Wal-Mart weighs first stores in Southeast Asia
Wal-Mart Stores, the world’s top retailer, is considering its first stores in Southeast Asia and expects to approach 10% growth in international sales to $100 billion this fiscal year despite a global economic slowdown.
By Agencies |
HONG KONG: Wal-Mart Stores, the world���s top retailer, is considering its first stores in Southeast Asia and expects to approach 10% growth in international sales to $100 billion this fiscal year despite a global economic slowdown. The retailer, a perennial runner-up to Carrefour in China in terms of sales and stores, is enjoying a huge leap in market share as it advances with a $1 billion acqusition of local chain Trust-Mart, expected to be fully completed by 2010.
The US household name, which has roughly 2.1 million employees worldwide, is now looking to expand into Southeast Asia as US consumers are squeezed by a soft housing market and tighter access to credit. ���I foresee international will outpace the US in terms of percentage of growth. We should be approaching the $100 billion mark this year for international,��� said Asia CEO Vicente Trius.Last month, Wal-Mart posted a 17% jump in second-quarter profit to $3.45 billion, on the back of a 17% increase in international sales to $25.26 billion.
But the discount retailer forecast current quarter results could miss Wall Street estimates as consumers worldwide deal with tough economic times. Analysts said Wal-Mart���s third-quarter outlook was lower than some expected, and warned that tougher times could be ahead. ���Although the international business continues to expand its presence within Wal-Mart���s operations, a drop in inflation rates or a strengthening dollar coupled with more difficult comparisons in the second half of FY09 could start to hold down the accelerated pace in sales growth Wal-Mart has experienced during the 1st half of this year,��� Credit Suisse analysts said in a research note.
On Wednesday, the US behemoth opened its Asian regional headquarters in Hong Kong, which will oversee its business in Japan, India, and China. Wal-Mart, which operates more than 4,000 stores in the United States and 3,000 stores in 13 other countries, posted $90.6 billion in international sales last fiscal year, about a quarter of overall revenue. In Asia, the firm operates 394 Seiyu stores in Japan and more than 200 stores in China. It also holds a minority stake in the 102-unit Trust-Mart chain in China and has a joint venture with Bharti Enterprises in India.
Since 2002, Wal-Mart has invested about $2.2 billion in Seiyu, which remains loss-making due to stiff competition. But Trius said Wal-Mart would not back out of Japan like it did in Germany and South Korea.
���No way,��� Trius said regarding a pull-out. ���These country comparisons are completely wrong. Germany was a consolidated market, but Japan is still fragmented.��� Wal-Mart���s major competitors include Germany���s Metro AG, France���s Carrefour, Britain���s Tesco and a host of local players in separate countries. Asked where else in Asia the discount retailer might expand, Trius confirmed Vietnam, Indonesia, and Thailand are all potential markets.
Wal-Mart, founded in 1962 and based in Bentonville, Arkansas, entered China in 1996, where it competes with international rivals and local competitors Lianhua, Wumart and Times for a slice of the country���s booming $1.3 trillion retail market.
China, which makes many of the clothes, toys and other products sold by Wal-Mart worldwide, has seen inflation surge to its highest levels in 11 years. But Trius said Wal-Mart expects improved management of its supply chain will help offset inflationary pressures in China, where it directly sources $9 billion in manufactured products a year.
Shares in Wal-Mart have gained more than 25% this year, easily outperforming a 13.2% loss on the Dow Jones industrial average.
The US household name, which has roughly 2.1 million employees worldwide, is now looking to expand into Southeast Asia as US consumers are squeezed by a soft housing market and tighter access to credit. ���I foresee international will outpace the US in terms of percentage of growth. We should be approaching the $100 billion mark this year for international,��� said Asia CEO Vicente Trius.Last month, Wal-Mart posted a 17% jump in second-quarter profit to $3.45 billion, on the back of a 17% increase in international sales to $25.26 billion.
But the discount retailer forecast current quarter results could miss Wall Street estimates as consumers worldwide deal with tough economic times. Analysts said Wal-Mart���s third-quarter outlook was lower than some expected, and warned that tougher times could be ahead. ���Although the international business continues to expand its presence within Wal-Mart���s operations, a drop in inflation rates or a strengthening dollar coupled with more difficult comparisons in the second half of FY09 could start to hold down the accelerated pace in sales growth Wal-Mart has experienced during the 1st half of this year,��� Credit Suisse analysts said in a research note.
On Wednesday, the US behemoth opened its Asian regional headquarters in Hong Kong, which will oversee its business in Japan, India, and China. Wal-Mart, which operates more than 4,000 stores in the United States and 3,000 stores in 13 other countries, posted $90.6 billion in international sales last fiscal year, about a quarter of overall revenue. In Asia, the firm operates 394 Seiyu stores in Japan and more than 200 stores in China. It also holds a minority stake in the 102-unit Trust-Mart chain in China and has a joint venture with Bharti Enterprises in India.
Since 2002, Wal-Mart has invested about $2.2 billion in Seiyu, which remains loss-making due to stiff competition. But Trius said Wal-Mart would not back out of Japan like it did in Germany and South Korea.
���No way,��� Trius said regarding a pull-out. ���These country comparisons are completely wrong. Germany was a consolidated market, but Japan is still fragmented.��� Wal-Mart���s major competitors include Germany���s Metro AG, France���s Carrefour, Britain���s Tesco and a host of local players in separate countries. Asked where else in Asia the discount retailer might expand, Trius confirmed Vietnam, Indonesia, and Thailand are all potential markets.
Wal-Mart, founded in 1962 and based in Bentonville, Arkansas, entered China in 1996, where it competes with international rivals and local competitors Lianhua, Wumart and Times for a slice of the country���s booming $1.3 trillion retail market.
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China, which makes many of the clothes, toys and other products sold by Wal-Mart worldwide, has seen inflation surge to its highest levels in 11 years. But Trius said Wal-Mart expects improved management of its supply chain will help offset inflationary pressures in China, where it directly sources $9 billion in manufactured products a year.
Shares in Wal-Mart have gained more than 25% this year, easily outperforming a 13.2% loss on the Dow Jones industrial average.
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