Wal-Mart Stores Inc. and Nordstrom Inc. might be very different retailers, but they’re both courting investors with multipronged growth stories that have an international bent.
Speaking at the Goldman Sachs 2014 Global Retail Conference last week, David Cheesewright, president and chief executive officer of Wal-Mart’s International division, said the business will do about $140 billion worth of sales this year.
“That would make us in our own right, the second-largest retail business on the planet,” he said. Wal-Mart’s International unit has a diverse portfolio, with operations in 26 countries, plus a number of franchise agreements. There are about 15 core retail formats, but it has more than 70 nameplates after a string of acquisitions.
“We’ve been a growth engine for Wal-Mart,” Cheesewright said.
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China holds the biggest growth opportunity for the retailer, which operates a mix of formats in the country.
“Sam’s Club, which typically targets more affluent customers, has been a very strong business,” Cheesewright said. “I think we have our highest growth in Sam’s Club worldwide in Shenzhen. We’re also seeing growth in some of our supercenters.”
Wal-Mart is taking a new tack in China, after spreading evenly across the entire country. “We’re going back to what Wal-Mart knows best, which is concentric circles,” Cheesewright said. “We’re very clear now about which regions we want to dominate. We’ll build out stores around distribution capability. We’re leveraging our assets and will put most of our resources into the South of China.”
Brazil, another priority, has “a long way to go, but I think we’re growing in confidence that after a couple of failed attempts, we really are going to get that business integrated and create a solid platform for growth there,” Cheesewright said.
And Wal-Mart International is investing in e-commerce, quickly expanding its online businesses. “Across our business, we’ve had significant double-digit growth for e-commerce,” he said.
Nordstrom’s message at the Goldman conference was also heavy on investment.
“We continue to be in a relatively robust investment cycle, if you look at where we are getting our growth,” said Michael Koppel, executive vice president and chief financial officer.
Nordstrom opened a full-line store in Houston last week and is set to cut the ribbon on its first Canadian door in Calgary later this month. The company also plans to add 16 new Rack stores this quarter.
“We’ve got another [full-line store] coming at the beginning of October in Jacksonville, so we continue to grow,” Koppel said. “And on top of that, we continue to invest in our infrastructure to support our online business. We’re opening a new fulfillment center next year in Pennsylvania, and certainly we continue to invest very aggressively in technology and capabilities to support that.”
While investing, Nordstrom is exploring divesting its credit card operation. “Not only do we control the credit business, but we also have a chartered bank that allows us to issue these credit cards across all 50 states. It allows us to issue a private label debit card and it gives us the flexibility to own that customer experience,” Koppel said. “We still feel very strongly about that.…The reason that we said we were interested in entertaining alternatives is there have been some recent transactions that would imply that there is a way for us to potentially have an economic deal, and at the same time, control the customer experience.”