Walmart investing in e-commerce, slowing physical growth

Walmart (NYSE:WMT) announced it would increase spending on e-commerce and digital initiatives as the retailer shifts focus away from store openings to building a digital presence.

The company will increase spending on technology infrastructure from an estimated $1 million this year to between $1.2 and $1.5 billion in fiscal 2016. The retailer will also add between 26 and 30 million physical sq. ft. worldwide, a decrease from this year's 32 to 34 million sq. ft.

During the company's annual meeting for the investment community, the retailer outlined expenditure plans for fiscal 2016. Total capital spending will range between $11.6 and $12.9 billion, with $1.2 to $1.5 billion of that allocated for e-commerce and digital initiatives.

"This is an exciting time for Walmart, as there are so many new ways to serve customers. Exceeding customer expectations has always been our goal, and we have short-and long-term opportunities to do that even better," said Doug McMillon, president and CEO, Walmart. "We'll change the mix of our capital spend next year to provide greater access, while continuing to focus on price leadership, service and a broad assortment. We'll give customers the choices they want and need in ways that only Walmart can."

The company also lowered its net sales growth expectations for the year from between 3 and 5 percent to between 2 and 3 percent due to a tougher sales environment

"Globally, we expect to finish this year with approximately $12.5 billion in e-commerce sales," said Charles Holley, Walmart's executive VP and CFO. "Looking forward we expect an increase in global e-commerce sales of around 25 percent in fiscal year 2016, and we anticipate growth over the three-year period from fiscal years 2016 through 2018 to average 30 to 40 percent."

Walmart also recommitted to investing in smaller-format stores while cutting investments from larger formats. The brand will open between 60 and 70 supercenters and 200 to 220 Neighborhood Markets in 2016. Walmart recently announced that it would rebrand all of its smaller format stores to be under the Neighborhood Market brand.

The company is optimistic about its winning formula. McMillon outlined the four key customer dimensions that Walmart is focused on for winning over consumers of the future: price, assortment, experience and access.

For more:
-See this Walmart press release

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