Wal-Mart Stores Inc, already struggling to woo shoppers constrained by higher taxes, is “getting worse” at keeping shelves stocked, the retailer’s U.S. chief told executives, according to minutes of an officers’ meeting obtained by Bloomberg News.
“We run out quickly and the new stuff doesn’t come in,” U.S. Chief Executive Officer Bill Simon said, according to the minutes of the Feb. 1 meeting. Simon said “self-inflicted wounds” were Wal-Mart’s “biggest risk” and that an executive vice president had been appointed to fix the restocking problem, according to the minutes.
Once a paragon of logistics, the world’s largest retailer has been trying to improve its restocking efforts since at least 2011, hiring consultants to walk the aisles and track whether hundreds of items are available. It even reassigned store greeters to replenish merchandise. The restocking challenge emerged as Wal-Mart was returning more merchandise to shelves after a previous effort to de-clutter its stores.
Wal-Mart’s inability to keep its shelves stocked coincides with slowing sales growth. Same-store sales in the U.S. for the 13 weeks ending April 26 will be little changed, Simon said in the company’s Feb. 21 earnings call.
Comparable sales increased 1% in the fourth quarter, compared with an average of 1.4% from analysts surveyed by Bloomberg. This year the shares gained 5% through yesterday, compared with a 6.3% advance for the Standard & Poor’s 500 Index. Wal-Mart fell 0.3% to $71.47 at 9:35 a.m in New York.
“These are personal notes from one participant in the meeting and are not official company minutes,” David Tovar, a Wal-Mart spokesman said in a telephone interview. “There are a number of significant misinterpretations and misleading statements that do not accurately reflect the comments by Bill Simon or any other participant in the meeting.”
When Simon said things were “getting worse” he was referring to “modular changes,” the process of replenishing merchandise to keep up with customer demand and changing seasons, Tovar said. Wal-Mart is working to “manage this in the most efficient way possible,” he said.
“We’re very pleased with our in-stock position,” he said, adding that products audited by the company and its consultants match or exceed historical levels. He declined to disclose what those levels are.
Tovar declined to make Simon available for comment.