RETAIL

WAL-MART SUES FORMER VICE CHAIRMAN

Wal-Mart Stores Incorporated sued a former vice chairman, Thomas Coughlin, accusing him of involvement in a scheme to misappropriate up to $500,000 through bogus expenses and the unauthorized use of company gift cards.

The suit, filed in Benton County Circuit Court in Ark., seeks to reverse a retirement agreement the executive had with the world’s largest retailer. The company said in the filing it would not have entered into that accord had it known Mr. Coughlin was misappropriating assets. It’s also asking for the return of all cash, property, and benefits he received, including about $5 million in pay and bonuses.

Wal-Mart stripped Mr. Coughlin last month of his retirement benefits after concluding he engaged in misconduct for using company funds for his own benefit. The company has referred the results of an internal probe to the U.S. Attorney for the Western District of Arkansas and has said a government investigation is in progress.

Mr. Coughlin, who retired in January and resigned from the board in March, won’t receive 186,407 shares of restricted stock and 302,503 stock options, according to a filing the company made with federal regulators. Wal-Mart took the action after suspending the benefits in April.

The Wal-Mart suit is “another step in its relentless campaign to discredit a man who dedicated his life to the company and its employees for 27 years,” a statement from the law firm of Zuckerman Spaeder LLP in Washington, which represents Mr. Coughlin, read. “Wal-Mart has used its unlimited resources to mount an attack on Mr. Coughlin while denying him any meaningful opportunity to defend himself.”

– Bloomberg News

PUBLISHING

MARTHA STEWART LIVING POSTS SECOND-QUARTER LOSS

Martha Stewart Living Omnimedia Incorporated posted a wider second-quarter loss, hurt in part by large payouts for a new syndicated TV show developed with reality-show kingpin Mark Burnett.

The company, which is in the midst of a turnaround following its namesake founder’s personal legal travails, forecast further losses for the second half of the year. But executives said increased advertising at the company’s magazines and the launch of new TV and radio programs are putting it back on a path toward profitability.

“The momentum we began to build early in 2005 is starting to deliver a quantifiable improvement in performance,” the president and chief executive of Martha Stewart Living, Susan Lyne, said in a statement. “We have exceeded our own plan both in terms of results and in the success of our efforts to leverage the consumer connection with Martha and the brand.”

The company reported a second-quarter loss of $33.5 million, or 65 cents a share, compared with $17.8 million, or 36 cents a share, a year earlier.

The latest quarter included a non-cash charge of $16.8 million, or 33 cents a share, for the vesting of certain warrants granted to Mr. Burnett in connection with the production of the new daily TV show starring Stewart, as well as certain other employee-related charges of $3.2 million, or 6 cents a share.

Revenue rose 4.3% to $46 million from $44.1 million – the first increase in 10 quarters – as a rebound in advertising at the company’s flagship magazine, Martha Stewart Living, and increased advertising at Everyday Food magazine offset declines in each of the company’s other divisions, including TV, merchandising, and online. TV revenue slid 42% to $1.8 million from $3.1 million, sapped by the absence of the company’s daily TV show, which was put on hiatus in September ahead of Stewart’s five-month prison sentence for lying to investigators about a stock sale. The new show, “Martha,” is set to debut on September 12.

Ms. Lyne said during a conference call that the TV show should help boost the company’s TV revenue to between $45 million and $50 million in its first season. However, the vesting of warrants for certain TV programs will continue to result in non-cash charges in the next two quarters and possibly 2006.

– Dow Jones Newswires

WALL STREET

WEILL WILL STAY PUT AS CHAIRMAN FOR FULL TERM

The chairman of Citigroup, Sanford Weill, said he will complete his term at the biggest American financial-services company, abandoning plans to leave early and start a buyout fund.

“It has hurt me to read speculation that in pursuing any new venture, I might somehow find myself competing with Citigroup or acting contrary to the company’s interests,” Mr. Weill, who is 72, said yesterday in a memo to employees. “Nothing could be further from my mind.”

Mr. Weill’s decision ends a standoff with his fellow directors and relieves Citigroup chief executive officer Charles Prince, 55, of the distraction it created days after the firm’s president, Robert Willumstad, announced his resignation. Citigroup’s board rejected Mr. Weill’s plan to retire early with his benefits and perquisites such as use of company jets intact, people familiar with the situation said last week.

“Sandy provides leadership even if Chuck Prince is CEO,” Thane Bublitz, who helps manage $65 billion at Minneapolis-based Thrivent Financial for Lutherans, which owns 4.2 million Citigroup shares, said. “It’s good for the firm, especially following the departure of Bob Willumstad.”

Citigroup’s directors feared the kind of public backlash that Morgan Stanley has endured since lavishing a $77.4 million exit package on a former CEO, Phil Purcell, the people said.

Mr. Willumstad, Citigroup’s president and chief operating officer, said July 14 he would resign in September to pursue a chief executive’s job at another company.

– Bloomberg News

NYSE ENACTS NEW RULE ON PROVIDING ACCOUNT INFORMATION

Brokerage firms offering fee-based accounts must give customers information about the cost and suitability of the accounts on a continuing basis, according to a new regulation at the New York Stock Exchange.

Brokerages have increasingly pushed fee-based accounts as alternatives to pay-as-you-go commission accounts in an effort to stabilize revenue, regardless of gyrations in the stock market. Regulators encouraged the approach as a way to dissuade brokers from promoting trades simply to build commission income, but they worry that the accounts aren’t suitable for investors that don’t make many trades.

“If investors do select a fee-based account, firms must undertake periodic reviews to determine if the account remains suitable over time,” said Richard Ketchum, chief regulatory officer of the New York Stock Exchange, in a prepared statement.

– Dow Jones Newswires

REGULATION

URUGUAY TO FILE WTO COMPLAINT ABOUT AMERICAN RICE SUBSIDIES

Uruguay will file a World Trade Organization complaint against American rice subsidies, the South American nation’s envoy to the WTO said, following a similar successful case by Brazil against American cotton aid.

Brazil has asked the Geneva-based WTO to authorize $3 billion in sanctions against America after the global trade arbiter backed a claim that cotton payments to American farmers are illegal because they breach commitments signed in 1994. The cases follow stalling WTO negotiations detailing how rich nations should cut subsidies to farmers and open their commodity markets.

“It’s similar” to the cotton case “in that it’s against subsidies and support for this sector,” Uruguay’s ambassador to the WTO, Guillermo Valles-Galmes, said in a telephone interview.

America, the world’s fourth-biggest rice exporter behind Thailand, Vietnam, and India, spent $1.5 billion in rice subsidies in 2003, up from $832 million in 1995, according to the U.S. Department of Agriculture.

– Bloomberg News