* Sales up 1-2 pct this year; 4-6 pct next year
* International square footage growth to outpace US
* Capex of $12.5-$13.1 bln this year, $13-$15 bln next
* CEO: We will be the price leader
* Wal-Mart shares down 0.3 percent
(Adds CEO comments, urban market comments)
By Nicole Maestri
SAN FRANCISCO, Oct 22 Wal-Mart Stores Inc
(WMT.N) said on Thursday it will keep its conservative approach
to U.S. expansion as it pours resources into renovating stores
or exploring higher-return investments abroad.
The world's biggest retailer said its international square
footage growth will outpace U.S. growth this fiscal year and
the next. It will open smaller stores in the United States to
penetrate new markets.
Wal-Mart also made it clear it will defend its turf if
rivals try to undercut its low prices.
"We watch the competition," CEO Mike Duke said on the
second day of its analyst meeting. "We will be the price
On Wednesday, Wal-Mart outlined plans to slash prices every
week until Christmas to fend off rivals and keep newly won
market share gains. [ID:nN21501560] Online competitor
Amazon.com Inc (AMZN.O) on Thursday forecast what could be a
blow-out holiday quarter for its business, sending its shares
up 13 percent. [ID:nN2238215]
Wal-Mart's price strategy pressured its shares as investors
worried the discounts would hurt margins. Wal-Mart's treasurer,
Charles Holley, said on Thursday that the retailer is being
"thoughtful and strategic" about price cuts to protect
But in response to analysts' questions about how Wal-Mart
would respond if rivals slash prices, Duke responded multiple
times that the retailer intends to be the "price leader."
Wal-Mart expects sales to grow 1 percent to 2 percent in
the current fiscal year, below projections it provided at its
analyst meeting last year that sales would rise 5 percent to 7
Chief Financial Officer Tom Schoewe attributed the
shortfall to currency exchange rates and deflationary
pressures. Last year, rising food and gas prices helped boost
sales figures, but those prices have eased this year.
SALES GROWTH THROUGH PROJECT IMPACT, SMALLER STORES
Wal-Mart forecast 4 percent to 6 percent sales growth next
year, with square footage up 4 percent in both years.
To boost sales in the United States, it is remodeling
stores under its "Project Impact" initiative. As of November,
it said it will have completed remodels at more than 30 percent
of its 3,538 U.S. Walmart stores.
In those stores, it is widening aisles, reducing clutter,
changing layouts and updating signs.
Eduardo Castro-Wright, who oversees Wal-Mart's U.S.
operations, said urban markets represent a big opportunity.
While Wal-Mart intends to enter those markets, it needs to
develop smaller stores that can generate acceptable returns.
"We have been testing ... several initiatives ... to try to
overcome what traditionally has been the difficulty in the
economic model that we have ... of very high real estate costs
with high labor costs and very low prices," he said.
The retail industry is eager to see if Wal-Mart, which has
specialized in running stores three times the size of a U.S.
football field, can replicate that success on a small scale.
Wal-Mart also expects capital expenditures of $12.5 billion
to $13.1 billion in the current fiscal year, which ends in
January 2010 and $13 billion to $15 billion for the next fiscal
Wal-Mart shares fell 15 cents to $50.48 on the New York
(Reporting by Nicole Maestri in San Francisco and Martinne
Geller in New York; Editing by Andre Grenon and Richard Chang)