Wal-Mart Stores Inc., the world’s largest retailer, rose to the highest ever after the company said its back-to-school season was “very strong” and annual sales would grow as much as 7 percent next year.
Shares of the Bentonville, Arkansas-based company climbed 1.7 percent to $75.42 at the close in New York, the highest price since its initial public offering in 1970. The stock also gained after Costco Wholesale Corp. posted fiscal fourth-quarter profit that topped analysts’ estimates. Costco rose 1.9 percent to $101.56.
Wal-Mart Chief Executive Officer Mike Duke has been cutting prices to lure shoppers seeking bargains amid the sluggish U.S. economy. The strategy has helped the company boost same-store sales after two years of declines. Sales of planners and writing utensils helped back-to-school results, Duncan Mac Naughton, chief merchandising and marketing officer of Wal-Mart U.S., said today in a presentation to analysts.
Sales for the fiscal year ending January 2014 will increase 5 percent to 7 percent, Chief Financial Officer Charles Holley said in the presentation. That’s the same growth rate the company forecast for this year. Capital expenditures for next year will be as much as $13 billion, he said. They were expected to be as much as $13.5 billion this year.
More U.S. Stores
Total retail space will grow by as much as 40 million square feet with as many as 260 new U.S. locations in fiscal 2014, the company said in a statement. This year it will add 219 U.S. stores, and space will grow by as much as 39 million square feet, the company said.
Part of the expansion will be opening more small-format Walmart Neighborhood Market locations in the U.S. The company plans to more than double those locations to 500-plus by its fiscal 2016, Bill Simon, CEO of Wal-Mart U.S., said in the presentation. Wal-Mart will have about 240 of the stores by the end of its fiscal 2013, which ends in January, he said.
“We want to serve customers we haven’t been able to serve,” Simon said.
Sam’s Club, Wal-Mart’s chain of warehouse clubs, is testing pricier memberships, said Rosalind Brewer, the division’s CEO. The base membership increased to $45 from $35, and the mid-level was changed to $45 from $40. The premium membership stayed at $100. Sam’s Club hasn’t raised membership prices since 2006, Brewer said.
In a presentation on its international divisions, Wal-Mart said it would be ready for Target Corp.’s entry into Canada. Target, the second-largest U.S. discounter, will open its first stores outside the U.S. in Canada next year.
“We’ve had a couple of years to prepare,” said David Cheesewright, CEO of Wal-Mart in Africa, Canada, Europe and the Middle East. “We know Canadians well. We’ve been there 18 years.”