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Wal-Mart cuts capital spending


BENTONVILLE, Ark. Wal-Mart Stores today announced that it will cut its capital spending for the fiscal year 2008 to approximately $15 billion, down from $15.7 billion last year. The company said that looking forward, total spending will flatten.

"We continue to focus on increasing operating cash flow, in addition to moderating capital expenditures," said Tom Schoewe, Wal-Mart Stores’ evp and cfo. "This strategy will increase free cash flow, allowing Wal-Mart to fund strategic acquisitions and provide returns for our shareholders through dividends and share repurchase."

Wal-Mart said it will accelerate its investment in its international operating segment during the next two fiscal years, while still focusing on new store growth in the United States. The company added that it will focus more on relocating and expanding existing discount stores in the U.S. to supercenters during the same time periods. Declines in capital spending at Wal-Mart Stores U.S. will be offset by increases at Wal-Mart international, resulting in worldwide spending of $14 to $15 billion in each of the next two years.

The company said it expects to add 48 to 49 million square feet globally, which is an increase of 6% in fiscal year 2008 over fiscal year 2007. During each of the following two fiscal years, Wal-Mart said it expects to increase square footage between 48 million and 52 million square feet, an increase of 5% to 6% percent.

As previously announced, Wal-Mart reported that it was reducing its U.S. supercenter growth. The company expects to open 195 supercenters in the United States this year, down 30% from the 281 opened during last fiscal year. Projections for next fiscal year and the following year call for 170 and 140 supercenters respectively, including expansions and relocations.

Eduardo Castro-Wright, Wal-Mart Stores U.S. president and ceo, pointed out that supercenters have a higher rate of return than any other format in the United States and the company will continue to focus on building the supercenter brand.

"As part of this effort, the company will focus on expansions and relocations of existing discount stores to supercenters, which will result in building fewer new stores. We also are building smaller supercenters, particularly in more condensed trade areas in established markets," Castro-Wright said. "And, we will concentrate on markets with the greatest growth potential."

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