Wal-Mart cuts spending, supercenter plans

By Nicole Maestri

NEW YORK (Reuters) - Wal-Mart Stores Inc cut its capital expenditure forecast on Tuesday and scaled back on planned supercenters as the world's largest retailer grapples with slowing sales in a saturated U.S. market.

Wal-Mart said its capital spending will fall this year and probably the next two fiscal years as it spends less on new U.S. stores, but spending on new international stores will increase and it will forge ahead with U.S. store renovations.

Wal-Mart's shares fell almost 3 percent as the pullback was not as extensive as some on Wall Street had expected and investors fretted that the retailer was diluting efforts to boost sales at existing U.S. stores -- which last year rose at their lowest pace on record -- by investing too much overseas.

"Wal-Mart was trying to please both value investors and growth investors, and at least for today wasn't able to really do either," said David Abella, a portfolio manager at Rochdale Investment Management, which owns Wal-Mart shares.

Abella said some investors would have preferred that Wal-Mart used excess cash to boost dividends or fund share buybacks instead of saying on Monday that it would spend up to $878 million to buy out minority shareholders in money-losing Japanese supermarket unit Seiyu Ltd.

PUSHING FOR A PULL BACK

Analysts and investors have been pushing Wal-Mart to rein in U.S. expansion plans as sales at existing stores, known as comparable store sales, have slowed and it has saturated many markets. As of September 30, Wal-Mart operated 4,114 U.S. stores.

Wal-Mart said in June that it would cut the number of supercenters it plans to open, but that has yet to translate into improved U.S. sales.