UPDATE 2-Wal-Mart ready for price fight this holiday season

* To introduce new U.S. formats, expand internationally

* Says to cut holiday season prices, lead in entertainment

* To increase spending on store remodels

* Shares down 1.4 pct at $50.99 (Recasts first sentence, adds comments from head of U.S. business, chief merchant, updates share movement)

SAN FRANCISCO, Oct 21 - Wal-Mart Stores Inc <WMT.N> plans to cut prices each week this holiday season as it fights off rivals, and it will put more money toward remodeling stores as it works to keep its newly won market share, executives said on Wednesday.

Wal-Mart has seen more higher-income shoppers come into its stores during the recession. Wal-Mart said that in February 17 percent of traffic growth in its U.S. stores came from new households and the majority of those households had annual income of more than $50,000.

Those new customers are spending more than the average Wal-Mart shopper, who typically has a lower annual income.

The world's largest retailer is doing a good job of retaining new customers who are shopping more frequently and across the entire store, said Eduardo Castro-Wright, vice chairman who oversees the U.S. business.

There had been some concerns that shoppers who came to Walmart stores for low prices on basics such as food might not decide to buy other higher-margin items.

Wal-Mart intends to be the price leader in entertainment products this holiday season, said John Fleming, chief merchandising officer for the company's Walmart U.S business.

Fleming said that the holiday season would be tough but that he likes Wal-Mart's chances.

Wal-Mart has already rolled out aggressive price cuts ahead of the 2009 holiday season. It is offering more than 100 toys for $10 each and it has cut prices on highly anticipated hardcover books by 60 percent or more, igniting a book price cutting war. [nN16185089]

Still, efforts to remodel stores will lead to increased capital expenditures, said Bill Simon, chief operating officer of Walmart U.S.

Walmart U.S. plans capital expenditures of $6.9 billion to $7.1 billion this year, and $6.1 billion to $7.1 billion next year, Simon said.

Wal-Mart is meeting with analysts on Wednesday and Thursday. Its shares were down 71 cents or 1.4 percent about two hours into the meeting.

Chief Executive Mike Duke kicked off the two-day event by telling Wall Street that the world's largest retailer has more room to grow, both at home and internationally.

"I am competitive by nature and I want to win," Duke said in his opening remarks on Wednesday afternoon. "There is no doubt in my mind that Wal-Mart will continue to win in retailing all around the world."

Duke said the company's expenses should grow less than sales. He said that Wal-Mart will work to improve its expense structure by driving more productivity and efficiency.

Last year, starting in early November, the retailer began introducing new rounds of price cuts every week until Christmas as part of what it called "Operation Main Street." It slashed prices on thousands of items that it said were "vital" to the holiday season, like food and toys.