Wal-Mart talks U.S. manufacturing jobs, grocery gains and health care

story by Kim Souza
ksouza@thecitywire.com

Bill Simon, CEO of Walmart U.S., said the retailer is excited about the interest from about 500 U.S. companies who want to sell American-made products in its stores. Many of those companies have secured a date to meet with Wal-Mart at its July 8, open call, Simon said.

“I am excited about the possibilities for these U.S. manufacturing jobs and to see what new U.S.-made products will be presented at these meetings. In these meetings we will look at possibilities of supplying Wal-Mart, Sam’s Club and or Walmart.com, whatever fits the best,” Simon said.

He said the retailer has 180 active projects with manufacturers in the pipeline toward moving operations onshore.

‘This is not a Wal-mart initiative. It is a macro-economic fact that is evolving from trends in the marketplace today. … These U.S. made goods do not cost more. If you drive past our home office you will see these silly pink flamingos out front. Last year we sold a ton of those that were made in China, there are two pink flamingos out there this year that we made in the U.S. that cost less and allow for more flexibility inventory ordering on demand,” Simon said during the question and answer session with executives on Thursday (June 5) at the Embassy Suites in Rogers for the Wal-Mart shareholders week.

LESSONS LEARNED
He said the multiple formats are essential in Wal-Mart’s ability to meet consumer’s diverse shopping needs. Simon added that the learnings from the Walmart to Go convenience store format in the past 90 days have been huge. On area is in the fountain beverages from milkshakes to coffee and soda.

“We took these fountains out of our supercenters and we are now evaluating the feasibility of bringing them back,” Simon said.

He added that the Bentonville store has some expensive features like the covered awning from the gas pumps to the front door, which may or may not be duplicated in future iterations of this concept store.

Simon told the group that the hybrid neighborhood market store is also a convenience play and comparable sales are on par with other top grocery retailers like Kroger.

“The past quarter marked the 46th consecutive positive same-store sales reading, with sales growing incrementally in every year since they were introduced in 1999 till now. These are hybrid stores that are performing very well,” Simon said.

Simon will need more of the stores in the Walmart U.S. universe to perform well. The company’s first quarter earnings were ugly. The retailer reported per share net income for the first fiscal quarter of $1.11, below the consensus estimate of $1.15. The company earned $1.10 per share from continuing operations. Total revenue of $114.96 billion was up slightly over the $114.07 billion in first quarter of 2013 and was below the consensus estimate of $116.27 billion.

Company officials said the first quarter was hit hard by unusual winter weather in the U.S. during January.

Comp traffic for Walmart U.S. was down 1.4% in the quarter, despite a 1.3% uptick in the average shopper ticket. This marks the fifth consecutive quarter of negative to flat comparable sales, the benchmark metric used to measure retail performance.

And the second quarter may not be a big improvement. The company is predicting earnings per share in the range of $1.15 and $1.25. The company hit $1.24 per share in the second quarter of the previous fiscal year.

HEALTH CARE TEST
Another area Wal-Mart is testing is company-owned health care clinics to be located in up to 12 supercenters this year, according to Simon. The first clinic opened last month in Copperas Cove, Texas, providing primary care access to Wal-Mart employees and customers.

“Associates on the Wal-Mart health plan have a $4 co-pay and customers pay a flat $40,” Simon said.

Wal-Mart is contracting with QuadMed staffing company who will provide two licensed nurse practitioners for the clinic. As a self insured company, Simon said getting its own employees to use the service is key to its success and the response in the one pilot test is strong.

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The retailer has about 180 health clinics in stores, which are operated by local health care professionals or hospitals on a lease arrangement, and this is retailer’s first company-owned clinic.

“Our Walmart Care Clinic pilot is creating a new price position for retail health services that aims to give our associates and customers greater access to quality, affordable health care that will improve their lives,” said Labeed Diab, president of Health and Wellness for Wal-Mart.

Following are some stats pushed out during several Thursday meetings with the media.
• $3.2 million: The savings money transfer fees since April.
• 115,000: The number of games exchanged for cash since March.
• 7 million: The number of online items at walmart.com.
• 1,000 new hires: The number of technology jobs added @WalmartLabs this year.

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