(Reuters) - (This story corrects basis point calculation in paragraph 5 in June 5 story.)
Wal-Mart Stores has a new priority: reducing theft.
Greg
Foran, head of the retailer's U.S. operations, told a media briefing on
Thursday he added theft and other forms of "unknown shrinkage" to a
list of urgent items to be tackled at Wal-Mart's 4,555 stores across the
United States.
Foran said he saw an opportunity to
boost margins by putting a dent in a problem that typically represents 1
percent for any retailer's sales. He noted that Wal-Mart generated
nearly $300 billion in revenues in the United States in the past fiscal
year.
"One percent of $300 billion is quite a lot
of money. If you can save 10 basis points of it – boy I’ll take it every
day of the week and put it into lower prices for customers," Foran told
Reuters after the briefing.
One basis point is
equal to one hundredth of 1 percent, meaning that 10 basis points - or
0.1 percent - of $300 billion would be equal to $300 million.
Wal-Mart
had flagged the issue when it announced its first quarter earnings last
month, saying that "shrink" was a major contributor to a 13 basis point
decline in its gross profit margin. It said half of the problem was
related to food.
Foran said unknown shrinkage could
include problems like mistakes in inventory record-keeping in addition
to stealing by customers or employees.
He said the problem was not necessarily growing, but he decided to focus on it given the potential margin boost.
After
Foran took over as head of the U.S. business in August, he instituted a
series of "urgent agenda" items aimed at improving store management.
Foran said he had taken two projects off that list and added two more,
including the focus on shrinkage. He did not provide further details.
(Reporting by Nathan Layne in Rogers, Arkansas; Editing by Leslie Adler)
