Wal-Mart Takes on the World

by Mark Friedman  on Monday, Dec. 12, 2011 12:00 am  

Despite receiving a setback in India last week, Wal-Mart Store’s international division, which already accounts for more than a quarter of the Bentonville retailer’s sales, is planning even more growth as it marches around the globe.

During the last 10 years, Wal-Mart’s international division’s sales have ballooned 240 percent to $109.2 billion for the fiscal year that ended Jan. 31. If the division were a separate company, it would have ranked No. 40 on the Fortune Global 500, just behind Citigroup.

And the division is on pace to shatter last year’s record sales. For the nine months that ended Oct. 31, Wal-Mart’s international sales were $90.4 billion, up 16.1 percent over the same period in 2010. The international sales have fueled Wal-Mart’s overall sales, which were up 6 percent to $321.57 billion for the nine-month period ending Jan. 31.

The retailer’s attempt to export its business model to India, however, has stalled. In November, the Indian government said it would, for the first time, allow Wal-Mart and other foreign firms to own 51 percent of supermarket chains in India.

Wal-Mart viewed the move as “an important first step,” according to a Nov. 25 company news release. Currently, Wal-Mart can own only wholesale stores in the country of 1.2 billion people.

But last week, the Indian government reversed its position, deciding not to allow foreign companies to enter the country by buying a 51 percent stake in an existing supermarket company.

“We respect the Government’s decision and look forward to a consensus being reached on [foreign direct investment] in multi-brand retail,” Kevin Gardner, a spokesman for Wal-Mart’s international division, said in an email to Arkansas Business.

Other international markets are flourishing, but some retail watchers are questioning how much more Wal-Mart can grow.

“Wal-Mart International will drive growth, will drive aggressive growth,” Doug McMillon, Wal-Mart’s CEO of International Operations, said at a meeting for analysts that was held in Bentonville in October.

At the meeting, McMillon laid out his plan for growing the division and boosting income. For the nine months that ended Oct. 31, net income for the division was $3.9 billion, up 8.4 percent from the previous year.

The top theme for the division’s growth will be “first and foremost” a focus on everyday low prices, McMillon said during the meeting. “We will be an EDLP operator over time around the world,” he said. (EDLP is Wal-Martspeak for “everyday low prices.”) 

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