Many Wal-Mart (NYSE: WMT) investors are probably heaving sighs of relief today. The Supreme Court has sided with the massive Arkansas discounter and blocked class action status for a lawsuit alleging that Wal-Mart discriminates against the women in its workforce.
If the lawsuit had officially gained class action status, it could have included up to 1.6 million women. Such a case could have potentially left Wal-Mart owing billions of dollars in settlements or judgments. Other American companies were equally alarmed at the precedent such a massive class action suit could have set. In March, major businesses like Bank of America (NYSE: BAC), Microsoft (Nasdaq: MSFT), Intel (Nasdaq: INTC), Altria (NYSE: MO), and General Electric (NYSE: GE) all filed papers supporting Wal-Mart's stance.
Still, the Supreme Court's decision might not be as much of a relief as investors think, and Wal-Mart could still be in a jam. The company has long endured a negative reputation for worker relations, one it can't seem to shake. Regardless of the Supreme Court's decision on this element of the legal action, the case has made headlines on major news outlets, publicizing its allegations that Wal-Mart has blocked equal pay and denied earned promotions to women throughout the company.
Don't underestimate the court of public opinion. Some consumers could decide that Wal-Mart's low prices aren't worth the disrespect the company allegedly directs toward its female employees.
The last thing Wal-Mart needs right now are major dings on its corporate reputation. It's still struggling to rev up its U.S. sales, and competition is cutthroat -- even without giving consumers other reasons to look down on its stores.
What do you think? Will a public relations mess like this ultimately lead to an even more dificult time for Wal-Mart in the future? Or do Wal-Mart's low prices shield it from too much blowback? State your case in the comments box below.
