Wal-Mart Slows New Store Openings, Spiffs Up Old Ones
Wal-Mart is already bracing for a tough holiday season — and retail climate overall — slowing the pace of new store openings and remodeling existing stores.
A telling sign of the season: The discount retailer is now attracting more higher-income shoppers.
Traffic at stores serving households with income above $65,000 has been growing much faster than at the chain as a whole, Eduardo Castro-Wright, president and CEO of the U.S. division, said at the retailer's annual analysts' meeting, which was broadcast over the Internet.
Wal-Mart now estimates that it will have opened 191 U.S. stores in fiscal 2009, which ends early next year, and 142 to 157 in the following year. In fiscal 2008, the company opened 218 U.S. stores.
Wal-Mart also plans to pare its spending to $5.8 billion to $6.4 billion from $9.1 billion last year.
Wal-Mart's efforts to manage its balance sheet and capital spending more conservatively in recent years are now paying off: The company has borrowed several hundred million dollars in the commercial-paper market in the past few weeks and said its interest rate was "substantially less" than 2 percent. The average rate in the past few weeks has been 1.96 to 2.12 percent, according to the Federal Reserve.
Wal-Mart will have the best prices this holiday season, Wal-Mart CEO Lee Scott said.
Scott, who has stressed that "Christmas will come on Dec. 25" despite the economy, said shoppers want to "treat their families right" when they can, and that this was evident in sales of children's apparel and Halloween costumes.
Wal-Mart shares have taken a beating along with the rest of the retail sector since the beginning of September, shedding 20 percent. The stock closed Monday at $49.67.
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