By and  on October 24, 2006

Wal-Mart announced plans Monday to adjust its growth model, scoring a hit with Wall Street.

The world's largest retailer will slow the pace of U.S. expansion and spending next year as it seeks to improve returns and jump-start its stock price.

In another key shift, the company intends to halt a market saturation strategy in which giant supercenters — stores of at least 100,000 square feet or more — were built a mile apart, which cannibalized existing store sales and was unpopular with some investors.

Wal-Mart, which has been lagging in apparel, will also remove the trendy Metro 7 line from some stores.

"For the past several years, our company goal was 8 percent annual square footage growth," said Wal-Mart vice chairman John Menzer, speaking Monday during the company's annual two-day presentation to Wall Street analysts in Teaneck, N.J. "We believe now because of the company's size…this level would be difficult to achieve in future years."

Wal-Mart, which has more than 6,500 stores in 15 countries and reported sales of $312 billion last year, said it would grow square footage by 7 percent in the U.S. and 10 percent abroad in the next year. It plans to build 305 to 330 stores in the U.S. Of those, 265 to 270 will be supercenters.

Capital expenditures for building and remodeling stores will only grow 2 to 4 percent next year, compared with about $18 billion in 2006, which was a 15 to 20 percent rise over the previous year, chief financial officer Tom Schoewe told analysts.

"We can still grow very rapidly, but what you're going to sense is a lot more concern about capital efficiency," he said.

Wal-Mart shares, which have mostly been stuck at less than $50 for years, jumped $1.91, or 3.87 percent, to close at $51.28 in New York Stock Exchange trading, the highest level in about 20 months.

Propelled by optimism about earnings reports, cheaper gas and Wal-Mart, the Dow Jones Industrial Average jumped 115 points, or 0.95 percent, to close at a record 12,116.91, breaching the 12,100 mark for the first time after crossing 12,000 just last week. Several retail stocks traded heavily, with teen specialty retailer Abercrombie & Fitch up $3.97, or 5.29 percent, to close at $78.99. Shares of Pacific Sunwear jumped 95 cents, or 5.85 percent, to $17.18, after Bank of America upgraded the company's stock on the anticipation of a turnaround under new leadership. Shares of Gap Inc. also rose by 76 cents, or 3.94 percent, to close at $20.06.

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