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Wal-Mart action plan to correct disparities
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WAL-MART Stores Inc yesterday said it discovered discrepancies in pricing and inventory at its China operations in 2011 and has since reinforced its compliance policies in the country.
The issues were not material to the company’s operations, Wal-Mart China spokesman Raymond Bracy said.
Wal-Mart implemented a “prescriptive action plan” after an extensive investigation involving external legal and accounting firms. Leadership changes were made and disciplinary action taken, Bracy said in a statement.
Bloomberg News reported on Wednesday that Wal-Mart had used “questionable accounting and unauthorized sales practices” to make its retail business in China appear stronger at a time when transactions were slowing and unsold inventory was piling up. These practices included bulk sales to other retailers and temporary markups of inventory, Bloomberg reported, citing internal documents and interviews with employees.
Bulk sales are common practice in developing markets and represent a “modest portion” of Wal-Mart’s business in China, Bracy said.
Wal-Mart is battling stiff competition from local rivals in China, a market key to its international ambitions, where many consumers value safe and authentic food over the low prices for which the world’s largest retailer is famed. Its reputation for food safety in China has come under scrutiny after its “Five Spice” donkey meat was found to contain fox meat.
Wal-Mart reported a 0.8 percent fall in China sales during the quarter ended on October 31, which it attributed to government austerity measures and deflation.
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