Wal-Mart Stores yesterday (Thursday 22 October) presented its global plans for store and club growth next year at its annual conference for the investment community and updated its projections for capital expenditures through the fiscal year ending on January 31, 2011.
Total capital spending for the fiscal year ending January 31, 2010, is projected to be in a range of US$12.5bn to US$13.bn, up from approximately US$11.5bn in fiscal year 2009.
Total capital spending for the fiscal year ending January 31, 2011 is projected to be in a range of US$13.0bn to US$15.0bn.
“Our plan for growth is clearly intended to increase shareholder value,” said Tom Schoewe, executive vice-president and chief financial officer. “In the US, we’re building new stores and accelerating the pace of our remodels because they have been so successful at winning and retaining customers.
“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,” Schoewe added.
If fiscal year 2009 were placed on a constant currency basis with fiscal year 2010, Wal-Mart said its international capital expenditures in fiscal year 2009 would have been approximately US$3.8bn.
In the fiscal year ending January 31, 2010, the company expects to add approximately 38m ft2, compared with approximately 44m ft2 added in the prior year (excluding square footage added by acquisition). Wal-Mart expects to increase global square footage by approximately 37m ft2 in fiscal year 2011.
In the US, Wal-Mart will continue to focus on further 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.
By November 2009, the company said Wal-Mart US will have completed Project Impact remodels at more than 30 per cent of its 3,538 stores. By the end of fiscal year 2012, approximately 70 per cent of Wal-Mart’s US stores, including newly-constructed stores, are expected to be updated under the Project Impact initiative.
“As part of our plan to accelerate growth, we are investing capital in fiscal year 2011 for stores that are planned to open in fiscal year 2012, and we're stepping up the remodels of our existing store base,” said Eduardo Castro-Wright, vice-chairman, Wal-Mart Stores.
“The remodeling of our existing store base is important because the investments are delivering strong sales performance, excellent customer response and higher returns.”
Wal-Mart subsidiary Sam’s Club plans to add between five and 10 new, expanded or relocated clubs in fiscal year 2011 after adding a projected 15 clubs this fiscal year.
Sam’s Club also plans to remodel between 50 and 55 clubs by year-end, and expects to remodel between 70 and 90 clubs next fiscal year.
Meanwhile, Wal-Mart International plans aggressive investment, particularly in growth markets such as China and Brazil. The international portfolio includes a variety of formats, from supercenters to small grocery stores.
New stores are expected to add approximately 23m ft2 in fiscal year 2010, and approximately 25m ft2 in fiscal year 2011. These projections are based on the existing store base and do not include possible acquisitions.
“We will continue our organic growth strategy, with strong capital discipline and optimization of our portfolio of formats and brands worldwide,” said Doug McMillon, president and CEO of Wal-Mart International. “We will allocate capital, by country and by format, to improve returns from these investments.”
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