UPDATED: Wal-Mart Plans to Slow Supercenter Growth, Buy Back Shares


UPDATED: Wal-Mart Plans to Slow Supercenter Growth, Buy Back Shares
Singer and actress Jennifer Lopez performs Friday at Wal-Mart's annual shareholders meeting at Bud Walton Arena in Fayetteville. (Photo: Walmartfacts.com.)
Wal-Mart Stores Inc. of Bentonville announced Friday that it will scale back plans for new Supercenters, allowing the retailer to reduce capital spending and put more money into stock repurchase plans.
At a meeting with Wall Street analysts last fall, Wal-Mart said it would limit its new Supercenters growth to 260-275 new stores in fiscal 2008. But at its annual shareholders meeting on Friday at Bud Walton Arena in Fayetteville, Wal-Mart reduced that number to 190-200. For fiscal 2009 and beyond, Wal-Mart said Supercenter growth will be cut to around 170 new stores per year.
"While we feel comfortable with these estimates, we will continue to review and evaluate our expansion strategy on an annual basis," John Menzer, Wal-Mart Stores Inc. vice chairman and chief administrative officer, said.
Wal-Mart CFO Tom Schoewe said the slower expansion strategy will lower Wal-Mart's fiscal 2008 capital spending to $15.5 billion from $17 billion.
Wal-Mart also announced a $15 billion shares buyback program.
Both moves sent shares of the world's largest retailer up 4 percent. Shares of Wal-Mart (NYSE: WMT) were trading at $49.70 on Friday after closing at $47.60 on Thursday.
With its stock price stagnant, Wal-Mart’s executives focused on the company's tremendous growth in the last 10 years, rising from $100 billion in sales in 1997 to $345 billion last year, and increasing earnings per share from 65 cents to $2.92.
The lack of movement on Wal-Mart’s stock, a long-time concern on Wall Street, was the focus of several shareholder proposals. Some investment group proposals took aim at Wal-Mart's board of directors, Chairman Rob Walton and CEO Lee Scott. But all were voted down.
Proposals to improve performance ranged from tying executive pay to performance to scaling back its public relations efforts in areas of environmentalism, health care and diversity.
During the session when shareholders presented their proposals, Peter Flaherty, president of the National Legal and Policy Center, said company founder Sam Walton had "a disdain for high-priced PR firms," and ripped Scott for embracing "environmental alarmism" and meeting with Al Gore. He also called board member Chris Williams a "Jesse Jackson crony" and closed by saying "people shop at Wal-Mart for low prices, not because it is politically correct."
Later, a nun from the Benedictine Sisters in Texas chastised Wal-Mart executives for their "generous compensation in an underperforming year" and called the discrepancy between executive pay and Wal-Mart associates "a scandal."
The most pointed critique came from the final proposal by Sydney Kay, who said board members should be required to own large amounts of Wal-Mart stock to give them a "fiduciary responsibility" to the shareholders. Without such a stake in the company’s financial performance, the board amounts to "puppets, flunkies and rubberstampers," Kay said, especially when it comes to compensation packages.

(To see more on the proposals, access Wal-Mart's proxy here.)

Jennifer Lopez, Sinbad
As usual, the shareholders meeting was a star-studded event. The host, comedian Sinbad, cracked jokes about annoying customers and wishing for a "one-aisle" Wal-Mart so he could get in and out without "opening a bank account, getting my hair cut and buying glasses."
New "American Idol" winner Jordin Sparks performed for the first time since winning the Fox TV show two weeks ago, singing Martina McBride’s "Broken Wing" and the new single "This is My Now." Actress/singer Jennifer Lopez closed the meeting with her latest Spanish-language single and her hit "Waiting for Tonight."
Corbin Bleu and Ashley Tisdale, stars of the Disney movie "High School Musical," which spawned a No. 1 album and a sold-out concert tour, danced with the Arkansas Razorbacks cheer squad. Wal-Mart also announced that its back-to-school sale campaign will be tied to the release of "High School Musical 2" on Aug. 17.
Chris Gardner, the inspiration for the Will Smith movie "Pursuit of Happyness," also made an appearance, saluting Wal-Mart for efforts to increase diversity among suppliers around the world.
Video of the annual shareholders is available at www.walmartstores.com/investors.