updated 10/24/2007 6:59:01 PM ET 2007-10-24T22:59:01

Chief Executive Lee Scott told investors Wednesday that Wal-Mart Stores Inc. is focused on improving flagging sales at its existing U.S. stores, even as it cuts plans for new store openings in an increasingly saturated market.

The world’s largest retailer is also looking abroad for stronger growth in the 13 countries where it has stores and hopes to add Russia to a list that already includes China, Britain and Japan, Scott told an annual meeting of investors and financial analysts.

In the longer term, Scott said Wal-Mart’s low-price strategy will allow it to profit in the United States from an “incredible opportunity” as a wave of Baby Boomers retire and need to stretch fixed incomes.

Scott wrapped up the two-day conference in Rogers, Ark., near Wal-Mart’s Bentonville headquarters, with an upbeat assessment that Wal-Mart has a strategy in place to grow while also increasing returns to shareholders.

Scott’s confidence contrasted with the first half of this year, when he said he was “very concerned” as Wal-Mart abandoned last year’s foray into fashion and upscale offerings and sought a way back to its traditional focus on low prices.

Wal-Mart cut its profit outlook for the year when it reported second quarter earnings in August. The company cited a slowing economy and analysts said Wal-Mart was struggling to find the right mix of merchandise.

“My assumption is that all things being equal and the economic environment not being any worse, that I believe that was the low point,” Scott said about the second quarter. He said he was optimistic about holiday sales.

Wal-Mart raised its earnings forecast for the current quarter on Oct. 11, citing improved cost controls.

“As you have heard, we are clearly focused on improving the Wal-Mart Stores U.S. business, with special emphasis on comp store sales,” Scott said, referring to sales at stores opened at least a year.

A key retail measure, Wal-Mart’s same-store U.S. sales have slowed to 0.8 percent through September this year, from 1.9 percent for the last full fiscal year and 3 percent in 2005.

Wal-Mart shares have fallen nearly 15 percent in the past year and are down about a third since Scott took over at the start of 2000.

Scott reiterated the pledge other executives made Tuesday to increase profits and free cash flow, or the money left over after expenses are paid, in part by reducing spending on new U.S. stores. Free cash flow gives a company money for projects or to return to investors, a prospect Scott raised.

“We all know that that then gives Wal-Mart the opportunity to fund initiatives such as additional share repurchases,” Scott said.

Wal-Mart’s international business has been growing faster than the U.S. to account for 22 percent of last year’s total sales of $345 billion. Scott said international will be “a bigger part of our business.”

Mike Duke, head of Wal-Mart International, said the retailer is increasing its spending on new stores outside the United States by about $1 billion this year even as it cuts back on growth at home. Most of that growth will be in China, Canada and Mexico, he said.

On Tuesday, Wal-Mart unveiled plans to cut growth of U.S. stores to about 140 annually by 2009 from 195 this year and a past track record of about 280 a year. That will allow it to cut capital spending in the face of slowing U.S. sales.

Duke said spending on international expansion will increase from $3.5 billion last year to around $4.5 billion this fiscal year, which runs through January.

That spending will be between $4.8 billion to $5.3 billion next year and $5.3 billion to $5.8 billion the following year, he said.

Duke said international growth will increasingly come from developing countries. Wal-Mart’s business includes developed nations such as Britain and Canada but most of its 13 countries are developing markets, including Mexico, Central America, Brazil, Argentina and China. It is starting a joint venture in India.

Scott said Wal-Mart wants to enter Russia, although he did not provide a timeline beyond saying it is exploring the idea.

Scott also defended Wal-Mart’s decision this week to spend $875 million to take full ownership of its money-losing Japanese subsidiary, Seiyu Ltd., despite failing to turn a profit there since Wal-Mart first bought a minority stake in 2002.

“Full ownership of Seiyu will give us the flexibility and freedom to do what we need to do in what is admittedly a challenging market,” Scott said.

Duke challenged comparisons that some analysts have made between Japan and Germany, where Wal-Mart last year sold its loss-making stores. Duke said differences included a more fragmented retail market in Japan and that Wal-Mart has better locations in Japan than in Germany.

Scott also said Wal-Mart has made progress repairing its corporate reputation with initiatives including environmental moves to save energy and cut solid waste and by offering $4 generic drug prescriptions. Union-backed campaign groups launched in 2005 to attack Wal-Mart over issues like the environment and health care.

Wal-Mart shares fell 6 cents, or 0.14 percent, to $43.87 on Wednesday.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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