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CNBC TRANSCRIPT: CNBC'S MARGARET BRENNAN INTERVIEWS LEE SCOTT, CEO, WALMART, ON CNBC'S "SQUAWK BOX" TODAY

Lee Scott
Lee Scott

CNBC TRANSCRIPT: CNBC'S MARGARET BRENNANINTERVIEWS LEE SCOTT, CEO, WALMART, ON CNBC'S "SQUAWK BOX" TODAY

WHEN: Today, Wednesday, October 22nd at 6:03 AM & 7:18 AM ET

WHERE: CNBC's "Squawk Box"

Following is the unofficial transcript of a "First on CNBC" interview with Walmart CEO Lee Scott , on CNBC'S "Squawk Box " Today.

All references must be sourced to CNBC.

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JOE KERNAN: OUR MARGARET BRENNAN IS TALKING TO THE WAL-MART CEO, LEE SCOTT. SHE JOINS US NOW WITH THE HIGHLIGHTS. YOU'RE UP EARLY, MARGARET.

MARGARET BRENNAN: VERY EARLY.

KERNAN: WELCOME TO OUR WORLD.

BRENNAN: AT 4:00 P.M. IN BEIJING, WE TALKED TO HIM IN BEIJING.

KERNAN: AND YOU'RE BACK HERE ALREADY. OH, YOU STAYED HERE. I GOT IT. WORK WITH ME.

BRENNAN: NOT SO MUCH ON TRAVELING THESE DAYS. BUT YOU DID MENTION CHINA THERE. AND THE REASON THAT LEE SCOTT WAS IN BEIJING IS, WAL-MART ROLLED OUT NEW INITIATIVES FOR ITS GLOBAL SUPPLIERS TODAY. THEY'RE REQUIRING THEIR SUPPLIERS IN CHINA PARTICULARLY TO BE MORE ENERGY EFFICIENT. THEY'RE CUTTING THEIR OWN ENERGY USE BY 30 PERCENT IN 113 STORES THAT THEY HAVE ION CHINA AND THEY'RE ALSO GOING TO REQUIRE OUTSIDE AUDITS OF THEIR CHINESE SUPPLIERS TO MAKE SURE THEY'RE COMPLYING WITH SAFETY LAWS. BUT WE ALSO, OBVIOUSLY, WANTED TO ASK HIM ABOUT WHAT HE'S SEEING IN TERMS OF THE GLOBAL ECONOMY. AND WHEN IT COMES TO GAS PRICES, LEE SCOTT HAS SAID THAT HIGHER GAS PRICES DROVE A NEWLY PRICE CONSCIOUS CONSUMER INTO THEIR STORES OVER THE PAST YEAR. SO NOW THAT GAS PRICES ARE BELOW $3 A GALLON, THE LOWEST LEVEL THIS YEAR, WHAT IS HE SEEING THERE? HE SAYS HE'S SEEN SUCH A TREMENDOUS STRAIN ON CONSUMER WEALTH OVER THE PAST FEW MONTHS AS A RESULT OF THIS FINANCIAL MARKET CRISIS, BUT DO GAS PRICES STILL MATTER GIVEN ALL THE OTHER PRESSURES ON CONSUMERS RIGHT NOW?

LEE SCOTT: WHEN PEOPLE PUT $10 LESS IN THEIR CAR IN GAS OR $20 LESS IN GAS IN THEIR CAR IN A WEEK, THAT'S DISPOSABLE INCOME THAT THEY HAVE THAT THEY CAN NOW DO TO A SIT-DOWN RESTAURANT OR THEY CAN GO TO A MOVIE OR THEY CAN COME AND SHARP AT WAL-MART. SO THE PRICE OF GAS I THINK AN EXTRAORDINARY IMPACT ON OUR ECONOMY AS WELL AS THE WORLD'S. AND I THINK REALLY WILL PLAY A DETERMINING PART IN HOW LONG THIS ECONOMIC PRESSURE LASTS. SO IF THE PRICE OF FUEL CAN STAY DOWN, MAYBE THIS RECESSION THAT PEOPLE THAT ARE TALKING ABOUT WILL NOT HAVE TO LAST AS LONG AS SOME PEOPLE WOULD HAVE PROJECTED.

BRENNAN: (IN STUDIO) 136 MILLION PEOPLE SHOP AT WAL-MART EACH WEEK. THEY HAVE TREMENDOUS VISIBILITY INTO THE CONSUMER. WAL-MART EARLIER REPORTED THAT BABY FORMULA SALES ARE SPIKING AROUND PAYCHECK CYCLES. THAT'S A WORRISOME SIGN CONSUMERS ARE REALLY HOLDING OUT TO BUY NECESSITIES. AND SCOTT SAYS THAT WHILE MANY OF THEIR CONSUMERS ARE LIVING FROM PAYCHECK TO PAYCHECK, THE COMPANY IS SEEING STRONG SALES OF HALLOWEEN COSTUMES AND CANDY RIGHT NOW. SO IT'S A SIGN THAT PARENTS ARE STILL BUYING DISCRETIONARY ITEMS WHEN IT COMES TO THEIR KIDS AND HE SEE THAT AS A POSITIVE SIGN FOR HOLIDAY SPENDING.

BRENNAN: (TO LEE) ARE THINGS AS DIRE AND DOES THE CHRISTMAS SEASON LOOK AS DIRE AS MANY ARE PROJECTING IT TO BE?

SCOTT: WHAT WE SEE IN OUR STORES IS NOT IN ANY WAY DIRE. ON THE OTHER HAND, YOU DO SEE THAT CUSTOMERS ARE SPENDING A LARGER PERCENTAGE OF THEIR INCOME ON CONSUMABLES AND ON FOOD AND THEN ON VERY TARGETED THINGS THAT THEY WANT. THE WII FIT THAT YOU JUST CAN'T KEEP IN THE STORE OR THE WII GAME ITSELF. iPODS CONTINUE TO SELL. SO PEOPLE HAVE MONEY.

BRENNAN (IN STUDIO): HE'S DESCRIBED CONSUMERS RIGHT NOW AS MORE SELECTIVE AND THOUGHTFUL, BUT THEY'RE STILL BUYING WHAT THEIR FAMILIES NEED. YES, UNEMPLOYMENT IS A WORRY, OF COURSE, BUT A TREMENDOUS AMOUNT OF AMERICANS ARE STILL EMPLOYED. SO NOT DIRE.

QUICK (IN STUDIO): MARGARET, DOES HE SAY THEY'VE PULLED IN NEW SHOPPERS AS THE ECONOMIC CONDITIONS GOT TOUGHER?

BRENNAN (IN STUDIO): IN THE PAST FEW MONTHS? I DID ASK HIM THAT, AS WELL.

AND HE SAID BASICALLY THAT THE BIGGEST IMPACT HAS BEEN ON THEIR OWN MANAGEMENT OF THEIR BALANCE SHEETS WHEN IT COMES TO THE FINANCIAL MARKET CRISIS. THEY HAVE SEEN A CHANGE IN SHOPPING PATTERNS BECAUSE OF THE PSYCHOLOGY OF CONSUMERS IN THE FEW WEEKS. BUT HE EXPECTS THAT TO NORMALIZE.

BRENNAN (IN STUDIO): LEE SCOTT SAYS THE BIGGEST IMPACT OF THE FINANCIAL CRISIS HAS BEEN ON WAL-MART'S OWN FINANCES. THEY'VE HAD TO MANAGE THEIR CASH VERY CAREFULLY IN HIS WORDS AS THEY'VE BUILT UP FOR THE CHRISTMAS SEASON. WHEN IT COMES TO CUSTOMERS, SCOTT SAYS SHOPPERS ARE MORE CAUTIOUS BUT THEY STILL HAVE THE CAPACITY TO BUY WHEN THEY WANT TO.

SCOTT: WHEN YOU THINK ABOUT OUR CORE CUSTOMER. OUR CORE CUSTOMER MAY BE MORE DRIVEN BY THE PSYCHOLOGY OF WHAT'S HAPPENING IN THE MARKETS THAN THEIR ACTUAL OWNERSHIP OF STOCK. SO THAT ONE WEEKEND WHERE WE HAD ALL THE DISRUPTION AND THE CONCERN ABOUT BANKS, CERTAINLY WE SAW PEOPLE BEING VERY CAUTIOUS WE SAW THE SALE OF HOME SAFES GO UP DRAMATICALLY, BUT SINCE THEN, EACH WEEK, IT HAS BEEN A MORE NORMALIZED PATTERN AS I THINK PEOPLE ARE MORE AND MORE GAINING CONFIDENCE THAT THE STEPS THE GOVERNMENT TOOK HAVE REALLY STABILIZED THE FINANCIAL SITUATION.

BRENNAN (IN STUDI0: SCOTT SAYS THAT THE TIGHTNESS IN THE CREDIT MARKET HASN'T CAUSED PRICE INCREASES ON THEIR PRODUCTS BUT THEY ARE SEEING AN IMPACT WHEN IT COMES TO THEIR SUPPLIERS.

SCOTT: WE'VE HAD SOME SUPPLIERS COME TO US AND ASK US FOR EARLY PAYMENT OF BILLS BECAUSE THEY WERE CAUGHT IN THAT CRISIS TWO OR THREE WEEKS AGO. WE WERE ABLE TO HELP SOME SUPPLIERS THROUGH THAT. WE ARE ALSO NOW, BECAUSE OF THE FALLING COMMODITY PRICES, WE'RE ALSO SEEING SOME FALL IN FOOD PRICES, AND SOME OF THOSE AREAS WHICH WE'RE ABLE TO PASS ONTO THE CUSTOMERS. SO ACTUALLY RIGHT NOW, I WOULD SAY WE'RE PROBABLY SEEING MORE PRICE DECREASES THAN WE'VE SEEN IN SOME TIME.

BRENNAN (IN STUDIO): SCOTT THOUGHT THAT WAS KEY THERE. SCOTT ESEENTIALLY SAYING THERE THAT AS FOOD AND COMMODITY PRICES GO LOWER IN THE MARKETPLACE, WAL-MART'S ALSO LOWERING THOSE PRODUCT PRICES FOR THEIR CONSUMERS BECAUSE OF COURSE THERE'S BEEN A LOT OF DEBATE ABOUT FOOD INFLATION AND THE BENEFIT THAT THEY'VE SEEN THERE IN TICKET SALES.

BECKY QUICK: MARGARET, THANKS VERY MUCH.


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