Wal-Mart Standards Fail in China, Worker Rights Abused, Report Shows

NEW YORK, Nov 25 - Workers making shoes, Christmas lights, tools, curtains and paper boxes sold at Wal-Mart stores labor in illegal and degrading conditions. China Labor Watch's latest investigation of five Wal-Mart supplier factories reveals that not a single factory has implemented Wal-Mart's basic standards, and a total of 10,000 workers included in the report suffer serious rights abuses.

"This is not about a single factory, but about Wal-Mart's inability to implement its standards," says CLW Executive Director, Li Qiang. In the report, CLW attributes this failure to ineffective auditing and a pricing structure that forces factories to sell goods at unsustainable prices. As the world's largest retailer, Wal-Mart leverages its massive product orders to purchase goods at low prices, and workers suffer the financial burden.

As Wal-Mart gears up for holiday sales, workers at all five factories work at least 3 hours of overtime/day, for 100-140 total hours of overtime/month, and one factory routinely schedules overtime through the night. Two of the factories illegally underpay overtime wages at rates as low as $0.44/hour, and two withhold wages from workers who fail to meet production quotas. Workers' low wages are further undermined by excessive fines and unpaid days off or maternity leave, and some workers cannot even purchase social security!

Worker abuse extends beyond paychecks. Workers at two factories are denied gloves on the grounds that it will slow production. Dormitory conditions are so poor that at one factory, there is no running water in the bathrooms. Canteen meals are extremely poor and workers often complain of hunger pangs, and one factory forbids workers from leaving the factory to eat. Worst of all, two of the factories have rules forcing workers to lie to Wal-Mart auditors, forcing workers into silence as Wal-Mart turns a blind eye to sweatshop conditions.

Violations at these randomly selected factories represent poor conditions across Wal-Mart's supply chain in China. Wal-Mart has already pledged to remediate these five factories. But with tens of thousands of Wal-Mart supplier factories in China, CLW does not seek a piecemeal approach to factory remediation. Rather, CLW urges Wal-Mart to address its systematic failure to purchase goods made in legal conditions, according to its own basic standards.

Walmart U.S. Remodeling Success Leads to Accelerated Program International to Step Up Growth in Emerging Markets

BENTONVILLE, Ark., Oct. 23- Wal-Mart Stores, Inc. today presented its global plans for store and club growth next year at its annual conference for the investment community and updated its projections for capital expenditures through the fiscal year ending on Jan. 31, 2011.

Total capital spending for the fiscal year ending Jan. 31, 2010, is projected to be in a range of $12.5 to $13.1 billion, up from approximately $11.5 billion in fiscal year 2009. Total capital spending for the fiscal year ending Jan. 31, 2011 is projected to be in a range of $13.0 to $15.0 billion.

"Our plan for growth is clearly intended to increase shareholder value," said Tom Schoewe, executive vice president and chief financial officer. "In the U.S., we're building new stores and accelerating the pace of our remodels because they have been so successful at winning and retaining customers.

"We're stepping up growth in our International operations to take advantage of growing economies and opportunities in emerging markets, such as China and Brazil," Schoewe added.

Capital expenditures for all purposes are projected as follows and exclude the impact of any future acquisitions:

Capital Expenditure Detail (US$ billions)

Actual Projected

Segment FY09 FY10 FY11

Walmart U.S. $5.8 $6.6 - 6.8 $7.0 - 8.0
Sam's Club U.S. $0.8 $0.8 - 0.9 $0.7 - 1.0
Walmart International $4.1 $4.2 - 4.4 $4.5 - 5.0
Corporate $0.8 $0.9 - 1.0 $0.8 - 1.0
Total $11.5 $12.5 - 13.1 $13.0 - 15.0


If fiscal year 2009 were placed on a constant currency basis with fiscal year 2010, International capital expenditures in fiscal year 2009 would have been approximately $3.8 billion.

In the fiscal year ending Jan. 31, 2010, the company expects to add approximately 38 million square feet globally, compared to approximately 44 million square feet added in the prior year (excluding square footage added by acquisition). Walmart expects to increase global square footage by approximately 37 million square feet in fiscal year 2011.

Square footage growth (excluding any acquisitions) is projected as follows:

Square Footage Growth by Segment (in millions)

Actual Projected

Additional Square Footage
for: FY09 FY10 FY11

Walmart U.S. 23 14 11
Sam's Club U.S. 2 1 1
Walmart International 19 23 25
Total Company 44 38 37


Walmart U.S. to Focus on Remodels and Accelerating Growth Through New, More Efficient Supercenters

In the U.S., Walmart will continue to focus on further improving the returns of its supercenter format through remodels of existing stores and by accelerating growth of new store designs capable of generating greater returns from current assets.

By November 2009, Walmart U.S. will have completed Project Impact remodels at more than 30 percent of its 3,538 stores. By the end of fiscal year 2012, approximately 70 percent of Walmart U.S. stores, including newly-constructed stores, are expected to be updated under the Project Impact initiative.

"As part of our plan to accelerate growth, we are investing capital in fiscal year 2011 for stores that are planned to open in fiscal year 2012, and we're stepping up the remodels of our existing store base," said Eduardo Castro-Wright, vice chairman, Wal-Mart Stores, Inc. "The remodeling of our existing store base is important because the investments are delivering strong sales performance, excellent customer response and higher returns."

Sam's Club Expanding and Remodeling

Sam's Club plans to add between five and 10 new, expanded or relocated clubs in fiscal year 2011 after adding a projected 15 clubs this fiscal year.

"We remain committed to opening and operating the optimal number of clubs, in the right sizes and formats, in locations that make the best use of our capital," said Brian Cornell, president and CEO, Sam's Club. "Sam's also is increasing its investment in remodeling to improve operating productivity and efficiency, based on a new club layout unveiled earlier today."

Sam's Club plans to remodel between 50 and 55 clubs by year-end, and expects to remodel between 70 and 90 clubs next fiscal year.

Investment outside the U.S. focused on Growth Markets

Walmart International plans aggressive investment, particularly in growth markets such as China and Brazil. The International portfolio includes a variety of formats, from supercenters to small grocery stores. New stores are expected to add approximately 23 million square feet in fiscal year 2010, and approximately 25 million more square feet in fiscal year 2011. These projections are based on the existing store base and do not include possible acquisitions.

"We will continue our organic growth strategy, with strong capital discipline and optimization of our portfolio of formats and brands worldwide," said Doug McMillon, president and CEO of Walmart International. "We will allocate capital, by country and by format, to improve returns from these investments."

Wal-Mart Stores, Inc. (NYSE:WMT) serves customers and members more than 200 million times per week at more than 8,000 retail units under 53 different banners in 15 countries. With fiscal year 2009 sales of $401 billion, Walmart employs more than 2.1 million associates worldwide. A leader in sustainability, corporate philanthropy and employment opportunity, Walmart ranked first among retailers in Fortune magazine's 2009 Most Admired Companies survey. Additional information about Walmart can be found by visiting www.walmartstores.com. Online merchandise sales are available at www.walmart.com and www.samsclub.com