Wal-Mart Cuts Spending

It says U.S. capital spending will be flat next year.
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Wal-Mart Stores (WMT) - Get Report said it will cut capital spending next year as it re-evaluates real estate projects.

The Bentonville, Ark., retailer said it will open 600 stores next year, putting square-footage growth at a projected 7.5%. Much of that will come overseas, where square footage will increase 10%. U.S. square footage will rise 7%.

But the company said capital spending in 2008 will rise just 2%-4% from a year ago, a sharp slowdown from fiscal 2007's projected 15%-20% expansion.

"We are still very committed to growth, but our real estate projects are now being subjected to a more rigorous prioritization process," said Wal- Mart Vice Chairman John Menzer. "This store selection process will enable the Company to drive higher returns by focusing on locations that make the most efficient use of capital."

The company said U.S. capital spending will be flat, as Wal-Mart builds fewer U.S. units, flattens construction costs, boosts its distribution center network and increases design efficiency.

"Our long-term goal is to continue to have our capital expenditures grow at a rate equal to or less than sales growth," the company added. "Additionally, over time, we expect our new capital efficiency model to reduce the impact of cannibalization."