Wal-Mart Stores Inc is finally seeing sustained improvement at its U.S. discount chain, with sales at Walmart stores open at least a year rising for three months straight, Walmart U.S. Chief Executive Bill Simon said on Wednesday.
Walmart is also gearing up to open up to 385 U.S. stores over the next two years, most of them supercenters, as it tries to retain and expand its dominance in the U.S. retail industry.
Shares of Wal-Mart jumped 2.5 percent to $56.10 in late morning trading.
Same-store sales account for about 98 percent of Walmart's total sales in the United States, so fixing the slump at existing stores is critical for the world's largest retailer.
Walmart U.S., by far the company's largest business, has posted nine consecutive quarters of same-store sales declines. While such sales rose in July, the last month of the fiscal second quarter, same-store sales fell 0.9 percent in the quarter.
Walmart U.S. same-store sales continued to rise in August and September, Simon said at Wal-Mart's 18th annual meeting for the investment community in Rogers, Arkansas, which is also being broadcast over the Internet. Traffic in stores has increased, led by traffic in the food department, Simon said.
For the current third quarter, the company previously said Walmart U.S. same-store sales should be down 1 percent to up 1 percent.
STEPPING UP STORE OPENINGS WITH LOWER CAPITAL EXPENDITURES
Walmart opened about 153 U.S. stores and spent about $7.3 billion on capital expenditures in fiscal 2011. Now, the company is preparing to open many more stores at a lower cost.
In total, the company plans to open 142 to 150 U.S. stores this fiscal year, which ends in January. It plans to spend $6.5 billion to $7 billion on capital expenditures this fiscal year.
Walmart currently has five Walmart Express stores, which it began testing in June. It plans to have 11 by the end of the fiscal year, said Karen Roberts, president of Walmart Realty.
In fiscal 2013, Walmart plans to open 210 to 235 U.S. Walmart stores and spend $6 billion to $6.5 billion on capital expenditures.
Walmart U.S. plans to open 130 to 135 supercenters and 80 to 100 small-to-medium stores next year, Roberts said.
Supercenters remain Walmart's primary growth vehicle in the United States, though new supercenters are smaller than in the past at roughly 90,000 to 120,000 square feet. Before, supercenters averaged about 185,000 square feet.
Most of the small-to-medium stores built in 2013 will be Neighborhood Market stores, which are Walmart's version of a grocery store. The financial returns of Neighborhood Market stores are approaching those of supercenters, Walmart says.
Walmart U.S. is working on lowering prices for shoppers by a cumulative $2 billion over the next two years as it works on trying to get them to shop more often, Simon said..
The money for the price reduction plan will come from changes such as reducing new store and remodeling costs as well as improving productivity and efficiency in areas such as stores, distribution, transportation and marketing.
(Reporting by Jessica Wohl in Chicago; Editing by Phil Berlowitz, Dave Zimmerman)