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Duke: Walmart Scales Down To Grow

In opening remarks at the Wal-Mart, Inc. 20th Annual Meeting for the Investment Community, CEO Mike Duke said that in a “tough and unpredictable global economy,” the company would continue pushing for comparable store sales gains in the United States by stocking up on new merchandise, investing in price via rollbacks and improving in-stock levels. Internationally, the company intends to streamline business by actively managing the operations portfolio, selling restaurants in Mexico and closing underperforming stores in Brazil and China while simultaneously investing in e-commerce.

In the short term, Duke said Wal-Mart will continue to focus on reducing expenses as a percentage of sales by at least 100 basis points over five years. He said that, among the highpoints of the retailer’s recent performance is the reduction of shipping costs and increase in transportation efficiency achieved by the company’s logistics team. In other cost savings successes, Duke said Wal-Mart had implemented a process initiative in China that is generating labor productivity gains. In addition, the company migrated all markets in Latin America except for Brazil to Wal-Mart’s Costa Rican Shared Services Center.  The company will invest savings generated in lower prices, Duke said.

Wal-Mart also has streamlined how it makes real estate decisions and invests capital, Duke said. It is achieving stronger performance from new stores while bringing down the cost associated with building, expanding and remodeling, he asserted.

Duke noted that supercenters remain the company’s primary format in the United States, but he added that Neighborhood Markets and Express stores would play a bigger role in driving domestic growth. Sam’s Club, which, he emphasized, has enjoyed substantial growth recently, will continue disciplined growth, make grand openings major marketing events and integrate physical and digital operations. And, Duke said, Walmart will continue investing in global e-commerce to improve operations fundamentals, innovate, grow in key markets and deliver the Walmart brand to more consumers.