WAL-MART'S FRESH PUSH

CAROL EMERT

FAYETTEVILLE, Ark. (FNS) -- Wal-Mart Stores is redoubling its efforts to improve supercenter fresh food sections. The giant retailer is attempting to lure more supercenter shoppers into the supermarket section with better-targeted offerings of fresh foods that rely on improved use of data, Nick White, executive vice president, told SN in an interview during Wal-Mart's annual shareholders' meeting here.

"We're striving to ensure that we have the right item at the right time at the right price," White said. "We're refining our mix in every store" according to the consumption patterns at each location.

White said Wal-Mart has not instituted a new system to help refine each store's inventories, but rather is making more of an effort to use data it already has on hand.

When asked about studies that indicate fewer supercenter shoppers are drawn to the stores for their food offerings than shoppers at rival retailers, White said, "comparisons with [Kmart's] Super K or other combination stores only encourage us to do a better job in each location. Obviously we have some areas to improve in."

Categories in which the merchandise mix is being refined include produce, bakery, meats and fish, White said. He noted that the store is not attempting to improve on quality, which is not a problem, but only on inventory.

There are no plans for radical changes at the supercenters, such as a new format, to help boost sales, he added. "We're continuing to improve the vehicle we've got."

According to the company's annual report, Wal-Mart expects to open 12 new supercenters this year in the United States and to convert between 80 and 85 Wal-Mart discount stores into supercenters, for a total of 92 to 97 new supercenters.

The company also intends to open 90 to 100 new Wal-Mart discount stores and expand or relocate 70. It plans to open nine new Sam's Clubs and expand or relocate four. It also expects to build three full-line distribution centers.

Internationally, Wal-Mart is planning to add a total of 20 to 25 stores in Canada, Brazil, Argentina, Hong Kong and China this year.

Unlike last year's annual meeting, when Wal-Mart executives announced plans to open stores in Argentina and Brazil, no announcements for international expansion were made at this year's meeting, which was held June 2. Indeed, Chief Executive Officer David Glass downplayed the importance of Wal-Mart's foreign moves, saying domination of the retail sector in North America is Wal-Mart's top priority.

"We'll maybe do 10 to 11 units in Argentina and Brazil and three to four in China to see if that works. If it doesn't work, we can cut back" and put the company's resources to work elsewhere, Glass told the estimated 15,000 meeting attendees, many of whom were store-level employees, who packed the Bud Walton Arena at the University of Arkansas here.

Arthur Emmanuel, chief operating officer of Argentina and Brazil operations, said sales at the Sam's Club unit that opened in Sao Paolo, Brazil, in May are on plan. He said four or five more stores will open in Sao Paolo by the end of the year, about half supercenters and half warehouse clubs. "We're extremely pleased with the acceptance of the wholesale concept in Brazil," he said.

Wal-Mart still expects to open a Sam's Club and a supercenter in Buenos Aires, Argentina, before year's end, Emmanuel said.

For now, any construction of new stores in Mexico remains on hold, said Gerardo Ruiz, public relations coordinator. Wal-Mart's 235 clubs and 11 supercenters in Mexico are all "running normally," he said.

As reported, Wal-Mart also plans to expand its Asian operations to include two joint-venture warehouse clubs in China, which will open this year. Wal-Mart already has three such clubs in Hong Kong.

Despite all of its activity both in the United States and abroad, Glass said he does not expect sales to reach $100 billion this year, as some industry watchers had forecast. He said it was never the company's goal to attain that level of sales. He forecast "$90-some billion this year and $100 billion soon."

Sam's Club got a boost from former First Lady Barbara Bush, who told the assembled stockholders how much she likes shopping at Sam's, and how much her husband, George, likes the Prego spaghetti sauce she buys there.

Bush, who wore red, white and blue, was presented with two jars of tomato sauce for her husband and a strand of pearls for herself.

During the annual meeting, Glass attempted to console shareholders who have seen the price of Wal-Mart's shares remain flat for the past two years despite very strong sales and earnings growth.

"If I were one of you today, I'd wonder what in the world is happening to the company's stock," he said. "

Glass noted how much the stock has risen since the company went public in the 1970s and reiterated his message of last year, that Wal-Mart's strong performance would push the stock price higher over the long term.

Glass received a cheer when he mentioned that Wal-Mart would open its first store in Vermont later this year.

There have been reports of local opposition, but Glass said, "It has never been true." He blamed "the irresponsibility of the press" for reports to the contrary.

By a wide margin, shareholders defeated a proposal that would have required Wal-Mart to make public its record for hiring and promoting women and minorities.