Markets

Wal-Mart Meeting Raises a Cheer It Hopes Reaches Investors

By Mike Duff

Updated on: June 8, 2009 / 12:09 PM EDT / MoneyWatch

Once a year, in a gala atmosphere, Wal-Mart conducts its annual meeting, trotting out stars, featuring cheering associates, touting another annum of expansion and, in recent years, dealing with a source of frustration, the company's share price.

Despite gains in revenues, comparable store sales and profits during the recession, Wal-Mart share price has bounced around since it tumbled with the rest of the stock market in October. Not only is it not near its 52-week high, which was over $63 a share in September, it isn't even at the level of its last, temporary spike of almost $53 in April. In contrast, Target's share price advanced throughout the spring despite falling comps and profits, leveling off only recently as investor William Ackman argued its faults during the proxy battle he launched.

Wal-Mart shares opened at $51.12 today after peaking at $51.69 in the week long run up to the company's annual meeting that culminated in a speech given by CEO Mike Duke on Friday.

In it, he made the case that Wal-Mart is not only posting strong financial numbers, it also is improving operations and doing so in a manner that addresses Wall Street fears that it will lose customers it has gained in the recession as economic conditions improved. He asserted that Wal-Mart has:

Improved what consumers can purchase in stores with high-demand products and services.
Upgraded the store experience, a focus for the retailer that has included renovating the electronics and home departments.
Reemphasized price leadership, using marketing and displays to remind customers of its commitment to low prices.
Strengthened formats around the world to make them easier to shop and to enhance operational efficiency.
Progressed on big issues like health care and sustainability, addressing the social concerns that have bedeviled the retailer and simultaneously disarming critics who find it a convenient target.

Further, Duke advanced a theme that has been important to Wal-Mart since former CEO Lee Scott developed it last year, that of a changing consumer conditioned by the recession to thrift and shopping for low prices. Duke termed this phenomenon the "new normal," a state of affairs that prompts consumers to a focus on saving money and to "understand and appreciate the value of value." That might not be the most elegant turn of phrase, nor is the case it supports certain, yet it does demonstrate that Wal-Mart recognizes it has to go farther to convince the sort of people who it needs to invest in its stores, and who often don't shop at them, that it is the best bet as regards winning more sales from those who do, now and when the recession ends.

Just in case that isn't enough, though, Wal-Mart has increased its dividend and, as announced at the annual meeting, launching a $15 billion share buyback program.

The retailer has complained about lack of investor recognition for its successes. As it piles on programs to boost its share price, the retailer may finally succeed in getting what it regards as its due or it many have to resign itself to a certain amount of investor antipathy, which is something Costco has managed to do.