Walmart Expects to Build 270 Supercenters in 2008

Wal-Mart Stores, Inc. today announced that the company’s global square footage is expected to increase by approximately 7.5 percent in fiscal 2008. The company also said that it estimates capital expenditures for its next fiscal year will grow at a significantly lower rate than spending for the current fiscal year.
“The company projects its capital spending in fiscal 2008 to increase by approximately 2 to 4 percent, which compares to the 15 to 20 percent increase forecast for fiscal 2007,” said Tom Schoewe, Wal-Mart Stores, Inc. executive vice president and chief financial officer.
Wal-Mart expects to open more than 600 new locations in the United States and around the world. The company’s expansion program will add approximately 60 million SF next year through a variety of formats worldwide. This estimate is before any possible future acquisitions.
“We are still very committed to growth, but our real estate projects are now being subjected to a more rigorous prioritization process,” explained Wal-Mart Vice Chairman John Menzer. “This store selection process will enable the company to drive higher returns by focusing on locations that make the most efficient use of capital.”
Schoewe said that the company will continue growing through new unit expansion, acquisitions and same-store sales. “In the past three years, capital expenditure growth has been higher than square footage and sales growth,” Schoewe explained. “During our next fiscal year, we expect that square footage growth will be around 7.5 percent. International square footage is expected to increase approximately 10 percent and U.S. square footage is expected to increase approximately 7 percent.
“We plan to decrease the rate of growth in capital expenditures considerably, as compared to our expected sales growth for Wal-Mart’s next fiscal year,” he continued.
“Our estimate for fiscal 2008 of 2 to 4 percent assumes that capital spending in the U.S. will be approximately flat to the current fiscal year. This reduction in growth is expected to result from: building fewer U.S. units; anticipated flattening of construction costs; improvements in the distribution center network; and design efficiency.”
“Our long-term goal is to continue to have our capital expenditures grow at a rate equal to or less than sales growth,” he added. “Additionally, over time, we expect our new capital efficiency model to reduce the impact of cannibalization.”
In outlining the expansion plan at Wal-Mart’s 13th Annual Fall Analysts’ and Institutional Investors’ Meeting, Schoewe emphasized that the Company has plenty of room to grow, both in the United States and internationally.
“Supercenters will continue to be our primary driver for expansion in the United States,” Schoewe said. “Internationally, our unit growth will cover a wide variety of formats, from large units like Wal-Mart supercenters and Sam’s Clubs, to smaller retail locations like Despensa Familiar in Wal-Mart Central America, Bodega Aurrera in Mexico, and Bompre?o in Brazil.”
In the fiscal year beginning February 1, 2007, Walmart plans to open 265 to 270 Supercenters, approximately 10 Discount Stores, 15 to 20 Neighborhood Markets, 20 to 30 Sam’s Clubs in the United States. The company also plans to open the same number of units internationally. Domestically, Walmart also plans to expand or relocate 160 units.
The company plans to construct two new regional distribution centers and two new full grocery distribution centers during the next fiscal year. Combined, these distribution centers are expected to add more than four million square feet of distribution space in the United States.
“Increased productivity in the company’s distribution centers means fewer centers will need to be built,” Schoewe said. “Through our high velocity distribution network and the increased use of technology, we are strengthening the efficiency of our distribution system.”

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