Fayetteville, Ark.—Wal-Mart told shareholders on Friday it will curtail SuperCenter growth in the current year by up to 29 percent, following with more modest cuts in subsequent years.
Chief financial officer Tom Schoewe 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 was viewed largely as a concession to Wall Street, which has grown increasingly impatient with the company’s slow domestic sales growth couple with the performance to date of its new segmentation effort.
Shoewe said in subsequent years, Wal-Mart will open about 170 SuperCenters each year. 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,” he explained. “It’s grown at about 19 and a half percent each year. And that’s caused some concern on Wall Street.”
But Schoewe warned about viewing it merely as a cutback in Wal-Mart’s plans.
“Before you write the headline that Wal-Mart is pulling back on growth let me talk to you and put some perspective on the numbers we just talked about,” he said. “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.
“I think the message you’re hearing here today is that we’ve found a real nice balance between appropriate returns and the growth of your great company.”
Later, chief executive officer Lee Scott reviewed the retailer’s merchandising efforts particularly the progress it’s made in consumer electronics and efforts to build up home. But while noting new, often better quality merchandise initiatives, he also reinforced its 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.