Walmart to reduce capital expenditure by 2014
Retail giant Wal-Mart Stores Inc (NYSE: WMT) has announced a substantial cut in spending of up to US$1.5 billion in the 2014 financial year, as the company looks for ways to manage expansion while keeping down costs.
Total capital expenditure is expected to fall to between US$12-13 billion, down from US$13.5 billion in the 2012 financial year.
The bulk of the reduction will come from Walmart U.S. at a rate of 8% while Walmart International is set to dip slightly by around 1%.
A company release highlighted the expenditure itself would cover growth for comp and new stores, logistics and supply chain expansion, investments to drive productivity and reduce expenses, and global e-commerce expansion.
“We manage our capital expenditures with the same discipline we manage operating expenses,” noted executive vice president and chief financial officer Charles Holley.
“We identify ways to further reduce our construction costs for new stores, as well as remodels. We are improving our real estate process and adding relatively the same square footage with fewer dollars.
“Investments in new initiatives drive further operating leverage through business processes, shared services and technology. Additionally, we are investing in our expanding global e-commerce business.”
In 2013 and 2014 the retailer aims to add between 72-79 million square feet as it balances expansion between supercenters and smaller formats. The business also claimed it was on track to reducing operating expenses as a percentage of sales by 100 basis points over five years, starting in the current fiscal year.
“Walmart plans to grow total company sales 5 to 7 percent in fiscal 2014, which is projected to increase net sales by $23.0 to $33.0 billion,” said Holley.
“We expect to increase retail square footage by 3 to 4 percent next year, which would add another 36 to 40 million square feet around the world. Operating expenses will continue to grow less than the rate of sales growth.”
Photo: Wal-Mart Stores Inc