- Investments in e-commerce and digital
initiatives are expected to range between $1.2 and $1.5 billion in
fiscal year 2016, up from approximately $1.0 billion, estimated for
this year.
- The company will add between 26 and 30
million net retail square feet worldwide next year, a decrease from
this year’s anticipated 32 to 34 million square feet, due to a
moderation of large format store growth and accelerated e-commerce
investments.
- The company’s updated guidance for
capital expenditures in its current fiscal year of $12.5 to $13.0
billion compares to its forecast of $12.4 to $13.4 billion provided
in February 2014.
- Capital investments will range between
$11.6 and $12.9 billion for fiscal year 2016, including a stepped
up commitment for e-commerce. This is below the updated range for
fiscal year 2015 of $12.5 to $13.0 billion, due to the change in
mix of spending toward more digital growth and a moderation of
physical store growth.
- The company also expects fiscal year
2016 net sales growth to range between 2 and 4 percent, which
translates into approximately $10 to $20 billion in net sales.
Wal-Mart Stores, Inc. (NYSE: WMT) today presented its capital
expenditure plans for the next fiscal year ending Jan. 31, 2016 at
its 21st annual meeting for the investment community. Total capital
spending for fiscal year 2016 is projected to range between $11.6
and $12.9 billion, including approximately $1.2 to $1.5 billion for
e-commerce and digital initiatives.
“This is an exciting time for Walmart, as there are so many new
ways to serve customers. Exceeding customer expectations has always
been our goal, and we have short-and long-term opportunities to do
that even better,” said Wal-Mart Stores, Inc. President and CEO
Doug McMillon. “We’ll change the mix of our capital spend next year
to provide greater access, while continuing to focus on price
leadership, service, and a broad assortment. We’ll give customers
the choices they want and need in ways that only Walmart can.”
The company also indicated that as a result of a tougher sales
environment than it anticipated a year ago, it now expects to grow
net sales for the current fiscal year between 2 and 3 percent on
last year’s $473.1 billion. The company indicated in February that
it expected net sales growth to be at the low end of its guidance
provided last October of 3 to 5 percent.
Charles Holley, Walmart’s executive vice president and chief
financial officer, outlined the company’s financial priorities for
growth and detailed the investment and expansion plans for fiscal
year 2016.
“Our business and customers continue to evolve and so will the
way we deploy capital. We will invest more heavily in e-commerce
initiatives, while temporarily moderating our global physical
growth, particularly larger stores,” Holley explained. “We are
focused on creating an endless aisle and appealing to our
customers’ changing needs.”
Holley also discussed the financial performance of the company’s
e-commerce business and provided more insight into certain
financial metrics.
“Globally, we expect to finish this year with approximately
$12.5 billion in e-commerce sales,” said Holley. “Looking forward
we expect an increase in global e-commerce sales of around 25
percent in fiscal year 2016, and we anticipate growth over the
three-year period from fiscal years 2016 through 2018 to average 30
to 40 percent.
“The greatest investment of capital and in operating loss for
our e-commerce operations will come over the next 18 to 24 months,
and then we would expect to see that investment start to moderate
in fiscal 2018,” Holley added.
The company expects net sales to increase by 2 to 4 percent next
year.
“This translates into approximately $10 to $20 billion of net
sales growth,” Holley said. “Operating expenses will grow at a rate
somewhat faster than sales growth and operating income will be flat
to slightly down, given our investments in technology, e-commerce
and digital.”
Capital expenditure details for fiscal
year 2016
Projected capital expenditures are as follows and exclude the
impact of future acquisitions, if any:
Capital Expenditure Detail
(US$ billions)
Segment FY 14
Actual
FY 15
Guidance (Feb.)
FY 15
Guidance (Oct.)
FY 16
Projected
Walmart U.S. $6.4 $6.4 – 6.9
$6.6 – 6.8 $6.1 – 6.6 Walmart
International $4.4 $4.0 – 4.5
$3.8 – 4.1 $3.7 – 4.2 Sam’s Club
$1.1 ~$1.0 ~$0.9
~$0.8
Total segments
$11.9 ~$11.4 – 12.4
~$11.3 – 11.8 ~$10.6 – 11.6 Corporate
& support $1.2 ~$1.0
~$1.2 $1.0 – $1.3
Total
$13.1 ~$12.4 – 13.4
~$12.5– 13.0 ~$11.6 – 12.9
The capital expenditures listed below provide the breakdown
between the company’s physical, e-commerce and digital initiatives
provided above.
Capital Expenditure Detail
(US$ billions)
FY 14
Actual
FY 15
Guidance (Feb.)
FY 15
Guidance (Oct.)
FY 16
Projected
Physical $12.7 ~$11.6 – 12.6
$11.5 – 12.0 ~$10.4 – $11.4 E-commerce
& digital $0.4 ~$0.8
~$1.0 ~$1.2 – 1.5
Holley also discussed the importance of the increased investment
in e-commerce.
“We expect capital investments in e-commerce worldwide to be
between $1.2 and $1.5 billion next year,” Holley explained, “and
these investments will include technology, infrastructure and other
areas to support e-commerce and digital initiatives to serve
customers.”
In fiscal year 2016, the company plans to add between 26 and 30
million net retail square feet, reflecting moderation of new store
openings across its segments. Net retail square footage growth
(excluding future acquisitions, if any) is projected as
follows:
Net Retail Square Footage Growth
(in millions)
Segment FY 14
Actual
FY 15
Guidance (Feb.)
FY 15
Guidance (Oct.)
FY 16Projected
Walmart U.S. 18.4 ~21 – 23
~21 – 22 ~15 – 16 Walmart International
12.5 ~12 – 14 ~9 –
10 ~10 – 13 Sam’s Club 1.7
~2 ~2 ~1
Total
32.6 ~35 – 39
~32 – 34 ~26 – 30
Actual and projected Walmart U.S. units include new stores and
conversions. Given the conversion of Walmart discount stores to
supercenters, the total number of supercenter units will continue
to increase, as the number of discount stores declines. Actual and
projected Sam’s Club units include new stores, expansions and
relocations. Unit growth in the United States is projected as
follows:
Total U.S. Unit Growth
(Gross)
Segment FY 14
Actual
FY 15
Guidance (Feb.)
FY 15
Guidance (Oct.)
FY 16Projected
Supercenters* 130 ~115
~120 ~60 – 70 Small format stores**
121 ~270 – 300 ~ 240
~200 – 220
Total Walmart U.S.
251 ~385 – 415
~360 ~260 – 290 Sam’s Club
20 ~17– 22 ~20
~9 – 12
Total 271
~
402 – 437 ~380
~269 – 302
*Existing supercenters average approximately 179K square feet.**
Existing Neighborhood Markets and rebranded Walmart Express stores
range between 12K and 66K square feet.
Walmart U.S. details
In February 2014, Walmart U.S. increased its original fiscal
2015 projected capital investment by $600 million to a range of
$6.4 to $6.9 billion due to an acceleration of approximately 150
small format openings. However, as a result of the timing of
certain planned small format openings, Walmart U.S. now expects to
open approximately 240 small format units in fiscal 2015, and carry
over approximately 20 units into fiscal 2016.
The company also indicated that during the testing of its
Walmart Express format, the analysis showed customers rely on these
stores for a variety of reasons, including grocery fill-in trips,
last-minute dinner plans and picking up prescriptions. These
patterns closely align with how customers also shop the
Neighborhood Market format, which has become a recognizable brand
that customers identify as a high quality, local grocery store.
Therefore, the company will rebrand Walmart Express as Neighborhood
Market and will utilize this brand for all small format stores,
regardless of square footage.
“We know that our supercenters are an important format for the
stock-up trip, but we want to be thoughtful about our investment,
ensuring that we align the space to evolving customer needs,” said
Walmart U.S. President and CEO Greg Foran. “To do this, we will
moderate supercenter growth in fiscal 2016. Our investment in
Neighborhood Markets will go forward because they continue to show
strong results across the box and they provide our customers with
convenient access to grocery, pharmacy services, and other
quick-trip needs.”
Fiscal year 2016 capital investments are projected to range
between $6.1 and $6.6 billion. The forecast includes new stores,
remodels, conversions, relocations, logistics, e-commerce and
technology infrastructure, and reflects the additions of new units
that will expand Walmart U.S.’s retail space by approximately 15 to
16 million net retail square feet. The company expects to open
between 60 and 70 supercenters and 200 to 220 Neighborhood
Markets.
Sam’s Club details
Sam’s Club will spend approximately $0.9 billion to open about
20 clubs this year, including relocations and expansions. Sam’s
Club is also remodeling approximately 55-60 clubs this year.
“Our new clubs continue to perform well. Starting in the third
quarter of this year, our new clubs incorporate several layout
improvements, including an expanded fresh area and a combined
health and wellness solutions center. These updates enhance the
member shopping experience, and drive stronger sales and leverage
labor efficiencies,” said Sam’s Club President and CEO Rosalind
Brewer.
During fiscal year 2016, Sam’s Club will open approximately 9 to
12 clubs, including relocations and expansions. Remodeling is
slated for between 60 and 65 clubs. Sam’s Club is projecting a
reduction in capital expenditures to approximately $0.8 billion
from its revised fiscal 2015 estimate of $0.9 billion. Sam’s Club
will continue to invest in membership and merchandise
capabilities.
“We are reducing the number of new club openings for next year
and accelerating technology initiatives that integrate our physical
locations with our digital capabilities,” Brewer explained.
Walmart International details
In February 2014, Walmart International indicated that it
expected capital expenditures to range between $4.0 and $4.5
billion and for net square footage to range between 12 and 14
million square feet for fiscal year 2015. As a result of fewer new
store openings in several key markets around the world, it now
expects fiscal 2015 capital expenditures and net square footage
additions to range between $3.8 and $4.1 billion and 9 to 10
million square feet, respectively.
Walmart International will continue to invest in organic growth
across its markets next year. Capital expenditures are expected to
range between $3.7 and $4.2 billion. New store openings in fiscal
2016 are expected to add between 10 and 13 million square feet.
“Our capital guidance for fiscal year 2016 reflects the actions
we are taking to build a platform for sustainable growth in our
five largest markets around the world,” said Walmart International
President and CEO David Cheesewright. “We are managing our
portfolio to be a best-in-class operator through innovation, making
compliance a competitive advantage and winning with an e-commerce
strategy that offers a unique shopping experience for our customers
across all channels.”
Global eCommerce details
Walmart Global eCommerce President and CEO Neil Ashe outlined
the progress made during the past year on the company’s e-commerce
strategy.
“We are delivering best in class e-commerce capabilities that we
are combining with the assets of the world’s largest retailer to
engage with customers in new ways. We have delivered the core
components of our new global technology platform. We are expanding
our next generation fulfillment network to reach our customers fast
and efficiently, and we’re building new data capabilities to
enhance our customer experience” said Ashe.
Ashe announced that next year Walmart will build new online
fulfillment centers in Georgia and Pennsylvania, each over 1
million square feet. These centers will be part of its next
generation fulfillment network that includes dedicated online
fulfillment centers, shared distribution centers, and
ship-from-store locations that are all tied together by one of the
biggest and most efficient transportation networks in the country.
Walmart will also add new fulfillment centers in Brazil and
China.
The company plans to spend capital of approximately $1.0 billion
for e-commerce and digital initiatives this fiscal year and between
$1.2 and $1.5 billion next year.
About Walmart
Wal-Mart Stores, Inc. (NYSE: WMT) helps people around the world
save money and live better -- anytime and anywhere -- in retail
stores, online, and through their mobile devices. Each week, more
than 250 million customers and members visit our 11,100 stores
under 71 banners in 27 countries and e-commerce websites in 11
countries. With fiscal year 2014 sales of over $473 billion,
Walmart employs approximately 2 million associates worldwide.
Walmart continues to be a leader in sustainability, corporate
philanthropy and employment opportunity. Additional information
about Walmart can be found by visiting http://corporate.walmart.com
on Facebook at http://facebook.com/walmart and on Twitter at
http://twitter.com/walmart.
Cautionary statement regarding
forward-looking statements
This release contains certain forward-looking statements that
are intended to enjoy the safe harbor protections of the Private
Securities Litigation Reform Act of 1995, as amended. These
forward-looking statements include statements regarding the
forecasts of Walmart’s management of:
- the capital expenditures to be made in
fiscal year 2015 and fiscal year 2016 by Walmart in total, by each
of its operating segments, by its operating segments in total, for
global physical growth, for e-commerce and digital initiatives and
for corporate and support;
- the net retail square footage growth of
Walmart for fiscal year 2015 and fiscal year 2016 in total and of
each of its operating segments;
- the total U.S. unit growth, the total
unit growth of Walmart’s Walmart U.S. operating segment, the growth
in supercenters and Neighborhood Market units within the Walmart
U.S. operating segment and the total growth in units within
Walmart’s Sam’s Club operating segment in fiscal year 2015 and
fiscal year 2016; and
- the percentage increase in Walmart’s
total net sales in fiscal year 2015 and fiscal year 2016 and the
dollar amount of net sales growth in fiscal year 2016.
These forward-looking statements also include statements
regarding management’s expectations, estimates and projections
relating to:
- Walmart accelerating its investment in
e-commerce while moderating growth in large format stores;
- changing the mix of capital
expenditures made by Walmart in the future from the mix of capital
expenditures in the past;
- the way Walmart deploys capital
continuing to evolve;
- Walmart investing more heavily in
e-commerce initiatives in the future while temporarily moderating
global physical growth, particularly larger stores;
- the growth of Walmart’s e-commerce
sales in fiscal year 2016 and for the three-year period of fiscal
years 2016 through 2018;
- the amount of Walmart’s e-commerce
sales in fiscal year 2015;
- the company’s greatest investment of
capital and in operating loss for the company’s e-commerce
operations coming over the next 18 to 24 months and that investment
starting to moderate in fiscal year 2018;
- the company’s operating expenses
growing at a rate somewhat faster than sales growth in fiscal year
2016;
- the company’s operating income being
flat to slightly down in fiscal year 2016;
- the number of supercenters of the
Walmart U.S. operating segment continuing to increase while the
number of discount stores will continue to decrease as a result of
conversions of discount stores into supercenters;
- the number of new small format stores
to be opened by the Walmart U.S. operating segment in fiscal year
2015;
- the moderation of growth of the number
of supercenters in the Walmart U.S. operating segment in fiscal
year 2016;
- the Walmart U.S. operating segment’s
investment in Neighborhood Market units continuing to go
forward;
- the number of Sam’s Club units to be
remodeled by the Sam’s Club operating segment in fiscal year 2015
and fiscal year 2016;
- the Sam’s Club operating segment
continuing to invest in membership and merchandise
capabilities;
- the Walmart International operating
segment continuing to invest in organic growth in fiscal year
2016;
- Walmart building and adding new
e-commerce fulfillment centers; and
- certain assumptions on which certain of
such forward-looking statements are based.
Such forward-looking statements are not guarantees of future
results and subject to risks, uncertainties and other factors,
domestically and internationally, including:
- general economic conditions, including
the overall sales environment in, economic conditions affecting,
and business trends in, the specific markets in which the company
operates;
- competitive initiatives of other
retailers and other competitive pressures;
- the amount of inflation or deflation
that occurs, both generally and in certain product categories;
- consumer confidence, disposable income,
needs, credit availability, spending levels, spending patterns and
debt levels;
- alignment of Walmart’s stores with
customer needs;
- changes in the level of public
assistance payments;
- customer acceptance of new initiatives
and programs of the company and its operating segments;
- consumer acceptance and use of
Walmart’s various e-commerce websites;
- customer traffic in Walmart’s stores
and clubs and on Walmart’s e-commerce websites and average ticket
size;
- consumer acceptance of Walmart’s
product offerings;
- consumer acceptance of the company’s
stores and merchandise in the markets in which new units are
opened;
- consumer shopping patterns in the
markets in which the small store expansion of the Walmart U.S.
operating segment occurs;
- disruption in the seasonal buying
patterns in one or more of the markets in which Walmart
operates;
- consumer demand for certain
merchandise;
- geo-political conditions and
events;
- weather conditions and events and their
effects;
- catastrophic events and natural
disasters and their effects;
- public health emergencies, civil unrest
and disturbances and terrorist attacks and their effects;
- the retail selling prices of gasoline
and diesel fuel;
- disruption of Walmart’s supply chain,
including transport of goods from foreign suppliers;
- trade restrictions;
- the availability and cost of
appropriate locations for new and relocated stores, clubs and other
facilities;
- local real estate, zoning, land use and
other laws, ordinances, legal restrictions and initiatives that
impose limitations on the company’s ability to build, relocate or
expand stores in certain locations;
- delays in the construction or opening
of new, expanded or relocated units planned to be opened by certain
dates;
- availability of persons with the
necessary skills and abilities necessary to meet Walmart’s needs
for managing and staffing new units and conducting their
operations;
- availability of necessary utilities for
new units;
- availability of skilled construction
labor in areas in which new units are proposed to be constructed or
in which existing units are to be relocated, expanded or
remodeled;
- conditions and events affecting
domestic and global financial and capital markets;
- the unanticipated need to change
Walmart’s objectives and plans; and
- other risks.
Walmart discusses certain of these matters more fully in its
filings with the SEC, including its most recent Annual Report on
Form 10-K (in which Walmart also discusses certain risk factors
that may affect its operations and its results of operations), and
the forward-looking statements in this release should be considered
in conjunction with that Annual Report on Form 10-K, and together
with all of Walmart’s other filings made with the SEC through the
date of this release, including its Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K. We urge you to consider all of
these risks, uncertainties and other factors carefully in
evaluating the forward-looking statements appearing in this
release. Because of these risks, uncertainties, factors, changes in
facts, assumptions not being realized or other circumstances,
Walmart’s actual results may differ materially from anticipated
results expressed or implied in these forward-looking statements.
The forward-looking statements appearing in this release are made
on and as of the date of this release, and Walmart undertakes no
obligation to update these forward-looking statements to reflect
subsequent events or circumstances.
Wal-Mart Stores, Inc.Media Relations ContactRandy
Hargrove, 800-331-0085orInvestor Relations ContactCarol
Schumacher, 479-277-1498
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