American Stores
Capital Expenditure Program
Back To Our Corporate Listings || Back To Our Fact Book Table Of Contents
CAPITAL EXPENDITURE PROGRAM
Over the last several years, the Company has significantly increased its capital spending to improve and expand its store base. Capital spending grew from $565 million in 1994 to $1.2 billion in 1997. New and replacement stores are an increasingly important focus of the capital spending program, accounting for 45% of capital spending in 1995 and 57% in 1996 and 1997. In 1997, the Company opened 96 new stores, completed 32 major remodels and 33 minor remodels and closed or sold 68 stores. Capital expenditures for the last three years have totaled over $3.0 billion. The Company expects to continue to make significant investments in its store base. In 1998, the Company plans to open approximately 75 new and replacement stores, including 20-25 combination stores and 40-50 drug stores, and to remodel approximately 90 stores.
The Company believes an aggressive and well-managed capital expenditure program is essential to maintaining and growing its store base. The Company's strategic and financial guidelines are designed to focus spending in the Company's core businesses and maintain the Company's investment grade credit rating. The Company believes a capital expenditure rate of approximately 5% of sales achieves this balance. The Company's capital guidelines call for approximately 80% of total capital expenditures to be expended on new stores, replacements, enlargements and remodels and approximately 20% on infrastructure projects. The Company completes a 5-year strategic plan relative to capital expenditures for each of its markets and all expenditures are subject to rigorous return on investment reviews.
The focus of the Company's store capital spending program is large combination food and drug stores and free-standing drug stores. The combination store format maintains the identity and full selection of both a food and a drug store, and thus provides the opportunity for customers to fulfill their food shopping and drug shopping needs in one trip.
The Company believes that having both combination stores and stand-alone drug stores in the same market better enables it to meet customer needs and reinforces the separate identities of the food and drug store.
Back To Our Corporate Listings || Back To The Table Of Contents
TOP