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Walmart Accelerates Small Store Growth

World's Largest Retailer Doubles Expansion Program from Initial Forecast
February 21, 2014
Wal-Mart Stores Inc. plans to accelerate its capital plan for U.S. small store format openings significantly for the current fiscal year.

The company is expanding its original capital forecast provided last October, and now expects to add approximately 270 to 300 small stores during the fiscal year, doubling its initial forecast of 120 to 150 stores.

Walmart U.S. will also continue its plan to open approximately 115 new supercenters this year.

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The world's largest retailer said the small store format has continued to deliver positive comp sales and traffic increases each quarter. Comp sales for the Neighborhood Market stores grew approximately 4% for fiscal year 2014.

"Neighborhood Market is performing comparable or favorable to leading grocers,” said Bill Simon, Walmart U.S. president and CEO.

Walmart currently operates 346 Neighborhood Markets and 20 Walmart Express stores. The Express units have performed well and are also being expanded beyond the initial three-market pilot.

As a result of its more aggressive growth plan, Walmart U.S. projects to end fiscal year 2015 with net retail square footage growth of approximately 21 million to 23 million square feet across all formats, versus its original projection of approximately 19 million to 21 million square feet.

“We have a healthy pipeline of stores in development, and we systematically work to improve our real estate and construction processes, reduce building costs and shorten the time needed to open our stores,” Simon said. “Our small store expansion will also strengthen our market share and create greater efficiencies in our supply chain through a tethered approach that uses supercenters as a supply chain base, links our resources and provides a unique and connected customer experience.”

Walmart is also among those retailers leading the charge in integrating their bricks-and-mortar stores with their online retail strategy.

“We currently have over 4,200 stores and will grow that significantly this fiscal year. Our full fleet will serve as the physical access points for our digital business, combining these two worlds in a unique way. Site to Store, Ship from Store, Pay with Cash, and Scan & Go are great examples of what we’re currently doing to marry digital and physical experiences,” Simon said.

To fund this additional growth, the company is revising its capital expenditures forecast for the Walmart U.S. segment to $6.4 to $6.9 billion, up from an initial range of $5.8 to $6.3 billion. This reflects the increased small store growth and the current pipeline of supercenters. In total, across supercenter and small store formats, Walmart U.S. plans to open 385 to 415 units in fiscal 2015, adding considerably to the more than 4,200 stores currently open.

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