Wal-Mart says new stores, ecommerce to boost sales

Wed Oct 10, 2012 6:13pm EDT
 
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By Jessica Wohl

(Reuters) - Wal-Mart Stores Inc (WMT.N: Quote) expects sales to grow throughout this year and next, as the world's largest retailer keeps enticing shoppers, especially those on limited budgets, with smaller new stores, ecommerce and lower prices.

Wal-Mart also said on Wednesday that it plans to add roughly the same amount of store space in fiscal 2014 as it has planned for fiscal 2013, and will still open more supercenters than smaller stores in the United States, its largest market.

The retailer also touted strong sales at U.S. grocery stores and a big start to holiday layaway sales, Its shares close 1.7 percent higher at $75.42 after jumping to an all-time high of $76.81 during the annual meeting with analysts and investors.

Shares came off session highs after Chief Financial Officer Charles Holley forecast 5 percent to 7 percent sales growth for fiscal 2014. That matched but did not exceed the growth forecast for the current fiscal year 2013 ending in January.

In the year since the last investor meeting, Wal-Mart's U.S. arm, by far its largest business, has rebounded from a prolonged slump. At the same time, its international operations have come under scrutiny following a New York Times article in April about alleged bribery at its Mexican unit.

Walmart plans to more than double the number of its Neighborhood Market grocery stores in the United States by fiscal 2016, putting more pressure on grocers such as Kroger Co (KR.N: Quote), Safeway Inc SWY.N and Supervalu Inc (SVU.N: Quote).

Smaller than supercenters and focused on groceries, the stores have become more profitable as Walmart has added more. Sales at existing Neighborhood Market stores have grown in excess of 5 percent, or double the overall Walmart U.S. rate, as shoppers find them more convenient.

"They kind of have the keys to the castle now," Susquehanna Financial Group analyst Bob Summers, who has a "buy" rating on Wal-Mart, said of the Neighborhood Market format.   Continued...

 
A Walmart store, that was destroyed by a tornado and later rebuilt, is seen in Joplin, Missouri May 17, 2012. May 22 marks the one year anniversary of a deadly EF-5 tornado that ripped through the town, killing 161 people. REUTERS/Eric Thayer