Wal-Mart accelerating U.S. small store growth; upping tech investments
Bentonville, Ark. -- Wal-Mart Stores detailed a number of moves, including opening smaller stores in the United States, cutting back on overseas growth and increasing its investments in technology and e-commerce, on the occasion of the company’s 20th annual investor meeting.
“Technology is our fastest growing area for capital expenditures,” said Charles Holley, Walmart’s executive VP and CFO. “We will increase our technology spend 70% from fiscal year 2009 through fiscal year 2014. Next year, investments in this area will increase another 12%.”
Holley said the company continues to make progress on capital efficiency, finding new ways to reduce construction costs for new stores and remodels and shortening the timeframe from approval to opening.
“Over the last three years, we delivered more with less, while growing square footage, sales and shareholder returns,” he said.
The discounter will add between 33 and 37 million net retail square feet worldwide next year, with more than half of the increase driven by Walmart U.S. Total capital spending for fiscal year 2015 (begins Feb.1, 2014) is projected to range between $11.8 and $12.8 billion, $200 million lower than the revised fiscal year 2014 projection.
In the United States, Walmart will add between 235 and 265 stores — including 120 to150 small format stores, up from 115 this year — next year. It is planning for about 245 openings this year, up slightly from earlier forecasts.
Walmart U.S. said it is increasing its fiscal year 2014 projected capital investment by $500 million to a range of $6.0 to $6.5 billion. The segment is projecting fiscal year 2015 capital investments to be lower than the updated current year forecast, but with greater square footage.
“We will accelerate growth of our Neighborhood Markets because of their strong returns, consistent comp sales performance and double-digit net sales increases,” said Simon. “We will continue to build and leverage the supercenter format, which remains our primary format for growth. We plan to open approximately 115 supercenters next year, including relocations and expansions.”
On the international front, the company plans to close approximately 50 underperforming stores in Brazil and China, with the majority of the closures occurring in the fourth quarter of its current fiscal year. Walmart International now expects to add approximately 14 million net retail sq. ft. this year, roughly seven million sq. ft. below its original guidance of 20 million sq. ft. to 22 million sq. ft.
For next year, Walmart International expects capital expenditures to range from $4.0 billion to $4.5 billion, which will generate approximately 12 million to 14 million net retail sq. ft. among its 26 markets.