Wal-Mart denies report on child labor But firm concedes it imported clothing

December 24, 1992|By New York Times News Service

Wal-Mart Stores Inc. yesterday rejected accusations that some of its Asian suppliers had used illegal child labor, but it acknowledged that imported clothing had been displayed as domestic merchandise in some of its 2,000 stores.

The accusations were made in a report Tuesday night on the NBC News program "Dateline." The program was seen in nearly 14 million households and drew the highest rating for the program since the weekly news magazine was first broadcast in March.

The program raised questions about how effectively Wal-Mart monitors its import standards and whether the "Buy America" program created in 1985 by Wal-Mart's late founder, Sam M. Walton, was more an advertising gimmick than a substantial plan.

David D. Glass, Wal-Mart's president and chief executive, said yesterday that several points made on the program were "inaccurate" and "misleading." But he acknowledged that the company, based in Bentonville, Ark., had made some errors.

"We remain more committed than ever to aggressively continue to set the example to all American companies to bring products and jobs home to the USA," he said.

Marketing experts and industry analysts said the report was not likely to dampen what a spokesman for Wal-Mart, Don Shinkle, described as "good, not great," sales growth in the final days of the important holiday selling season.

Analysts estimated that sales for the season at Wal-Mart stores open for at least a year -- often called same-store sales -- were about 9 percent higher than a year earlier.

Investors apparently concluded that the repercussions from the

report among Wal-Mart customers would not be severe.

Wal-Mart's shares regained $1.375, to $64.625, in active trading on the New York Stock Exchange yesterday, after having fallen $2.375 on Monday and Tuesday as advance publicity of the NBC program spread.

But some analysts said the NBC report exposed problems that (( Wal-Mart faces in maintaining its own standards with suppliers and store managers as it strains to keep its phenomenal growth rate on track.

The Buy America program was designed to help domestic suppliers compete against foreign companies. More than 100,000 jobs in the United States are now supported by orders that Wal-Mart has shifted from foreign suppliers, Mr. Shinkle said.

Those orders generated $6 billion in sales in the last seven years, or about 3 percent of Wal-Mart's total sales in that period.

Mr. Shinkle said goods ordered directly from foreign suppliers accounted for 6 percent of Wal-Mart's sales. But he said he did not know how much of Wal-Mart's sales came from other foreign manufacturers represented by agents through which Wal-Mart places orders.

Mr. Shinkle acknowledged that managers in a "at least one store" put "Made in America" signs on racks of merchandise that were actually imports. NBC said it found that mistake in more than a dozen stores.

Sid Doolittle, a partner at McMillan-Doolittle, a Chicago firm that studies consumer behavior, said the errors indicated Wal-Mart's lack of attention to a growing problem.

"I've been in a dozen Wal-Mart stores in the last week, and I'm convinced that there is a lot of sloppiness now in the application of the program," Mr. Doolittle said. "It's lost its original thrust. They have allowed abuses to occur."

The NBC program showed scenes of children as young as 11 sewing Wal-Mart labels into garments in a Bangladesh factory. It said the factory was the site of a fire two years ago where 25 workers, including several children, died. Bangladesh has no laws against child labor.

Mr. Glass said a Wal-Mart executive who made a surprise visit recently to the factory concluded that the company's supplier was not using child labor and had not violated any laws.

Walter F. Loeb, a retailing analyst who heads his own company in New York, said many U.S. retailers and clothing makers, including J.C. Penney, Levi Strauss and Kmart as well as Wal-Mart, have increased orders from Bangladesh in recent years.

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