October 25, 2005

Wal-Mart vows changes in health care, environment

By Emily Kaiser

CHICAGO (Reuters) - Wal-Mart Stores Inc., under attack from
critics including labor groups and environmentalists, has vowed
to cut energy usage, reduce waste and offer lower-priced health
care to employees.

In a speech to employees released on Tuesday, Chief
Executive Officer Lee Scott said the world's biggest retailer
needed to take the lead in efforts such as switching to
renewable energy sources, and even called on Congress to raise
the national minimum wage from the current $5.15 an hour.

Some of Wal-Mart's most vocal critics dismissed the efforts
as little more than a charm offensive, but others applauded the
retailer for taking at least some small steps to change the way
it does business.

Scott said the U.S. minimum wage "is out of date with the
times," noting that many Wal-Mart customers do not have enough
money to buy basic necessities between paychecks.

"While it is unusual for us to take a public position on a
public policy issue of this kind, we simply believe it is time
for Congress to take a responsible look at the minimum wage and
other legislation that may help working families," he said.

Scott presented the changes as a positive for both
employees and shareholders, saying goals such as using only
renewable energy and creating zero waste can boost profits.

For example, he said improving fuel mileage in the trucking
fleet by one mile per gallon would save more than $52 million
per year. The company also aims to cut energy usage at its
stores by 30 percent.

Wal-Mart recently opened an experimental store in McKinney,
Texas, to study environmental efforts such as heating the store
with used cooking and motor oil. Scott said the savings so far
were not enough to cover the cost of building the store, but it
may be economically feasible if Wal-Mart takes advantage of its
size and rolls out such changes across the chain.


But some Wal-Mart observers said the retailer did not go
far enough to address concerns about employee wages, treatment
of suppliers and environmental damage.

Wal-Mart Watch, a group initially funded by the Service
Employees International Union that has called on Wal-Mart to
change its labor and other practices, said the retailer can
afford to do more.

"Wal-Mart Watch credits Wal-Mart for recognizing that their
employee health plan is inadequate for their employees and
unfair to taxpayers forced to support their use of Medicaid,"
the group said in a statement.

"We call on Wal-Mart to go further and address the full
range of deficiencies in their plans, from affordability to
eligibility to out-of-pocket costs to waiting periods. This is
a company that can well afford to remedy those problems."

Wake-Up Wal-Mart, a group backed by the United Food and
Commercial Workers union, dismissed the efforts as "empty
actions" that shift responsibility to suppliers and others.

"What this truly is, is a publicity stunt meant to repair a
faltering public image," Chris Kofinis, a spokesman for Wake-Up
Wal-Mart, said.

Wal-Mart has acknowledged that it has an image problem, and
has stepped up its marketing efforts in the hope of convincing
critics that it treats employees fairly and gives back to the
community. Scott said the retailer spent a year meeting with
critics, and the latest changes were partly in response to
concerns raised in those discussions.

The retailer, which is hosting a two-day analysts meeting
beginning on Tuesday, also has to convince investors that it is
changing for the better as lawsuits alleging worker
mistreatment pile up.

Wal-Mart faces the largest ever class-action lawsuit,
charging it with discriminating against women in pay and
promotions. Analysts say a settlement could reach into the
billions of dollars.

The bad news - what Wall Street calls "headline risk" - is
clearly weighing on the stock, which is down some 20 percent
from a November 2004 peak. Its shares trade at 15.4 times
analysts' profit forecasts for next year, below rival Target
Corp.'s price-to-earnings ratio of 18.

Shares of Wal-Mart were off 45 cents, or 1 percent, at
$45.76 in morning New York Stock Exchange trading.