Wal-Mart Lowers Capital Spending Plans
Wal-Mart Stores said Tuesday its capital expenditures for this fiscal year should be lower than forecast, as the world's largest retailer tries to improve U.S. sales at existing stores.
Capital spending for the next two fiscal years will also likely decline, Wal-Mart said, with a noticeable pullback in spending for new U.S stores and warehouse clubs.
Instead, Wal-Mart's spending on international new stores should rise and it will continue to put money toward renovating its U.S. locations.
"We're very concerned about taking good care of that installed base of stores," Wal-Mart Chief Financial Officer Tom Schoewe said at its analyst meeting, which was broadcast over the Internet.
The company is expected to provide more details on its U.S. store growth plans later Tuesday.
Analysts and investors have pushed Wal-Mart to rein in U.S. expansion plans as sales at existing stores, known as comparable store sales, have slowed and it has saturated many markets. As of Sept. 30, Wal-Mart operated 4,114 U.S. stores.
In June, Wal-Mart said it would cut the number of supercenters it plans to open by as much as 30 percent this year, but the planned slowdown has yet to help U.S. sales.
For the first eight months of this fiscal year, its comparable sales at U.S. stores were up 1.5 percent, compared with a year-earlier gain of 2.6 percent.
For its current fiscal year, Schoewe forecast capital expenditures of $14.7 billion to $15.4 billion. In June, Wal-Mart forecast fiscal year capital spending of $15.5 billion, down from $17 billion, because it would open fewer supercenters than planned.
For fiscal years 2009 and 2010, Wal-Mart forecast capital expenditures of $13.5 billion to $15.2 billion.
Reducing Capital Expenditures
While its capital expenditures for new stores and warehouse clubs in the United States should be $6.7 billion to $7 billion this fiscal year, that figure should fall to $4.5 billion to $5 billion by fiscal 2010.
But Schoewe said the retailer will still put money toward store remodeling, with spending forecast at $2.1 billion this year and $2.2 billion to $2.4 billion in the next two fiscal years.
Wal-Mart expects square footage growth of about 6 percent for the current fiscal year. For fiscal 2009 and 2010, it expects square footage growth of about 5 percent to 6 percent, excluding any acquisitions.
In June, it said it expected a consolidated square footage growth rate of roughly 6 percent for this fiscal year and next year.