Wal-Mart Plans to Open Fewer Stores to Invest More in Digital and Technology

walmart-to-invest-digital

Wal-Mart on Thursday reiterated its guidance for the current fiscal year, and said it expects next year’s earnings to come in relatively flat as it invests more in digital and technology.

The world’s largest retailer also said it will open slightly fewer stores than originally planned this year, and said it will significantly slow its pace in fiscal 2018.

Wal-Mart outlined its plans for the upcoming fiscal years ahead of its annual investor day in Bentonville, Arkansas.

The low-price chain still expects adjusted earnings per share of $4.15 to $4.35 this year. For fiscal 2018, the company predicts earnings will be relatively flat with this year’s adjusted figure. And in 2019, it expects earnings growth of 5 percent.

At last year’s investor day, Wal-Mart said it expected earnings per share in fiscal 2018 to increase modestly, and then grow 5 to 10 percent in fiscal 2019.

The company said it will spend $11 billion in capital expenditures this year and next. But more of that money will be going toward e-commerce, including the buildout of distribution centers.

Wal-Mart will open 130 U.S. stores, down from its original projection for 135 to 155. And next year, it will open just 55 U.S. stores. That breaks down into 35 supercenters and 20 of its smaller Neighborhood Markets.

“We are encouraged by the progress we’re seeing across our business and we’re moving with speed to position the company to win the future of retail,” CEO Doug McMillon said in a statement. “Our customers want us to run great stores, provide a great e-commerce experience and find ways to save them money and time seamlessly — so that’s what we’re doing.”

The retailer entered its annual meeting with momentum at its back, including its biggest quarterly same-store sales gain in four years during the period ended July.

Ahead of Thursday’s announcement, Wal-Mart shares were up more than 17 percent this year. That was a marked shift from 2015, when investors worried the company’s pricey turnaround plan — which included a $2.7 billion investment in wages — would not deliver.

Click here to read more.

SOURCE: CNBC, Krystina Gustafson