Arkansas’ burgeoning biomass industry got a big boost earlier this summer when in the space of 30 days two privately held investor groups announced multi-million dollar projects to produce commercially viable fuel from the state’s vast supply of forest dregs.

On July 30, Zilkha Biomass Energy announced plans to build a proprietary black wood pellet manufacturing plant in Monticello that company officials said could be easily integrated into the energy grid as a clean energy alternative to coal-powered electricity.

“Power companies across the globe are looking for renewable energy alternatives and biomass wood pellets stand as one of the most practical and cost-effective solutions,” said Jack Holmes, CEO of Zilkha Biomass Energy. “This plant in Monticello will be one of Zilkha’s largest and will help us capture more of the growing biomass energy market.”

Less than a month after the Zilkha announcement, Highland Pellets LLC announced on Aug. 25 that it was building a 500,000 metric ton per year wood pellet facility in Pine Bluff, about an hour’s drive north from Monticello. In its news release, Highland boasted that its $130 million plant will create more than 35 direct jobs and another 482 offshoot jobs that would provide an $86 million a year financial bounce to local communities.

Grant Tennille, executive director of the Arkansas Economic Development Commission, is one of the state’s biggest cheerleaders for the biomass industry. He also said Gov. Mike Beebe has been a staunch supporter of the renewable and clean energy industry since he first sworn as the state’s 45th chief executive in 2007.

“The governor has been talking for years that our biomass resource needs to be leveraged.” Tennille said in a recent interview. “We need to find ways to sell Arkansas biomass and I think the economics right now are very strong.”

PROJECTS ATTRACT INVESTMENT DOLLARS

According to Tennille, a number of factors have come into play to make it a perfect time for the development of an Arkansas wood pellet industry. First, the Pine Bluff and Monticello projects include trustworthy investors that have the necessary capital and management experience to make the Arkansas projects a full-scale success.

“We are dealing lately with more credible people than in the past,” Tennille said. “And over time, we got a lot smarter and better in how we [recruit] and negotiate with people who come to us,” Tennille said. “And in the last six months, the math seems to be changing. They are showing up with long-term contracts for these pellets, and [current market] prices are giving them some margins.”

For instance, Highland is led by former Wall Street executive Tom Reilley, a former senior managing director at the New York-based Bear Stearns investment firm that failed in 2008 in the global financial crisis. Today, Reilley is a successful private investor with stakes in a number of biotech and renewable energy firms in Boston, Singapore and the United Kingdom.

The Highland team also includes several experienced executives who will lead the development of the Arkansas plant. Scott Jacobs, director of business development, and Mike Ferguson, director of engineering and operations, together operate a company called AgriRecycle, which specializes in the design and construction of wood pellet facilities.

Down the road in Monticello, Zilkha Biomass has also put together a team with a strong financial resume and a management team that has built and operated several wood pellet plants. The company operates a pilot plant in Crockett, Texas, that has production capacity of 40,000 metric tons of pellets per year.

Company spokesman Jonathan Ohueri said the company also is building another wood pellet mill in Selma, Ala., which is scheduled for commissioning later this year. That facility will have a production capacity of 275,000 metric tons of pellets per year.

“Black pellets produced at this mill are already committed to an interested customer,” he said.

In addition, Ohueri said the Monticello black pellet plant already has the necessary financial backing for the project, which will be funded through a combination of new market credits and bond financing. But what gives the project instant credibility is the fact that Zilkha Biomass is partly owned by Silicon Valley-based Vulcan Capital, the investment vehicle for Microsoft Corp. co-founder and billionaire Paul Allen.

WEEDING OUT ‘SHAKY CHARACTERS’
Still, without mentioning any names, Tennille admitted that the renewable energy business has attracted “snake oil types and shaky characters” to Arkansas in the past, including a number of biomass and “green energy” ventures that have preyed on Delta communities.

Perhaps the most infamous biomass project in Arkansas was also a highly-touted wood pellet plant. In 2009, Hot Springs lawyer Stephen R. Walker unveiled a proposed $180 million Phoenix Renewable wood pellet plant in Camden, which would be headquartered in the town’s shuttered International Paper plant and bring more than 400 jobs to the south Arkansas community.

When Walker first announced the project, the ground-breaking ceremony included a long list of political supporters – including U.S. Sen. Mark Pryor and then U.S. Rep. Mike Ross. The business venture was so well-publicized that the Wall Street Journal mentioned the Camden project in a July 2009 story hyping the “lowly wood pellet” as one of fastest growing sources of renewable energy in the world, along with wind and sun.

But hardly a year had passed before that venture ran into trouble. In May 2010, the Arkansas Securities Department issued a “cease and desist” order against Phoenix and Walker for multiple violations of the Arkansas Securities Act.

The order halted Walker and his limited partnership from soliciting and selling securities for the Camden wood pellet plant, saying the stock in the company was not registered or exempt from registration as required by Arkansas securities law. According to the order, more than 50 people had invested about $1.4 million in Phoenix between 2009 and 2010. During the same time period, the company had expenditures of about $1.4 million under former CEO Sam Anderson. Those expenses included over $250,000 in payments made directly to Walker and over $80,000 in payments to Anderson, his companies and his family, according to a state securities filing.

But Phoenix was not the only questionable renewable energy project. Other similar projects began popping up in Arkansas and across the South shortly after the Obama administration began committing federal dollars to so-called “green energy” projects as part of the president’s overall energy policy.

One of the most notorious was Destin, Fla.-based Global Green Holdings LLC, operating through its shell recycling firm called Waste Not Technologies (WNT), which approached a number of rural communities across the South and the Midwest with promises of thousands of high-paying jobs. In the space of just a few months in 2008 and 2009, at least five rural communities in Oklahoma, Kansas, Michigan, South Carolina and Kentucky held big economic development ceremonies with WNT officials. Each community got the same identical sales pitch – that WNT would invest $150 million to bring 1,400 high-paying jobs to these communities by building an 800,000-square-foot recycling factory.

Surprisingly, many of these communities were hooked by WNT’s marketing ploy that it had a proprietary formula that could turn everyday household garbage into usable products and building materials, a process most recycling experts said was virtually impossible. A South Arkansas economic development official said WNT approached several communities in the Arkansas Delta with the same proposal, but talks never moved forward because of questions about the company’s financial integrity.

But WNT was still able to convince economic development officials in Herington, Kans., and Manchester, Ky., that their grandiose proposal was legitimate. In June 2009, the Kentucky Economic Development Finance Authority approved a deal to give WNT up to $42 million in incentives – tax money it would get to keep if it created the 1,400 jobs in Clay County community. But nothing ever happened, except WNT conning the city and a local construction company out of $1.32 million as an advance fee to jump-start the project. Once the WNT officials got their hands on the money, they left the poor Kentucky community empty-handed and embarrassed.

In August of this year, nearly five years after the WNT scheme ended, a grand jury in Kentucky charged WNT’s David Bennett, Daniel Goodwin, Sidney Tarrant and Izhar Syed with conspiracy and five counts of mail fraud. The U.S. Attorney’s office in Kentucky has requested warrants to have the four arrested and brought to Kentucky, but so far the WNT officers have not been apprehended.

Both Tarrant’s and Bennett’s names have come up in other alleged scams in Arkansas. In November 2011, Arkansas fuel supplier Magness Oil Co. of Gassville, Ark., filed a federal suit against Tarrant and others, saying he owed the company $500,000 in another advance fee loan deal turned sour. Similarly, Eagle Creek Construction and Development Inc. of Bentonville won a $3.6 million default judgment against Bennett for his involvement in an advance fee scheme to provide upfront funding for a Northwest Arkansas real estate development.

Altogether, more than 20 judgments for tens of millions of dollars have been entered in local, state and federal courts across the South against Bennett and Tarrant. To date, neither man has paid one cent on any of those judgments or spent a day in jail.

Despite such bad actors, Tennille said Arkansas economic development recruiters are now a lot wiser and better equipped to check financial credentials and conduct due diligence inquiries on business prospects.

“Over time, we got a lot smarter and better,” Tennille said. “The snake oil types have gotten up and left because they believe there is a better scam out there somewhere. At the beginning of the gold rush, there were quite a few shaky characters floating out there in the world.”

EUROPEAN MARKET POISED FOR GROWTH
Now, Tennille said, Arkansas is poised to become a big player in the biomass sector as the wood pellet market takes off in Europe.

According to the U.S. Energy Information Administration, wood pellet exports from the U.S. nearly doubled last year, from 1.6 million short tons (approximately 22 trillion Btu) in 2012 to 3.2 million short tons in 2013. More than 98% of these exports were delivered to Europe, and 99% originated from ports in the southeastern and lower Mid-Atlantic regions of the country.

In the United Kingdom, the EIA said, wood pellet imports from all sources have grown from near zero in 2009 to more than 3.5 million short tons in 2013. Because of the United Kingdom’s Renewables Obligation program, the operators of several large coal-fired power plants have either retrofitted existing units to co-fire biomass wood pellets with coal or have converted to 100% biomass.

Another principal driver in market activity is the European Commission’s 2020 climate and energy package, binding legislation enacted in 2009 that implements the European Union’s 20-20-20 targets. Those targets include reducing EU greenhouse gas emissions by 20% from 1990 levels, increasing the renewable portion of EU energy consumption by 20%, and to improve EU energy efficiency by 20%, the EIA said.
For instance, the Drax power plant in North Yorkshire, England, the largest coal-fired power plant in the U.K., is in the process of converting half of its six generating units to run solely on wood pellets.

Highland officials have said publicly that their Arkansas plant will primarily focus on meeting the demand they are experiencing from the U.K. and other international markets that need pellet suppliers for the conversion of their coal-fired power plants to sustainable biomass-fired plants. Highland’s fiber supply is fully contracted for 10 years, officials said.

Zilkha spokesman Oheuri also said the Houston-based wood pellet manufacturer has commitments from customers to purchase the company’s black pellets, “and have sold test quantities in Europe and other markets.”

“Our patented … (black) pellet is the attractive option because it shares some of the same qualities as coal,” he said. “The shared qualities between our product and coal reduce or remove the need for expensive plant retrofits when switching to our fuel.”

Tennille also cited the fact that the growth of U.S. wood pellet exports has been concentrated in southeastern states, which has built-in advantages in terms of abundant material supply and relatively low shipping costs to Europe. “Transportation cost is the largest part of the total cost of wood pellets,” he said.

And according to the Arkansas Biomass Resource Assessment, a study commission by the Arkansas Energy Office in 2008, the state has “an excellent biomass resource potential” with an estimated 19.8 billion kilowatts (kwh) of electricity that could be generated using renewable biomass fuels in Arkansas. “This is enough electricity to fully supply the annual needs of 1,979,000 average homes, or 150 percent of the residential electricity use in Arkansas,” the report says.

Arkansas’ biomass resource supply figures are based on estimates for five general categories of biomass: urban, mill, forest and agricultural residues, and energy crops. Of these potential biomass supplies and the quantities cited below, most forest and agriculture residues and energy crops are not presently economic for energy use, the report says.

However, the Highland and Zilkha Biomass projects have changed that premise. Both companies say they intend to make use of Arkansas’ ample forest residues, which include unused logging leftovers, imperfect commercial trees, dead wood and other non-commercial trees that need to be thinned from crowded, unhealthy, fire-prone forests.

According to the state’s biomass study, the estimated supply of forest residues for Arkansas is more than 1.7 million dry tons per year. And what excites Tennille is that he believes that sometime in the near future, the domestic market will turn around and wood pellet energy generation will become commercially viable in the U.S.

But that is a big dream. Today, biomass has played a relatively small role in terms of the overall U.S. energy picture, supplying 3.2 quadrillion Btu of energy out of a total of 98.5 quadrillion Btu in 2000. And the EIA projects that biomass will generate 15.3 billion kilowatt hours of electricity by 2020, or only 0.3% of the projected 5,476 billion kilowatt hours of total generation.

But the optimistic Tennille believes the new projects in south Arkansas represent a great opportunity for the state to be at the forefront of an entirely new energy growth sector, much like the financial boon that the state experience over the last decade with the development of the Fayetteville Shale.

“We know the forests in Arkansas are a tremendous renewable resource. But the question is ‘How do we make sure we are engaged in the highest value-added business? At some point in the future, there will be higher value opportunities for that resource,” he said.

“We’ve got a glut of timber in south Arkansas, and everybody in the forest and paper product industry on the planet knows where every tree is and knows where the market is headed,” Tennille continued. “So, the wolves have been looking at Arkansas and our natural resources. If this works, they are coming to Arkansas because we got plenty of trees.”

Arkansas Gov.-elect Asa Hutchinson said with huge Republican gains across the state, voters have sent a clear message for change, but he warns that expectations must be kept in check.

“You’ve got to keep it in perspective. The expectation level is going to be very high. That, ‘all right, you’ve got the wheels of government, now what are you going to do with it?'” Hutchinson said in his first in-depth interview since winning Tuesday’s gubernatorial race.

Governor-elect Hutchinson will be sworn into office in early January, but will be planning for the transition to his administration between now and then. He says he’s adopting a cautious and methodical approach during the transition period, but he expects to reshape state government in line with his political philosophy and leadership style.

“There will be significant change. This is a change in leadership and there will be changes, that’s what elections are about,” he said in response to whether he will keep some, all, or none of the current agency heads running parts of state government.

“[I] recognize that there are some positions that I want to have a continuity – they’re doing a good job – so there’s going to be a balance there. I want to make the best judgments, have the best people in there that will help me accomplish the agenda we’ve been elected on,” he said.

During the next 30 days, Hutchinson said he will meet with agency directors and assess their organizations and leadership. Ultimately, he knows he will be responsible for state government’s direction. And although the election results gave the GOP huge majorities, Hutchinson does not expect to work on strictly partisan lines or with pure party unity.

“If there’s a challenge or a problem, you’re accountable. There’s not anyone else you can point your finger at,” he said. “And the challenge is obviously that we’re going to have to work together not just across the aisle with Democrats, but within ourselves.”

Hutchinson acknowledged that with a much larger Republican Party comes diversity within its own ranks. In this instance, Republicans have members that span a conservative spectrum from “moderate conservative” to “very conservative.” Describing those differences, Hutchinson said all views must be respected.

“Just because I’m governor and I’ve got my priorities doesn’t mean it’s their priorities, and, they’re new legislators. So we’ve got to understand each other, we’ve got to persuade each other – it’s a competition of ideas – and I think there’s going to be some common ground with a conservative direction, with tax cuts, our budget being balanced, and a conservative approach to government – but we’re going to have some disagreements and we’re going to have to work through them,” he said.

Hutchinson added his thoughts during the interview on how he learned of Tuesday night’s quick election returns, his phone conversation with President Obama, key turning points in the Governor’s race, and some of his biggest concerns regarding the state budget as he moves forward.

Link here for the television interview with Hutchinson.

Ruth Whitaker, the long-time GOP advocate from Crawford County who served in the Arkansas Senate for 12 years, has passed away Monday (Nov. 10) morning. She was 77.

She is survived by her son, Bryan and wife Carol of Fayetteville, daughter Alicia and husband Ron Viers of Cedarville, and three granddaughters. Her husband, Dr. T.J. Whitaker, preceded her in death.

According to a note from former Rep. Rick Green of Van Buren, Whitaker passed away in Northwest Arkansas surrounded by her family and close friend, former State Rep. Sarah Agee. 

Whitaker, elected to Senate District 3 (Crawford and Franklin counties; part of Washington County), served in the 2011 session as vice chair of the Judiciary Committee and was on the Insurance & Commerce Committee. She fell ill during that session, her last before being term-limited.

Legislation she sponsored or actively co-sponsored included:
• Jesse’s law: The law required Arkansas boat docks and marinas to be brought up to National Fire Protection Association Standards.

• Legislation requiring that a majority of members on the Arkansas Oil & Gas Commission be experienced in the development, production and transportation of oil and gas.

• Legislation providing funding for the Arkansas State Police to build and equip the Winthrop Paul Rockefeller Arkansas State Police Hall of Honor,

• Creation of the Arkansas Acceleration Fund within the Arkansas Science & Technology Authority.

• Legislation providing funds for expansion of the library at the University of Arkansas at Fort Smith.

She also was able to secure state funds for projects in her district. That legislation included funding of rural fire departments in Franklin County, riverfront improvement funds in Ozark, funds for Van Buren industrial park improvements, funds for rodeo ground improvements in Charleston, and funds for the Regional Intermodal Transportation Authority in Crawford and Sebastian counties.

Several pieces of legislation she authored or co-sponsored focused on the promotion of native Arkansas wineries and the state’s wine industry.

Gov. Mike Beebe said he remembers Whitaker’s “deep love” for the state and its people.

"Ruth Whitaker was a strong, independent Arkansan who didn’t fear anyone or shy away from anything. While we didn't always agree politically, most conversations between Ruth and me would still end with both of us laughing. She carried a deep love of Arkansas and her people, and I will miss her wry smile and sensibility,” Beebe said in a statement.

Sen. Jake Files, R-Fort Smith, issued this statement: “Senator Whitaker was a respected leader and was very respected while she worked on party politics or across the aisle, but she always stood on principle. She was a fearless fighter for our Region, and her legacy will be one of great pride to her family, the people of Crawford County, and the citizens of Arkansas. People like her don't come along often, and we are fortunate to have had her as a legislator and friend for so long.”

Rex Terry, Sebastian County Republican Party Chairman, provided this statement to The City Wire: “Ruth Whitaker brought a great mix of intelligence, hard work and common sense to the Arkansas senate. She was accessible and responsive to her constituents, and highly regarded by her friends and colleagues in both parties. As a Republican, Senator Whitaker worked hard to build a two party system in our state, and her success paved the way for the party’s move toward the majority. She loved being in the Senate and she loved our state and nation. I always valued her friendship, as did so many people. She will be missed.”

Prior to serving in the Arkansas Senate, Whitaker was elected to the Cedarville city council, and was a former PTA president.

She was a member of the Arkansas Federation of Republican Women and past president of the Women's Auxiliary to the American Medical Association of Sebastian County. She was elected secretary of the Arkansas State Republican Party from 1992-1994 and held other appointments in the state party, including vice-chairman and parliamentarian. She is a lifetime member of the American Legion Auxiliary and the Alden Kindred of America tracing her lineage back to the first settlers aboard the Mayflower.

Whitaker earned a bachelor’s degree from Hendrix College.

The City Wire will update this story later today.

Diabetes is a $160 billion annual cost to the nation’s health care system and diet food supplier Nutrisystem’s diabetic food box has risen to the top selling item on the diet and diabetes aisles at Wal-Mart, according to Dawn Zier, CEO and President of Nutrisystem.

Predominantly a direct marketer, Zier said the move to Wal-Mart was needed to widen the company’s core audience and provide an entry-level opportunity for lower income demographics.

“By bringing our world-class weight loss solution to select Wal-Mart stores, is allow us to make a difference in the lives of consumers we were not currently reaching,” she said.
“Once a dieter has the affordable kit, they’re only responsible for procuring a small supply of fresh fruits and vegetables, healthy carbs, and healthy proteins to complement the meal plan.”

During Nutrisystem’s earnings call Nov. 3, Zier said the relationship with Wal-Mart for the JumpStart 5-day box has been a success since it was launched in mid-2013. She said more work was done to formulate a diabetic version of the Jumpstart box which is also sold at Wal-Mart and it has sold well because there are limited products for the growing number of diabetics.

Retail sales for recent quarter grew to $4.7 million, from $3.5 million a year ago and the company expects sales will expand more in the fourth quarter and throughout the diet season. 

“We will be featured on end caps in Walmart Stores and we have added several new products and meal occasion items for the diet aisles and elsewhere in the store,” Zier said.

She said the retail sales of Nutrisystem products mostly mimic the direct online sales in terms of demographics, which are about half female and half male users. However, she said the diabetic formulas are more popular with men at the retail level.

Sam’s Club is also part of the company’s plans for 2015 as Nutrisystem formulated a different diet product than the Jumpstart boxes sold in Wal-Mart. Zier said the Sam’s Club premier offering is a higher level “in and out” product that will be featured beginning in January and throughout the diet season. 

The company also announced they extended their partnership to include Walmart.com where they will be a direct ship vendor immediately after the holidays.

The test sales with Target this fall have not resulted a deal with that retailer, but Zier said Target doesn’t reset its diet and diabetic aisles until April. She said they will not be in Target Stores during the diet season, but they are testing 12 new products on Amazon.com.

“We are excited about this test because we think it will open up a new potential customer base for us. These are brand new products exclusive to Amazon so that they will not cannibalize other sales elsewhere,” Zier said.

The company expects its revenue will increase by double digits in the fourth quarter ahead of the time when many begin making resolutions to lose weight, thanks in part to the retail partnership with Wal-Mart.

The Jumpstart 5-day plan sold at Wal-Mart retails for $44.98, and includes 15 entrees, five desserts and a meal planner. Nutrisystem is working to keep products costs in check despite higher food inflation and price increases in other sales channels. Zier said affordable access for the diabetic product is even more crucial as this market is grossly underserved.

The Arkansas Department of Health reported that diabetes prevalence in Arkansas is higher among those with lower income levels. Prevalence among those with income 
less than $15,000 annually was almost three times that of those with income above $50,000 annually.

“Arkansans are increasingly feeling the effects of diabetes as nearly 235,000 people suffer from the disease in the state, and over 35,000 have the disease in Northwest Arkansas. By the year 2050, it is estimated that one in three adults will be directly affected by diabetes,” according to the local affiliate of the American Diabetes Association.

Ways to cut the budget and raise revenues were presented to the Fort Smith Board of Directors just hours before the Board heard about recommended outside agency funding from city coffers that support area non-profit organizations.

In all, the city received recommendations for $162,000 in outside agency funding of 25 different non-profits that will be voted on during the budget meetings upcoming in the next two weeks.

The total proposed for fiscal year 2015 has been reduced during the last two budget cycles from a total of $227,000, according to Administrative Coordinator Christy Deuster, who works in the city's finance department.

Since the information provided to the Board Monday (Nov. 10) was strictly informational, no action was taken. But eliminating outside agency funding altogether is among the proposals from City Administrator Ray Gosack sent to the Board on Monday morning. The cuts are an attempt to fully fund fire and police pension plans projected to go broke in 2019, as well as address other budgetary concerns.

Gosack's budget reduction possibilities also included cutting a total of $1.991 million from the general fund's current obligations, including $50,000 committed to the U.S. Marshals Museum, $26,000 from the convention center's budget, $57,380 from the general fund's transit obligations, eliminating the $105,000 spent on the Creekmore Park Holiday Express (lights, train operation, etc.), and an additional $299,840 from the parks and recreation budget. Gosack's proposal also included $102,260 in cuts for various administration, engineering, finance and other city office departments.

The largest cuts come from the police and fire departments, with a combined $1.186 million in cuts between the two. In the fire department, the largest cuts are in the area of overtime spending, where Gosack recommends cutting $456,750 from the fire budget.

"Reduce overtime spending by not meeting minimum staffing requirements," he wrote. "Would result in rolling brownout of fire stations - 1 station 80% of the time, 2 stations 22% of the time. This will lengthen response times in the affected areas."

The cuts in fire also include $18,500 for travel and training, which Gosack said "will affect succession planning," $35,000 for the replacement of a mechanic's 20-year-old service truck and $9,000 for replacement of a fire hose repair machine, which Gosack said could "lead to unsafe fire hoses causing injuries to fireground personnel."

In the police department, Gosack has proposed freezing 10 patrol officer positions at a cost savings of $567,120. But he said such a move eliminates "response to unconfirmed alarm calls, non-injury accidents, and low priority calls for service."

The recommended cuts in police also include one animal control officer at $45,530, "which lengthens the response time to calls for service by appox. 20%." The final cut is $53,710 for a crime analyst position, "which affects proactive response to calls for service, reduces effective public communication and the ability to reduce citizens' fear."

Gosack also proposed revenue options, including increasing the franchise fee on gas, electric, telephone and cable television from 4% to 4.25%, which would raise $412,000. Additionally, the city could take cable television franchise fees even higher to 5%, which would raise an additional $129,000.

Water, Sewer and sanitation services do not currently have franchise fees imposed on customers, but adding a 1% fee would raise $388,200 while a 4.25% fee would raise $1.65 million.

Increasing alcohol-related permits and fees could add $89,000, while increasing oak cemetery fees could raise $25,000.

Should the city approach voters about taking 5% of the penny sales tax for street and reallocating that to other purposes benefitting the general fund, Gosack said it would raise $995,000.

The largest revenue generator identified by Gosack included a business license fee which could raise $1.8 million if approved by the Board.

City Director Mike Lorenz, who said following Monday's Board study session that he had not yet read Gosack's email, noted that even though non-profit funding was presented as a recommendation to the Board, it is in no way definitely going to be funded when there are talks of freezing positions and making cuts painful cuts elsewhere in the budget.

"I have mixed feelings. In the root cause of everything with budget, we have to look at everything. Every single issue. And you have to look at every item, this one included, and say is that an absolute necessity and is it absolutely the city's place to fund any item - whether it be the non-profits or anything else? And where do you draw that line? … I think we have to have a serious discussion about is that the city's position? Should we be in the position of helping charities and how do you make that decision of which ones?"

The first night of budget meetings will be Thursday (Nov. 13) at 6 p.m. at the Fort Smith Police Department's community room located 100 South 10th Street.

Link here for a (large) PDF file of Gosack's memo.

Cynthia Smiley, the wife and codebtor of former Arvest Bank President Dennis Smiley, used her husband’s position to borrow more than $1.7 million for Design for the Home LLC, the interior design business she closed in April of this year, according to her recent Chapter 7 bankruptcy filing.

This highly leveraged home-based business generated just $10,747 income for Smiley between 2012 and 2014. This paled in comparison to the credit card debt ($156,000) amassed by the debtor in the same period. The debt was American Express, $104,000; Citibank, $34,000; Dillard’s, $10,000; Neiman Marcus, $5,400; and Bank of America, $2,800.

It looks as though the $4 million in bank loans made to the couple in recent years went to support a lifestyle beyond their means. Dennis Smiley’s income was not disclosed in his wife’s individual filing. But lenders say they showed his income at roughly $400,000 a year, which is short of the amount needed to float a $550,000 mortgage and maintain interest payments to 20 banks who continued to extend the couple credit.

Cynthia Smiley claimed that her husband handled all the tax returns and finances for the family and her business. She seeks to discharge 100% of the cosigned debt made with him in recent years. This move comes after knowledge that Dennis Smiley faces allegations of multiple bank fraud incidents relating to collateral used in connection with more than a dozen loans from 20 banks across the state — some of which involved Design for the Home.

When Dennis Smiley suddenly resigned his bank president position in March with Arvest Bank Benton County, lenders on the hook for roughly $4 million began filing civil suits for judgment against the couple who had pledged Dennis’ retirement stock with Arvest Bank as the same collateral multiple times.

Jury trials are expected in several of those civil cases in the first half of 2015 and a federal criminal investigation continues amid fraud and forgery allegations against Dennis Smiley by several of the lending banks and his father, Henry D. Smiley Sr.

Bankruptcy law prohibits debtors from discharging debts that were obtained through a fraudulent manner. Cynthia Smiley’s Chapter 7 Bankruptcy petition is her claim of innocence in these fraud allegations.

Tim Tarvin, bankruptcy law professor at the University of Arkansas, said creditors have a chance to object to their debt being discharged. He said if that’s likely to happen, they will begin voicing their opposition at the creditors’ meeting slated for Nov. 25.

Tarvin said innocent spouses are typically allowed to discharge the debt in their name and get a fresh start. He said debtors facing criminal implications create a far more difficult case because some, but no all the debt could be dischargeable. Under the law, he said it’s possible for one spouse to benefit from, and even coerce the other to borrow money. But if there’s an element of fraud that is linked specifically to one of them, the other can claim the innocent spouse provision.

Lenders have until Jan. 26 to file objections to discharge in this pending Chapter 7 bankruptcy case, according to the court docket.

Following Smiley’s resignation from Arvest, Cynthia has returned to work as a real estate agent with reported gross income this year of $19,535 through Oct. 23. That’s nearly twice the income she earned as a home decorator in the prior two years, according to the filing.

Smiley claims in her bankruptcy filing that she and her husband are being allowed to live rent-free with paid utilities in a home owned by John David Lindsey at 3602 Legacy Lane in Rogers.

From Smiley’s bankruptcy filing it appears that aside from their home with three mortgages, the couple had no real assets to show for the millions borrowed in recent years. She disclosed cash assets of $3,938, with a life insurance policy worth $10,500 and jewelry valued at $7,300. She also turned back a 2013 Mercedes Benz to the dealer in March, leaving the couple with a 2011 GMC titled to Dennis Smiley.

The couple did manage to pay $25,000 to attorney Jill Jacoway in April in three separate installments in exchange for Jacoway representing Cynthia in the Chapter 7 bankruptcy proceedings, according to court records.

The Smileys also disposed of their biggest asset in September when they closed on the sale of their home in Pinnacle Country Club. The home was listed at $649,000, but it sold for $550,000. Arvest, holding first and third mortgages, received payment of $305,811. First Security, holding the second lien, was paid $216,702.

Equal pay for equal work was the focus of Monday's (Nov. 10) Sebastian County Quorum Court budget meeting. At issue were inequities in pay between county employees within the same pay grade.

Several different county-wide elected officials made requests of the court for specific individual pay raises, some which impacted only specific employees while other requests impacted groups of employees. The reasons for the requests was due to some employees with tenure and time on the job actually earning less than newer employees coming into similar positions.

According to County Human Resources Director Steve Hotz, the way newer employees have been able to come into positions earning more than some of the individuals they may be replacing or others in similar positions or pay grades due to budgets set for the positions.

"The filled positions are budgeted higher," he said. "The new person is hired from from a minimum to a mid-point not to exceed the budget. The budget (for the position) really monitors what people can be paid.”

In the case of an employee of the county clerk's office, an employee went to a more demanding job but received no pay raise even though the individual hired to replace the employee was paid a higher starting wage. Since the individual in the county clerk's office did not earn promotion but simply made a so-called lateral move, Hotz said the individual was not eligible for a raise, necessitating a request for about an $1,800 raise during Monday's meeting from the county clerk's office.

Another example shared by County Sheriff Bill Hollenbeck, he said his chief deputy was making less than some of the deputies he supervises in the department. For that reason, Hollenbeck requested raises for the chief deputy and others in his office. In all, Hollenbeck requested $74,000 in raises, which were added to the proposed budget by a vote of the court.

As a result of the inequities between the positions in all departments across the county, Shawn Looper made a motion that was adopted by the court to have Hotz study all positions and the pay ranges across all positions in order to come up with a more fair and equitable pay structure.

Before the motion was approved, Hudson said without a study and followup action more issues would come up during the fiscal year 2016 budget cycle.

"We need minimum salaries for key positions," he said. "We've had several pay adjustments that you just dealt with. I think if we don't do something with out pay system here, you're going to see more of them next year. And we've had outside parties do studies. The recommendation is to do it in-house and hopefully conducted throughout the first six months, seven months of next year and presented mid-year in 2015.”

Hudson said countywide elected department heads "had a discussion along these lines at the job evaluation committee and there seemed to be a consensus that this is something that makes sense to do for the county elected officials and the three quorum court members that were in that discussion. Some more stable way of handling county pay, I think, is needed.”

In all, $120,000 in pay raises were approved for addition to the county budget, according to Hudson, though he said additional cuts could be needed in order to offset the pay raises coming from the county general fund.

"They weren't funded, so whenever we get to the plan to balance the budget if you're re-prioritizing the funds, then there'll be a tradeoff in where you're spending the money," he said.

Hudson said a 1% cost of living raise he had originally proposed totaled $114,000 and would likely be where he would target the “tradeoffs."

Discussions on the county budget continue at 6:30 p.m. on Thursday (Nov. 13) on the second floor of the county courthouse in Fort Smith. Hudson had previously said he hopes to have a budget ready for a vote following Thursday's meeting, though additional budget meetings are slated to take place should a budget proposal not come out of Thursday's meeting.

While many have an opinion on the Millennial generation, there remains much mystery behind the mega demographic that wields more than $1.3 trillion in annual spending power and is eclipsing Baby Boomers in numbers and purchase potential.

Milliennials (those born between 1980 to 1995) now comprise 27% of the population with some 80 million adult consumers in the U.S. The Baby Boomer generation cohort is 76 million, according to U.S. Census Bureau.

Stacy Tholking, director of shopper insights for Proctor & Gamble, said the “sorry, not sorry generation” are interesting but there are also many misconceptions about this dynamic demographic. Tholking was part of a recent panel discussion on Millennials at the Excellence in Retail Conference held at the University of Arkansas.

“The common myth that Millennials are poor and living in their parent’s basements is just not true. Many are earning on average $60,000 a year and they have heavily invested in their education, more so than prior generations. Because they spent a long time in school they were not out there setting up their own households. Maybe that’s were the basement living myth got started,” Tholking said.

She said they have grown up in a different world, one of open access 24/7. They also understand they may not be safe in the movie theater or on their college campus. This view of the world has shaped the way they think, which is different from prior generations.

“They do believe there is a lot they can do in this world and they take that responsibility seriously. They have a fearless mentality and are not afraid to fail which is why many have chosen to start their own companies,” Tholking said. “The myth that Millennials are lazy is also false. They are not motivated by money per se, like their parents and grandparents.”

INSIGHTS SOUGHT
Matt Kistler, senior vice president of consumer insights at Wal-Mart, said Wal-Mart is actively engaging Millennials, but too often its supplier partners are not focusing on this important, yet different demographic. He said everyone is collecting data on the group, but data are not insights.

He said knowing what they buy or how they shop is simply not enough and does not get to the real insights needed by Wal-Mart. He said Wal-Mart is trying to figure out where the Millennial is heading so they can be there in the future, admitting that it’s a work in progress and one that suppliers may benefit being a part of as well.

“We need to collaborate more with our suppliers on this. We know Millennials want ‘now, new and always.’ Wal-Mart will also be Wal-Mart and that resonates as the now, but we need help with the new. That’s where our suppliers can join us and that’s the exciting part. This customer is moving faster. They are leading us more than we are leading them,” Kistler said.

One group retailers are wooing are the Millennial moms. They comprise 97% of all new moms today. Kistler said the baby is a big deal and Wal-Mart is constantly looking for ways to help with convenience and value, from direct-ship diapers to drive-up grocery.

Kistler said Wal-Mart doesn’t need more data from its suppliers. The missing link is data analysis that provides real insight into how retail can best serve the Millennial generation today and 20 years for now.

CONVERSATIONAL COHORT
Thokling said being out front with innovation is important to Millennials because they “hit the future first.” She said this group are active communicators and companies must work to engage a conversation that should be a two-way process though social media.

She also said immediate access is important to this cohort because they often live in the moment and record nearly every moment. Thokling said Millennials are more focused on savings than the previous generation. She said they actively save for retirement and shop for the best deal. It’s part of their DNA, she said. The group also looks for transparency and virtue in the companies it supports. Tholking said this likely comes from the group coming of age in an era of government and corporate mistrust.

Tholking sees opportunities for supplier companies to work with Wal-Mart to better reach and understand the Millennial generation.

“We should be leaning in where the Millennials are leading in growth. Wal-Mart is doing that with its smaller format and e-commerce investments. These are places where Millennials are over represented amongst the shopper base. Suppliers have an opportunity to jump in here and I think if we all play together, we will win,” Tholking said.

INNOVATION PUSH
She said investments geared toward the Millennial generation will likely cascade out to the older generations because they follow Millennials in terms of technology adoption.

“The Millennials are pushing the innovation, but other groups also use and want it. The Millennials are just the first in line,” Tholking said.

Kistler said Wal-Mart is trying to give Millennials what they want. For the holidays he said Wal-Mart expanded its app capabilities to give users access to research, reviews and product specs as well as provide shoppers with good lists and a geo map function that helps them locate items within a physical store by aisle number and shelf location. He said these are geared to helping Millennials save time and make informed purchases.

The city of Fort Smith will be without a parks and recreation director effective Nov. 21 following the Monday (Nov. 10) resignation of Mike Alsup. The move is not expected to impact work on the Ben Geren Aquatics Center, according to city and county officials.

According to Deputy City Administrator Jeff Dingman, Alsup submitted his resignation Monday to take a job in Tennessee. The resignation comes the same day the Sebastian County Quorum Court approved on third reading an operations contract with American Resort Management of Erie, Pa., to manage the marketing and pre-opening operations of the Ben Geren Aquatics Center.

In spite of Alsup's resignation, which Dingman said was unexpected, Sebastian County Judge David Hudson said he expects the water park construction and pre-opening work to stay on track.

"He was the city's representative, but we have a construction manager who's accountable on the project to both the (city and) county government and myself. And the county's more responsible for oversight of the construction project. The city, under the agreement, was going to operate the facility. But our recommendation now is that we employ a management company. And that will serve both entities," Hudson said. "That will have some impact in regard to some of the follow up details that he was working on in regard to furniture, fixtures and equipment and things of that nature."

According to Hudson, the governments will be able to work together to gather information on the various items Alsup was working on before his resignation in order to keep the project from falling behind schedule. Hudson said he had been in touch with the cities of Clarksville and Rogers regarding their water parks, which have opened within the last two years, in order to compare notes on the three respective projects.

Dingman echoed Hudson, saying that the change in parks leadership would not change the timelines for completion, adding, "It's our project and it's still cooking."

Beyond the work on fixtures and equipment, Dingman did note that Alsup had been instrumental in working out details on the operating agreement with ARM and said with the contract and funding now approved by the quorum court and the city's board of directors, the contract was ready to be signed and work begin on marketing and other items associated with the $88,000 contract split between Fort Smith and Sebastian County.

"Mike had already been in touch with the management company on the things they need and the next step with them," he said, noting that having the contract in place at the time of Alsup's departure in two weeks will be beneficial to the project.

"One thing that helps with the transition … (is that) we've got a management company to help guide us with this project."

Hudson noted that beyond the management company being in place, city administration has been active in the aquatics center project and would continue playing a key role in the absence of Alsup.

"There's always been transition in government positions with the salary levels that we have in government and the other opportunities. I don't remember any right in the middle of a project like this, but that doesn't mean it hasn't happened. But Mike's been a key component. He's worked a lot of the administrative details. But we also have Jeff Dingman who's been very directly involved and Ray Gosack. So those individuals are still there and there's other staff members in the city, along with the county, so I'm sure we can regroup and followup appropriately."

Dingman said it will "take a while to get a suitable replacement" for the position.

"We're looking for proper experience and background for handling that department," he said. "But in the meantime, we'll handle it until we get the replacement."

Hudson confirmed that the the aquatics center is still on schedule for a Memorial Day 2015 opening date.

The Steel Horse Rally is officially a go and downtown Fort Smith could see up to 10,000 motorcyclists and visitors visiting the downtown area May 1 and May 2.

Dennis Snow, organizer of the motorcycle rally and the host of Thunder TV, told the Fort Smith Board of Directors during its Monday (Nov. 10) study session that he has secured locations throughout the downtown area to help with the rally and fundraising for the event would begin as early as next week.

"Like I said, we are a non-profit. We will officially start our fundraising next week because this will solely be funded by businesses in the area. And that's one thing that we're going to try to do, as far as our vendors, as far as what we're utilizing, we want to keep this money in our backyard."

The early fundraising, he said, will allow the organization to establish its outreach efforts to market and advertise the Steel Horse Rally in states surrounding Arkansas — namely Oklahoma, Texas, Louisiana, Missouri and other bordering states.

"Where some of this money will go will allow me to go to all the contiguous states around Arkansas and do radio, television and print and carry the Fort Smith name out there," he said. "Because the downtown area is such a perfect area."

Even though Snow said the Steel Horse Rally is timed to not conflict with Bikes, Blues and Barbecue in Fayetteville – the events will take place six months from each other – he said Fort Smith is uniquely suited to host the rally and have room for growth. He said Fayetteville may be at capacity based on geographic constraints.

"If you look at Dickson Street and Bikes, Blues and Barbecue versus Garrison Avenue, there's really no comparison for what we want to do down there," he said, noting that Garrison is the second widest downtown street in the United States.

Beyond money being used for outreach efforts, Snow said funds would also go to bringing in some of the biggest acts in country and rock for performances on the Friday and Saturday of the rally.

Other details of the Steel Horse Rally were revealed to the board of directors on Monday, including the creation of a so-called biker's village during the rally near the glass pavilion in downtown, located near the Arkansas River.

"We're going to have vendors from all areas," he said, adding that it would focus on local vendors in order to keep the rally a Fort Smith-centric event. The location, he added, also allows for as much growth as possible without the risk of losing the Fort Smith, western heritage feeling.

Snow also noted that the annual Arkansas' Best Tattoo Convention had recently changed its name to the Tattoo Alley of the Steel Horse Rally and would set up shop at the Fort Smith Convention Center during the event.

The different announcements made by snow Monday highlight just a small portion of the work he said has gone into organizing the rally, which will benefit non-profits across the Fort Smith region. And with so much early success seven months out from the planned motorcycle rally, Snow said the future is bright for growth, adding that he believes the 10,000 expected visitors to Fort Smith may prove to be a conservative number.

"I will give you my personal guarantee that each year for at least five years, it will get bigger and better and get more and more proud," Snow said, noting that he had been installed to a five year term as executive director of the Steel Horse Rally organization by its board of directors.

He added that the event will not be just a motorcycle rally highlighting the Steel Horse brand, but it would highlight all Fort Smith has to offer.

"We want to showcase the glass pavilion, the walkway there, we want to use every facility that we have. Pendergraft Park. We just really want to showcase Fort Smith and this thing's going to grow. I can't give you the first year, but hopefully I can tell you that (it will be twice as big) the second year. … Motorcycle rallies right now are really, really large generators of revenue and most importantly, it's that tax money that turns over three to five times and that's what I know we all want to see is that tax money."

(The City Wire co-owner Michael Tilley is a board member of the Steel Horse Rally Organization.)

Academy Award winner Jon Voight told a crowd gathered Tuesday morning in Bentonville that Americans are “safe and free,” but often take both for granted. Voight was one of the featured speakers and honored guests at Wal-Mart’s annual Veteran’s Day Salute held at its corporate office in Bentonville.

“The more I have traveled and visited with our armed men and women I am convinced they are the best of us,” Voight said. “It’s an important day to remember all our great service men and our heroes who gave of their lives to keep Americans safe and free. ... None of our heroes should ever be forgotten.”

Voight challenged all Americans to ask themselves what they can do in return for the sacrifices made so that we remain “safe and free.” He said finding ways to support military families is one good way to show them their work and sacrifices are appreciated.

“America’s greatness is found in the strength of its armed forces ... not to conquer but to liberate,” Voight added.

He thanked Wal-Mart for its efforts to hire veterans and also train veteran entrepreneurs through partnerships of the Walmart Foundation.

Other speakers and guests at the Wal-Mart event included the Singing Men of Arkansas who performed the “Battle Hymn of the Republic” and the military service song medley;  Gary Profit, director of military programs at Walmart and a retired brigadier general; and World War II veteran Russ Moniker who served at the Battle of the Bulge as a combat medic.

LETTERS FROM HOME
While Voight’s star power filled the auditorium it was the 13-year-old Savannah Maddison who captured the spotlight throughout the two-hour festivities. Maddison helped to open the ceremony by singing the Star Spangled Banner immediately after the honor guard displayed the colors.

Maddison said she was moved by a friend of hers who father was serving in Afghanistan in 2011 to write letters to service men and women serving in the Middle East. The idea caught fire and some 88,000 letters have been written and sent in a program known as Savannah’s Soldiers. Maddison said it got so big she had to set up a 501(c)3 to handle all the gifts being made. Her goal is 100,000 letters and she’s confident it will happen. To be sure, Maddison put in a plug to attend the retailer’s annual shareholder meeting in June.

“I’ve heard it’s a big deal and I hope to be there,” Maddison said.

WAL-MART COMMITMENT
Wal-Mart CEO Doug McMillon opened his segment with a photo of his father Morris McMillion, who was served as a dentist during the Vietnam War.

“Service men in Vietnam might not have thought they needed a dentist, but if they had a toothache in Vietnam, I can assure they needed a dentist,” McMillon said. “I am honored to remember my father’s service today.”

McMillon said Wal-Mart has always bled red, white and blue, not just because it was founded by a veteran but because it seeks to serve where it can, in support of the military. He said that was the reason Wal-Mart made an intentional effort to hire more veterans. The goal to hire 100,000 veterans by 2018, was likely too low. McMillon said in the first 18 months they have already hired 68,000 and promoted 5,000 of them to higher paying jobs.

“We have always hired veterans but this intentional effort has been good, because it has allowed us to focus on more ways to facilitate in the transition from active service to civilian work. We know this is good our company and it’s good for America,” McMillion said.

Candice Lovelace began her career at Wal-Mart about one month ago after serving six years in the U.S. Navy as an operations officer. The 28-year-old Lovelace told The City Wire she got interested in the military during high school in her hometown in Georgia.

“I grew up in a single family home and I was drawn to the ROTC program looking for male leadership, somewhat father figures that were missing in my life. It was a great fit for me. I love the organization, regimen that comes with the military. I attended Spelman College on an ROTC scholarship and then went into the Navy as an officer. It’s been a wonderful journey for me. I never dreamed that would be the path I would take,” Lovelace said.

She was recently recruited to Wal-Mart at a hiring fair and is now training at the Bentonville distribution center to be an operations manager. 

“I have about one more month of training here and I will return home to Georgia and take over some operational management duties at a distribution center there. I see lots of opportunities for advancement in the operational division at Wal-Mart and I am embracing this new role. I think the military prepared me a great career at Wal-Mart,” Lovelace said.

Lt. Gen. Sam Cox, director of workforce management at Pentagon, was also a guest at Tuesday’s event. Cox said the hiring of veterans by Wal-Mart and other companies is timely as the military continues to reduce force levels. Last year, he said 17,000 service men and women joined the civilian ranks because of the cutbacks. He said they have a will and a need to serve and it’s important for companies to recognize and take advantage of this talent pool.

SERVICE/REMEMBRANCE
Derrick Van Orden, a recently retired Navy Seal who also acted in the movie “Act of Valor,” told the crowd that he’s adjusting to civilian life just one month into his retirement. The 45-year-old Van Orden said the Navy was a way up for him. A high school dropout at age 16, he eventually joined the military and somehow wound up at BUDs — Basic Underwater Demolition — for 24 weeks of training.

He said the training is intense. The reason “Act of Valor” was made was to draw attention to the Seals in hopes of getting more recruits. He said out of the class of 500, 499 of them failed, leaving just one Seal to promote, a few years back.

“I’m 45 years old and when I look at the training today, it’s hard to believe I could have done it. The model is to equip a team to endure and accomplish a mission, no matter how great the sacrifice of any one member. The mission accomplished must prevail,” he said.

Van Orden said in early 2002 he was in charge of tactical training for group of 50 Seals headed to the Middle East to fight the Taliban. He said there was a horrific snowstorm at Fort Chaffee where the training was taking place. 

“We were to spend two weeks in the fields, and we didn’t have rubber boots. Thank God the local Wal-Mart in Fort Smith had 50 pairs of boots for the team so they didn’t lose any time. It’s pretty neat when you think that someone, somewhere ordered those boots and stocked them, just at the exact time they were needed to help with a military mission,” Van Orden said.

That was his first trip to Arkansas and one he will never forget.

“All over the country, there’s someone about to clean a toilet, stock a shelf, sweep a floor. It’s not about the job one has to be proud, it’s about the work,” he said. “I am grateful for companies like Wal-Mart giving our service men and women a chance to perform work they can be proud of.”

On the biggest shopping day of the year Wal-Mart has planned a similar sales schedule to that of Black Friday 2013. The retail giant has unveiled its top deals which include big screen televisions, tablets and loads of licensed merchandise in what is dubbed as 5-days of deals.

“Black Friday is no longer about waking up at the crack of dawn to stand in long lines and hope for the best. At Wal-Mart, it’s become a family shopping tradition where everyone shops at some point throughout the weekend,” said Duncan Mac Naughton, chief merchandising officer, Walmart U.S. “This year, we’re blowing it out with five days of deals in store and online. We’ll have crazy low prices on the gifts our customers want.”
 
Wal-Mart said it served 22 million customers on Thanksgiving Day in 2013. With this year’s Black Friday deals beginning Thursday (Nov. 28) and lasting through Monday (Dec. 1), Wal-Mart is predicting that more families – adults and kids – will flock to its digital and physical aisles to take advantage of the retailer’s low prices on electronics, toys, kitchen appliances, bedding and thousands of other popular products.

The retailer said it has store-specific plans to help manage crowds and make the shopping experience easier. It’s also unveiling an interactive circular and bringing back the popular 1-hour guarantee for the top promotional items.

Customers in the designated areas of the store between 6 and 7 p.m. on Nov. 27 can  purchase the gift they want and either take it home that night or receive it at a store before Christmas.

“We’re using our entire supply chain to deliver for our customers in a way no other retailer can,” said Mac Naughton. “Our guarantee ensures our customers get the product they came for and enables us to organize the store in a way that makes the shopping experience better for everyone.”

After listening to customers who used Wal-Mart’s 1-Hour Guarantee last year, the retailer has simplified the registration and pick-up process for those who do not receive the product during the event. This year customers will be asked to take the following steps:
• Bring their 1-Hour Guarantee ticket to the checkout lane and pay for the item.
• Visit Walmart.com before 12:59 p.m. ET Dec. 1 to enter the transaction code from the receipt and choose the store to pick up the item before Christmas.
• Provide the receipt when it’s time to pick up the item. Any corresponding Walmart gift cards will be given to the customer at this time.
 
In addition to the 1-hour deals, Wal-Mart planned hourly specials that begin Thanksgiving Day at 6 p.m. These sales include toys, popular KitchenAid Mixer, bicycles and loads of licensed products from Elsa dolls to Teenage Mutant Ninja Turtle sleepwear.

At 8 p.m. the retailer will feature an electronics sale offering tablets, big screen televisions, cameras and wireless phones.

Black Friday deals begin at 6 a.m. and shoppers will get 30% off entire categories until noon. Early bird bargains include Fisher Price toys, Christmas Trees and music.

Weekend long deals that run from 6 a.m. Black Friday through Sunday (Nov. 30) include tires, jewelry and the latest smartphones.

Wal-Mart said it will provide $70 million in holiday pay to hourly workers over the weekend. The retailer is also giving those who work Thanksgiving Day a 25% discount on an entire purchase Dec. 4 or Dec. 5.

It has been eight days since history was made in Arkansas, with Republicans sweeping all federal and statewide constitutional offices. But the history making night appears to have caught some Democrats off guard after internal polls showed at least one statewide candidate up by four points going into election day.

In a day and age where a solid ground game and big data propelled Barack Obama from the Illinois State Senate to the White House in just four years, how can polling be wrong?

The answers run the gambit, but Democratic consultants who spoke on the record said the internal polling conducted for the Democratic Party of Arkansas was flawed in a few different ways, starting first with how the polling was conducted.

Will Watson, a Fayetteville-based Democratic consultant, said the increasingly popular trend of cell phone-only households skews polling. The reason, he said, is because federal regulations state that any polling conducted by cell phone must be done by a real person when the call is made to a cell phone while so-called robocalls are permissible for landlines.

"I think that a question both political parties are going to have to answer going forward are how do you connect with voters who are increasingly not on land lines, but are on cell phones or even the Internet to get an accurate sample of public opinion? The honest answer is that we have the ability to reach voters, it is just not cost effective. It is more expensive to use a live caller."

According to Watson, conducting polling on down ballot races using the proper methodologies that include live callers reaching out to cell phone-only households can sometimes be "prohibitively expensive." To understand just how expensive, he said a robocall can cost "pennies on the dollar," sometimes as low as two cents per call. On the other hand, he said live caller polls can run "50 cents, 75 cents per dial. … I've even heard $1 per person you talk to. That's in addition to the cost of assembling the poll and doing the data work afterward."

The other issue Democrats ran into this cycle is leaning too heavily on newly-registered voters versus consistent voters with a long history, according to Jonesboro-based Democratic consultant Taylor Riddle.

He said the comparisons between the accurate polling reported by the Arkansas Poll the week before the election – which showed Democrats down double digits in the races for U.S. Senate and governor – and those done by many campaigns were off based on methodology.

"You look at the methodology of Janine Parry's (Arkansas) Poll and our’s, we were basing it off of newly registered voters," Riddle said. "The centerpiece of the campaign was registering enough voters to turn the election. We were basing it off of newly-registered voters versus those who have voted consistently."

Reputable polls have traditionally queried likely voters, or those with a multi-year voting history, to establish credibility.

But sources familiar with the Democratic Party of Arkansas' internal polling who spoke on background for this story said in spite of the election results, the internals actually held up.

In the race for attorney general, for example, internals showed Rep. Nate Steel up four points against Republican Leslie Rutledge going into the election. While Steel lost by nine points on Nov. 4, one of the sources noted that the poll and the final vote total were nearly identical – around 43%. But Steel's numbers barely moved from that spot when factoring in undecideds and the margin of error because nearly all the respondents who self-identified as undecided chose to cast their votes for Rutledge and other Republicans, the source said.

The sources said many of the internals were consistent, showing again that voters who had not yet made up their minds were choosing Republican instead of Democratic, a trend seen nationally with governors mansions lost in liberal bastions such as Illinois, Maryland and Massachusetts on the same night Republicans made history in Arkansas.

Rep. Greg Leding, D-Fayetteville, said the Republican wave was something Democrats did not expect. But he said Republicans were not necessarily expecting it, either.

"The margins in the (Arkansas) House surprised everyone," he said. "Most Republicans expected Congressman Cotton and Congressman Hutchinson to win. But I think it's fair to say that everyone was shocked by the margins. And Democrats and Republicans were shocked by the extent of the losses in the House."

The Republican majority in the Arkansas House increased from 51 to 64.

Riddle said the next few weeks and months will be a time for soul searching within the Democratic Party of Arkansas as it picks up the pieces of what is left of the party and looks forward to the 2016 election, while trying to fix problems with internal polling and possible focus on get out the vote efforts.

"What can be done better? I think that we need to be mindful of the Independent (voter) more. I think that we need to focus on solidifying where Independents are leaning versus basing (efforts) on newly registered voters. Base it on those who we know are sporadic or even consistent voters versus just thinking because they are registered, they are going to vote our way."

Watson said he is not sure there would have been much different that could have been done considering the national wave that turned over control of the U.S. Senate to Republicans, the first time during the Obama administration that both houses of Congress have been controlled by the GOP. But he also implied that what happened last week was cyclical, equating it to another election in recent memory.

"It was not isolated to Arkansas and not isolated to the House. This is similar to what happened with Democrats in '08 when we captured the White House and both chambers of Congress. Arkansans should be happy that the minimum wage passed across the state and (in other states) across the country, but they should continue to find a coalition that will help them win in 2016 and beyond."

Leding said while there are no answers on what could be done to improve polling in 2016 and beyond, he said it is important that stakeholders understand that polls are just that. And polls can change.

"I certainly hope candidates, campaigns and the media place a more careful emphasis on polls in the future."

In what he dubbed as his “goodbye tour,” Gov. Mike Beebe made his final remarks to the Arkansas State Chamber of Commerce – the state’s largest business lobby.

Beebe, who said that every appearance to annual events such as the chamber’s annual meeting is “nostalgic,” said he shouldn’t receive all the credit for the positive things that materialized in his administration.

“The things I get credit for are accomplishments that are shared and should be shared by so many,” Beebe told an audience of nearly 450 at the Statehouse Convention Center in downtown Little Rock.

Beebe praised business leaders, the Arkansas legislature, educators and state employees fro their diligence in advancing issues regarding education and economic development.

“When Arkansas looks back on the last eight years and the obstacles we’ve overcome, the accomplishments we’ve achieved, the accolades we’ve received, it should be a matter of pride for all of you,” he said.

Beebe said he wasn’t going to make any new pronouncements during the speech, but he noted how much he will miss the office he’s held for the last two terms.

“I will miss the most the constant contact with people,” Beebe said. “I had to come mainly to say what a labor of love the last eight years have been. ... If I live to be 120, I’ll never be able to repay Arkansas and her people for the opportunities that Ginger and I have had.”

He also encouraged the business leadership group to work with Governor-elect Asa Hutchinson and to continue to operate in a bipartisan spirit.

“We’ve done all this stuff together. I hope you’ll continue to work together moving forward,” he said.

Stephen Moore, chief economist at The Heritage Foundation and former editorialist with The Wall Street Journal, described himself as a conservative Republican, but he said Beebe would be “great” if he ran for President.

“We need more pro-business, common sense Democrats in Washington,” Moore said. Beebe has said repeatedly he has no interest in running for office after his term as Governor ends in January.

Moore spent the bulk of his remarks talking about ideas for moving the U.S. economy forward.

“We need to get the government to stay out of the way,” said Moore, a former aide to President Ronald Reagan.

Moore said that the GOP gains from last Tuesday’s elections should lead to positive developments for the economy. He predicted that the Keystone XL pipeline project and other pro-energy policies would move forward and he suggested there may be reforms to corporate taxes.

A recent study of equality for lesbian, gay, bisexual, and transgender (LGBT) individuals in Arkansas by the Human Rights Campaign ranks Fayetteville highest in the state on its new Municipal Equality Index, even as the city prepares for a vote Dec. 9 on whether to repeal its non-discrimination ordinance meant to protect members of the LGBT community.

The HRC study looks at six categories to form its ranking on a scale of 100. Fayetteville earned a 42. The categories include non-discrimination laws, relationship recognition, municipality as employer (same-sex partner benefits and equal opportunity in city contracts), municipal services, law enforcement (reporting hate crimes and engaging with the LGBT community) and the overall relationship with the LGBT community.

Compared to other cities in Arkansas, Fayetteville by far surpasses all others, with Fort Smith, North Little Rock, and Springdale coming in at 16 out of 100 possible points and Little Rock coming in at only 13. The five cities were the only Arkansas cities included on the index.

In the area of non-discrimination laws, Fayetteville earned a zero of 18 available points, while it earned 12 out of 12 for relationship recognition for having a domestic partner registry. In the employer category, the city earned a 16 out of 29 based on offering non-discrimination in employment, domestic partner benefits and equivalent family medical leave.

The city earned only six of 15 available points for enumerated anti-bullying policies under the municipal services category and 10 of 18 in law enforcement for the reporting of hate crime statistics to the FBI. The final category netted the city only two of eight points for the city's stance on LGBT equality.

When comparing Fayetteville to other cities in the south, the results were mixed. Tuscaloosa, Ala., for example, only scored three out of 100 on the index while Memphis and Athens, Ga., scored 46, and Knoxville, Tenn., scored a 36. One of the highest ranking cities in the south was Tallahassee, Fla., with an 81 out of 100 in the index.

“In many municipalities, local leaders are taking important steps to provide LGBT people with the protections and security not available at the state or federal level,” said Rebecca Issacs, Executive Director of Equality Federation. “Municipal victories are fueling the movement for equality in states across this nation. The Municipal Equality Index is a terrific tool to help spur those victories along and celebrate the cities who have worked so hard to get us to this point.”

But in Fayetteville, efforts to strengthen protections for the LGBT community have been met with resistance after the city passed ordinance 5703 earlier this year, which made it illegal to discriminate against an individual based on their sexual orientation.

A vote is scheduled for Dec. 9 that would repeal the ordinance in its entirety and the push for repeal has been backed by the Fayetteville Chamber of Commerce. In a memo dated Monday (Nov. 10), Chamber President and CEO Steve Clark said the Chamber's support of the repeal had nothing to do with being against the LGBT community and instead was standing against a law that he said was vague and non-specific in what constitutes discrimination.

"This is absolutely not a pro-LGBT vs. anti-LGBT debate, though that is how it is being framed," he said. "The ordinance as it was drafted is unworkable and unacceptable. If we stand by and ignore the impact of the legal deficiencies in the ordinance, in the next few years our members will bear the burden of funding the inevitable litigation necessary to clarify, amend, or overturn the law as it has been passed."

He said the Fayetteville "Chamber abhors discrimination of any kind, and we will not accept the characterization that we favor any form of hatred or discriminatory behavior."

Fayetteville Mayor Lioneld Jordan said in a letter to Clark also dated Monday that the Chamber should "rescind its decision" to stand for repealing the ordinance. Jordan is an ex-officio member of the Chamber's board of directors.

"I was surprised to learn of this decision since I received no notification of the Board meeting in which it was considered, and I was certainly disappointed in the announced decision to work for repeal of the ordinance," Jordan said. "Had I been notified of the meeting, I would have attended and discussed the reasons why I think a non-discrimination policy enhances our efforts at economic development in Fayetteville."

University of Arkansas Chancellor G. David Gearhart also stepped into the political debate on LGBT equality and non-discrimination policy, adding that he too is an ex-officio member of the board and was not advised of the meeting. He added that the vote should proceed without Chamber interference.

"Many people favor allowing the citizens of Fayetteville to decide the issue at the ballot box in December, rather than having pressure exerted by the Chamber," he wrote. "If, indeed, the law is vague and too broad, the court system of Arkansas will clarify the law in due course."

While Clark has said the Chamber's stance is not about pro-LGBT vs. anti-LGBT, the city council meeting earlier this year where the ordinance passed had many people speaking out against the ordinance specifically because of religious reasons. Dr. Janine Parry, who runs the Arkansas Poll at the University of Arkansas, said data shows Arkansas as being one of the slowest in the South to accept the LGBT community, specifically citing the state's slowly evolving views on gay marriage.

"They have changed, but more modestly and more slowly than elsewhere. About 1 in 6 of Arkansas Poll respondents supported marriage equality, and 1 in 5 supported some other kind of recognition when we first asked this question in 2005 (so, about 1/3 of total sample), whereas more than half were unwilling to extend any legal status to same-sex relationships. Almost a decade later, support for marriage has crept up about 5 percentage points, while the percentage rejecting any recognition has fallen by about the same margin. So, we sit now at 40-45% in support of some kind of recognition (although only 20-24% support marriage) versus about 46-48% against. It remains, obviously, divisive."

HRC President Chad Griffin said ordinances like the one debated in Fayetteville were what would lead the state and the nation in getting legal recognition and status to protect those within the LGBT community from discrimination. He aid the group's new index would help drive equality across more American communities.

“In just three years, the number of municipalities earning top marks for their treatment of LGBT citizens has more than tripled. Simply put, in this country there is an ongoing race to the top to treat all people, including LGBT people, fairly under the law, and it’s time our state and federal laws caught up,’ Griffin said.

Emotion sells. It drives the financial markets and consumer impulse buying which is why Wal-Mart is trying to harness this power through its marketing campaign this holiday season and throughout the year, according to Stephen Quinn, chief marketing officer for Walmart U.S.

Quinn recently spoke on the emotional connections Wal-Mart is trying to make with its 140 million weekly shoppers in its U.S. business.

“Ten years ago there were a lot of Wal-Mart haters out there. In 2005, we set out to define who we were on our own terms,” Quinn said. “ Sometimes it means we have to build a store in their community to win them over.”

Quinn said the recession that followed has largely turned into a lost decade for many in terms of income gains. However, he said, it was the 2008 recession and the new frugality mindset that has helped Wal-Mart connect with more customers facing tough economic choices beginning in 2008 and continuing today.

“We went with the ‘Save Money, Live Better’ message in response to this frugal shopper mindset that began to takeover in 2008. We sought to simplify our ad process with the basket challenge campaign in recent years and more recently have looked for opportunities to insert ourselves in areas that matter most to our customers,” Quinn said.

He said Wal-Mart has worked to make key emotional connections with its shopper base through advocacy campaigns like “Made in America,” hiring veterans, women’s empowerment and sustainability. That alone is not enough. Quinn said the stores themselves must do a better job expanding on connection points with shoppers.

“We continue to give shoppers different formats in which to shop, but the stores also must provide solution centers and elevate the overall in-store experience which is a work in progress,” Quinn said.

BEING RELEVANT, TRUSTWORTHY
Wal-Mart said it must also connect on relevance, because consumers trust a retailer that is relevant. Quinn said the retailer’s link to Weather FX is one recent breakthrough to relevance. The tool allows stores to be ready for weather-related events and have the products shoppers need. He said the return of the Store of the Community in conjunction with their own Facebook pages also helps with the relevance connection. Each store can easily communicate with their shopper base through its own Facebook page which is also used promote new items as they arrive.

Quinn said Wal-Mart began trying to emotionally connect with its shoppers through stories last year, pushing itself into the “David” position of a bigger message — such as promoting a return of American manufacturing jobs. He said they continue to air commercials related to this initiative and around the dignity that comes from work and they are connecting with more consumers on a different level through these campaigns.

The retailer recently set out to erase the distrust shoppers voiced among Wal-Mart’s meat quality and produce freshness. But rather than tell the story themselves, Wal-Mart sought out third-party participants to tell their makeover story for them. Television celebrity Adam Richman hosted the Wal-Mart Steakover challenge and farmers are helping to tell the freshness story for produce.

OTHER IMPROVEMENTS
That said, the retailer has made only modest progress in these two categories in the eyes of consumers. Walmart U.S. CEO Greg Foran said it’s not enough and has vowed to do better.

Quinn said a “utility” connection which gives consumers tools to enhance their shopping experience is another way the retailer hopes to win favor and loyalty. The Savings Catcher is that kind of utility connection with more than 33 million receipts scanned as of early October and more than $2 million returned to customers using the app since it was rolled out nationwide in August, the company reports.

Marketing can only do so much for a company if the underlying fundamentals are not aligned. Likened to putting lipstick on a pig, the marketing campaigns can dress up the brand, but if the brand disappoints consumers there’s not enough lipstick in the world to make it attractive to shoppers, Quinn explained.

Foran didn’t mince words during the company’s recent analysts conference (Oct. 15), saying that the supercenter stores need work despite being cash cows with lots of potential. He laid out a plan to shape up the U.S. business and drive more sales by boosting store labor, curbing inventory overruns, doing a better job with fresh produce and meats, expanding private label selections and improving meat quality.

Quinn said loyal Wal-Mart shoppers make an average of 80 trips to their local stores per year and that’s a strong base from which the retailer has sought to build brand equity. But, there’s still work to be done. He said Walmart gift cards are the most wanted of all gift cards, but they are also a card shoppers are the most apprehensive about giving.

“Wal-Mart is working on that,” Quinn said.

EXPECTED EARNINGS
Wall Street will be watching Thursday (Nov. 13) when Wal-Mart reports its third quarter financial results, which have already been guided downward as the year has progressed.

Analysts are mixed on how well the retail giant will rebound or retrench given weakened guidance among the entire retail sector. Some believe Wal-Mart will benefit from lower gasoline prices as their shoppers will have more money to spend. Others say the heightened promotions by Wal-Mart and retail in general are eroding their gross margins which will have a drag on earnings.

Analysts expect Wal-Mart to report $1.12 per share on revenue of $119 billion. Wal-Mart has a history of reporting very close to the street consensus.

Mike Kindellan is changing the world one cardboard pallet at a time. And he’s hiring University of Arkansas at Fort Smith students to help him do it.
 
Kindellan, the managing partner of the Missouri-based environmental company Amerigreen Worldwide, created a machine that manufactures cardboard pallets – a cheaper, environmental alternative to their wooden counterparts – after working three decades in the logistics field. 
 
“I have a 30-year background with Tyson Foods, and my biggest problem was pallets. They weighed too much, they hurt people, and they also damaged products,” Kindellan said. “Our cardboard pallet weighs five to 10 pounds versus a regular hardwood pallet that weighs roughly 80 pounds. And they won’t ever hurt you. The worst you can do is get a paper cut.”
 
The concept has the potential to transform the logistics industry, with cost-savings in the millions for companies that make the switch from wooden to cardboard. There was only one problem: the machine that created the pallets wasn’t functional, and it didn’t have drawings or documentation. That’s where UAFS came in. The university met with Amerigreen Worldwide and convinced them that UAFS had the resources to assist them with the project, including several faculty members with experience working in industry.
 
“They were a little leery at first. But we convinced them that we have the expertise and we have the background,” said Dr. Kerrie Taber, project manager for the venture and interim department head of the applied science and organizational leadership programs at UAFS. 
 
The result was four students – Shirley Carter of Fort Smith, Dalen Surls of Cedarville, Luede Yang of Booneville and Ntxuzone Yang of Fort Smith – working internships to create documentation and safety recommendations for the machine, which is housed in Fort Smith. The internships are unorthodox because of their format, which has the students working for the company but with UAFS faculty serving as the supervisors, an arrangement that is the best of both worlds for students. 
 
“Normally they work for the company and the supervisor overseeing their work is at the company,” Taber said. “With us as the supervisors, we know what they’ve learned and what they should know. So we’re able to tie in what they learned in the classroom to the work they’re doing.”
 
It also provides hands-on experience for students like Surls, who values the chance to work in a real-world environment.
 
“This is a very valuable learning experience. I will be doing a lot of things with the software that will help me in not only this experience but with future jobs too,” Surls said. “It’s not every day that you see something like this done. Machines like this are normally put on paper first then built, but this is the other way around. I’m doing something that not many people get to do and something that I enjoy at the same time.”
 
“I hope to find a job with a national company using the skills I’ve learned,” he added.
 
The 16-week project is the first in what Taber hopes is a series of jobs UAFS students will complete for both Amerigreen Worldwide and other companies.
 
“UAFS has a history of responding to the needs of industry, and creating partnerships for students to work with those companies is a new and exciting development for us,” Taber said.

Third quarter net income for Wal-Mart Stores Inc. dipped 0.7% and fiscal year-to-date net income is down 1.7%, although total revenue in the quarter was up 2.9% and per share net income of $1.15 beat the consensus estimate of $1.12.

Wall Street, looking for any sign of optimism about the consumer and the retail sector, rallied on the cautiously upbeat earnings announcement from Wal-Mart Stores on Thursday (Nov. 13). Wal-Mart shares led the way, rising more than 4% in active trading at $82.64, up $3.44 in the morning session.

Total revenue during the third fiscal quarter (ended Oct. 31) for Bentonville-based Wal-Mart was $119.001 billion, up over $115.688 billion during the same period in 2013 and ahead of the consensus estimate of $118.35 billion. Revenue for the first three fiscal quarters of the year is $354.086 billion, better than the $346.588 billion during the same period of 2013.

"Walmart reported solid earnings per share of $1.15 in the third quarter," Doug McMillon, Wal-Mart Stores president and CEO, said in the earnings report issued early Thursday. "The highlights for the quarter include the positive comp in Walmart U.S., including the strong performance from Neighborhood Markets, the 21% increase in e-commerce sales globally and the profit performances from Sam's Club and our International business."

Although slight, the world’s largest retailer was able to reverse its comp store sales trend with U.S. stores. It’s the first net positive increase since 2012. Same store sales in the U.S. – including Sam’s Club – were up 0.5% compared to a decline of 0.1% during the same quarter of 2013. Same stores sales with Neighborhood Markets – the company’s leading small-store format – were up 5.5%. The company also reported that e-commerce sales worldwide were up 21%.

"We're investing in key areas of our business, including wages in our U.S. stores and in e-commerce and mobile capabilities. We continue to see opportunities to improve our business," McMillon said in the report. "Being the price leader is an ongoing priority for us and a commitment to customers. As with every year, that is even more important during the holiday season. We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we're set to deliver for customers during this time."

Stacy Widlitz, analyst with SW Retail Advisors, said Wal-Mart is investing in the right areas and that will likely help longer term. She said getting things right is going to be somewhat expensive in the short run.

Consolidated operating expenses increased 3.5% due to continued investments in wages and higher U.S. health care related expenses. Foreign Corrupt Practices Act and compliance-related costs were approximately $41 million, which represents about $30 million for the ongoing inquiries and investigations and $11 million for internal global compliance program and organizational enhancements. 

Wal-Mart said last year that FCPA and compliance-related costs were $69 million for the third quarter. So far this year the company has spent $137 million on FCPA and compliance-related costs, which was less than their previous guidance of between $200 million and $240 million. 

The company issued fourth quarter per share earnings guidance of between $1.46 and $1.56, and full year per share guidance of $4.90 to $5.15. Prior to the earnings report, the consensus estimate among analysts who cover the company was for fourth quarter earnings at $1.57 per share, and $4.99 per share for the full year.

U.S. OPPORTUNITY
In his first 100 days of leadership a Walmart U.S., CEO Greg Foran said he’s encouraged by the opportunities he sees among the 5,000 stores in the system.

"We had several merchandise categories driving top-line growth," he said. "I'm encouraged by our performance during key seasonal events. We had strong back-to-school results in apparel, home and school supplies, and we ended the quarter well by executing a strong Halloween event."

Walmart U.S. reported third quarter sales of $70.025 billion, up 3.4% over a year ago. Through three quarter of this year sales were $208.48 billion which was a gain of 2.7% year-over-year. The U.S. segment accounted for 59% of the retailer’s total sales in the quarter and thus far this year. 

Operating income at Walmart U.S. is down 1.2% in the quarter and down 2.6% for the year. Foran said comp sales have improved to 0.5%, but higher operating costs put downward pressure on top and bottom line performance in the quarter.

“We’ll partially offset these headwinds in the fourth quarter by making progress on the ‘urgent agenda items’ that I presented at the investor meeting last month. We have opportunities to become better shopkeepers, to execute the everyday business better,” Foran said. 

His “urgent agenda” items relate to better store management starting in the fresh departments of deli, produce and meats. He vowed to investors last month his plan to clean up the operations while also evaluating store labor counts and excess inventory in some categories while addressing lingering out-of-stocks in others.

A internal memo linked to the media earlier this week validates Foran’s insistence on addressing the areas of fresh. The memo sent to store managers tagged as "highly sensitive,” asks Wal-Mart store managers to make sure they discount aging meat and baked goods to maximize chances of selling them before expiration dates. Wal-Mart verified the memo was sent and the areas being addressed.

Foran said the U.S. store comp of 0.5% was positively impacted by 0.2% from online orders that were fulfilled in stores. The company also estimated “fractional” losses from the normalization of food stamp benefits in the past 12 months, which Wal-Mart said might not ever be recovered. The average ticket rose 1.2% in the quarter, but there was also a small decline in traffic count. While traffic is down year-over-year, Foran said it’s improving quarter to quarter, up 0.4% from the second quarter and 0.7% better than the first quarter of this year.

Traffic is a dynamic that bears watching as more sales are being completed online across the entire retail landscape. Widlitz said retailers embracing the omni-channel approach, which includes Wal-Mart, hold the most potential for improved sales during the holidays and beyond. 

GROCERY GAINS, iNVENTORY ATTENTION
Widlitz said there is some upside in grocery because of the inflationary prices, particularly in meat and dairy. Walmart U.S. disclosed net inflation of 0.281% in the quarter over prices a year ago. The retailer said much of that is in meat and dairy and consumers continue to trade down in the categories.

“I think some of the savings people will realize from fuel purchases is likely going to go toward feeding their families,” she said.

Grocery is a huge segment for Walmart U.S. and that’s only going to increase as the retailer plans to open more than 100 Neighborhood Markets in the current quarter, in addition to 70 of smaller grocery formats.

“Given the significant number of fourth quarter openings, we expect headwinds related to pre-opening expenses, as well as higher inventory balances from these openings. We remain pleased with the 5.5% comps Neighborhood Markets are showing,” Foran said.

Foran said inventory rose 5.2% in the quarter. More than half of that increase was related to new store growth and a conscious decision to flow inventory through the diversified import network early for the upcoming holiday season. 

“This allowed us to minimize risk of delays and mitigate impact to our holiday business. We’ve taken recent actions with respect to reducing inventory, but it’s too early to see any significant impact. However, we’re reasonably confident that we’ll see an improvement in inventory levels over the next year,” Foran noted in the call.

WAL-MART INTERNATIONAL
Walmart International total sales were $33.7 billion, up 1.7%. On a same-currency comparison, sales would have been up 2.9%. Overall revenue was diminished by a $396 million hit from unfavorable currency exchange rates.

“While sales growth slowed some on a constant currency basis compared with the first half of the year, sales trends improved in the latter part of the quarter in markets such as Canada and Mexico. Customers remain challenged across much of the globe, but our teams continue to do a great job of serving these customers by helping them save time and money,” Walmart International CEO David Cheesewright noted in the earnings transcript.

He said recent steps taken to accelerate e-commerce platforms in Mexico and China are underway as are the collection points for pickup in the U.K. 

“Walmart China recently launched a ‘Worry Free Fresh’ program starting with 49 stores, providing our customers with a money-back satisfaction guarantee when buying fresh produce and meats,” he added.

Though there is always room for improvement, Cheesewright said he feels good about the third quarter results. Operating income grew faster than sales at 5.2% on a constant currency basis and 3.7% percent on a reported basis. He said the segment did not leverage expenses for the quarter, in part due to continued investments in e-commerce and other initiatives, but leveraging expenses remains a key priority.

In the five largest countries, Canada, Brazil and Mexico delivered positive comp sales, but comps declined in the U.K. and China due to retail deflationary pressures. Net sales and comp growth were strong in some of our other markets, including Africa, Argentina, Central America, Chile and Japan.

SAM’S CLUB
Sam’s Club delivered profit growth the quarter, with operating income up 5.3%, without fuel, and 12% with fuel. Segment sales were $14.39 billion in the quarter, up 2.3% from a year ago. Through three quarters of this year sales revenue registered $43.14 billion, growing 1.6% from a year ago.

"Although we lapped the fee increase from last year, our membership income growth remained strong at 10.1%" said Rosalind Brewer, Sam's Club president and CEO. "Clearly, our members responded positively to our efforts to enhance membership value."

In the quarter, comp sales increased 0.4% driven by relatively balanced growth in traffic and average tickets. Traffic remains up among the Savings members, with pressure from fewer trips within business members, Brewer noted in the release. 

Membership and other income grew 9.9%. Sam’s Plus member renewals and upgrades were strong, offsetting softness in Sam’s business member base, she added.

Higher sales are the number one wanted item on Wal-Mart’s Christmas wish list and the mega retailer is somewhat optimistic that will happen thanks to lower fuel prices and a slightly better overall economy.

“This time last year we faced the debt crisis uncertainties, SNAP cuts (food stamps) were taking hold and higher gases were also weighing on consumers,” said Charles Holley, chief financial officer for Wal-Mart, said during a media call on Thursday (Nov. 13). The media call was associated with the company’s fiscal third quarter earnings report.

That said, Wal-Mart is not leaving the holiday sales to chance. Greg Foran, CEO of  Walmart U.S., said he met Wednesday (Nov. 13) with store mangers for two hours to make sure everyone was on the same page going into the holiday season.

He admitted the popular electronics segment is again under pressure from price deflation and lack of innovation. With that he expects Wal-Mart to sell more electronic items and make less money on this category than last year. Foran said layaway use is strong, but gave no year-over-year comparison.

“As I traveled to stores I see up to 100 containers out back (of each store), which is an indication that lots of shoppers are using the layaway option this year,” Foran said.

Promotions are deep and Wal-Mart expects that to weigh on its fourth quarter earnings. Adding labor during the busier holiday season will also pressure earnings.

“We expect this holiday season to be highly competitive. ... We’ll continue to see pressures to the bottom line as we balance wage leverage with higher customer service standards. We recognize we have opportunities amid the challenges,” Foran noted in the pre-recorded earnings call.

One of those opportunities is potentially more disposable income for the Walmart shopper.

“Customers have a little more discretionary spending power in the coming months from lower gas prices. We’re enthused by our holiday plans across the box and online,” Foran said.

David Strasser, analyst with Janney Capital Management, said perhaps the worst of it is behind Wal-Mart, having retuned to positive comp sales for the first time in since 2012. Strasser said in all of the pre-holiday retail ads he’s reviewed there appears to be more posturing than promotions through discounts, which is better for retailer margins. 

Foran said the retailer is using more price rollbacks, with around 20,000 announced in recent days and he expects consumers to respond favorably. Holley said consumers are not afraid to spend when they recognize a true value.

“We see this over and over when we promo large ticket items or bring new products they want to market. We have to give consumers a reason to shop with us,” Holley said.

Wal-Mart execs admis there is still lots of things it can and will do better, starting with customer service. The retailer plans to spend an extra $70 million in wages during the holiday season with added front-end labor in its promise to make sure more registers are open during peak shopping periods.

Declining store traffic is an ongoing concern, but Foran said in recent weeks the trend has been improving. He said his “urgent agenda” memo sent to store managers recently    was needed as he has promised to do a better job managing fresh items such as produce, deli and meats. The memo went to 32 departments and asked stores to find creative ways to sell clearance items and to keep "complete records of daily throws" of meat and poultry.

Foran said Wal-Mart will do a better job as shopkeepers and he knows that will mean additional labor, which is why he’s evaluating the labor mix for the fourth quarter and beyond.

OUR Walmart member Janet Sparks, a nine-year customer service manager at a Walmart store in Baker, La., said it’s gratifying to hear that Wal-Mart executives plan to address store labor, but she hasn’t seen these changes take place as of yet. Sparks’ message coincided with the early Thursday earnings report by Walmart and was pushed out by the union-funded group.

Sparks said it has been store understaffing that has contributed to wasted food and dirty shelves in the grocery department. She said her store routinely has long checkout lines because there are not enough cashiers and customer service managers scheduled to work.

Foran vows to address the labor constraints but said that’s just part of the problem. He knows there is work to do get stores to what he deems an acceptable level.

Investors of America’s Car-Mart have enjoyed a robust comeback in the recent quarter after a somewhat sluggish first half amid higher charge-offs and competitive pressures among the company’s larger lots.

Since the start of the company’s fiscal second quarter (Aug. 1) through Wednesday (Nov. 12) shares are up 28.4%, or $10.68, as of Wednesday’s closing price at $48.20. The share price set a new 52-week high on Monday (Nov. 10) trading at $48.93 intraday, before closing at $48.70. 

Company executives have said repeatedly they have strong cash flow, low debt levels and a growing book of subprime business with 60,000 customers. But, investors began to shy away from the stock earlier this year after the company reported weaker same-store sales, flat earnings with a sluggish overall loan portfolio performance. 

In the recent quarter, Car-Mart delivered big on net earnings which drew more interest from Wall Street as the competitive pressures felt for the previous year began to ease. 

Jeff Williams, chief financial officer of America’s Car-Mart, recently told analysts at the C.L. King investor conference in New York that  the past six years of 0% interest had drawn more lenders into the subprime auto market to chase higher yields. Many of those are new car lenders and their used-car departments, independent auto dealers and traditional tote-the-note lots that write the loans and then sell them off in the secondary market, he said.

Experian considers subprime as borrowers with credit scores of 550 and 619, and deep subprime levels involve credit scores below 550. Williams said Car-Mart’s core customer falls in the deep subprime level.

Car-Mart’s delinquencies have improved over the past two quarters. Now that lower fuel prices are giving consumers some breathing room, analysts expect this will also be a positive for the car dealer and finance company’s ability to collect on loans.

Analysts with Stifel Nicolas estimate that households earning $30,000 a year spend up to one-fifth of their disposable income on gasoline. With fuel prices well below $3 per gallon, investment bank Cowen predicts savings to consumers to tally some $40 billion over the next year if fuel prices stay under $3.10 a gallon. 

Bill Armstrong, and analyst with C.L. King, recently upgraded Car-Mart shares from neutral to a buy position.

“We think credit availability for subprime auto buyers may begin tightening up in the months ahead as industry-wide loss rates continue to increase. At the same time, Car-Mart appears to be more effectively adapting to the still-difficult competitive environment, as evidenced by its improved performance in the first quarter,” Armstrong said.

The Street.com also rates America’s Car-Mart a “buy” position citing a number of strengths outweighing the competitive pressures.

“The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income,” Street.com notes on its website.

Car-Mart is expected to report its second fiscal quarter earnings on Nov. 19. Wall Street consensus is 66 cents per share on revenue of $120.56 million. This would be a gain of 8.1% in net profits while top line revenue is expected to dip 0.7% from a year ago.