Wal-Mart Stores has decided to freeze its capital expenditure in its upcoming financial year as it looks to make its spending “more productive”.
The US retail giant has projected it will spend US$13-14bn on capex, including acquisitions, in its current financial year, which runs until the end of January.
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However, in a meeting with analysts yesterday, the world’s largest retailer said it will hold its spending at that amount for the following 12 months.
Wal-Mart’s international operations will get a greater proportion of the retailer’s capital expenditure. Next year, the company plans to spend $4.5-5bn on capex outside the US, an increase of 11.8%.
“We continue to prioritise our investment in the emerging markets of China, Brazil and Mexico,” Doug McMillon, president and CEO of Wal-Mart’s international business, said. “We will build scale in existing markets and continue to evaluate acquisitions to enter additional large, higher growth markets.”
By contrast, Wal-Mart’s capex in the US will fall 7.4% to $6-6.5bn. However, the retailer said it would increase its space in the US by 14-15m sq ft. Wal-Mart said there would be a “larger percentage” of superstores in the US than in previous years, although it said it would continue to open smaller outlets.
“Supercenters remain the primary growth vehicle for Walmart US and the company will reduce construction costs on the new stores through value-engineering initiatives,” Bill Simon, president and CEO of Wal-Mart’s US operations, said. “We have identified a large number of potential Neighborhood Market opportunities, and we plan to open between 80 and 100 medium to small formats next year.”
The retailer, meanwhile, said it would “continue to review” its new Express format in the US. It has five Express stores open and plans to open six more by the end of its current financial year.
