Egg Industry News and Commentary

  —  Apr 14

 
Supermarkets Scale Back Capital Expenditure

    

In a March 30th article by Mark Hamstra in Supermarket News, leading chains intend to throttle back capital expenditure during the coming year based on expectations of continued food deflation and lower traffic.

Kroger Company will reduce capital expenditure from $3.7 billion in fiscal 2016 to $3.2 billion in fiscal 2017.  There will be a 35 percent reduction in new-store development with 55 projects planned compared to 85 in fiscal 2016.

 

The company will implement 175 major remodels but will invest in digital technology and project which will improve efficiency.  Michael Schlotman, Executive Vice President and CFO stated recently, “Capital expenditures in 2017 will be focused on sale-generating initiatives, remodels, upgrades to our logistics network and merchandising systems and digital and technology initiatives.

  • Whole Foods will reduce capital expenditure with emphasis on new stores.  In 2015 the company opened 32 new stores followed by 25 in 2016.  Eleven new stores were opened during the first quarter of fiscal 2017 with three more relocations planned for 2017.
  • Walmart reduced capital expenditure from $6.8 billion in fiscal 2016 to $6.1 billion for the current fiscal year.  Progressively the number of new superstores has declined from 69 in fiscal 2016 to 60 in 2017 and 35 for fiscal 2018. Small-format stores will be reduced to 20 planned in the current year down from 70  last year.
  • Publix Supermarkets will follow a contrary path by projecting an increase in capital expenditure from $1.4 billion in 2016 to $1.9 billion in 2017.  The company will undertake 156 remodels, seven replacements and will construct 32 new supermarkets during the current fiscal year.