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Quick Hits: Wal-Mart Slows Global Invasion


Brief scrutiny of today's headlines.

It's not the end of the world, but Wal-Mart's (WMT) decision to open fewer new stores in the next 2 years is certainly a sign of a downbeat economy.

The world's largest retailer plans to open 191 stores in fiscal year 2009, and from 142 to 157 stores in 2010, as compared with 218 new stores in fiscal year 2008. This suggests that Wal-Mart doesn't expect the economy to rebound quickly.

Worldwide, Wal-Mart operates about 7,250 stores, including about 975 discount stores, 2,800 combined discount-grocery stores and 590 warehouse stores under the Sam's Club name. About 55% of its stores are in the US. The company is also the top retailer in Canada and Mexico.

Wal-Mart's capital expenditures are expected to total $5.8 billion to $6.4 billion in fiscal year 2009 and $6.3 billion to $6.8 billion in 2010. That's a drop from the $9.1 billion the company spent on capital projects in its last fiscal year.

Wal-Mart will remodel more existing stores to offset the slower openings, but it's unclear how many stores will be remodeled or how extensive the remodeling will be.

Lee Scott, Wal-Mart's president and chief executive officer, told analysts meeting at a 2-day investor conference in Bentonville, Arkansas that customers are more thoughtful and cautious about their spending in the current economic climate. This forces retailers to scramble, offering discounts and changing how merchandise is displayed.

For the holiday season, Wal-Mart plans to roll out Christmas shops that feature wrapping paper and holiday decorations. The company also plans to display holiday gifts throughout its stores.

Rival Target (TGT) stressed extras such as trendy clothes. That tactic made sense in a strong economy, but leaves Target vulnerable as many shoppers cut back on non-essentials or economize amid job worries.

Wal-Mart isn't standing still. The king of big-box retailing will test small-format neighborhood food stores in Phoenix, Arizona and may soon take the idea national.

Don't bet against Wal-Mart, even in an increasingly sour economy.

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