Walmart Takes A Break

Walmart WMT has decided to scale back the number of planned U.S. superstore openings in 2007 by more than 25% in an effort to focus more on existing stores. One of the reasons for this decision was the current sagging sales growth and difficulties in expanding its sales of apparel and home decor items. This move would improve service and offerings at existing stores, and will help Walmart cut capital spending to $15.5 billion in 2007.

Wal-Mart will open 190 to 200 new supercenters in the current 2008 fiscal year, rather than the 265 to 270 it originally had announced. The company plans to open about 170 supercenters annually in future years.

Execs also highlighted Wal-Mart's efforts to conserve energy and resources, which have also led to cost savings, and noted their commitment to international markets including China and Mexico. Faced with increased saturation in the United States, Wal-Mart is looking to international expansion to help fuel future growth. They have found success in some countries but have also stumbled in markets such as Germany, which it was forced to abandon.

The stock price has been wayward lately. Announcement of $15 billion stock repurchase plan helped the boost the stock prices. However Walmart has also been found guilty of bad compensation plans. They are accused of not providing their employees good health care and benefits. Walmart execs argue that the company has introduced programs that offer inexpensive health insurance for employees. In response critics believe that the new, cheaper program is not a solution because it requires employees to shell out for high deductibles that are hard to afford on Wal-Mart wages. Traders and investors have played this reputation/image factor of Walmart, driving prices downwards.