BENTONVILLE, Ark. — Wal-Mart Stores here will continue to slow its pace of new-store growth in the U.S. and shift its spending toward remodels and toward overseas expansion, the company said in a meeting with investors and analysts last week.
Although total capital expenditures for fiscal 2011 — which begins early next year — will increase to a range of $7 billion to $8 billion in the U.S., up from about $6.6 billion to $6.8 billion in the current fiscal year, square footage growth is actually expected to decline slightly as the company builds smaller stores and rolls out Project Impact remodels.
The average new store going forward will be about 8% smaller than the historical average, but is more productive in terms of sales per square foot and about 22% cheaper to build, the company said.
Eduardo Castro-Wright, vice chairman, also said the company sees “considerable opportunities to expand here in the U.S., and especially in the major metropolitan areas,” but noted that driving increased sales productivity from current stores is a priority. Project Impact remodels are seeing sales gains that are 125 to 150 basis points better than a control group of stores, he said, margins are improving and inventories are down about 8%-9%. About 32% of the store's fleet will be remodeled by the end of the current fiscal year.
Remodeled stores are seeing a lift in basket sizes, the company said, noting that sales at remodeled stores improve particularly in the areas of fresh food, home goods and apparel, and show marked improvement in customer satisfaction scores.
Castro-Wright singled out Supermercado de Walmart, the company's new Hispanic-oriented banner, as having potential for growth. “We are very pleased with the performance of that format, and we now have the model that will allow us to bring that format to locations around America,” he said.
Wal-Mart has also increased its pricing advantage over traditional supermarket operators, the company said.
John Fleming, chief merchandising officer at Wal-Mart U.S., said the company's own price survey comparing it with eight large supermarket chains showed that it has a price differential of 12%-14%, up from a range of 10%-12% a year ago.