UPDATE:
http://blogs.moneycentral.msn.com/to...-disaster.aspx
"After fighting all the way to the Supreme Court, retailing behemoth Wal-Mart announced yesterday it would drop its claim to the settlement a former employee received after a horrific traffic accident. The change of heart came just as the funds, all $270,000 that remained, were being prepped for transfer to the company’s coffers. Unfortunately, it comes way too late to save any shred of goodwill in the minds of consumers.
The case involves 52-year-old Deborah Shank, who worked as a night-shift shelf stocker until a run-in with a tractor-trailer left her permanently brain-damaged and wheelchair bound. Although the story has been in and out of the news since December, things picked up when Wal-Mart won its suit against the family a few weeks ago.
This spurred MSNBC’s Keith Olbermann to award the company his “Worst Person in the World” award for four straight nights—starting with this tirade last Thursday. The blogosphere absolutely erupted over the story’s injustice. No wonder, given that this stokes all those passionate anti-corporatism and anti-globalization feelings bloggers often harbor.
Because of its already tattered image, this was an especially bad move for Wal-Mart. Even more infuriating is how, as public pressure grew to a fever pitch, Wal-Mart’s PR hacks continued to resist calls for change. The company needs to be smarter than this. Otherwise, all efforts to change the public’s perception of it will fail; as will efforts to attract the urban and suburban shoppers that remain the company’s last untapped opportunity here in the United States.
Sure, hyping up edgy new blogs, rolling out private-label organic coffees, making its stores more energy efficient, and going upscale with sushi and $500 wine are steps in the right direction. But if Wal-Mart wants to be seen as cool, à la Apple, Google, or Starbucks, it really needs to stop acting so maliciously. Yesterday’s statement, in which the company offers a feeble apology for “any additional stress” it placed on the Shanks, won’t help matters much. Nor will its lukewarm efforts to expand healthcare coverage amongst employees.
Embarrassingly, this bad publicity comes as the company unveils its big “Earth Month” campaign that will showcase its sustainability efforts. A big advertising push will play up Wal-Mart’s role in making eco-friendly products more affordable and accessible.
In the meantime, shares continue to trend higher as investors enjoy the company’s position as the retailer of last resort for embattled consumers. Given that we've yet to reach the full depths of this recession, Wal-Mart's stock price has room to run.
On average, analysts are looking for earnings per share to ring in at $3.40 this year. Assuming the market awards the company a premium closer to Costco, which is also benefiting from a weak consumer but gets the whole corporate social responsibility thing, I’m looking for shares to trade at 19 or 20 times this estimate—moving prices into the upper $60s over the next few months.
Eventually, as consumers regain their footing, come out of survival mode, and become more selective, the folks down in Bentonville will need to come to terms with their corporate attitude problem. Otherwise, shoppers will prefer the guilt-free experience they get at Costco and Target."
UPDATE: