Monday, February 26, 2007

Stockton Considers Law To Block Big Retail

Feb 26, 2007 4:17 pm US/Pacific
Stockton Considers Law To Block Big Retail

(AP) STOCKTON City councilors plan to take up a proposed ordinance Wednesday that would block new big-box retail stores from opening.

Allowing more large chain retailers to do business could hurt local commerce and transform the downtown shopping district into a row of empty storefronts, said Vice Mayor Leslie Baranco Martin, who proposed the ordinance.

It is similar to one enacted in Turlock last year that banned stores that exceed 100,000 square feet and devote at least 5 percent of space to groceries.

Wal-Mart Stores Inc. opposed the Turlock ordinance but the U.S. District Court in Fresno sided with Turlock last year. San Diego and Long Beach have passed similar laws and other communities across the nation have set square-footage caps, changed zoning laws and even seized land by eminent domain to keep large retailers out.

Stockton officials have not decided yet how the ordinance would apply to a Wal-Mart Supercenter already approved by the city planning board and another Wal-Mart store not yet approved, said Ren Nosky, city attorney.

The full council must approve it before it becomes law.

Roderick Scott, a spokesman for the Bentonville, Ark.-based Wal-Mart, said he hopes the city realizes the retailer generates jobs and crucial tax revenue.

(© 2007 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. )

© MMVII Sacramento Television Stations Inc. All rights reserved.

Appeals Court Orders Wal-Mart Discrimation Suit To Trial

Appeals Court Orders Wal-Mart Discrimation Suit To Trial

A federal appeals court ruled Tuesday that Wal-Mart Stores Inc., the world's largest private employer, must face a class-action lawsuit alleging as many as 1.5 million female employees were discriminated against in pay and promotions.

The ruling by the 9th U.S. Circuit Court of Appeals upholds a 2004 federal judge's decision to let the nation's largest class-action employment discrimination lawsuit go to trial, possibly exposing the Bentonville, Ark.-based retailing powerhouse to billions of dollars in damages.

"Plaintiff's expert opinions, factual evidence, statistical evidence and anecdotal evidence present significant proof of a corporate policy of discrimination and support plaintiff's contention that female employees nationwide were subjected to a common pattern and practice of discrimination," the court wrote in a 2-1 decision.

Wal-Mart said it would ask the court to rehear the case with the same three-judge panel or with 15 judges, a move likely to idle the case for months. Tuesday's ruling came 18 months after the case was argued.

"This is one step of what is going to be a long process," Wal-Mart attorney Theodore Boutrous Jr. said. "We are very optimistic of obtaining relief from this ruling."

He said Wal-Mart's own review found no significant disparity in pay between men and women at 90 percent of its stores.

Wal-Mart, which currently employs 1.3 million workers, claimed that the conventional rules of class action suits should not apply in the case because its 3,400 stores, including Sam's Club warehouse outlets, operate like independent businesses, and that the company did not have a policy of discriminating against women.

U.S. District Judge Martin Jenkins, the San Francisco trial court judge who said the case could proceed, had ruled that anecdotal evidence warranted a class-action trial. Wal-Mart took the case to the San Francisco-based appeals court.

Jenkins said if companywide gender discrimination is proven at trial, Wal-Mart could be forced to pay billions of dollars to women who earned less than their male counterparts. Jenkins rejected as "impractical" Wal-Mart's suggestion of having individual hearings for each plaintiff and he planned to use a statistical formula to compensate the women if they won.

Wal-Mart said the judge's scenario was an unprecedented denial of its rights and sought to dismiss the case. The company said women who allege discrimination could file lawsuits against individual stores.

The women's lawyers said the idea was ridiculous, and would clog the federal judiciary.

"Although size of this class action is large, mere size does not render a case unmanageable," Judge Harry Pregerson wrote for the majority, which upheld Jenkins' decision in its entirety.

But Judge Andrew Kleinfeld wrote in a dissent that women should perhaps file individual lawsuits to safeguard Wal-Mart from paying those who don't deserve money, and would also ensure women get the compensation they deserve.

The appellate court's decision, he wrote, "threatens the rights of women injured by sex discrimination. And it threatens Wal-Mart's rights."

Brad Seligman, one of the attorneys who represented the women suing Wal-Mart, said the decision would hurt the company's reputation.

"No amount of PR by Wal-Mart is going to allow it to deal with its legacy of discrimination," Seligman said.

David Nassar, executive director of Wal-Mart Watch, a group critical of Wal-Mart policies, said the decision vindicates "victims of the company's illegal and immoral gender discrimination."

Copyright 2007 by The Associated Press contributed to this report. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. © 2006 SmartMoney. SmartMoney is a joint publishing venture of Dow Jones & Company, Inc. and Hearst SM Partnership. SmartMoney is a registered trademark. All Rights Reserved. All quotes delayed by 20 minutes. Delayed quotes provided by ComStock.

© 2007, KRXI-TV.

Sunday, February 25, 2007

Almost 100 Pounds of Marijuana Found in Wal-Mart Distribution Center

Almost 100 Pounds of Marijuana Found in Wal-Mart Distribution Center

An employee at the Wal-Mart Distribution Center in Plainview, was not expecting what he found inside a box there Friday.

Plainview Police say an employee was filling an order around 4 a.m. Friday, and noticed one of the boxes was heavier than usual. When he opened the sealed box, he allegedly found 92 pounds of marijuana inside.

Police are still investigating and say drug dogs went through the facility all day. NewsChannel 11 will continue to follow this story and bring you the latest details as they become available.

All content © Copyright 2000 - 2007 WorldNow and KCBD, a Raycom Media Station.

Saturday, February 24, 2007

Costco: The 'anti-Wal-Mart'

Extra2/16/2007 12:00 AM ET
Costco: The 'anti-Wal-Mart'
The warehouse-club retailer 'has figured out the big, simple things': Hold down expenses and prices, treat employees well, make discount shopping fashionable and keep shareholders happy.
By Barron's

"Membership has its privileges." That slogan belongs to American Express, but it might better apply to Costco Wholesale, the leading warehouse-club operator in the U.S., whose determination to deliver value and innovative products to its 23 million members has made it one of the country's top retailers.

Costco (COST, news, msgs) has succeeded by flouting industry norms. The big-box retailer charges customers a base yearly fee, now $50, to shop in its sprawling stores, which offer quality goods at low markups. Consequently, its margins are among the slimmest in retailing. The privileges also extend to employees, who are paid well and enjoy generous health-care benefits.

This formula has generated fierce loyalty among both shoppers and workers while rewarding long-term investors. Costco shares, which traded Thursday around $58, are up from a split-adjusted price of $1.67 when the company went public in 1985. True, they no longer are dirt-cheap, but in view of the company's superior management and opportunities for growth, neither are they rich.

Small businesses are big customers at Costco, but the company also has managed to make discount shopping fashionable for affluent Americans by offering fine wines, books and big-screen televisions at low prices, and staples such as paper towels and razor blades in bulk.

By offering one-time specials like discounted Prada bags or Callaway golf clubs at individual outlets, Costco has created what it calls a "treasure-hunt" atmosphere in its stores.

Not the Wal-Mart way
Costco is among a handful of retailers that has flourished despite Wal-Mart Stores' (WMT, news, msgs) onslaught; Wal-Mart's more downscale Sam's Club chain runs second to Costco. With its strong labor relations, low employee turnover and liberal benefits, Costco has been called the "anti-Wal-Mart." Its approach has paid dividends because Costco, based in Issaquah, Wash., hasn't encountered the same community resistance as Wal-Mart when it has sought to open stores.

"Retailing isn't rocket science. Costco has figured out the big, simple things and executed with total fanaticism," says Charles Munger, a Costco director for the past 10 years. The outspoken Munger, 82, is better known as Warren Buffett's longtime partner at Berkshire Hathaway (BRK.A, news, msgs), where he serves as vice chairman.Crucial to the chain's success is CEO Jim Sinegal, who co-founded Costco in 1983 with Jeff Brotman, the company's chairman. "Jim would be on any intelligent list of the top 10 retailers of the past century," Munger says.

Sinegal, 70, also is one of the biggest bargains among big-company CEOs: In an era of seven- and eight-figure pay packages for CEOs, Sinegal earned a salary of $350,000 in Costco's latest fiscal year, which ended in August. He garnered other compensation of about $100,000.

What's more, Sinegal got no bonus last year, after the company determined that it had failed to measure properly the appropriate date for certain option grants from 1996 to 2002, although no evidence of fraud or falsification of records was found.

"Jim wouldn't let the board give him a bonus. His view was that the option glitch happened on his watch," Munger says. "How many people behave like that? No wonder everyone loves him."

Unlike Buffett, who draws a salary of just $100,000 as the CEO of Berkshire, Sinegal isn't a billionaire. He owns Costco stock worth about $135 million and has options on 1.2 million shares.

Sinegal's compensation and demeanor offer a welcome contrast to former Home Depot (HD, news, msgs) CEO Robert Nardelli, who alienated employees with his autocratic style and whose gargantuan exit package of $210 million didn't sit well with shareholders.

Video: Behind the scenes at Costco
None of this has been lost on the investment community. At nearly $58, Costco trades for 22 times fiscal 2007 projected earnings of $2.58 a share. It has one of the highest price-earnings ratios among major retailers. Target (TGT, news, msgs) shares, at nearly $63, trade for 17 times estimated 2007 earnings, while Wal-Mart, at $48, commands 15 times projected 2007 profits.

Though some retailing analysts deem Costco shares expensive, the company seems to qualify under one of Buffett's investment dictums. Buffett has said he'd rather buy a good business at fair price than a fair business at a good price. Berkshire owned 5 million Costco shares at the end of September.

Growth and more growth
This is a genuine growth story. Earnings per share have increased at a 12% annualized rate in the past five years. Neil Currie, a retailing analyst at UBS Securities, believes the company is capable of generating 13% growth in earnings per share in the next few years and an even higher rate if it gets more aggressive in repurchasing shares. The bullish Currie carries a 12-month price target of $66. With large annual buybacks, Costco could earn more than $4 a share in fiscal 2010, Currie estimates. That could support a stock price of $80.

The company plans to open 36 to 40 stores in the current fiscal year and about 35 annually in subsequent years. The store base totaled 474 on Dec. 31, including 371 in the United States. Costco says domestic and international markets ultimately can support more than 1,000 stores. Outside the U.S. and Canada, the most promising markets are likely Mexico, the United Kingdom and Japan.

Costco's merchandise sales in its most recent fiscal year rose 14% to $59 billion, while membership fees generated $1.2 billion in revenue. This year, sales are expected to rise more than 10%, reflecting lower prices for gasoline. Sales at stores open at least year, a key gauge of retailing success, were up a healthy 8% in fiscal 2006.

Could the company be a candidate for a leveraged buyout? Costco does possess some of the key characteristics that private-equity players seek. It has a strong balance sheet, a predictable cash flow and a durable franchise. Its market value is a hefty $26 billion, but LBOs of that size are doable these days.

Costco bought back $1.5 billion of stock in its latest fiscal year and $400 million in the quarter that ended Nov. 30. But it has resisted a large debt-financed buyback like the one under way at Home Depot, and to date it hasn't sought to raise funds through the sale of its real estate. The company takes pride in its impressive financial condition. "Have we gotten to the point in America that balance-sheet strength is a negative?" Munger asks.Currie argues that Costco could keep LBO operators at bay by launching a more aggressive buyback program and taking on a moderate level of debt.

"The best way for Costco to protect its independence is to have a high multiple on its stock," the analyst says, adding that an augmented buyback would help achieve that goal. He believes Costco comfortably can repurchase $2 billion or more of stock annually. The dividend yield on the stock is a low 0.9%.

Most income from members' fees
Its cooperativelike operation makes the retailer's business model unusual. In its latest fiscal year, Costco generated pretax income of $1.75 billion, about 70% of which came from membership fees. An additional $125 million was kicked in by the interest income on the company's cash. Costco earned just $400 million from its stores, for a retailing operating margin of less than 1%. The low margin is intentional and reflects the company's commitment to low prices.

As a matter of corporate policy, Costco refuses to mark up any product by more than 15% above its cost. When the company signed a new contract in 2005 with a supplier for Brooks Bros.-style men's cotton and button-down shirts, and got a significant price reduction for a massive two-year order, it immediately cut the price of the shirts to $12.99 from $17.99, notes Richard Galanti, Costco's chief financial officer. Other retailers might have phased in the reduction and captured added profit, but that's not the Costco way. The shirts now cost $14.99 because they are made with better-quality cotton.

One attraction in the eyes of a potential buyer would be the opportunity to lift margins. Costco leads Sam's Club in most financial measurements, including total sales, sales per store, sales per square foot of retail space and sales per employee. But Sam's operating profit margin of 3.5% tops Costco's 2.8%.

Some complaints on Wall Street
If Costco were to raise its margins to Sam's level, it would translate into an additional 65 cents a share of net income -- a large amount relative to the current-year consensus estimate of $2.60 a share. Sinegal has talked in the past about lifting Costco's margins to 4%, but little progress has been made.

This has led to some criticism on Wall Street. An analyst report in December, after Costco reported its fiscal-first-quarter profits, was entitled "Still No Margin." Galanti says management has no interest in going private. "The public model has worked for us. We have no plans to change," he says.

Video: Behind the scenes at Costco
Many Costco shareholders are also happy with the current situation. "Costco refuses to be undersold and thinks so long term that the company will not even remotely degrade the value it gives customers, even if it would fuel a healthy increase in margins and earnings and very few customers would notice," says Ken Charles Feinberg, a co-manager of the Davis New York Venture Fund (NYVTX) and Selected American Shares (SLADX), both run by Davis Selected Advisors. "That's how a great management builds a great business franchise that's built to last."

The Davis funds are Costco's largest shareholder, with a 12% stake.

Feinberg says that Costco's effective valuation is lower than its stated price-earnings ratio because of the company's conservative approach to depreciation. He recently calculated that Costco trades for about 16 times his projection of calendar "owner earnings." This profit measure adds to operating earnings depreciation expense in excess of what is needed to maintain the existing store base. Feinberg believes Costco is a "compelling bargain" for long-term investors.

Sinegal doesn't talk much to Wall Street and wasn't available to speak with Barron's. Even at 70, he maintains a grueling schedule. He aims to visit each Costco store twice a year and is about 70% successful in that goal, Galanti says. This means he's on the road 40 to 45 weeks a year. Costco executives jokingly refer to Sinegal's weekly travels as a "death march" because he usually begins each day at 7 a.m. and finishes at 10 p.m.

Dressed in sneakers, khaki pants and Costco's now-$14.99 button-down shirts, Sinegal asks store managers what's selling, what's not and how Costco prices compare with the competition. He has no set plans to retire, although he has talked casually about holding the job for five more years. Because he hasn't set a retirement date, there is no heir apparent. But Costco has a strong group of managers who share Sinegal's passion and vision.

Unlike most CEOs, Sinegal has no severance or golden parachute in his contract, which runs less than a page. He insists on one-year contracts, believing the Costco board should have the opportunity to evaluate him annually to determine if he's still up to the job. Sinegal's view is that the restrained terms of his contract send an important message to employees.

In the view of Berkshire's Munger, one of Costco's great strengths is that its two founders, Sinegal and Brotman, are still active. Brotman, 64, focuses on real estate. "There is no better site acquisitor in the retailing industry," Munger says. "I'd like to see Jeff get more credit. He deserves it."

Costco has chosen to focus on more affluent coastal markets; California alone is home to 30% of its stores. Finding sites for new outlets in densely populated areas is one of Brotman's specialties.

The company features products that offer its members large cost savings over what they would pay at traditional retailers. The chain carries just 10% of the items in a typical supermarket, which might stock 40,000 products.The formula works. Costco sold 1.5 million TVs last year and has successfully built what it calls ancillary businesses such as prescription drugs and eyeglasses, filling 26 million prescriptions in 2006. Hungry Costco members bought 63 million hot-dog-and-soda combinations last year at in-store snack bars -- priced at only $1.50 and with free soda refills. The dogs are even kosher.

Costco's customer-focused strategy is apparent in its 87% membership-renewal rate.

The retailer allows returns on nearly all items at any time, with no questions asked; computers are the lone exception. It doesn't even need to see receipts. This liberal policy has proved costly in the past year because the company is seeing returns of an unusually large number of big-screen TVs. Analysts suspect that many members are taking advantage of the sharp drop in TV prices to return models bought in the past 12 months so they can buy new ones at lower cost. Costco said it is evaluating its TV-return policy but emphasizes that no change will be retroactive and that it still plans to maintain the industry's most generous return policy on electronics.

Low turnover among employees
Workers get a relatively good deal at Costco -- a point of emphasis for the company, which contends it's also a matter of good business. Despite fewer stores, Costco's sales are about 50% above those of Sam's Clubs, and sales per employee are about $500,000 a year versus $340,000 at the Wal-Mart unit, UBS' Currie calculates.

Sinegal was asked in a recent Bloomberg TV interview about the company's health-care benefits. Costco provides health insurance to its 93,000 domestic employees and pays 90% of the cost, which runs about $6,000 annually per employee.

Video: Behind the scenes at Costco
"We're 100% committed to maintaining this program," Sinegal said. "It works for us, and our people count on it. We think they're entitled to that security."

Costco has one of the lowest turnover rates in retailing. Among employees who have been with the company for at least a year, just 6% leave annually. That may be because store employees such as cashiers can earn more than $40,000 a year after only four years on the job.

Costco shares aren't a bargain at current levels, but patient investors could be rewarded because the company is an industry leader with top-notch management, a loyal customer base and solid growth prospects in the U.S. and abroad. In Street-speak, Costco may be "under-earning," meaning its profit margins are lower than they need to be. Management is loath to tinker with a successful formula, but margins probably have only one way to go: up. In time, the shares are likely to follow.

This article was reported and written by Andrew Bary for Barron's.

Fund data provided by Morningstar, Inc. © 2005. All rights reserved.

© 2007 Microsoft

Friday, February 23, 2007

Walmart Pre Hearing begins

News for Thursday, February 22nd, 2007
Walmart Pre Hearing begins
Written by Ken Hashizume

Day two of discussions on the proposed Wal-Mart is taking place in Port Elgin.

An adjudicator yesterday denied a request by Eric Gillespie, a legal representative for four appellants, that the pre-hearing be adjourned.

Gillespie represents Friends of Saugeen Shores, Concerned Womens Coalition, the Owen Sound Cycling Club, and Cycle Ontario Alliance.

Gillespie says the request to adjourn was to allow the appellants more time to negotiate in settling their appeals and whether a pair of First Nation communities would like to be added to the list of appellants.

He says the Saugeen and Chippewa First Nation communities have put in a land claim on the proposed site of the Wal-Mart.

Legal representative for Saugeen Shores, Dennis Wood, says the dismissal of the request means that the proceedings can continue on.

Wood says other appeals will be heard to determine whether a full hearing is necessary.

The adjudicator will hear more arguments this morning at 10 inside Rotary Hall at the Saugeen Shores Municipal Offices.

Wood says a request will be put forth to dismiss the appeals.

© 2006 Bayshore Broadcasting Corp. All Rights Reserved.

Tuesday, February 20, 2007

Northcross Wal-Mart Opponents To Form Human Chain In Protest

Northcross Wal-Mart Opponents To Form Human Chain In Protest
Feb 9, 2007 11:12 PM EST

The moratorium for the proposed Wal-Mart at the Northcross Mall is now expired.

Permits for development have been issued, but so far, construction has not started. The exact design is still up in the air. But the proposed site is going to be a busy place on Saturday morning.

The group Responsible Growth For Northcross is planning to form a human chain around this site Saturday at 10 a.m. But supporters of the new store will also be here. There's a lot of emotion from a lot of people, and nobody even knows exactly what's going to be built.

"The 60-day moratorium really wasn't adhered to, in that development activities continued here to get permits and whatnot," said Jason Meeker with Responsible Growth for Northcross.

"We've had some progress, but I still think Lincoln and Wal-Mart have some work to do from what I've seen," said Councilmember Brewster McCracken.

McCracken says the city is trying to bring Wal-Mart and the neighborhood group together with a compromise. He's publicly stated that the original Wal-Mart proposal was not good for Northcross.

"What we've learned in the last 60 days is the Wal-Mart on this site would be the largest Wal-Mart in the entire world," McCracken said.

You read that right. He said, "The Wal-Mart on this site would be the largest Wal-Mart in the entire world."

KXAN checked city records on Wal-Marts in the area and not only would the Northcross Wal-Mart not be the largest in the world, it wouldn't even make the top five in Central Texas. The Wal-Marts at 183, at 620, in Buda, in Pflugerville and on Ben White Wal-Marts all have more square footage.

With the help of urban planners and designers, Responsible Growth For Northcross came up with a vertical, mixed-use design.

Attorneys for Wal-Mart told KXAN that the city has given them all the neighborhood's concerns, and they're attempting to address as many issues as they can.

Wal-Mart attorneys said that, in the revised plan, they'll use the city's commercial-design standards even though they're exempt from those mandates.

Wal-Mart is already on the lease at Northcross. But opponents insist that it is an illegal site plan, and that's a fight they'll take to court if they have to.

All content © Copyright 2000 - 2007 WorldNow and KXAN. All Rights Reserved.

Sunday, February 18, 2007

Dillons, Wal-Mart recall peanut butter products

Sunday, February 18, 2007
Dillons, Wal-Mart recall peanut butter products
By LOIS DAVIDSON, Sentinel Staff Writer
Published: Saturday, February 17, 2007 9:05 AM CST

Most people have heard about the salmonella outbreaks resulting from eating peanut butter made from ConAgra Foods Inc., beginning with the code 2111 on Peter Pan and Great Value peanut butter products. Already this outbreak has caused 300 individuals across the nation to become sick.

To prevent any more illnesses, Wal-Mart and Dillons have teamed up with ConAgra Foods Inc.

“We have had some of the 2111 peanut butter containers in our Dillons stores. As a precaution, we are removing all varieties of the Peter Pan peanut butter from our shelves,” said Sheila Lowrie, Dillons spokesperson.

Dillons carries ConAgra's Peter Pan peanut butter and it is not known yet when the Peter Pan peanut butter will return to the stores. Not allowed to discuss what the outbreak will do economically to Dillons, Lowrie stated that the store is following all FDA regulations.

Wal-Mart, on the other hand, carries both brands of peanut butter and has removed all Peter Pan and Great Value products from their stores.

“Food safety is always a top priority at Wal-Mart and Sam's Club. We are working very closely with ConAgra to fully understand the details of this situation,” said Dan Fogleman, Wal-Mart spokesperson. “We are doing all we can at this time.”

According to Fogleman, Wal-Mart has placed an additional precautionary measure by installing a sales restriction on the products in question. A restriction notice will appear on the cashier's screen to prevent the products from leaving the store if they are inadvertently scanned.

Wal-Mart and Dillons will refund any Peter Pan or Great Value peanut butter with a product code beginning with 2111. For a full refund, a person may take the entire container or just the lid to the store.

A person may also mail the lid, name and address to ConAgra Foods, P.O. Box 57078, Irvine, Calif. 92619-7078. For more information call 866-344-6970.

If a person has become sick and has eaten peanut butter in the past three days, save the product until the illness has been diagnosed. More information is at .

According to the International Food Information Council, symptoms of salmonella includes nausea, stomach cramps, diarrhea, fever, headache and chills.

To avoid possible bacteria contamination, the IFIC states to sanitize often, cook foods to proper temperatures, refrigerate properly and to avoid cross contact, especially with raw meats and vegetables.

Associated foods with salmonella poisoning include: raw or undercooked meats, poultry, eggs, milk and dairy products, shrimp, salad dressings, noncommercial sauces, cream-filled deserts, and toppings made from raw eggs, cocoa, chocolate and alfalfa sprouts.

For information on ways to prevent a salmonella outbreak in the home, visit .

A nursing supervisor at Memorial Hospital in McPherson, said that no one in McPherson has come in contact with the peanut butter salmonella outbreak bacteria.

He said that whoever begins to have the salmonella symptoms should see their physician.

Copyright © 2006 GateHouse Media, Inc. Some Rights Reserved.

Saturday, February 17, 2007

Bird Watchers Dispute Vallejo Walmart Plan

Bird Watchers Dispute Vallejo Walmart Plan
Land Would Take Over Sanctuary
By Leslie Brinkley

Feb. 2 - KGO - Seven thousand birdwatchers are expected to descend on Vallejo this weekend for the San Francisco Bay "Flyway Festival." And while they celebrate the wetlands and wildlife there, they're also worried about the construction of a giant new Walmart on the shores of an environmentally sensitive slough.

Bird watchers will flock together this weekend along White Slough in Vallejo, it's an area the Audubon Society has dubbed a globally important bird area. One million shorebirds stop here mid-winter along their pacific migration route.

Right next to White Slough and the bird sanctuary, Walmart has filed an application with the city of Vallejo to build a 390,000 square foot superstore.

Myrna Hayes, S.F. Bay Flyway Festival Co-Founder: "People can have a Walmart Supercenter anywhere in the town, but you just can't have a wetland anywhere, a beautiful, globally important bird area, that will bring a different economy to your community."

Myrna Hayes thinks Vallejo should shed its industrial image for a greener one by tapping into the $40 billion dollar bird viewing business.

Vicki Gray, Vallejoans for Responsible Growth: "We're concerned about having an environmentally improved area here on the White Slough and a vibrant commercial downtown."

ABC7's Leslie Brinkley: "Walmart would diminish those chances?"

Vicki Gray: "Absolutely."

But some bird watchers believe the project wouldn't necessarily ruin the slough if done right.

Joe Naudzunas, Birdwatcher: "A lot of places we go to watch birds in the San Francisco Bay, there are toxic waste sites all over the place, but there are still birds."

Clay Taylor, Birdwatcher: "If the place becomes stabilized, and there is not a lot of disturbance, they're gonna like it anyway whether Walmart's here or not."

The City of Vallejo says it's far from a done deal.

Craig Whitton, Vallejo Asst. City Manager: "What the council has only agreed to do is study the project. We will be assessing the biological impacts, economic impacts."

Vicki Gray: "It's about ruining, speaking of birds, our golden goose in Vallejo."

A final decision on whether to build a Walmart by the slough should be made by the time the birds return here next winter.

Copyright 2007, ABC7/KGO-TV/DT.

Copyright ©2007 ABC Inc., KGO-TV San Francisco.

Wednesday, February 14, 2007

Several Coke bottlers to drop suits over Wal-Mart delivery plan

Article published Feb 12, 2007
Several Coke bottlers to drop suits over Wal-Mart delivery plan
AP Business Writer

A rift between The Coca-Cola Co. and some bottlers has been eased as the world's largest beverage maker announced Monday that several suits over its plan to distribute Powerade to Wal-Mart stores directly through the retailer's warehouses were being dropped.

Coca-Cola also said it will work with the bottlers "to develop and test new customer service and distribution systems."

The company and its bottlers will consider shipping products directly to retailers' warehouses, as well as other ideas, Coca-Cola spokesman Dan Schafer said. In turn, the bottlers will be compensated for products delivered in their regions through forms of distribution other than themselves, Schafer said, adding that details still need to be worked out.

Atlanta-based Coca-Cola said that it hoped that all U.S. bottlers who distribute Coca-Cola products, including Powerade, will participate in the initiative.

Those who have already joined agreed to drop lawsuits now pending in U.S. District Court in Atlanta, and Circuit Court of Jefferson County in Birmingham, Ala., Coca-Cola said in a statement.

It was not immediately clear if all the bottlers that had sued Coca-Cola over breach of contract agreed to drop their claims. Schafer said "substantially all the bottlers in the suit" had dropped their claims.

Last year, several bottlers that handle roughly 10 percent of Coca-Cola's U.S. volume sued to try to block a new delivery system that the beverage maker's largest bottler, Coca-Cola Enterprises Inc., wanted to test for its Powerade sports drink.

A major Coca-Cola customer, Bentonville, Ark.-based Wal-Mart Stores Inc., had approached the company and its bottlers, saying it wanted to increase availability of Powerade in its stores and help the brand grow faster by delivering the product to its stores through its own warehouses rather than through the bottler system.

Wal-Mart is the world's largest retailer.

The test of the proposal was only being conducted in CCE's territory, but some other of Coke's bottlers objected, Coke said.

"Our bottling system is our heritage, and it will be the foundation for our future growth. The partnership with our bottlers is what makes the Coca-Cola system powerful and unique, and we will work diligently to ensure that we move forward and succeed together," said Sandy Douglas, president, Coca-Cola North America. "One of the historic strengths of our system has been its ability to change and adapt as our consumers, customers and competitors have changed."

Under the agreement, the company will join U.S. Coca-Cola bottlers in testing new systems to bring company products to customers who require special services. At the same time, Schafer said CCE's Wal-Mart warehouse delivery system will continue.

Analysts said the news was positive for Coca-Cola.

"For Coca-Cola, getting past the disputes with its bottling system is critical to meeting the changing needs of its retail customers and opens the door for a more aggressive and diverse product pipeline over the next few years," Banc of America Securities analyst Bryan Spillane said in a research note.

Coca-Cola shares rose 16 cents to close at $47.92 in Monday trading on the New York Stock Exchange.


Dateline Alabama

Wal-Mart adopts automated absenteeism system

Wal-Mart adopts automated absenteeism system
Chris Silva
Employee Benefit News • February 2007

Having grown weary of seeing two employees running themselves ragged picking up the slack for absent workers, Wal-Mart has instituted a new policy requiring those who are sick or late to work to call an 800 number. Workers using the automated system to call in sick are tagged with an "unauthorized" absence; anyone who logs seven of those within six months automatically will be fired.

Any Wal-Mart worker that forgoes the new system and accrues three no-call/no-show absences in a six-month period also will be fired. The discount-chain giant also is encouraging anyone needing more than three consecutive days away from work to file for an unpaid leave of absence or time off under the Family Medical Leave Act.

Wal-Mart's shift in policy comes at a time when absenteeism is on the rise and many employers - particularly in retail and similar transient industries - have reached the point of exasperation. According to the 16th annual CCH Unscheduled Absence Survey, unscheduled absenteeism can cost large companies an estimated $850,000 per year. CCH, a human resources consulting group based in Riverwoods, Ill., determined a national absenteeism rate of 2.5% in 2006, up from 2.3% in 2005.

"We did this to formalize our existing attendance policy, to ensure greater consistency and minimize subjectivity," says Wal-Mart spokesman John Simley. The program was initially tested in a few select Wal-Mart stores in the spring of 2006, Simley says, and the results were favorable. "The goal there was to improve the work environment and the shopping experience, and the tests have shown that the new attendance policy does exactly that. So it does work."

The new policy has also been well received by the majority of company employees and associates, Simley adds. "It's actually been very smooth, and the people who appreciate it the most are the associates who are there, at work, and don't have to stretch themselves to cover for someone who's absent."

A new approach

According to CCH, one-third of all absences were unscheduled in 2006, with personal illness accounting for only a third of the reported reasons (35%). Other reasons included family issues (24%, up from 21% in 2005), personal needs (18%), stress/burnout (12%) and entitlement mentality (11%, down from 14% in 2005).

The majority of workers have found work-life to be popular absenteeism deterrents, CCH data show. Employers, however, have generally attempted to quell absenteeism by implementing disciplinary actions and yearly reviews, CCH found.

Wal-Mart's call-in system represents a new approach to fighting absenteeism. Workers navigate an automated system to ensure they're routed to the right store. The call generates a confirmation number, which is electronically filed and stored.

The system also tracks tardiness. Wal-Mart gives employees a 10-minute grace period before they're marked for an incomplete shift, says Simley. The discount chain developed the system internally; there's no third-party administrator.

Analysts and consultants familiar with absenteeism believe an automated approach like Wal-Mart's is worthy of consideration.

"I think this is a recognition that these old approaches just aren't working anymore," comments Tom Klett, senior consultant with Watson Wyatt. "We've got to take a new approach."

Remarks Richard Chaifetz, chairman and CEO of EAP provider ComPsych: "Employers have gotten smarter about absence management programs. As the technology has become more advanced and companies have become more tech-savvy, they've seen cost savings in automating or outsourcing administrative tasks like tracking absences."

An automated system has proved more reliable than phoning in for the store manager, who sometimes will miss the call, says Simley.

The new policy also leaves little doubt about the consequences.

"The idea here is to make this consistent for everybody and make them aware of their obligations," Simley says. "We can't make exceptions and enforce the policy differently for people."

That a high-profile corporation like Wal-Mart has revamped its absenteeism system is noteworthy, says Klett. "It looks like they have centralized the system, which is important. The fact that a company of this size has acted on this makes people understand that absenteeism is a bigger issue than they've realized. There's no pat solution out there. There's a lot of latitude for creativity, and I think we're starting to see it." - C.S.

(c) 2007 Employee Benefit News and SourceMedia, Inc. All rights reserved.

Wal-Mart workers speak out

Feb 14,2007
Wal-Mart workers speak out
by Bend Weekly News Sources

“Our Community First” updates residents on local opposition to a proposed Bend Wal-Mart SuperCenter, Tuesday, Feb. 20 at 7 p.m.

Wal-Mart workers from three countries will speak out on what they believe is “the high cost of low prices” -- and Ann Wheeler, a local community activist, will provide an update on local opposition to a proposed Wal-Mart SuperCenter in Bend.

The event is slated for Tuesday, February 20 at 7 p.m., and will be held in the Central Oregon Environmental Center located at 16 NW Kansas Avenue, Bend. The event, sponsored by Central Oregon Jobs with Justice, Our Community First, and the International Labor Rights Fund is free, and translation will be provided.

The Wal-Mart Workers Tour brings together Cynthia Foley, a former Wal-Mart employee who experienced sexual harassment at a Florida Wal-Mart; Beatrice "Betty" Fuentes, a cut flower worker from Colombia who led a fight to improve working conditions at a plantation that ships 80 percent of its flowers to Wal-Mart; and Kotagarahalli Ramaiah Jayaram, a garment worker and union organizer who has worked to improve the wages of workers who make clothing for Wal-Mart in India.

Ann Wheeler, representing Our Community First, will provide an update on the campaign to stop Wal-Mart's plans to build a SuperCenter at the intersection of U.S. 97 and Cooley Road in north Bend. Our Community First led the successful effort to derail Wal-Mart's plans that culminated in a state land use board's rejection of the company's store application last summer.

For more information, contact Central Oregon Jobs with Justice at 541-617-3879 or visit Our Community First's web site, where email contact information is provided.

© 2006 Bend Weekly News

Sunday, February 11, 2007

Wal-Mart Worker Caught On Tape

Wal-Mart Worker Caught On Tape
Posted by: Josh Boose, Reporter
Created: 1/31/2007 10:25:31 PM
Updated: 2/8/2007 1:14:28 PM

Imagine accidentally leaving an envelope of cash at a checkout and then finding it gone in a matter of minutes. That's what happened to a local woman. She's out her money, right? But thanks to a surveillance camera, that's not the end of story!

2 On Your Side's Josh Boose has been investigating this story for months now. He started looking into this case in November. That's when we got an email from Amy Ditmar.

She left an envelope with about five hundred dollars in at a Wal-Mart checkout. She wanted 2 On Your Side to look into it, to see what really happened to that envelope.

"What we have here, in my opinion, is a crime of opportunity," says Cheektowaga Police Captain, John Glascott.

"You can't trust anybody," says Ditmar.

Ditmar was doing some early Christmas shopping just before Thanksgiving at the Wal-Mart on Walden Avenue in Cheektowaga. She paid for what she bought, then went on her way. But she realized something was missing.

"I left an envelope with some money on the counter and I didn't realize I left it there until about twenty minutes to a half-hour later," say Ditmar.

In that envelope she says, was about five hundred dollars in cash and her debit card.

Less than 45 minutes later, Amy went back to Wal-Mart, hoping someone found the envelope and turned it in.

Ditmar says, "I went right up to the cashier I was dealing with earlier and asked her if she saw the envelope and she looked at me and said she was too busy with other customers."

Amy talked to the store manager. He told her he would look into it. But, she wasn't satisfied.

She approached a Wal-Mart security guard who was also an off-duty Cheektowaga police officer.

The officer told her they would check the surveillance tape to see what happened to her envelope.

Watch the surveillance video.

Amy says it took about a half hour for the manager and police officer to review the tape.

"They told me they didn't see anything. And if anything happened they would call me back, so I was a little upset about that," recalls Ditmar.

Upset, because she needed that money.

"The presents I was buying everybody, I had bills due. It really put a damper on things. I had to ask my mother for some help and that was kind of embarrassing," says Ditmar.

Later that night, Amy got a call at home. It was the off-duty police officer from Wal-Mart. "He called me that night and told me he was positive that I didn't lose the money on my own. Pretty much, he told me the cashier is the one to blame. And his hands were tied because of Wal-Mart policies."

We later found out the officer was so frustrated with what happened, he quit. He wouldn't discuss the problem on camera, but his supervisor at the Cheektowaga Police Department did.

"He was just unhappy working for Wal-Mart and what their corporate policies were in regard to this", said Captain John Glascott.

Back to that missing envelope.

We stayed in contact with the Cheektowaga Police for four weeks as they investigated. A month after Amy lost her money, they showed us the surveillance tape. 2 On Your Side showed it to Amy.

"Right there," says Ditmar, watching the tape.

While watching the video, Amy claims she saw her envelope sitting by the cash register. If you look closely to the surveillance video (you can see the video by clicking on the video link above), a customer points it out and then hands it over to the cashier, Germaine Hayes. Within a few minutes, the customer checks out and it appears Hayes leaves her register, envelope in hand.

"You would think her being on camera, I mean, she knows there's surveillance everywhere," says Ditmar.

It appears Germaine Hayes now goes to another register to visit with a co-worker. It looks like she still has Amy Ditmar's envelope.

Then, right in full view of the camera, police say she puts the envelope in her pocket.

"It makes me so mad," states Ditmar.

From there, Hayes and her co-worker go into the ladies room. Police say that's where the "empty" bank envelope was later discovered.

From there, Germaine Hayes walks out the back hallway and out the door.

"Going home. Going for a shopping spree," Ditmar says chuckling.

2 On Your Side's Josh Boose asks Cheektowaga Police, "You're trying to find her?"

"We're trying to find her, we're unable to locate the woman right now." says Captain Glascott.

While Cheektowaga Police we're trying to track down Germaine Hayes, 2 On Your Side's Josh Boose contacted Wal-Mart. He wanted to know why the store manager and security officer told Amy they didn't see anything on the tape. Wal-Mart told Josh they weren't aware of any conversations like that. But they did have something to say about Germaine Hayes.

They told 2 On Your Side: "The associate in question is no longer employed by Wal-Mart. We don't tolerate theft by anyone at our facilities."

Read all of emails between Josh Boose and the Wal-Mart spokeswoman

Just more than a month after the incident, Cheektowaga Police tracked down Germaine Hayes. "She was found, she came in and she was arrested for grand larceny," says Captain Glascott.

When it was time for Hayes to appear before a judge, 2 On Your Side was there as she came out of the courthouse. She was laughing.

"Do you want to make any comments at all?" asks Josh Boose. "There's no comments at all. Have a nice day," responds Hayes.

"This isn't a joke, not to me. She finds it humorous," Ditmar says.

"Do you ever think you're going to get your money back?" Josh Boose asks Amy.
"I do," she responds.

Since November, 2 On Your Side called Wal-Mart five times, we emailed them six times. We wanted to know if they would give Amy her money back.

Sixty six days after Amy lost her money, she received a letter in the mail from Wal-Mart.

Ditmar says, "I got a letter from the manager at Wal-Mart explaining how sorry she was for my troubles and if I had any more problems to call her. And she gave me a giftcard for $500."
A gift card for Walmart.

So this simple story of something most of us have probably done before, leaving something behind, turned out to be not so simple after all. All thanks to a surveillance camera and one woman's determination.

Germaine Hayes is due back in court March ninth.

Amy Ditmar hopes she'll see her money back when the court proceedings wrap up. She'll be in that courtroom, waiting and watching to see what happens.

2 On Your Side will too.

We've been getting a lot of response to this investigation. On Tuesday, 2 On Your Side's Josh Boose contacted Wal-Mart again with questions.
Here's what Wal-Mart had to say;

"We care about the safety and security of our customers and associates while they are shopping and working in our stores. This incident was very unfortunate and we fully cooperated with the police during its investigation, as we do whenever and wherever an incident occurs. First, we shared surveillance tapes with law enforcement which I understand was very helpful in the investigation and the arrest of suspect. Secondly, we terminated the associate who was arrested for the incident. Lastly, because we felt it was the right thing to do, we gave our customer a $500 gift card to help offset the loss that she suffered. We are hopeful and supportive that Ms. Ditmar will be successful in receiving $500 in cash as the case proceeds through the judicial process in March. At this point, we consider the matter closed."


Sunday, February 04, 2007

Judge rules against proposed WalMart in Bedford Township

Article published Friday, February 2, 2007
Judge rules against proposed WalMart in Bedford Township

MONROE — A Monroe County judge ruled this morning in favor of Bedford Township in its fight to stop the building of a WalMart store on property owned by Whitman Ford.

Circuit Judge Joseph A. Costello, Jr. issued an order finding in favor of the township, ruling that the township’s laws and master zoning plan “do not constitute exclusionary zoning,” as claimed by Mr. Whitman’s attorneys in a trial last month.

The battle between the township and one of its leading businessmen, Jon Whitman, has drug on for years, with township trustees rejecting several attempts by Mr. Whitman to secure commercial zoning so he could develop his land, reaping millions.

Even though some township officials were supportive of his develop plans, a vocal citizens group, made up mainly of residents of one of the township’s largest subdivision adjacent to the proposed WalMart site, turned out in the hundreds at numerous meetings to heckle any officials who voiced support for Mr. Whitman.
In the end, township trustees sided with residents opposed to Mr. Whitman and WalMart.

Read more in later editions of The Blade and

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West Valley Walmart employees charged after allegedly slashing prices for co-workers and friends

West Valley Walmart employees charged after allegedly slashing prices for co-workers and friends
Last Update: Feb 1, 2007 11:50 AM

WEST VALLEY CITY (AP) - Some Wal-Mart employees who are accused in the illegal slashing of prices for co-workers and friends have been charged.

Wednesday, five employees were charged with felony theft. The alleged price slashing occurred over a 10 month period at a Wal-Mart store in West Valley City.

Police believe the discount spree cost the retailer about $15,000.

Court documents say the cost is an estimate based on surveillance footage and documents provided by a store employee.

--- Information from: Deseret Morning News

(Copyright 2007 by The Associated Press. All Rights Reserved.)

© 2007 Clear Channel Broadcasting, Inc.

Saturday, February 03, 2007

Wal-Mart documentary a sordid tale

Wal-Mart documentary a sordid tale
By YURI WUENSCH - Edmonton Sun

In 1958, movie audiences were terrified by The Blob, a sci-fi thriller about an alien life form that consumes everything in its path as it grows and grows.

Today, we have Wal-Mart.

The retail giant is the world's second-largest corporation and the world's largest private employer. Its multi-billion dollar gross domestic product rivals that of many small nations. Wal-Mart's five owners, all members of Arkansas's Walton family, currently rank 17th to 21st on Forbes's annual list of the world's richest people.

It's that vestment of wealth and power in the hands of so few and Wal-Mart's effect on everyday Canadians that are the focus of Montreal director Sergeo Kirby's documentary, Wal-Town: The Film.

Kirby is in Edmonton tonight, screening the film at Metro Cinema (Zeidler Hall, Citadel Theatre). The movie plays tonight and Sunday nights at 7.

The documentary follows six university students, calling themselves "Wal-Town," who undertake a tour of Wal-Mart locations across Canada to raise awareness of the corporation's business practices and how they have affected cities and towns across the country.

When Wal-Town began in 2004, an anti-Wal-Mart movement was already alive and well in the U.S., but there wasn't as much information about Wal-Mart's presence in Canada. That's part of the reason Kirby signed on for the tour.

"I actually went to Concordia University with the group and it was roughly two weeks before they started that I jumped on board," he explains. "So, it was a scramble to get someone from my end involved and to raise some of the initial funds."

Joining the project late also meant Kirby didn't have much time to conduct much preliminary research.

His previous films have covered things like the B.C. logging industry and the most recent Balkan war, so he definitely had an interest in social issues. But he didn't have much of an impression of Wal-Mart beyond the most common negative stereotypes that are associated with multi-national corporations.

"I was very curious - why Wal-Mart? It's sort of an example of how innocuous it is as a company, because it is so ubiquitous.

"Most Canadians are sort of wary of large American companies and are aware of how it affects culture, giving access to a lot of American products and how it doesn't reflect our indigenous interests.

"It's generally known that Wal-Mart has cheaper prices, but it's also known it has inferior goods. I'd heard facts about it using sweatshop labour, but I was largely concerned about the impact it had across Canada."

More than one million Canadians shop at Wal-Mart everyday and about 80% of Canadians have shopped or will shop at Wal-Mart.

Many Canuck consumers on fixed incomes shop at Wal-Mart because of its affordable prices.

Others shop there because of a form of economic entrapment - it's often the only game in town.

Wal-Mart has a sordid history, believes Kirby, of moving into smaller communities and undercutting prices of local businesses, which can't compete with the chain's buying power.

As a result, many of those smaller businesses end up going under.

"When you go to the States, you sort of see where Canada could end up 20 years from now," Kirby says. "You just see these stretched-out communities, devastated downtowns. Their cores are gone, now basically just parking lots and coffee shops. You see this fast-forward motion of us becoming less connected as communities, especially in small towns."

The film details how it's already happened in places like Guelph and its example is exactly what the townspeople of communities like Stratford fear.

But Wal-Town: The Film, Kirby notes, is meant to be less an indictment of the corporation's policies and more an examination of how we as a society allow such blobs to be created in the first place.

"Fundamentally, it boils down to a question of how our economic society is structured. There have to be some checks and balances. What sort of values are rising to the top? The ones that are lost are things like citizenship - our participation - within this economic engine that we've constructed."

Copyright © 2007, Canoe Inc. All rights reserved.

Friday, February 02, 2007

Will Wal-Mart sell electricity one day?

Will Wal-Mart sell electricity one day?
Company enters power industry to cut costs at Texas stores
05:04 PM CST on Monday, January 29, 2007
By ELIZABETH SOUDER / The Dallas Morning News

Wal-Mart's energy strategy goes far beyond selling squiggly lightbulbs. The world's largest retailer could one day sell the electricity, too.

The company recently made big announcements about its environmental goals to sell 100 million compact fluorescent lightbulbs (the corkscrew ones) this year, shift to renewable energy, and install solar panels and windmills at some stores.

More quietly, Wal-Mart has created its own electricity company in Texas, called Texas Retail Energy, to supply its stores with cheap power bought at wholesale prices. This saves the world's largest retailer about $15 million annually and gives the company total control over its utility bills.

Plus Wal-Mart now has the infrastructure to sell electricity to Texas consumers. That could change the game in a deregulated state where high prices have become a hot political issue.

And it could help the giant company to continue to grow, even in one of its most saturated markets.

"We've considered it. Whether or not it will ever materialize, we don't know. It boils down to whether the customers and suppliers want that," said Chris Hendrix, general manager of Texas Retail Energy. "Short-term, it's out of our scope. Longer-term, anything's possible."

Retailers are becoming more sophisticated about buying electricity as deregulation allows power companies to compete for their business.

It's no longer enough for store managers to simply write a check for the utility bill. Now most retailers make electricity decisions at the executive level.

"Because of deregulation, people have changed the way that they look at purchasing this commodity. Before, they would get a bill, they would send it to accounts payable, and that's it. Now there's a lot more that goes into it," said David Wiers, president of the Texas Electricity Professionals Association, a new group of brokers, consultants and other third parties in the power industry.

A company such as 7-Eleven or McDonald's might strike a deal with an electricity retailer to supply all Texas stores at a certain price. Others, including Lowe's, rely on brokers to buy wholesale power for the stores.

Many retailers have installed software to control store lights and temperature from a central location and collect minutely detailed information about their systems, such as the exact temperature inside each freezer.

Such technology gives big-box retailers the ability to get even better deals on electricity by agreeing to cut back electricity use anytime the grid gets overloaded.

No equal

But no other retailer has managed to do what Wal-Mart has accomplished in Texas: cut out the middleman. Wal-Mart buys power directly on the wholesale markets.

"Wal-Mart has made a pervasive commitment to minimizing costs. That's what they do," said Edward Fox, associate professor of marketing at Southern Methodist University.

In other parts of the country, Wal-Mart, the largest private purchaser of electricity in the U.S., buys electricity from third parties, just like any other retailer. But in Texas, the company saw an opportunity to try something new.

It helped found an electricity provider called Creed Power Co. and, in 2004, acquired the remaining stake in the company and changed its name to Texas Retail Energy. Wal-Mart wouldn't disclose the purchase price.

According to filings with the Public Utility Commission, the company exists to serve Wal-Mart and Sam's Club stores. Wal-Mart would have to file an amendment application to allow the company to serve other customers.

Wal-Mart's stores in Texas use 1.6 million megawatt-hours of electricity each year. That accounts for 0.5 percent of the Texas power grid last year. It's enough juice to power 133,000 homes. And it's about one-third of the annual output of one of the new coal-fired power plants TXU Corp. has proposed.

"We think we can do it cheaper than having somebody do it for us. And secondly, it put us in control of our own destiny," said Mr. Hendrix, of Texas Retail Energy. He said his group of six employees saves Wal-Mart about $15 million a year, net of the cost to run the program.

Mr. Wiers of the electricity professionals association estimates it would cost a couple of million dollars for a retailer to create an in-house electricity supplier.

Power plant next?

Mr. Hendrix said he would consider selling electricity to consumers or to Wal-Mart's suppliers, if that's what customers want. But his main focus is buying power for Wal-Mart itself.

He said he would consider buying a renewable-energy power plant, such as a wind farm, if the company can't find enough vendors to meet Wal-Mart's eventual goal of using only renewable power.

Mr. Hendrix and Angie Beehler, who handles energy regulation and legislation issues for the discounter, are active in Austin. They testify before the Public Utility Commission and take part in workshops. Mr. Hendrix has been a member of a technology advisory committee at the Electric Reliability Council of Texas, which operates the grid.

Wal-Mart has been stumping for deregulation of electricity markets around the country.

"Anytime you get competition in an energy market, you're going to have choice," Ms. Beehler said. "Don't you like a large selection of green beans? Like Del Monte, Heinz? It's about choice."

Selling electricity could represent a fresh growth opportunity for Wal-Mart.

Mr. Fox of SMU said Texas is the largest market for Wal-Mart, and therefore a saturated market.

"Given their scale and their size, they are at upper limits for what they can do in a particular market," Mr. Fox said.

Still, he added: "There's a lot of pressure to continue to grow."

Mr. Fox said electricity sales could fit with Wal-Mart's push to sell energy-efficient products and its goal to use renewable energy. He pointed to the experimental store in McKinney, where Wal-Mart installed a range of efficient technology and relies on a windmill near the parking lot for some power.

"What Wal-Mart tends to do is they experiment. They make mistakes cheaply by kind of dipping their toe in the water, and then they determine if it's something they can grow and can be a material part of their business," he said.

Mr. Fox said it's unclear whether selling electricity to consumers plays to Wal-Mart's strengths.

"I'm not sure whether it takes advantage of what they do well in terms of distribution and whether they can exploit their relationships with their customers to do well in this market," he said.

For electricity industry insiders, those customer relationships are what make Wal-Mart so intriguing as a possible electricity retailer.

"One of the things that would help our markets would be to have one of the companies in it to decide, 'I'm going to spend the kind of dollars necessary to achieve customer base,' " Public Utility Commissioner Barry Smitherman said.

"You would think a company situated like Wal-Mart that has so many customers coming through their doors every day might be able to acquire customers relatively cheaply or without spending additional dollars," he said.

Texas Retail Energy

Formerly known as: Creed Power Co.

Ownership: Acquired by Wal-Mart, the biggest private electricity user in the nation, in 2004

Business: Supplies power to Wal-Mart and Sam's Club stores in Texas

Annual electricity supplied: About 1.6 million megawatt-hours

Possibilities: Could buy a renewable-power plant or market to consumers

SOURCES: Texas Retail Energy; Public Utility Commission

© 2007 Denton Publishing Co.

Thursday, February 01, 2007

Wal-Mart pays itself rent, gets large tax breaks

Wal-Mart pays itself rent, gets large tax breaks
02/01/2007 @ 9:17 am
Filed by Michael Roston

Wal-Mart, the nation's largest employer and the world's biggest retailer, is regularly paying itself rent and using the transaction to decrease the taxes it pays to state governments, according to a report in this morning's Wall Street Journal.

The article by Jesse Drucker shows that Wal-Mart has saved hundreds of millions of dollars in taxes in 25 states, and may not be the only company using the practice. Drucker shows that state governments are finally getting wise and working to close a complicated tax loophole that the federal government discontinued years ago.

Wal-Mart is using a tax loophole involving "real-estate investment trusts" to call "rent" it pays to itself a tax-deductible business expense, Drucker explains. A Wal-Mart subsidary will pay rent to a real-estate investment trust, which is owned by another Wal-Mart subsidiary. The trust hands the rent to the second subsidiary in the form of a dividend, which cannot be taxed. Additionally, Wal-Mart counts the initial rental payment as a business expense, which is deducted from taxes in the state where the store is located. In one four-year period, Wal-Mart avoided $350 million in taxes using this strategy, which was developed by the accounting firm Ernst & Young LLP.

The loophole is getting attention in state governments. Newly installed New York Governor Elliot Spitzer said he would close the loophole in the hopes of adding $83 million to New York's state budget, and North Carolina is suing Wal-Mart for back taxes. Smaller companies using the same loophole, like Autozone and Fleet Funding, are also receiving more scrutiny.

The full article can be accessed by subscribers at the Wall Street Journal website. An excerpt is provided below.

Wal-Mart could deduct from its state-taxable income the rent paid by Wal-Mart Stores East to the REIT. The REIT paid the majority of its rental earnings to its 99% owner, Wal-Mart Property Co., in the form of dividends. That company's base in Delaware gave it another way to avoid liability for state taxes, since some states do require that dividends a REIT pays to its corporate owner be taxed, as the federal government does.

The Delaware subsidiary then paid the money back to Wal-Mart Stores East, the same subsidiary that made the payments to the REIT to begin with. Those payments to Wal-Mart Stores East weren't taxed either, because dividends paid to a corporation by a subsidiary normally aren't counted as taxable income for the parent company.

The result of the circuitous transaction: Wal-Mart could effectively turn rental payments to itself into state level tax-deductions in most of the states where the payments have been made. Under typical circumstances, rent paid to a third-party landlord also would reduce taxable income. But that would ordinarily be cash out the door, like most other tax-deductible expenses. Here, the majority of the tax-deductible rental payments came straight back to Wal-Mart.

The national tax savings have been significant. Over a four-year period, from 1998 to 2001, Wal-Mart and Sam's Club paid company-controlled REITs a total of $7.27 billion that eventually came back to Wal-Mart in states across the country, according to a North Carolina Department of Revenue auditor's report filed in court by Wal-Mart. Based on an average state corporate income tax rate of 6.5%, three accounting experts consulted by The Wall Street Journal estimated the REIT payments led to a state tax savings for Wal-Mart of roughly $350 million over just those four years. SEC filings show the company paid $1.18 billion in state taxes during that period. The loss of federal deductions that bigger state tax payments would have triggered brought the company's effective tax savings overall down to about $230 million. Wal-Mart declined to comment on the figures.

© MMVII, CBS Broadcasting Inc. All Rights Reserved.