Wal-Mart to focus on international growth, smaller stores and remodels
Bentonville, Ark. Looking to assure investors that its growth plans remain robust, Wal-Mart Stores on Thursday presented its global plans for store growth and capital spending next year at its annual two-day analysts' conference. The company’s international expansion in 2010 will exceed that of its more conservative growth in the United States, where it will focus on renovating existing Walmart locations and opening smaller stores.
In total, Wal-Mart expects to add approximately 37 million sq. ft. next year compared with some 38 million sq. ft. in 2009. Internationally, it will add some 25 million sq. ft. Domestically, it will increase its square footage by approximately 12 million sq. ft. (with Walmart accounting for 11 million, and Sam’s Club another 1 million).
Wal-Mart projects its total capital spending for 2010 (the fiscal year ending Jan. 31, 2011) will be in a range of $13.0 to $15.0 billion. That compares with a projected $12.5 to $13.1 billion spending for its current fiscal year (end Jan. 31, 2010).
On the domestic front, the company will continue to focus on improving the returns of its supercenter format through remodels of existing stores, and by accelerating growth of new store designs capable of generating greater returns from current assets. In an interview with reporters, Wal-Mart CFO and executive VP Tom Schoewe said the company’s new supercenters were shrinking to 150,000 sq. ft., from a typical 195,000 sq. ft., and will get even smaller, the Associated Press reported.
"The remodeling of our existing store base is important because the investments are delivering strong sales performance, excellent customer response and higher returns," said Eduardo Castro-Wright, vice chairman, Wal-Mart Stores.
By November, Walmart U.S. will have completed remodels at more than 30% of its 3,538 stores. By the end of fiscal year 2012, approximately 70% of Walmart U.S. stores, including newly constructed stores, are expected to be updated to its updated format.
Wal-Mart’s warehouse club division, Sam's Club, will add between five and 10 new, expanded or relocated clubs next year, after adding a projected 15 clubs this year. Sam's Club plans to remodel between 50 and 55 clubs by year-end, and expects to remodel 70 to 90 clubs next fiscal year.
"Sam's also is increasing its investment in remodeling to improve operating productivity and efficiency, based on a new club layout unveiled earlier today,” said Brian Cornell, president and CEO, Sam's Club.
Walmart International plans aggressive investment, particularly in such growth markets as China and Brazil. New international stores are expected to add approximately 23 million sq. ft. this year, and approximately 25 million next year. These projections are based on the existing store base and do not include possible acquisitions.
"We're stepping up growth in our international operations to take advantage of growing economies and opportunities in emerging markets, such as China and Brazil," said CFO Schoewe.