Rogers, Ark. -- Wal-Mart Stores had positive news for analysts and investors gathered for the retailer’s annual meeting on Wednesday in Rogers, Ark. The chain said its same-store sales rose in July, August and September, reversing a two –year slump. It also announced that it plans to cut its capital spending in the United States, even as it increased cap spending abroad, as it continues to shift toward building smaller stores.
Analysts have been closely watching for an end to the sales declines at Wal-Mart's namesake U.S. stores, which account for 62% of the company's total revenue. Wal-Mart will report its quarterly on Nov. 15.
"The progress is now visible in our business," said Bill Simon, president of Wal-Mart's U.S. stores. "We have confidence in our plan."
At the meeting, the retailer updated its capital spending forecast for its current fiscal year (fiscal 2012, ending Jan. 31, 2012) to between $13.0 and $14.0 billion, which includes acquisition-relate expenditures. It expects total capital spending for fiscal 2013 to be within the same range. The company plans to add between 45 and 49 million square feet next year, and expects total sales will grow 5% to 7%.
Wal-Mart said it will reduce its U.S. cap spending by 7.4% to $6 billion to $6.5 billion in its next fiscal year. It put its total U.S. growth for fiscal 2013 at 220 to 250 stores, up from 150 to 160 this current fiscal year. Of the total, 130-135 will be supercenters, 80 to 100 will be small- to medium-sized stores and 10 to 15 will be under the Sam’s Club banner.
New Walmart supercenters now range from 90,000 to 150,000 sq. ft., although they still offer the assortment found in larger supercenters, according to Karen Roberts, president of Wal-Mart's realty division. Previously, supercenters averaged about 185,000 sq. ft. The chain said it remained committed to the format.
“Beyond our priority of comp sales growth, supercenters remain the primary growth vehicle for Walmart U.S. and the company will reduce construction costs on the new stores through value- engineering initiatives,” said Simon. “We have identified a large number of potential Neighborhood Market opportunities, and we plan to open between 80 and 100 medium to small formats next year.”
The discounter open another six of its Walmart Express stores – which are less than one-tenth the size of a typical Walmart with a much smaller assortment – by the end of its current fiscal year.
Walmart International’s capital expenditures are estimated at $4.0 to $4.5 billion before acquisitions this year, and will rise to $4.5 to $5.0 billion before acquisitions in fiscal 2013.
“We continue to prioritize our investment in the emerging markets of China, Brazil and Mexico,” said Doug McMillon, Walmart International president and CEO.
McMillon told investors that the retailer would look first to countries where it already operates stores for M&A opportunities. No specific markets were identified.
“First and foremost we want to build scale in the markets where we are,” McMillon said. “We like the markets that we are in and will continue to prioritize those. There are a few remaining high-growth markets we are not in, and we won’t miss an opportunity there if one presents itself.”