Walmart Reveals Expansion Plans

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Walmart Reveals Expansion Plans

Wal-Mart Stores, Inc. last week took the wraps off its worldwide 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 Jan. 31, 2011.

The Bentonville, Ark.-based mega-retailer projected total cap ex for the fiscal year ending Jan. 31, 2010, to range from $12.5 to $13.1 billion, up from about $11.5 billion in fiscal year 2009. Total capital spending for the fiscal year ending Jan. 31, 2011 was forecast to be between $13.0 and $15.0 billion.

“Our plan for growth is clearly intended to increase shareholder value,” said Wal-Mart EVP and CFO Tom Schoewe. “In the U.S., we’re building new stores and accelerating the pace of our remodels because they have been so successful at winning and retaining customers.” Schoewe noted that the company was also ramping up growth of its international businesses “to take advantage of growing economies and opportunities in emerging markets, such as China and Brazil.”

For the fiscal year ending Jan. 31, 2010, Wal-Mart expects to add about 38 million square feet worldwide, vs. about 44 million added square feet in the prior year (excluding square footage added by acquisition). The Walmart division plans to boost global square footage by about 37 million square feet in fiscal year 2011.

In the United States, Walmart will continue working to increase the returns of its Supercenter format by remodeling existing locations and rolling out new store designs. By next month, Walmart U.S. will have finished “Project Impact” remodels at over 30 percent of its 3,538 locations. By the end of fiscal year 2012, around 70 percent of Walmart U.S. stores, including recently built sites, are expected to be brought up to date under the program.

“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,” noted Wal-Mart Stores vice chairman Eduardo Castro-Wright. “The remodeling of our existing store base is important because the investments are delivering strong sales performance, excellent customer response and higher returns.”

Sam’s Club intends to add between five and 10 new, expanded or relocated clubs in fiscal year 2011, after adding a projected 15 clubs this fiscal year. The warehouse club division will also overhaul between 50 and 55 clubs by the end of the year, and expects to revamp between 70 and 90 clubs next fiscal year.

“We remain committed to opening and operating the optimal number of clubs, in the right sizes and formats, in locations that make the best use of our capital,” observed Sam’s Club president and CEO Brian Cornell. “Sam’s also is increasing its investment in remodeling to improve operating productivity and efficiency, based on a new club layout.”

Plans for Walmart International, which includes formats ranging from Supercenters to small grocery stores, call for vigorous investment, particularly in growth markets such as the ones Schoewe mentioned. New stores will add about 23 million square feet in fiscal year 2010, and about 25 million more square feet in the following fiscal year. These projections are based on the existing store base and don’t take into account possible acquisitions.

“We will continue our organic growth strategy, with strong capital discipline and optimization of our portfolio of formats and brands worldwide,” affirmed Walmart International president and CEO Doug McMillon. “We will allocate capital, by country and by format, to improve returns from these investments.”

Wal-Mart Stores, Inc. operates 8,000 retail units under 53 different banners in 15 countries. Walmart employs more than 2.1 million associates worldwide.