Why Women Are Mad at Wal-Mart

Wal-Mart's (NYSE: WMT  ) environmental initiatives and other recent moves have helped reverse its occasionally bad reputation. However, the reemergence of a huge, landmark lawsuit should remind Fools of the risk that still plagues the megaretailer.

The lawsuit, originally filed almost 10 years ago, claims that Wal-Mart paid women less than their male counterparts while offering them fewer promotions. Wal-Mart wants to challenge the suit's class action status in the U.S. Supreme Court. 

Given that the lawsuit includes female employees' claims since June 2001 -- potentially as many as 1.5 million! – an ultimate legal defeat would be a blow to Wal-Mart and its shareholders. According to legal analysts, damages could reach the billions of dollars. The potential risk to Wal-Mart's reputation might be less tangible, but no less damaging.

For years, Wal-Mart's arguably bad and bullying behavior -- particularly towards workers -- made it one of my least favorite stock ideas. I consider such policies a major risk to a business. I grudgingly changed my uber-bearish tune on Wal-Mart in early 2009, figuring that it was a solid stock idea during tough times, with shoppers were in penny-pinching mode.

However, given allegations like this, rivals Costco (Nasdaq: COST  ) and Target (NYSE: TGT  ) start to look a lot less risky by comparison. Costco, Whole Foods Market (Nasdaq: WFMI  ) , and Starbucks (Nasdaq: SBUX  ) have far better reputations and track records for treating workers well, since each has taken a longer-term focus on employees as stakeholders.

Wal-Mart will undoubtedly fight the suit with all of its considerable resources. Shareholders probably shouldn't worry yet, since the case could take years to resolve. Still, long-term investors should take note.

The possibility of a financial comeuppance is important, but not the retailer's only consequence here. Any proof that Wal-Mart treated female workers unfairly and promoted less qualified men could erode public relations, hurt Wal-Mart's sales and earnings, and allow consumers to feel better about shopping at rivals' stores.

Wal-Mart and Costco are Motley Fool Inside Value selections. Costco, Starbucks, and Whole Foods Market are Stock Advisor picks. The Fool owns shares of Costco. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax owns shares of Whole Foods Market and Starbucks. The Fool has a disclosure policy.


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  • Report this Comment On April 28, 2010, at 12:50 PM, joecoonrod wrote:

    I was a store manager for wal mart for several years. one of our biggest pushes was equality. Mr Sam would have it know other way.Women were paid the same and promoted the same. most women who worked at wal mart were not looking for managemnet jobs. if they were they were treated the same . I knew of several who went into system. most didnt want to be transfered because husband was bread winner. Know they and the lawyers smell blood its not right to do this this way. wal mart, store managers, distict managers and regional managers were very good to follow these policies. thanks joe

  • Report this Comment On April 29, 2010, at 2:14 PM, DanP98765 wrote:

    Were you a store manager for just one store or all several thousand of them?

    Sam Walton was a good guy, but did it occur to you that

    Mr. Walton had already passed on for several years already before the time period covered by this lawsuit?

    Did you hear about the lady in new england who won

    two million dollars in a discrimination lawsuit?

    Don't you think that if Wal-mart really did run their

    business with integrity that they would have to worry

    about lawyers. Do they not have enough lawyers of their

    own?

  • Report this Comment On April 30, 2010, at 10:41 AM, kristm wrote:

    MEN are mad at Walmart because their product selection caters primarily to women and girls. Women make most purchasing decisions and do a majority of the family shopping, but that doesn't excuse the company's almost complete absence of mens' and boys' clothing and shoes. And that ISN'T something people can sue over.

  • Report this Comment On December 23, 2011, at 4:43 PM, Amblinalong wrote:

    I currently work at Wal-mart. I am middle aged but fit, and wanted to have an active job, making a lot of money and advancing is not important in my life. However, equal rights for those who wish it is important to me. I have witnessed our new supervisor, an hourly employee, a young lady new to the job title, railroaded by the two grumpy old men I work with who scream at each other daily, pull tricks, lie, cheat, plant old meat in the meat department to make her look bad, forgetting how to do their jobs all of a sudden to make her look bad, not rotating on the counters or in the storage cooler so new stuff would go out sooner and old stuff would go out too late and have to be thrown away. The amount of throwaways and disorganizations has caused her termination, at the holidays. These men are all kinds of proud of themselves. I don't threaten them because they know I have no intention of sticking around. One physical labor menial job is the same as another to me. We have the same job titles, but I am 2nd class, there only to clean up after them and take their orders... which they have no authority to give. I buck their orders all the time, they were intimidated at first, but once perceiving I had no aspirations, they stopped caring and probably get a "cute" kick out of it. I have told the female managers, I filed a report when they badgered me daily to help them get another young person fired.... a young man who goofed off too much for their liking. I figured it was management's problem not theirs.. not mine. I have also recently advised management of their lies and tricks to get the supervisor fired. No one cares. The women pretend they don't know. They have a store wide reputation for being hateful and horrible to work with, but if you try to talk to management, suddenly no one knows this. Wal-mart is everything this failed lawsuit claims it is. The only reason I haven't been fired is because every male member of management there knows I don't intend to try to advance and so they think it's all cute, and they joke about it, my assertions and complaints. I will stay long enough to qualify for their insurance.. one year for part time employees. I will use it for my health problems immediately and expensively. Then I am gone. So be it.

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