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Mounting Criticism Puts Wal-Mart on the Defensive

Jan. 12, 2005

Wal-Mart CEO vows 'unfiltered truth'
By Lorrie Grant, USA TODAY
Wal-Mart Stores (WMT) is fighting back.

The world's biggest retailer's image has been battered in recent years by
critics of its labor practices, its effect on competitors, its imported
goods and more. Among the results have been lawsuits and resistance in some
cities to Wal-Mart expansion.

Wal-Mart CEO Lee Scott wants to 'simply communicate' to the chain's critics.

Now, for the first time in its 43 years, a Wal-Mart CEO is publicly
responding to detractors.

A national blitz kicks off Thursday with an open-letter ad in more than 100
newspapers, including USA TODAY, from CEO H. Lee Scott, who has led the
company since 2000. He will continue his message on TV and radio talk shows.
(Q&A: Wal-Mart CEO to counteract 'urban legend')

A Web site ‹ ‹ will offer what he calls the
"unfiltered truth" about the Bentonville, Ark.-based retailer.

Scott says critics were creating an "urban legend" that forced him to speak
up for Wal-Mart's 1.2 million workers.

"We've decided it's time to draw our own line in the sand," he said in an
interview. "We want to set a tone going into our fiscal year that starts
Feb. 1, that Wal-Mart Stores is going to be aggressive in taking care of
customers, taking care of our associates, communications and merchandising.
It's just the tone that we want to set."

The Web site breaks out state-by-state data such as the number and size of
stores, number of associates, average wage for full-time hourly workers and
the amount spent with suppliers in the state.

Also included are tax and health benefits data and worker testimonials.

A public relations expert cautions that appearing too defensive could make
matters worse, but believes Wal-Mart can benefit from a more active stance.

"The sleeping giant has been awakened and has emerged with a defensive
posture and a take-no-prisoners attitude," says Gail F. Baker, a senior
public relations expert at the University of Florida. "The average satisfied
Wal-Mart customer, who may miss the ad, is likely to rally to the retailer's
defense after hearing television sound bites like 'Wal-Mart's not going to
take it anymore.' "

The company Scott runs might have outgrown its tradition of handling issues
quietly and internally. Wal-Mart today is a 5,245-store chain with worldwide
sales projected to be $285 billion for the fiscal year that wraps up Jan.
31. That compares with 4,000 stores and $156 billion annual sales when Scott
took over from David Glass five years ago. The company was a 1,940-store
chain when its only other CEO, founder Sam Walton, died in 1992.

Scott says the purpose of the public effort is to inform: "As long as what
we're communicating is factual, there's no downside. If we put this out and
people disagree with it or they want to discuss it, if what they're
discussing are the facts, then we come out just fine."