US: Wal-Mart plans to reduce capital expenditure
Wal-Mart Stores said it intends to reduce its capital expenditure in fiscal 2014, but emphasised it will add roughly the same amount of retail space as this year.
The company's capital expenditure for the year ending 31 January 2014 will range from US$12bn to $13bn, compared to the $12.6-13.5bn it expects to spend during the current financial year.
The retailer said the reduction in capital expenditure will drive comparable and new store growth, operating leverage and productivity initiatives as well as expansion in global e-commerce, including acquisitions.
Wal-Mart's three operating segments will add 36-40m sq ft in retail space, which remains flat against the fiscal 2013 forecast of 36-39m sq ft.
The world's largest retailer yesterday (10 October) said it plans to grow its sales 5-7% in fiscal 2014, which is expected to increase net sales by $23bn to $33bn.
Wal-Mart also plans to invest in technology including e-commerce initiatives such as a global technology platform and applications for mobile and social media.
Neil Ashe, president and CEO of Walmart global e-commerce said: "We will continue to innovate in ways that will allow us to expand our global platform and strengthen our infrastructure and local fulfillment networks, while taking advantage of transformational mobile capabilities."
The company added that it remains on track to reduce operating expenses as a percentage of sales by 100 basis points over five years with savings reinvested in lower prices and improved international profitability.
"Our momentum in delivering strong results continues, and we are investing for the future by creating an even stronger business," said Wal-Mart Stores president and CEO Mike Duke.
"Strong business fundamentals are driving our top line and bottom line results. We are delivering on the productivity loop and being even more disciplined about our operating expenses and capital spending. We have a deliberate approach to how we will grow, how we will deliver further operating leverage and continue to deliver strong returns to our shareholders."
International capital expenditure will range from $4.5bn to $5bn, with improvements in engineering and construction expected to drive greater efficiencies. New stores are expected to add 20-22m sq ft next year, which is in line with the 21-23m sq ft expansion forecast for the current fiscal year.
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