Week In Review: Wal-Mart Stumbles Into 2006
For Immediate Release
Friday, January 06, 2006
Washington, D.C., January 6, 2005 – Wal-Mart CEO Lee Scott must have been thrilled to ring in the new year. Public relations disasters like a leaked, damning internal health care memo, a declining stock price, and discrimination lawsuits added up to a miserable 2005 for the world’s largest company.
But if this past week is any indication, 2006 will be filled with the same public relations gaffes and legal problems of last year. In just the past week:
• Low 2005 earnings: On Thursday, Wal-Mart reported “disappointing” holiday sales numbers that amounted to its smallest December numbers in five years. Wal-Mart’s retail competitors, Target and Costco, beat expectations and posted higher gains of 4.7% and 7% respectively. [Guardian, “Wal-Mart has least happy Christmas in five years,” 1/6/06]
• Earnings jingle a flop: Public relations professionals said Wal-Mart “risked angering investors” by including a bizarre holiday jingle on a phone message that announced their disappointing sales figures to shareholders. One reminded Wal-Mart that “People get kind of emotional about their money” and another quipped that “There’s nothing funny about mediocre earnings.” [Reuters, “Wal-Mart Christmas message elicits few Ho-Ho-Hos,” 1/5/06]
• New Md. advertising campaign: The Maryland Citizens’ Health Initiative released a new radio ad on Wednesday featuring two business leaders who ask Marylanders to contact their state lawmakers and urge them to override Gov. Bob Ehrlich’s veto of the Fair Share Health Care bill. Citizen’s Health Initiative also released a survey showing solid public support for the bill. [Annapolis Capital, “Poll shows support for Wal-Mart Bill,” 1/5/06]
• Wal-Mart fined for overcharging Wisc. customers: The Wisconsin Bureau of Consumer Protection announced yesterday that it had fined Wal-Mart $25,000 for overcharging customers for bulk items in its stores. State inspectors alerted Wal-Mart to the problem in 2003, but the company neglected to correct it. [Associated Press, “Wal-Mart to settle overcharge allegations,” 1/5/06]
• More Calif. legal problems: Sacramento station KCRA-TV reported this morning that California’s attorney general is investigating allegations of illegal waste dumping at Wal-Mart stores in Northern California. Wal-Mart faced similar charges in 2002, and KCRA sources said Wal-Mart’s “long history of violations” prompted the investigation. [KCRA, “Attorney General involved with Wal-Mart case,” 1/6/05]
• Bank of Wal-Mart opponents holding firm: The FDIC will soon consider Wal-Mart’s application to open its own bank, and the political climate isn’t improving. Wal-Mart Watch and the Independent Community Bankers of America are stepping up their joint campaign, which includes bi-partisan opposition and 1,700 comment letters from bankers to the FDIC. [CNN, “Wal-Mart Bank faces tough opposition,” 1/4/06]
• Yet another public relations gaffe: Yesterday Wal-Mart altered its Web site after a reporter inquired about a page that linked a “Planet of the Apes” DVD to movies about Martin Luther King, Jr. and African American actress Dorothy Dandridge. Wal-Mart flack Mona Williams said she was “deeply sorry that this happened.” [Associated Press, “Wal-Mart ends automated movie suggestions,” 1/5/05]
Next week isn’t bound to improve the mood at the Home Office in Bentonville. The Maryland General Assembly opens its 2006 session on Wednesday, and their first order of business is an attempted override of the Fair Share Health Care veto. A successful vote would generate momentum for 29 other state legislatures that are considering similar bills.
Friday afternoon update:
And if you thought this news was bad, here's how the week ended:
Former Wal-Mart Vice Chairman Thomas Coughlin has agreed to plead guilty to federal wire-fraud and tax-evasion charges, according to sources familiar with the case. Read More.
