Wal-Mart chief defends chain's holiday sales performance
Scott anticipating record profits and sales in fiscal year
BENTONVILLE, Ark. -- Wal-Mart chief executive Lee Scott, questioning Wall Street's judgment of the company's holiday sales performance, said yesterday he is pleased with 2005 results and is counting on changes in merchandise, management, and public relations to bolster growth in 2006.
The world's largest retailer estimates its December sales growth at stores open at least a year came in at about 2.2 percent -- the low end of its original forecast -- despite heavy marketing efforts.
But Scott said that he views that as being less important than an increase of more than $2 billion in total sales last month at new and existing stores.
Scott said Wal-Mart Stores Inc.'s stock, which fell 11 percent in 2005, is undervalued -- especially since he expects the company to report record sales and profits for the current fiscal year that ends Jan. 31.
''Is it more important to grow total sales and total profitability, or would you be better off if you did not impact your stores with new stores and ran higher [same-store] comps, which is what Wall Street is focused on?" he asked.
''Overall, if you look at the business results themselves, we came through those challenges and produced those results that people expect of us, which are record sales and record earnings," Scott said.
Scott said some changes, such as sales of trendier clothing, were already helping.
Other moves, including regrouping management, would kick in around mid-2006.
''What we look at is, when you end the year, did you produce the record results you wanted and are you positioned to do that again in the next year? And we are positioned to do that again in the next year. Increasing sales, increasing EPS [earnings per share], increasing real profit dollars," he said.
Scott said he was spending more time speaking about Wal-Mart in the face of an organized campaign against it by two union-backed groups, trying to get his message across that Wal-Mart is good for Americans because it bolsters competition and cuts prices for working families.