Wal-Mart's Future: World's Largest Retailer Marches Toward $500 Billion in Annual Sales

by Mark Friedman  on Monday, Jul. 2, 2012 12:00 am  

While domestic sales have flatted out, China is a growth market for Wal-Mart, which already employs more than 100,000 in 370 Chinese stores.

Same-stores sales are considered a key indicator of a retailer’s health because sales are compared with stores that have been open at least a year.

“With the development of the Neighborhood Market as a medium format and the Express [store] as a test small format, we’re seeing our customer respond to those smaller stores,” Karen Roberts, a Wal-Mart U.S. executive vice president, said in a meeting for analysts held in Bentonville in October.

In Wal-Mart’s current fiscal year, it plans to add between 80 and 100 smaller format stores, which are less than 60,000 SF, in the U.S. It plans to add between 130 and 135 larger-format stores, according to an October news release from the company.

Room to Grow

President and CEO Mike Duke said in the October analyst meeting that Wal-Mart’s biggest revenue growth would come from international sales.

“The international business continues to be a vibrant growth engine,” Duke said during the presentation in October. “And the team is growing market share in almost every market we operate.”

It is unclear how a Mexican bribery scandal will affect Wal-Mart’s growth. Shareholders filed a flurry of lawsuits shortly after an April article in The New York Times alleged that Wal-Mart de Mexico officials “had orchestrated a campaign of bribery to win market dominance.”

One lawsuit filed by a shareholder seeks to recover “the hundreds of millions of dollars of financial and reputational damages caused by” the retailer’s alleged bribes. “As a result, the Company is now subject to serious legal liability,” the lawsuit said.

Wal-Mart said in a U.S. Securities & Exchange Commission filing on May 17 that the investigation into its business practices in Mexico could spill over into other areas of the company. Wal-Mart “could be exposed to a variety of negative consequences as a result of the matters,” it said in the filing.

Still, sales from the international division have been soaring. Its sales were up 15.2 percent to $125.9 billion for its fiscal year that ended in January. And for its first quarter of this year, sales were up 15 percent to $32.1 billion, which was about half of the U.S. Wal-Mart’s division sales of $66.3 billion.

Wal-Mart’s overseas growth strategy is the same that made it a retail powerhouse in the first place: a focus on low prices. So engrained is the “Everyday Low Prices” mantra that it has been reduced to an internal acronym: EDLP.

“We will be an EDLP operator over time around the world,” Doug McMillon, Wal-Mart’s CEO of International Operations, said in the October meeting for analysts.

 

 

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