• CNNMoney.com, Wednesday, January 10, 2007 12:45 PM

Wal-Mart had personnel problems galore in 2006, like the embarrassing ouster of Julie Roehm, the young ad whiz Wal-Mart had hired away from DaimlerChrysler. It also had a bad rep as an employer. In October, a Philadelphia jury ordered Wal-Mart to pay $78 million to a class of 185,000 workers who claim they were denied breaks and forced to work off the clock. A top Wall Street analyst suggests Wal-Mart take a break from earning growth to better compensate its people.

"I could rite the press release now," says HSBC retail analyst Mark Husson, whose stock-picking prowess ranked among the top 5% of all analysts last year, according to StarMine.

"Having done the right thing by consumers for so many years, it's now time to do right by our employees. It will be good for America and good for our employee turnover as well." Husson says high turnover is hurting sales, especially of upscale items.

Wal-Mart may yet turn things around. Bets in China and India may start paying off. But Wall Street is not likely to put up with a 2007 from Wal-Mart that looks anything like the year that just ended.

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