Walmart to slow new store growth, invest in remodels and online

10/6/2016

Walmart gave a lackluster profit outlook for next year, and said it will slow new store openings as it invests in remodels and digital initiatives.



The chain on Thursday outlined its plans for the next several years ahead of a meeting with investors. In a big change for a company whose growth has been fueled by aggressive store expansion, Walmart going forward said it will rely more on comp sales and e-commerce growth to drive the top line. Although the retailer is pulling back on new store growth, it plans to increase investments in e-commerce, technology, store remodels and other customer initiatives.

  

Walmart will open 130 stores in the United States this year, down from its original projection of 135 to 155. And next year, it will open only about 55 U.S. stores, including 35 supercenters and 20 of its newer, small-format Neighborhood Market locations. By contrast, Walmart opened 60 supercenters and 70 smaller-format stores this year.



Capital expenditures will total about $11 billion this year and next, with most of the investment going to e-commerce and digital initiatives and remodeling its stores. The chain has been investing heavily in the digital area as seen in its most recent $3.3 billion acquisition of e-commerce startup Jet.com. And on Thursday, Walmart said it had boosted its stake in JD.com, China’s second-largest online retailer, to 10.8% from 5.9%.



Walmart reiterated its full-year profit outlook. For fiscal 2017, the retailer expects adjusted earnings per share of $4.15 to $4.35.



It expects fiscal 2018 earnings per share to be relatively flat compared to fiscal 2017 earnings. Looking further ahead, it foresees fiscal 2019 earnings per share growth of about 5%.



Walmart said it remains on track to generate approximately $80 billion in operating cash flow from fiscal year 2017 through fiscal year 2019.



“We are encouraged by the progress we’re seeing across our business, and we’re moving with speed to position the company to win the future of retail,” Walmart CEO Doug McMillon said. “Our customers want us to run great stores, provide a great e-commerce experience and find ways to save them money and time seamlessly -- so that’s what we’re doing.”


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