Wal-Mart Stores said Friday it will moderate the growth of its supercenter stores "a little bit," sending shares of the world's largest retailer up about 4%.
Speaking at Wal-Mart's annual shareholders meeting, Chief Executive Lee Scott said the company needs to make some changes in areas where it is underperforming.
"In the U.S., we have to improve in our merchandising areas," Scott said. "We've talked about home, we've talked about apparel...We must improve."
As part of this effort, Chief Financial Officer Tom Schoewe said Wal-Mart will open 190 to 200 supercenters this fiscal year, down from the company's previous view of 265 to 270 stores.
Starting next fiscal year, the company expects to open 170 supercenters annually, Schoewe said.
Analysts and investors have pushed for the retailer to rein in U.S. expansion plans as it works to improve sales growth in its home market.
In a press release, Wal-Mart said its overall consolidated square footage growth rate will be about 6% for fiscal years 2008 and 2009 and 4% to 5% in the United States.
Schoewe said the new expansion strategy would lower Wal-Mart's fiscal 2008 capital spending to $15.5 billion from $17 billion.
The retailer also said it will repurchase $15 billion worth of its shares. Analysts and investors have been pressing Wal-Mart for this information on expansion. Wal-Mart's shares are down almost 14% in the past five years, while those of rival discounter Target
Wal-Mart shares were last up $1.74, or 3.8%, at $49.34 in midday trade on the New York Stock Exchange. In the past 52 weeks, the shares have traded in a range of $52.15 and $42.31.
Chairman Has Confidence In Scott
"It hasn't been an easy year, this last year," Walton told the meeting. But he expressed confidence in Scott and thanked him for his work for the company.
Some investors have called for Scott to step down.
"The stock price will move when investors really believe they're going to be able to turn this thing around," said Patty Edwards, a managing director at Wentworth, Hauser and Violich, in an interview on CNBC's "Morning Call." Edwards owns Wal-Mart shares, but said she owned more of the company's stock three years ago.
"We would love to buy into the company again," Edwards said. "We think it's cheap, and there's a big chance of a turnaround, but they have to actually make some changes, bring some fresh air in and stop acting like they are the smartest people in the room."
One step Wal-Mart has taken is to nominate former JC Penny Chief Executive Allen Questrom to the board.
Questrom Brings Clout In Apparel
"This is a notable nomination in part because of Questrom's notable status as a retailer," said CNBC's Margaret Brennan, speaking from the annual meeting.
According to Bear Stearns retail analyst Christine Augustine, Wal-Mart must take steps to improve its apparel business, which accounts for 15% of its sales.
"It's important for them to stabilize that business," Augustine told CNBC. She was optimistic about the nomination of Questrom to the company's board.
"We're hopeful that his expertise and advice will be listened to and that he'll be able to contribute to some improving trend in those businesses," Augustine said.
At the meeting, several shareholders did express concern about the poor performance of Wal-Mart shares, during the question-and-answer period, Brennan said.
There also were those who voiced support for shareholder proposals on executive pay and pay-for-performance. However, all of the shareholder proposals were defeated by investors.
Despite the criticism, Brennan said many of the Wal-Mart associates who were attending the meeting were "very much excited and seemed to be shrugging off the headline risk that Wall Street seems to be talking so much about."