April 12, 2012 / 3:58 PM / 8 years ago

UPDATE 2-Walmart Int'l focusing on own business over deals

* Walmart focused on returns from existing divisions

* Sees further growth in groceries in Canada

* Business not where it could be in China

By Jessica Wohl and Allison Martell

CHICAGO/TORONTO April 12 (Reuters) - Wal-Mart Stores Inc is focused on improving results in China and other foreign countries where it already operates, rather than on entering new markets, its top international executive said on Thursday.

“Our focus this year in particular has been on improving returns with our existing businesses,” Walmart International Chief Executive Officer Doug McMillon told investors and analysts at a meeting in Toronto that was also webcast.

The bulk of Wal-Mart’s sales and profit come from the United States. The international business is growing much faster, however, since many U.S. markets are already saturated with stores and the economy there remains sluggish.

Much of the meeting focused on Canada, where Walmart says it is now the fastest-growing retailer. The chain is expanding rapidly ahead of Target Corp’s entry into that market.

Walmart Canada has been busy converting many of its outlets to “supercenters,” which sell a wider array of grocery items than regular stores, along with general merchandise.

Slightly more than half of the Canadian stores are now supercenters, and Walmart Canada CEO Shelley Broader said the chain had nearly doubled its share of the fresh food market over the last two years.

“We are in our infancy in the food business,” she said.

Walmart’s supercenter expansion has put pressure on margins at established Canadian grocers like Loblaw Cos Ltd, Metro Inc and Empire Co Ltd’s Sobeys chain.


In two key markets, Walmart is getting ready to move to an everyday-low-price model in China and has already switched to it in Brazil, McMillon said.

In China, some new stores have not been as strong as Walmart would like, he said. And last year, Walmart China dealt with a pork mislabeling problem that led to big leadership changes and the temporary closure of some stores.

“A lot of issues have been identified in China over the last few months,” said McMillon. “It’s just nowhere near what it could be.”


Walmart International is looking at possible deals, both to enter new countries and acquire technology and other capabilities, but for now the focus is largely on the existing business, McMillon said.

“We understand the obligation and opportunity that we have to improve returns, and we will do that,” he said.

Russia is one market that some industry experts expect Walmart to take another look at, after closing its office there in 2010 without opening any stores.

Walmart has no plans to enter Russia, but would not rule it out for the future, McMillon said.

In the latest quarter, Walmart International grew faster that its larger U.S. counterpart. Operating income rose 15.2 percent to nearly $2.31 billion at Walmart International and increased 1.4 percent to $6.11 billion at Walmart U.S.

International results were mixed. Sales growth at Wal-Mart’s Asda chain in Britain slowed from the previous quarter , while Wal-Mart de Mexico, or Walmex , topped analysts’ expectations as it opened more stores.

On Tuesday, Walmex said it had opened 27 stores in March, when sales at stores open at least a year rose 5.6 percent.

Shares of Wal-Mart were up 0.3 percent at $59.98 in midday trading.

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