Executive Briefings

Retailers Put the Brakes on Expansion

Pressed by a slowing economy, retailers are starting to scale back expansion plans, in an attempt to curtail expenses and boost profits at existing locations. Wal-Mart said earlier this year that it will slow square footage growth to 5 percent to 6 percent, down from a historical pace of 9 percent, a move that is expected to improve earnings by lowering projected costs. McDonald's, too, has drastically reduced store openings in recent years to better focus on improving operations at existing restaurants, a decision that has helped to fatten earnings and boost the company's share price.
Other retailers are starting to put the brakes on store expansion. Walgreen Chief Executive Jeffrey Rein said recently that a slowdown in store openings was under consideration, signaling an important change in strategy for the drug store chain, which has grown rapidly in recent years through new outposts. Starbucks, Chico's and Wet Seal also have said they would slow the pace of new stores, in a bid to improve profits and sales at existing locations.
Source: Fortune, http://money.cnn.com

Pressed by a slowing economy, retailers are starting to scale back expansion plans, in an attempt to curtail expenses and boost profits at existing locations. Wal-Mart said earlier this year that it will slow square footage growth to 5 percent to 6 percent, down from a historical pace of 9 percent, a move that is expected to improve earnings by lowering projected costs. McDonald's, too, has drastically reduced store openings in recent years to better focus on improving operations at existing restaurants, a decision that has helped to fatten earnings and boost the company's share price.
Other retailers are starting to put the brakes on store expansion. Walgreen Chief Executive Jeffrey Rein said recently that a slowdown in store openings was under consideration, signaling an important change in strategy for the drug store chain, which has grown rapidly in recent years through new outposts. Starbucks, Chico's and Wet Seal also have said they would slow the pace of new stores, in a bid to improve profits and sales at existing locations.
Source: Fortune, http://money.cnn.com