US retail giant Wal-Mart has said it plans to moderate the growth of its US supercenter business as part of a strategy to improve returns, productivity and sales within its US stores.
Wal-Mart said the strategy, announced at the company’s annual shareholder meeting on Friday (1 June), builds on both the company’s plan to balance returns and growth that was announced at its October 2006 meeting for analysts and investors, as well as its three-year “road map” to improve customer relevancy and returns.
The plan is intended to result in higher US return on investment, reduced capital expenditures and higher US comparable store sales growth, the company said. In addition, Wal-Mart’s board has approved a new share repurchase programme which increases the company’s repurchase authorisation to US$15bn.
“We are committed to improving return on investment, while continuing to grow in the United States,” said president and CEO Lee Scott said at the shareholders’ meeting. “Today’s announcement of this strategy and the share repurchase programme underscores Wal-Mart’s commitment to returning value to our shareholders.”
Scott added that in addition to the share repurchase programme, Wal-Mart would be returning more than $3.6bn to shareholders this year in dividends. “Wal-Mart has increased its dividend every year since its first declared dividend of five cents per share in March 1974,” he said.
The trimming of superstore growth means that Wal-Mart will open between 190 and 200 new US superstores during this fiscal year, including 70 relocations and 40 expansions of discount stores into supercenters, and approximately 170 new superstores each year for the next three fiscal years.
“While we feel comfortable with these estimates, we will continue to review and evaluate our expansion strategy on an annual basis,” said vice chairman and chief administrative officer John Menzer.
In October 2006, the company had announced that its fiscal year 2008 growth plans included opening between 265 and 270 supercenters in the US.
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