Wal-Mart is on pace to meet its annual target for opening, expanding or relocating outlets in Canada, but the company said on Tuesday its spending on development projects in the country would slow to reflect a darker outlook for retailing. Wal-Mart Canada is sticking to its numerical goals even though the world's largest retailer plans to slow the pace of US store openings and cut capital spending there.
Wal-Mart Canada, which operates more than 310 stores across the country, plans to complete 25 to 27 projects by the end of January 2009. "We typically open between 20 and 30 stores a year ... and we don't anticipate that changing," David Cheesewright, chief executive at Wal-Mart Canada, said in an interview.
Cheesewright said the nature of its development projects would change, with the emphasis shifting to smaller stores and more cost-efficient equipment and building materials. "Although we are planning to open the same number of stores, we are certainly not going to spend the same amount of capital," he said.
"There is no slowdown in how aggressively we want to grow, but we are able to do it in a significantly more efficient way, which gives us built-in protection in a slowing economy." Meanwhile, Wal-Mart's US division plans to open 191 stores in the current fiscal year, which ends in early 2009, and 142 to 157 stores in the next fiscal year, it said during an analysts meeting in Bentonville, Arkansas, on Monday. The company opened 218 US stores in fiscal 2008. Wal-Mart also plans $5.8 billion to $6.4 billion in capital spending this fiscal year for its US division, down from $9.1 billion last year. In fiscal 2010, it plans to spend $6.3 billion to $6.8 billion.
Cheesewright would not comment on the Canadian division's capital expenditure targets. The slowing economy has also enabled Wal-Mart to become more "opportunistic" as it uses its huge buying power to negotiate lower prices from vendors who might be having a difficult time moving their products. "One of the great things about our business is that we are able to be opportunistic at the moment as well. We are in a very strong position financially..." he said.
"What happens in those economies is that there are pockets of opportunities around where we can buy for less from the vendors and sell for less to the customers." This has enabled the company to "roll back" - the company's buzz word for price reductions - on many of its most popular items and staple products. This year, Wal-Mart Canada also plans to reduce prices earlier than usual on many popular toys, hoping to jump start what is expected to be a sluggish holiday season for retailers and enable shoppers to spread out their purchases over the next two months.
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