NEW YORK (MarketWatch) — Retail giant Wal-Mart Stores Inc., urged by First Lady Michelle Obama, said it plans to reformulate thousands of food products to make them healthier and more affordable in a bid to boost its largest business by revenue.

At an event in Washington featuring a speech by Obama, Wal-Mart WMT, +2.23% said it intends to reduce sodium by 25% and sugar additives by 10% by 2015 in both its Great Value private label and national branded products.

Officials said Wal-Mart would remove industry produced trans fat and partially hydrogenated oil in the meantime. It also plans to lower prices on healthier food items, the company said, adding it also plans to build stores in what it described as “food deserts.” Read “Wal-Mart breaks bread with the White House.”

U.S. First Lady Michelle Obama speaks at the Walmart announcement initiative to make food healthier and more affordable in Washington. Reuters

The initiative will hopefully “add to” but won’t dent the company’s profit projection, said Bill Simon, president and chief executive of Walmart U.S.

Obama’s fight against childhood obesity served as a catalyst that led to the “collaborative” effort with the First Lady’s office, said Leslie Dach, the company’s executive vice president of corporate affairs, adding Wal-Mart had several meetings with Obama’s office in the past year.

“It affects products suppliers sell in stores all over the country,” Obama said. “They are changing how the entire food industry does business.”

In 2006, Wal-Mart introduced a $4 generic prescription drug program, leading other rival retailers to follow suit.

The initiative came at a time as Wal-Mart’s sales and traffic have slowed with its customers hurt by a still high unemployment rate and rising gasoline prices. The industry is also battling rising food inflation cost.

The company’s earlier initiative to narrow its product assortment has also alienated some of its shoppers. Meanwhile, its discount rival Target Corp. TGT, +1.07% has increased its fresh food and grocery offerings. The initiative also may help Wal-Mart in its push to build stores in urban markets such as New York, analysts said.

“We hope this will provide greater reason and opportunity for customers to come to our stores,” Dach said. “We are very eager to bring Wal-Mart to food deserts. We’ll work closely with neighborhoods and cities and elected officials.”

Some of the food items being targeted include those that consumers don’t expect to come with a lot of sodium or sugar such as salad dressing, lunch meat or box dinners, said Andrea Thomas, senior vice president of sustainability at the Bentonville, Ark.-based Wal-Mart. The company also plans to highlight healthier foods with a seal.

Wal-Mart said it also plans to work with suppliers, including partnering more directly with farmers, and lower transportation costs among other initiatives to help cut prices on the healthier food items and bring about $1 billion a year in savings for consumers on fresh foods.

“Wal-Mart must be thinking that by lowering the cost component, and then promoting a lower price, it will lead to share gain in the largest component of its overall business,” said Wall Street Strategies analyst Brian Sozzi, adding grocery represents 51% of Walmart U.S. sales and 39% at Sam’s Club.

Wal-Mart shares rose 1.3% in late morning trading.

