Wal-Mart to cut supercenter growth; shares jump

By Nicole Maestri

FAYETTEVILLE, Arkansas (Reuters) - Wal-Mart Stores Inc. (WMT.N) said on Friday it will cut the number of supercenters it plans to open this year by as much as 30 percent as it tries to boost sales at U.S. stores, sending it shares up 4 percent.

Chief Financial Officer Tom Schoewe, who also said the world's biggest retailer will buy back $15 billion of its own stock, made the eagerly awaited comments at the annual shareholders' meeting.

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.

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

"Our (comparable) store sales aren't at the level that they need to be," Schoewe told reporters after the meeting, but he said reducing supercenter openings should change that.

Wal-Mart's supercenters pair full-scale grocery stores with its traditional discount store format. Thanks to its supercenters, Wal-Mart is the largest U.S. seller of food.

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.

Supermarket stocks rallied following the announcement, with Safeway Inc.'s (SWY.N) up more than 5 percent and Kroger Co. (KR.N), the largest U.S. grocery chain, rising 3.6 percent.

GETTING BACK ON TRACK

Wal-Mart has struggled in recent months with its U.S. comparable-store sales, reporting a drop of 3.5 percent in April -- the largest fall 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.

"We believe our plan will improve sales growth," Scott said at the meeting.

Company executives said on Friday that Wal-Mart went too far with some of its fashion offerings and needed to "earn the right" to sell higher-price goods to its shoppers, instead of putting them in stores and assuming they will sell.