Wal-Mart trims SuperCenter expansion
June 1, 2007-- Home Textiles Today,
Fayetteville,Ark.— Wal-Mart said it will curtail SuperCenter growth in the current year by up to 29%, following with additional cuts to previously announced goals for subsequent years.
Tom Schoewe, cfo, said the mammoth retailer would open between 190 and 200 SuperCenters this year, compared to the 265 to 270 originally planned.
The announcement during the annual shareholders meeting here earlier today was viewed largely as a concession to Wall Street, which has grown increasingly impatient with the company’s slow domestic sales growth coupled with the performance to date of its new segmentation effort.
Schoewe said in years ahead Wal-Mart will open about 170 SuperCenters annually. Because of the savings in capital expense, the company’s board of directors yesterday approved an increase in its share repurchase program from $10 billion to $15 billion.
“Unfortunately our capital spending is growing at a faster rate than sales,” Schoewe explained. “It’s grown at about 19.5% each year. And that’s caused some concern on Wall Street.”
He stressed the fact of continued expansion. “After this year, beginning next year we’re adding 170 SuperCenters a year. That’s 20 million incremental square feet of SuperCenters each and every year.”
Lee Scott, president and ceo, reviewed the retailer’s merchandising efforts, particularly the progress in consumer electronics and the attempt to build up home. But while noting new, often better quality merchandise initiatives, he also reinforced the core position on price.
"Our customers know today that Wal-Mart is the price leader, and Wal-Mart will stay the price leader. Period," Scott said. "This is not a sprint, it's a marathon."
During the meeting, retailing guru Alan Questrom, credited for the turnaround at JCPenney, was elected to the Wal-Mart board. And chairman Rob Walton took a moment to offer the board and the Walton family’s vote of confidence in Scott’s leadership.
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