Copyright 2009 Little Rock Newspapers, Inc.

September 11, 2009 Friday

BUSINESS

498 words

STEVE PAINTER ARKANSAS DEMOCRAT-GAZETTE

Mike Duke, Wal-Mart Stores Inc.'s president and chief executive officer, sees a challenging retail environment continuing this fall and expects Christmas shopping will be a last-minute affair for many of the chain's customers.

Despite some signs that the economy is emerging from a recession, Duke said at a retail conference in New York, shoppers likely won't return to pre-recession spending habits anytime soon.

"Customers are buying now when they need product, not anticipating a future need," he said. "I think this is something that will be with us for a long, long time." Duke spoke at the Goldman Sachs Global Retailing conference. His remarks were carried live on the Internet via a link on the company's Web site.

Duke said the company sees sales drop near the end of paycheck cycles even for basic needs such as infant formula. But he said the company also can boost sales in some categories such as grocery and video games as customers avoid eating out and spending on entertainment.

"For any of us in the food business, there's more opportunity there," he said.

Last year, Wal-Mart's sales held up well during the Christmas shopping season as most retailers saw sales plummet from year-earlier levels.

Duke said he's not concerned that Wal-Mart's Christmas sales won't look as good this year, saying he hopes the company is always facing tough year-over-year comparisons.

Patricia Edwards, a retail analyst who runs Storehouse Partners LLC in Seattle, said she expects Wal-Mart to do well again this year at Christmas. She anticipates that Kmart and Sears may siphon off some potential Wal-Mart shoppers because they offer layaway, which allows customers to buy merchandise and pay for it a little at a time.

"For the very, very strapped consumer, people will be drawn to layaway," she said.

Wal-Mart ended its layaway program in 2006, citing declining use and increasing costs.

Overall, Edwards is not as pessimistic as some analysts on the outlook for shopping.

"This year, things are still incredibly tight, but we are not as fear-driven as we were this time last year," she said.

Wal-Mart is in the midst of remodeling its U.S. stores, which Duke said is resulting in increased sales.

However, he said the international division has the greatest potential for future growth. The company's Asda operation in Britain has strong momentum, he said, with gains in store traffic, average ticket and overall market share.

And the company is consistently recording monthly same-store sales gains at its Seiyu stores in Japan. Wal-Mart implemented everyday low pricing into a market in which many retail experts said customers wouldn't respond.

"Everyone who said that is just dead wrong," said Duke, who oversaw international operations before taking over as CEO early this year.

Wal-Mart's stock closed Thursday at $51.03 a share, down 8 cents, or 0.16 percent, on the New York Stock Exchange. It has traded between $46.25 and $63.85 a share in the past year.

This article was published 09/11/2009

September 11, 2009