Expect a fierce battle for this middle space as drugstore chains and Wal-Mart square off.
Although growth in these regions is factored into our analysis, further upside could impact Wal-Mart International revenue per square foot.
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For instance, Wal-Mart recently opened a 99, 000 square-foot outlet in Florida.
This highlights the fact that the electronics Best Buy sells generate a much higher revenue per square foot than Wal-Mart and so it makes sense for Wal-Mart to want to push into this business.
Leading the industry in sales per square foot, which Wal-Mart does thanks partly to its extraneous businesses like auto service and (now) healthcare, is a huge advantage in the retail world.
We expect CapEx as Percent of Gross Profits to slightly increase as Wal-Mart focuses on international expansion by increasing its retail square footage.
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Home Depot, IKEA, Target and Wal-Mart all have distribution centres of more than 1m square feet (100, 000 square metres) in the Savannah area to handle cargo coming through the port, which sits at a nexus of interstate highways and railway lines that provide quick access to the south-east and Midwest.
Because the Siegels, along with their children, nannies, maids, dogs, lizards, a python and enough possessions to fill a Wal-Mart, couldn't contain themselves within the 26, 000 square feet of their starter mansion.
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Some of Wal-Mart's new supercentres, which can range up to 220, 000 square feet in size, are now being designed to be just a fraction smaller than the 100, 000 square-foot limits on retail units that have been imposed in some parts of America.
Others like Wal-Mart, Target and Staples are opening up in urban (and some suburban) areas with fewer square feet.
The higher than expected increase in Revenue per Square Foot for Best Buy U.S. may come at the expense of competitors like Wal-Mart and RadioShack.
This bodes well for Wal-Mart as we maintain our bullish take on the company driven by expected improvements in sales metrics (like revenue per square foot) and stable profit margins.
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