Dec. 7 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, dropped Interpublic Group of Cos.' DraftFCB as its new advertising agency, sending Interpublic's shares to their biggest loss in almost four years.

The decision ``is the result of new information we have obtained over the past few weeks,'' Wal-Mart spokeswoman Mona Williams said in an interview today.

Wal-Mart earlier this week said that advertising chief Julie Roehm had left after less than a year with the company. Roehm in October hired DraftFCB and Aegis Group Plc's Carat USA to manage the $570 million account. Wal-Mart won't consider DraftFCB when it seeks a new agency, Williams said. Carat will be allowed to compete for the contract.

The Wal-Mart business was crucial to Interpublic's revival after the agency lost clients such as General Motors Corp. and Bank of America Corp. While the business would have generated less than 1 percent of Interpublic's revenue, the win was seen as a sign that Chief Executive Officer Michael Roth had turned the company around.

``We're disappointed in Wal-Mart's decision,'' said Philippe Krakowsky, Interpublic's executive vice president of strategy and corporate relations, in an interview today.

Shares of New York-based Interpublic fell 79 cents, or 6.4 percent, to $11.54 at 4:01 p.m. in New York Stock Exchange composite trading, the biggest drop since February 2003. Wal- Mart stock fell 18 cents to $46.36.

Roehm's Departure

Williams declined to say what the new information was.

Wal-Mart said Dec. 5 that Roehm, who led the selection of the new agency, had left the company. Neither Roehm nor Wal-Mart would say then whether she resigned or was fired. Sean Womack, the vice president of marketing, also has left.

Roehm said in an interview today that she had ``no idea'' what Williams's comments meant, ``and I don't know why they chose those words. I'm not happy with that.''

``I think the decision to let Draft go clearly came about based on some strategic decision internally,'' Roehm said.

Some advertising industry executives, including Linda Fidelman, an agency search consultant in New York, said questions had been raised about the relationship between DraftFCB and Roehm after she attended an advertising event in September.

``It never happens that an existing client shows up, let alone a prospective client,'' said Fidelman, who heads New York- based Advice and Advisors. ``People could not believe she was there. The fact that she came in the middle of review was unethical.''

Rival Agencies

Roehm said she was invited to discuss why Wal-Mart selected DraftFCB as one of the finalists. ``In no way did I indicate that I had some favoritism toward them,'' said Roehm, adding that she would have spoken about any of the finalist agencies.

Rival advertising agencies, which spent at least five months pitching for the business that went to DraftFCB, will now need to go through the process again to try to win the account. Other Interpublic units will be eligible to participate in the review, with a decision expected by the end of January, Williams said.

DraftFCB was chosen over GSD&M, WPP Group Plc's Ogilvy & Mather and Martin Agency, another Interpublic company. The unit was formed earlier this year by the merger of Interpublic's Draft and Foote Cone & Belding division and is run by Howard Draft.

The new agencies were to begin Jan. 1 as Wal-Mart ended its relationships with its current firms, GSD&M, owned by Omnicom Group Inc., and Bernstein-Rein. Wal-Mart was the 36th largest account in the U.S., according to a 2005 Advertising Age survey.

Slowing Sales

Sales at the company have slowed, with Wal-Mart last month posting a decline of 0.1 percent at U.S. stores open at least a year, hurt by store renovations and disappointing demand for clothing and home goods. Wal-Mart has cut prices on goods ranging from toys to household appliances to bolster results and intensified its marketing message that it offers the best prices.

Steven Barlow, an analyst with Prudential Equity Group, said Interpublic investors were ``overreacting,'' just as they did when DraftFCB won the account. ``It was $20 million in revenue and maybe $2 million in profit,'' he said in an interview.

Interpublic had $6.27 billion in revenue in 2005.

Industry executives were surprised when Wal-Mart chose DraftFCB and Carat given the recent creation of the firm and questions about previous mergers at Interpublic, trade magazine Advertising Age reported in October.

Roehm told Ad Age that Wal-Mart was won over by Draft's retail experience and FCB's background on packaged goods.

Howard Draft did not return a call seeking comment.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net; Tim Mullaney in New York at tmullaney1@bloomberg.net.

Last Updated: December 7, 2006 20:50 EST