices and more hours. Without their efforts, it seems unlikely Walmart U.S. COO Gisel Ruiz would bothered to mention hours and schedules for hourly associates in her presentation to analysts. But she did: “And also, something that’s very important to us is that our full time and part time associates are consistently working more hours.” Bill Simon echoed that later, stating that the company could “move people around and so allow them to have more hours more suited to their schedules and closer to their homes if that’s what they would like.”

The problem is, their statements are inconsistent with recent news reports that the company is trimming hours for existing associates and hiring more temporary workers, as well as with comments on the OUR Walmart Facebook page that indicate little to no real progress on scheduling matters. But the fact that both Ruiz and Simon specifically addressed scheduling issues means that OUR Walmart has made the issue one they can’t ignore. They wouldn’t have done the same for mere publicity stunts.

It will be interesting to see how the company will address OUR Walmart’s planned Black Friday actions.

 

Procter & Gamble is about to get reamed out by Walmart

In yet another report reflecting how Amazon is eating Walmart’s lunch on e-commerce, the day before the analyst meeting, the Wall Street Journal published a piece on Amazon’s special arrangement with Procter & Gamble, in which the e-commerce juggernaut is establishing a presence inside the supplier’s warehouses:

“The under-the-tent arrangement is one Amazon’s competitors [such as Walmart] don’t currently enjoy, and it offers a rare glimpse at how the company is trying to stay ahead of rivals… By piggybacking on [suppliers’] warehouses and distribution networks, Amazon is able to reduce its own costs of moving and storing goods, better compete on price with Wal-Mart and club stores like Costco Wholesale Corp., and cut the time it takes to get items to doorsteps. A few of Amazon’s rivals have caught wind of the arrangement and aren’t happy about it.”

Count Bill Simon among those who are not happy. Walmart’s not used to not getting its way with suppliers, so given this development, company execs’ next trip to P&G’s Ohio headquarters might be a doozy. Simon told analysts: “Suffice it to say, there’ll be some interesting conversations in Cincinnati soon.”

(Relatedly: Walmart has a long way to go on e-commerce: The company forecasted $13 billion in e-commerce revenue for next year. For comparison, Amazon reported more than $61 billion in sales in 2012.)

 

The Waltons are poised to make out like even richer bandits

With the Walton family owning more than 50 percent of Walmart stock, every time company execs talk about Walmart shareholders, the first image that should come to mind is that of the six Walton family members who, with a net worth of nearly $145 billion, make up the country’s richest family.

Last week, CFO Charles Holley told analysts: “We’re committed to returning excess cash to shareholders and we’re planning for share repurchases and dividends to match or hopefully exceed last year’s levels. Now our shareholders are always a top priority. We deliver a consistent dividend growth for over the last 30 years. We doubled our dividends since the time of the financial crisis in 2008.”

Translation: The Walton family, by virtue of inheriting Walmart shares, is going to become even richer.

(Remember, too, that there is a major Walton family bloc on the company Board of Directors, the body that votes on dividend distribution: Three family members—Rob Walton, Jim Walton, and Greg Penner—currently serve as directors. We don’t know if the Waltons recuse themselves from dividend votes, but even if they did, it’s hard to imagine their strong presence at the company and on the board has no effect on those votes.)

 

“Acting with integrity has always been part of who we are” (i.e., pay no attention to those bribery allegations behind the curtain)

From the way Walmart brass talk about the company’s recent efforts on global compliance, If you didn’t know better, you’d almost think the company was doing it out of the goodness of its heart and not, say, in response to any particular events that may have happened or been revealed in blockbuster New York Times investigative reports. (Eduardo Castro Wright who?)

Said Walmart International CEO Doug McMillon:

“Now let’s move on to compliance. I’ve been a part of Walmart for almost 23 years now and I can tell you that acting with integrity has always been part of who we are. It was foundational. Doing the right thing is part of the DNA at Wal-Mart. That gives us a foundation to use as we start to strengthen our compliance programs by enhancing our approaches to talent, to process and to systems.”

If acting with integrity has always been the Walmart way, what explains that whole thing where Chairman Rob Walton, former CEO (and current director) Lee Scott, and current CEO Mike Duke were aware of bribery allegations yet allegedly stymied an internal investigation into the allegations?

As we wrote in August, when Walmart announced that spending on FCPA- and compliance-related matters again exceeded forecasts: “Duke and Walton talked up business ethics and integrity at the company’s 2012 and 2013 shareholder meetings. Seems like Walmart could have avoided a whole lot of trouble (not to mention mounting investigation and compliance costs) if company leaders like Duke and Walton had actually taken ethics and integrity seriously when allegations of bribery first surfaced.”

To date, no one has been publicly held accountable for either the initial alleged bribery or the subsequent cover-up.

Check out Part 1 of our takeaways here.

What do you think?