Wal-Mart Will Pay Up to $640 Million in Settlement (Update3)

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Wal-Mart Will Pay Up to $640 Million in Settlement (Update3)

By Margaret Cronin Fisk


Dec. 23 (Bloomberg) -- Wal-Mart Stores Inc., the world’s largest retailer, will pay as much as $640 million to settle 63 federal and state class actions claiming the company cheated hourly workers and forced them to work through breaks.

Today’s settlement ends actions pending in most state courts and in federal court in Nevada, and occurs two weeks after a Dec. 9 agreement in Minnesota. The company will record an after-tax fourth-quarter expense of $250 million, or about 6 cents a share.

The agreement comes five weeks before Mike Duke takes over from outgoing Chief Executive Officer H. Lee Scott, who has overseen a sales resurgence and sought to burnish Wal-Mart’s image among environmentalists, politicians and labor groups. Wal-Mart may pay from $352 million to $640 million, potentially less than 0.1 percent of its $378.8 billion in revenue in 2008.

“In terms of money, it doesn’t move the needle at Wal- Mart, but cleaning it up is going to be viewed as a positive by everyone, including Wall Street,” Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York-based retail consulting and investment banking firm, said in a phone interview. “They don’t want to pass this along to the next CEO.”

Similar lawsuits in California, Massachusetts and Pennsylvania aren’t on the list of cases settled that was provided by Wal-Mart. Dan Fogleman, a company spokesman, declined to comment on the status of those lawsuits.

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