The retailer scales back its U.S. expansion plans as its struggles to get profitable growth back on trackIn an admission that its growth formula has fizzled, Wal-Mart announced on June 1 that it is sharply dialing back expansion plans in the U.S. The world's largest retailer plans to open as many as 190 supercenters this year, a 25% drop from its previously announced plans of opening up to 270.
The company said that approximately 80 of the supercenters originally scheduled to open in January, 2008, will open in early fiscal 2009 instead. The announcement comes just after Wal-Mart reported a 3.5% drop in April sales at stores open a year or more, its largest decline since 1979 (see BusinessWeek, 4/30/07, "Wal-Mart's Midlife Crisis").
With growth harder to come by, the company is using another tried-and-true method to bolster its stock. Wal-Mart also announced on June 1 that its directors approved a new share repurchase program that increases its buyback authorization to $15 billion. Investors liked the sound of that, and bid up the shares by nearly 4% on June 1 to $49.36 in afternoon NYSE trading. Nonetheless, the shares have languished in the upper $40s-low $50s since hitting a peak of $61.21 in early 2004.
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