Retailer anticipates 50-55 new stores, 220-230 Supercenters; backs view of 45-47 cents a share. September 30, 2003: 7:53 AM EDT
SAN FRANCISCO—Continuing the heady growth that has put pressure on the rest of the retail industry, Wal-Mart Stores Inc. said it will increase total selling space by more than 8 percent next year, with particularly aggressive expansion in its Supercenters.
Bentonville, Ark.-based Wal-Mart, the world's biggest company in terms of revenue, also reaffirmed Monday its earnings forecast of 45 to 47 cents per share in the third quarter. Wal-Mart said earnings are "currently tracking in the middle of that range."
The company said its expansion plans would include between 50 and 55 new discount stores and 220 to 230 Supercenters. In recent years, Wal-Mart has stepped up growth of its Supercenters, a retail format more than twice as large as its regular discount stores. The company first introduced the Supercenters in 1988, and last year they outnumbered the smaller discount stores for the first time in company history.
The massive buying power of these Supercenters means Wal-Mart can often purchase -- and sell -- goods more cheaply than competitors.
In the latest expansion plan, set to begin in the new fiscal year in February, relocations or expansions will make up about 140 of the Supercenters, while the remainder will be built in new locations, the company said.
"It's a little bit more aggressive than I would have thought, but it seems pretty reasonable," said Ira Kalish, global director at Deloitte Research. "I think that over the next four to five years the principal growth will be from supercenters and adding more food sales."
Despite the continued aggressive expansion, some analysts said they were surprised the company did not offer a more aggressive forecast for third-quarter earnings, given the strength of its September sales.
Wal-Mart reported Monday that September sales growth at stores open for at least a year were at the high end of its target range of 3 to 5 percent. That growth level was viewed as a good early indicator of holiday sales.
"They might just be low-balling it a little bit," Martin Bukoll, senior equity analyst at North Trust in Chicago, said of the company's latest earnings forecast. He noted that Wal-Mart showed particularly strong September sales in high-margin items like apparel.
"You get this really warm and fuzzy feeling that things are going well at Wal-Mart," said Bukoll. "The 8 percent growth is something like 50 million feet, and that's more selling space than all but a couple of U.S. retailers."
As Wal-Mart announced aggressive growth plans and strong sales, rival J.C. Penney Co Inc. (JCP: Research, Estimates) reported that its September same-store sales were at the low end of its forecast at department stores, and slightly below expectations at its Eckerd drug store chain. In contrast to Wal-Mart, Penney said demand for outerwear had been disappointing.
Wal-Mart's expansion plans have not always gone smoothly. The retailer has encountered more resistance as it tries to move into heavily populated urban areas. Critics contend its massive stores hurt the environment, increase traffic congestion and drive smaller stores out of business.
The firm also plans to open 25 to 30 Neighborhood Markets, which are smaller grocery stores, and 35 to 40 new Sam's Club warehouse stores, in the coming fiscal year, which begins Feb. 1, 2004.
Analysts see the smaller Neighborhood Market store as a key to Wal-Mart's urban strategy because it can fit into densely populated areas such as New York City.
Wal-Mart has been slow to roll out the smaller stores, saying it can't find enough managers to run them. However, some analysts have questioned whether the slow roll-out means the format has not met Wal-Mart's profit forecasts.
Wal-Mart (WMT: Research, Estimates) shares gained 43 cents Monday to close at $57.23.
source: http://money.cnn.com/2003/09/30/news/companies/walmart.reut/ 30sep03
|
If
you have come to this page from an outside location click
here to get back to mindfully.org |