Wal-Mart Plans Improvements

FAYETTEVILLE, Ark. —  Wal-Mart Stores Inc. said Friday that it needed to clean up its stores, treat employees well and bring in more upscale goods such as organic food and trendy clothes to revive sales and profit growth.

Executives at the world’s biggest retailer said their game plan for this year involved targeting wealthier shoppers who may buy basics such as food at Wal-Mart but look elsewhere for fashionable items such as clothing and housewares.

“We aren’t where we need to be, especially in the Wal-Mart stores in the U.S.,” Chief Executive Lee Scott told a crowd of 20,000 gathered for the company’s annual meeting here.

The strategy shift comes after Wal-Mart missed profit forecasts for its recently ended fiscal first quarter. The retailer has also endured years of bad publicity, including charges that it discriminated against women in pay and promotions and the recent resignation of former Vice Chairman Thomas Coughlin amid charges that he misused company funds.

Wal-Mart set three goals: making the company a better place to work, improving the shopping experience and being more aggressive in buying merchandise.

“We sometimes have inconsistencies in how clean a store is or how organized,” said Mike Duke, head of the U.S. Wal-Mart Stores division, Wal-Mart’s largest unit.

“Sometimes our checkout lines are too long, and we’re not staffed properly,” he said. “We did a great job of focusing on the ‘opening price point’ customer. We may not have focused enough on the customer who is willing to pay for a little better quality and style.”

Wal-Mart has had success in getting customers into its massive Supercenters, which combine a grocery store with discounted general merchandise. But lately food has accounted for the lion’s share of sales growth, and that has hurt earnings because food generates thin profit margins.

Scott said the key was to improve merchandise, particularly apparel and housewares, to encourage people to cross over from the grocery aisle into the discount store.

“We need to widen our appeal to a broader range of customers,” Scott said, but he was quick to add that the retailer would “never turn its back on its obligation” to low-income customers who can’t afford to go elsewhere.

Wal-Mart has already started adding more expensive items such as high-thread-count bed sheets and flat-screen televisions in hopes of drawing more middle- and high-income shoppers to its stores.