But when asked if the 23 year old striker will sign before the end of the month, Wenger said: "Yes. We're on a good road."
The Frenchman added: "I am optimistic we will get to a happy conclusion. I was optimistic last week but I'm a bit more optimistic this week."
"The discussions progress smoothly - slowly but smoothly," added Wenger.
When asked if Walcott's desire to play regularly as the central striker has complicated matters, Wenger explained: "No, it's not linked with that.
"I believe Theo can have a preference maybe to play through the middle, but first of all he never made a conditions of that to extend his contract. Certainly I would not accept it.
"Secondly, he was always happy when he plays - on the flank or through the middle? I see him playing more up front."