Wal-Mart’s international growth will keep pace or even surpass U.S. expansion, a top company official said Tuesday.
Speaking in Toronto, Charles Holley, executive vice president of finance and treasurer of Wal-Mart Stores, said there will be 625 to 660 Wal-Marts in their various formats opening in fiscal 2008 around the world — 305 to 330 in the U.S.
“In 1997, international sales represented 5 percent of Wal-Mart’s revenue,” Holley said at the company’s Analyst & Investor Field Trip to Canada seminar. “That figure is now 22 percent.”
Although U.S. store sales were up 7.8 percent last year, international sales were up 30.2 percent, much of it through acquisitions. In U.S. operations, apparel and home furnishings have not performed as well as grocery, home entertainment and health and wellness sales, which Holley said should improve in six months in back-to-school selling.
The $352 billion retailer has said it wants to slow the pace of expansion in the U.S. and focus on generating more profits from existing stores. Most of the four-hour seminar centered on Wal-Mart’s Canadian operations and a look at the changing retail environment of that country.
General merchandise accounted for about 49 percent of Wal-Mart Canada’s $391 million in retail sales last year, up 6.4 percent from 2005. Growth during the current year will remain strong, but not as good as last year, executives said.
One of the biggest changes is the growth of foreign general merchandise retailers in Canada from 10 in 1985 to more than 100, including Wal-Mart, which began Canadian operations in 1994 when it took over 120 former Woolco stores. There are now 290 Wal-Mart and Sam’s Club stores in Canada. Apparel is available in 125 Wal-Marts and will be in all stores by the end of this year. The labels include George, B.U.M., Penmans, 725 and Athletic Works.
“We’ve identified fashion to match the sensibilities of Canadians,” said Jim Thompson, senior vice president of merchandising. “The key is to deliver trendy fashion with entrenched value. We’re also exploring the possibility of bringing George Home Fashions to Canada.”
George is now considered an important fashion brand among Canadians, experiencing double-digit growth in the last year, said Mark Dombrow, director of marketing for Wal-Mart Canada.
Since 80 percent of Canadians live in the country’s six largest cities, Wal-Mart will take advantage of this demographic in its real estate strategy by opening downtown stores in some of the bigger cities, including Montreal, Toronto and Vancouver.
The retailer will also open 60,000-square-foot prototypes in smaller towns of around 10,000 people, but its focus will remain on bigger markets. Wal-Mart Canada’s growth plans this year include expanding 10 discount stores to supercenters and opening 10 new supercenters.