In the latest indication that Wal-Mart is rethinking its foreign strategy, the world's largest retailer is shutting more than 50 underperforming stores in Brazil and China.
Due to fewer store openings in Mexico and India, Wal-Mart reported this week that it would reduce its expected foreign capital investments in 2014 by $500 million, to somewhere between $4 and $4.5 billion. While the chain continues to expand internationally, it has reduced its expected room growth by 30% in 2014, a reduction of 7 million square feet. house and lot for sale
In a statement, Walmart International Chief Executive Doug McMillon said, "We are strengthening our new store success and e-commerce capabilities." "We are optimistic that a solid foundation for long-term growth and enhanced returns will be in place with disciplined growth and greater e-commerce integration in our market."
Wal-Mart revealed earlier this month that it was dropping six-year-old plans to open hundreds of stores in India, citing government regulations as the reason. Wal-Mart also canceled a joint venture with Bharti Enterprises of India to run 20 wholesale stores, though the company still plans to operate its own wholesale business in India.
Wal-Mart has been a major client for commercial property ventures all over the world, and international revenues is seen as a primary growth driver for the Arkansas-based retailer. However, the rate of growth has declined in recent years, falling to 7.4% in the last year from 20% two years earlier. Last quarter, sales at stores open for at least a year fell in Canada, Japan, Mexico, and Central America, according to the company.
"Wal-Mart International continues to be a growth driver for us, even with the reduction in square footage," said Charles Holley, the company's chief financial officer.
Walmart also revealed that in the United States, it would move some of its emphasis from supercenters to smaller stores. According to the business, smaller-format stores, which are usually 20,000 to 40,000 square feet, would account for more than half of new store openings in 2015.
In the next two years, Wal-Mart expects to open more than 500 stores in the United States. In the coming year, the big box retailer plans to expand its e-commerce business from $10 billion to $13 billion.