Wal-Mart cutting U.S. store openings further

By Brad Dorfman and Nicole Maestri

CHICAGO/NEW YORK (Reuters) - Wal-Mart Stores Inc (WMT.N) will slow the pace of U.S. store openings and cut back on capital spending, aiming to boost sales by remodeling existing stores and improving its merchandise selection.

The world's largest retailer also said on Monday that it is attracting higher-income shoppers with discounts as the U.S. economy reels from tighter credit, mounting job losses and falling home prices.

Traffic at stores serving households with income above $65,000 has been growing much faster than at the chain as a whole, Wal-Mart U.S. President and Chief Executive Officer Eduardo Castro-Wright said at the retailer's annual analysts' meeting, which was broadcast over the Internet.

"What that means is we are seeing a lot of new customers that did not consider Wal-Mart before, that consider Wal-Mart now," Castro-Wright said.

Wal-Mart is holding its annual two-day analyst meeting in Bentonville, Ark. Its U.S. business is making a comeback after the retailer saturated markets with stores and saw slower growth in recent years.

Cash-strapped shoppers are increasingly heading to its stores for low prices for necessities, such as food and medicine.

Wal-Mart is also benefiting from efforts started in 2006 to slow aggressive expansion plans and focus on improving U.S. sales. After its sales at existing U.S. stores rose 1.4 percent last year -- its lowest annual result in history -- sales have rebounded and gained 2.9 percent through September.

Analysts are watching to see if Wal-Mart can keep its momentum going amid the threat of a global recession. While Castro-Wright provided an update on its U.S. business, Chief Financial Officer Tom Schoewe is expected to outline expansion and capital spending plans for the entire business on Tuesday.

The company's shares closed down 3.4 percent at $49.67

SLOWING NEW U.S. STORES

Wal-Mart's U.S. 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, Castro-Wright said. The company opened 218 U.S. stores in fiscal 2008.

Wal-Mart also plans $5.8 billion to $6.4 billion in capital spending this fiscal year for its U.S. division, down from $9.1 billion last year. In fiscal 2010, it plans to spend $6.3 billion to $6.8 billion, Castro-Wright said.

While it reduces overall capital spending, it is putting money toward remodeling stores.

Castro-Wright said the retailer has seen dramatic improvement in its electronics department, where it has done extensive renovations, bringing in name-brands products and expanding space for shoppers to test out video games.

"We're going to increase investment behind remodels so that we can bring all of our fleet up to the same standard as fast as we can," Castro-Wright said.