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2008-10-27
Bentonville, AR. Wal-Mart Tries To Shed Its Halloween Cannibal Image

Wal-Mart, for some internal reason, holds an analysts meeting every October -- right before Halloween -- to announce its growth projection plans for the year. It's fitting that the company which has become famous for cannibalizing its own sales for years, should find a new costume to show analysts. Wal-Mart announced on October 23, 2007 that its total capital spending in the United States for the fiscal year that ended January 31, 2008, would be roughly $10.8 billion -- a drop of -- 15% below their 2007 U.S. capital spending of $12.2 billion. The retailer said that in 2009 capital spending on American stores would "flatten" to $9.9 billion, and to $9.2 billion by 2010. That means Wal-Mart's spending on new stores in America would fall by almost 25% in three years. Last October, Wal-Mart said "more emphasis will be placed on relocating and expanding existing discount stores to supercenters." Translated into square footage, Wal-Mart's footprint for new stores in the U.S. would drop in half from 45 million new square feet in 2007, to 22 million by 2010. Wal-Mart noted that new supercenter growth would come in around 195 stores in 2008, or 86 fewer stores than in the year before. In 2009, superstores would continue to slide to 170, and 140 in 2010. In a matter of three years, new superstore growth will have been sliced in half. Wal-Mart promised to build smaller supercenters, and focus on expansions and remodeling of existing stores, not new ground-up construction. "And, we will concentrate on markets with the greatest growth potential," a company spokesman added. Last year Wal-Mart said it had no plans to build distribution centers for its U.S. stores for the next two years -- but several American communities are in the middle of fighting off huge distribution centers today. Citizens groups across America are celebrating another victory this week, following Wal-Mart's latest announcement that its store slow-down trend will continue for the next couple of years. This week at Wal-Mart's two-day analysts' meeting, the giant retailer said it will open 191 stores in the current fiscal year which ends on January 31, 2009 -- below its projection of 203 supercenters and discount stores this year. The company says it opened 218 stores in 2008. Wal-Mart is going to continue to cool off store growth to 142 to 157 new stores. Wal-Mart now says its capital spending on U.S. stores will not exceed $6.4 billion, significantly below its projections issued last year. In 2010, capital spending in the U.S. will top out at $6.8 billion. Just one year ago Wal-Mart estimated capital spending in the U.S. would hit $9.2 billion by 2010. Based on these latest projections, 2010 is now projected to come in 26% lower than just last year. Wal-Mart tried to shed its cannibal image last year, and its trying once again to bury that image forever.

What you can do: All of this is excellent news to citizen's groups who are fighting Wal-Mart stores in unprecedented numbers. Wal-Mart's skid downwards began suddently in June of 2007, when the company abruptly told shareholders at its Fayetteville Annual Soiree that new store production was being pared back. Long criticized by Wall Street insiders for 'cannibalizing' its own stores, and eating into its own 'same store sales,' Wal-Mart pleased the analysts -- and community activists -- by pulling hard on the reins. The concept of Wal-Mart new store growth being hacked in half by 2010 was not imagineable a couple of years ago. But the company had clearly super-saturated many markets, and had become its own most dangerous enemy. Wal-Mart's very anemic same store sales numbers proved the point. Last year Tom Schoewe, Wal-Mart's chief financial officer, said that new store locations would be chosen to "reduce impact on existing units and drive higher returns." Wal-Mart needs to convince Wall Street that the cannibal years are over -- but the company continues to propose new supercenters located as close as two miles apart. Apparently the new placement strategy and small superstore prototype hasn't reached the Wal-Mart Realty level yet. Readers are urged to email Wal-Mart at the following link: http://walmartstores.com/contactus/feedback.aspx and submit the following message: "Great news coming out of your analysts' meeting in Bentonville. I am so pleased to hear that you are cutting back on the number and size of new superstores. Your strategy of saturating market areas has turned into a self-inflicted wound on your sales per store. But keep putting on the brakes. Those of us who fight your stores at the local level are aware that 140 new stores is a ribbon cutting every 2.5 days. That's not really slowing down -- that's still unsustainable! I encourage you to keep scaling back and scaling down. You will have cut new store growth in half in just three years. But you remind us every Halloween that your rate of growth is still pretty 'scary.'"










 
 
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