Walmart announces $11.8 to $12.8 billion FY2015 global capital expenditure plan

Company remains focused on comp sales growth, International returns, leverage initiatives and capital discipline

  • Wal-Mart Stores, Inc. (Walmart) expects capital investments to range between $11.8 and $12.8 billion for fiscal year 2015.  This range includes a $200 million reduction from the current fiscal year 2014 capital guidance. 
  • The company will add between 33 and 37 million net retail square feet worldwide next year, with more than half of the increase driven by Walmart U.S., including accelerated small format openings.
  • The capital plan includes increased investments in technology and e-commerce.  
  • The company maintains its fiscal year 2014 capital forecast of $12.0 to $13.0 billion and reduces its total retail square footage plan to approximately 34 million.  Walmart International announced a $500 million reduction from its current plan due to fewer new store openings, resulting in a reduction of approximately 7 million square feet. 
  • Walmart U.S. accelerates small format openings and e-commerce fulfillment centers, and increases its fiscal year 2014 projected capital investment by $500 million to a range of $6.0 to $6.5 billion.   The segment is projecting fiscal year 2015 capital investments to be lower than the updated current year forecast, but with greater square footage.


BENTONVILLE, Ark., Oct. 15, 2013
-- Wal-Mart Stores, Inc. (NYSE: WMT) today presented its capital expenditure plans for the next fiscal year ending Jan. 31, 2015 at its 20th annual conference for the investment community. Total capital spending for fiscal year 2015 is projected to range between $11.8 and $12.8 billion, $200 million lower than the revised fiscal year 2014 projection.

“Our underlying businesses are solid, and we are pleased that we will add approximately 34 million net new square feet of retail space this year, even with a tough and unpredictable economy.  This is incremental to the more than 1 billion square feet of retail space Walmart operated around the world at the end of last year,” said Wal-Mart Stores, Inc. President and CEO Mike Duke. “We’re spending in a disciplined manner by setting up a more streamlined real estate process.  We continue to improve our sales per square foot and Walmart will continue to grow through new stores and e-commerce, while expanding our logistics and fulfillment network in critical markets.”

The company forecasts that net sales for the current fiscal year will range between $475 and $480 billion. The company reported total revenue of $231.1 billion through the second quarter ended July 31, 2013.

Charles Holley, Walmart’s executive vice president and chief financial officer, outlined the company’s commitment to its financial priorities for growth, leverage and returns, and detailed the investment and expansion plan for fiscal year 2015.  Walmart uses its operating cash flow to drive growth through stores and e-commerce, strategic acquisitions, dividends and share repurchases.

“We continue to make progress on capital efficiency, finding new ways to reduce construction costs for new stores and remodels and shortening the timeframe from approval to opening,” Holley explained. “Over the last three years, we delivered more with less, while growing square footage, sales and shareholder returns.” 

Holley pointed out that the capital dedicated to technology and e-commerce is growing.

“Technology is our fastest growing area for capital expenditures,” he explained.  “We define technology investments as systems and Global e-Commerce capital dollars.  We will increase our technology spend 70 percent from fiscal year 2009 through fiscal year 2014.  Next year, investments in this area will increase another 12 percent.

 “Walmart plans to grow company net sales 3 to 5 percent in fiscal year 2015, which is projected to increase net sales by $14 to $24 billion.  We expect to add another 33 to 37 million net retail square feet around the world next year,” Holley said.  “In terms of leverage, our operating income will grow at the same rate, or faster, than sales due to our continued focus on operating expense discipline.  Generating strong free cash flow remains a key priority.”

Capital Expenditure Details for Fiscal Year 2015

Projected capital expenditures are as follows and exclude the impact of future acquisitions:    

Capital Expenditure Detail
(US$ billions)    

Segment
Actual
FY 13
FY 14
Original
FY 14
Revised
FY 15
Projected
Walmart U.S.
$6.0
$5.5 – 6.0
$6.0 – 6.5
$5.8 6.3
Sam’s Club U.S.
$0.9
~$1.0
~$1.0
~$1.0
Walmart International
$4.6
$4.5 – 5.0
$4.0 – 4.5
$4.0 4.5
Corporate & support
$1.4
~$1.0
~$1.0
~$1.0
Total
$12.9
~$12.0 13.0
~$12.0 13.0
~$11.8 – 12.8


 For fiscal year 2014, Walmart now expects to add approximately 34 million net retail square feet globally, compared to the company’s original square footage guidance, provided Oct. 10, 2012, of 36 to 40 million square feet.  Today’s revision in projected retail square footage growth is driven by a reduction in new store openings within Walmart International, partially offset by an increase in Walmart U.S. new stores.  In fiscal year 2015, the company plans to add between 33 and 37 million net retail square feet, reflecting aggressive growth across its businesses.   Net retail square footage growth (excluding any future acquisitions) is projected as follows:


Net Retail Square Footage
(in millions)
Segment
Actual
FY 13
FY 14 
Original 
FY 14
Revised
FY15                           Projected
Walmart U.S.
14
~15 – 17
~18
~19 – 21
Sam’s Club U.S.
1.1
~1
~2
~2
Walmart International
19.4
~20 – 22
~14
~12 - 14
Total
34.5
~36 40
~34
~33 - 37


Projected Walmart U.S. and Sam's Club U.S. units include new stores, expansions and relocations. Given the conversion of Walmart discount stores to supercenters, the number of supercenter units will continue to increase, as the number of discount stores declines. Unit growth in the United States is projected as follows:

Total U.S. Unit Growth
(Gross)
Segment
Actual
FY 13
FY 14 
Original 
FY 14
Revised
FY 15             Projected
Large formats
136
~125
~125
~115
Small formats
79
~95-115
~120
~120 - 150
Total Walmart U.S.
215
~220-240
~245
~235 - 265
Sam’s Club U.S.
14
~12-20
~19 - 21
~17 - 22
Total
229
~232 - 260
~264 - 266
~252 - 287


Walmart U.S. Details

Compared to last October’s forecast, Walmart U.S. increased its fiscal 2014 projected capital investment by $500 million to a range of $6.0 to $6.5 billion, due to an acceleration of small format openings, especially Neighborhood Markets, and e-commerce initiatives.  As a result of this more aggressive plan, Walmart plans to end fiscal year 2014 with square footage growth of approximately 18 million net retail square feet versus its original projection of approximately 15 to 17 million square feet.

Fiscal year 2015 capital investments are projected to be $200 million lower than this updated current year estimate.  The forecast includes new stores, remodels, logistics and technology infrastructure, and is designed to add new units that will expand its retail space by approximately 19 to 21 million net retail square feet next year. Walmart U.S. will build approximately 120 to 150 small format stores next fiscal year. 

“We will accelerate growth of our Neighborhood Markets because of their strong returns, consistent comp sales performance and double-digit net sales increases,” said Bill Simon, Walmart U.S. president and CEO.  “We will continue to build and leverage the supercenter format, which remains our primary format for growth.  We plan to open approximately 115 supercenters next year, including relocations and expansions.  The combination of our large and small store formats allow us to strengthen our market share position and give customers convenient access to shop for food and general merchandise, as well as access to our e-commerce offerings. 

“We believe our multi-format portfolio will fuel the next generation of retail, enable the convergence of digital and physical store locations through e-commerce and unlock value, giving our customers anytime, anywhere access to Walmart,” added Simon.  “We are positioned for sustainable growth and are the only company with a unique combination of large supercenters, small formats and a dotcom and mobile presence.” 

Sam’s Club Details

Sam’s Club maintains its capital spend for the current fiscal year at approximately $1 billion.  The segment will add approximately 19 to 21 clubs, including relocations and expansions in fiscal year 2014, up from 14 last year.  Sam’s is also remodeling more than 70 clubs this year.

“The new clubs we’ve opened this year are outperforming our expectations and we will continue to increase our openings.  Our fleet is in the best position and condition it has been in years,” said Sam’s Club president and CEO Rosalind Brewer.  “We improved our construction cost structure, and with the productivity initiatives in place and consistent layouts, we are opening clubs that cost less to run and improve the shopping experience for our members.” 

During fiscal year 2015, Sam’s Club will open approximately 17 to 22 clubs, including relocations and expansions.  Remodeling is slated for between 55 and 60 clubs.  Sam’s is projecting a capital budget of approximately $1 billion, in line with its updated plan for fiscal year 2014.

Walmart International Details

Walmart International decreased its fiscal year 2014 projected capital investments by $500 million to a range of $4.0 to $4.5 billion, due to fewer new store openings in Mexico and India.  In addition, International plans to close approximately 50 underperforming stores in Brazil and China.  The majority of the closures will occur in the fourth quarter of fiscal year 2014.  International now expects to add approximately 14 million net retail square feet, roughly 7 million square feet below its original guidance of 20 to 22 million square feet.  

Walmart International continues to invest in organic growth across its markets and expects fiscal year 2015 capital expenditures to range from $4.0 to $4.5 billion, which will generate approximately 12 to 14 million net retail square feet among its 26 markets.

 “We’ve made progress on having everyday low price in every market, and we are improving our new store performance and e-commerce capabilities,” said Walmart International president and CEO Doug McMillon.  “We are confident that with disciplined growth and greater e-commerce integration in our business, we will have in place a solid framework for long-term growth and improved returns.

“Our guidance for fiscal year 2015 reflects actions to continue strengthening our position in markets like China and Brazil,” McMillon added.  “We are managing our portfolio to be a best-in-class operator through innovation, making compliance a competitive advantage and winning with an e-commerce strategy that offers a unique shopping experience across all channels.”

Global eCommerce Details

Walmart Global eCommerce President and CEO Neil Ashe outlined the progress made during the past year on the company’s e-commerce strategy. The company made a number of smaller acquisitions during this fiscal year to strengthen technology expertise and add talent. 

“We are delivering value to Walmart through revenue growth and engaging millions more customers,” said Ashe. “We made significant progress globally during the past year by driving relevant offers and experiences, building a broader assortment and innovating through Big Data, social and mobile capabilities.  Looking ahead, we will continue to invest significantly in our global technology platform, next generation fulfillment network and the best talent.”

About Walmart
Wal-Mart Stores, Inc. (NYSE: WMT) helps people around the world save money and live better -- anytime and anywhere -- in retail stores, online, and through their mobile devices. Each week, more than 245 million customers and members visit our more than 11,000 stores under 69 banners in 27 countries and e-commerce websites in 10 countries. With fiscal year 2013 sales of approximately $466 billion, Walmart employs more than 2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting http://corporate.walmart.com, on Facebook at http://facebook.com/walmart and on Twitter at http://twitter.com/walmart. Online merchandise sales are available at http://www.walmart.com and http://www.samsclub.com

Forward-looking statement
This release contains statements that Walmart believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are intended to enjoy the protection of the safe harbor for forward-looking statements provided by that Act. Except as noted below, these forward-looking statements are identified by use of the words or phrases “accelerates,” “are projected,” “capital plan,” “decreased,” “expect,” “expects,” “forecast,” “forecasts,” “guidance,” “increased,” “increases,” “is projected,” “is projecting,” “is slated,” “maintains,” “plan,” “plans,” “priorities,” “projected,” “reduces,” “reduction,” “will accelerate,” “will add,” “will build,” “will continue,” “will expand,” “will generate,” “will grow,” “will increase,” “will occur,” and “will open” or a variation of the foregoing words or phrases in these statements, in the descriptions of certain assumptions on which expectations, forecasts or projections discussed in this release are based. The forward-looking statements discuss, among other things: management’s revised expectations for the capital expenditures (also referred to as “capital investments,” “capital spending,” the “capital plan” and the “capital budget”) in fiscal year 2014 (which are revised from the company’s previously announced projections for capital expenditures for fiscal year 2014) and fiscal year 2015 for the total company, for each of its operating segments (including projected differences from previously announced projections for the company and the company’s Walmart U.S. and Walmart International operating segments) and for corporate and other purposes; management’s projections for the growth in and addition of retail square footage for the total company and each of the company’s operating segments (including projected differences from previously announced projections for the company and the company’s Walmart U.S., Walmart International and Sam’s Club operating segments) in fiscal year 2014 (which are revised from the company’s previously announced projections for square footage growth for fiscal year 2014) and fiscal year 2015; management’s projections for unit growth in the company’s Walmart U.S. and Sam’s Club operating segments in the United States in fiscal year 2014 (which are revised from the company’s previously announced projections for unit growth in the United States for fiscal year 2014) and fiscal year 2015, including for larger and smaller formats within the Walmart U.S. operating segment; management’s projections for the company’s net sales in fiscal year 2014 and fiscal year 2015, including the percentage and amount of growth in net sales compared to fiscal year 2014; management’s expectations that the company’s operating income will grow at the same rate, or faster than, the company’s sales; management’s expectation that the fiscal year 2014 and 2015 capital plans will include increased investments in technology and e-commerce; projected increases in the company’s technology spend from fiscal year 2009 through fiscal year 2014; management’s expectations that the company will grow through new stores and e-commerce, while expanding its logistics and fulfillment network in critical markets; management’s expectation that the number of supercenters operated by the Walmart U.S. operating segment will continue to increase and the number of discount stores operated by the Walmart U.S. operating segment will decline; the number of new small format stores to be opened by the Walmart U.S. operating segment in fiscal year 2015; management’s expectation that the Walmart U.S. operating segment will accelerate growth of the Neighborhood Market format and will continue to build and leverage its supercenter format; management’s expectation for the number of new supercenters, including relocations and expansions, that the Walmart U.S. operating segment will open in fiscal year 2015; management’s expectation for the company’s Sam’s Club operating segment to open a certain number of new clubs and to continue to increase the openings of new clubs; the number of clubs, including relocations and expansions, the company’s Sam’s Club operating segment will open in fiscal year 2015; the number of remodels the company’s Sam’s Club operating segment will complete in fiscal year 2015; management’s expectations that the company’s Walmart International operating segment will close a certain number of underperforming stores in Brazil and China and that a certain number of those closures will occur in the fourth quarter of fiscal year 2014; management’s expectation that the company’s operating segments will continue to invest significantly in the company’s global technology platform, next generation fulfillment network and the best talent in the e-commerce area; and the various factors and circumstances that will drive or influence certain of such expectations, forecasts and projections.  Also included in the forward-looking statements in this release are certain statements regarding the company’s priorities and focus on certain matters, including its priorities of growth, including comparable store and club sales growth, leverage, including leverage initiatives, and returns, including returns at the company’s Walmart International operating segment and free cash flow.  The forward-looking statements in this release also include the information contained in the charts entitled “Capital Expenditure Detail,” “Net Retail Square Footage,” and “Total U.S. Unit Growth,” which information relates to capital expenditures to be made, square footage growth and units to be added in the United States during each of fiscal year 2014 (which information is revised from previously announced projections in regard to such measures for fiscal year 2014) and fiscal year 2015.  These forward-looking statements and the information in the charts described above are subject to risks, uncertainties and other factors, domestically and internationally, including general economic conditions, including the effects of the current economic situation, competitive pressures, geopolitical conditions and events, inflation, deflation, consumer confidence, credit availability, spending patterns and debt levels, currency exchange fluctuations, unemployment and partial employment rates, personal income and other tax rates, trade restrictions, availability of attractive investment opportunities in non-United States markets, availability of appropriate locations for new or relocated units, local real estate and other laws, ordinances, legal restrictions and initiatives that may prevent the company from building or relocating, or that impose limitations on the company’s ability to build or relocate, stores in certain locations or to close underperforming stores in certain countries, availability of persons with the necessary skills and abilities necessary to meet the company’s needs for managing and staffing its new stores and conducting its operations, including in the e-commerce area, availability of necessary utilities, weather conditions, availability of skilled labor, labor, material and other construction costs, insurance costs, operating expenses, fluctuations in market rates of interest and other capital market conditions, and other factors and risks. The company discusses certain of these matters more fully in its Annual Report on Form 10-K for its fiscal year ended January 31, 2013, and this release should be read in conjunction with that Annual Report on Form 10-K and together with all of the company’s other filings, including its Quarterly Reports on Form 10-Q and Current Reports on Form 8- K, made with the SEC through the date of this release. You are urged to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this release. As a result of these matters, including changes in facts, assumptions not being realized or other circumstances, the actual implementation of the company’s operating and other plans by one or more of its operating segments, its actual capital expenditures, unit growth, and square footage growth in one or more of its operating segments, the formats of the units built, the conversion of discount stores to supercenters by the Walmart U.S. segment, the focus of the company’s expansion and sales and operating income growth may differ materially from the expected results and the plans described in these forward-looking statements. The forward-looking statements included in this release are made only as of the date of this release, and the company undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.