Wal-Mart will scale back on expansion

Wal-Mart Stores Inc. said Friday it would cut the number of Supercenters it planned to open this year by as much as 30% as it tried to boost sales at U.S. stores, sending its shares up 4%.

At the company’s annual shareholders’ meeting, Chief Financial Officer Tom Schoewe also said the world’s biggest retailer would buy back $15 billion of its own stock.

“Our [comparable] store sales aren’t at the level that they need to be,” Schoewe said, adding that reducing Supercenter openings should change that.

Analysts and investors have pushed Wal-Mart to rein in U.S. expansion plans as sales at its existing stores, known as comparable-store sales, have slowed and it has saturated many markets.

“It’s a sigh of relief for Wal-Mart shareholders and for all of retail,” said Adrianne Shapira, an analyst with Goldman Sachs in New York who has a “neutral” rating on the stock.

The company’s stock price has fallen 23% since Lee Scott was named chief executive in 2000.

Wal-Mart’s Supercenters pair full-scale grocery stores with its traditional discount store format. Wal-Mart is the country’s largest food seller.

Friday’s announcement was the second time in the last 12 months that the company promised to trim capital expenditures. In October, Wal-Mart said it would shave new store openings by half a percent, or as many as 35 fewer Supercenters domestically. The company also said then that capital expenditures for this year would be between 2% and 4% -- down from 15% to 20% last year.

The retailer, which had 2,307 U.S. Supercenters at the end of April, said it now expects to open 190 to 200 Supercenters this fiscal year, down from its previous plan of 265 to 270.

Starting next fiscal year, the company expects to open 170 Supercenters annually, Schoewe said.

The company declined to say which projects “may be deferred.”

Supermarket stocks rallied following the announcement, with Safeway Inc.’s shares up more than 5% and Kroger Co., the largest U.S. grocery chain, rising 3.6%.

Wal-Mart has struggled in recent months with its U.S. comparable-store sales, reporting a drop of 3.5% in April -- the largest decline since it began reporting the figures in 1979.

It has blamed the poor figures on merchandising missteps, such as offering trendy clothes that customers rejected, and store remodeling activity, which it said disrupted shoppers.

Wall Street has said that Wal-Mart would have a better chance of improving sales if it cut back on its square-footage growth and concentrated on improving existing stores.

Last year, Wal-Mart downplayed its discount roots to try to expand its image beyond that of a low-priced retailer.

It stocked more upscale items like organic food and plasma TVs, hoping wealthier shoppers would spend more in its stores.

But lower-income customers balked at some of the changes, and Wal-Mart has returned to emphasizing its low prices.

Wal-Mart shares rose $1.87 to $49.47.