Wal-Mart: Brazil, China business is looking up

Walmart store in Pacaembu neighborhood, west of Sao Paulo, southeastern Brazil on November 28, 2013. provided to china daily

A sales increase at Wal-Mart stores in Brazil and China and the closing of 54 stores in both countries is why the world's largest retailer is seeing business improve in the markets, according to a company executive.

Kevin Gardner, senior director of International Corporate Affairs for Wal-Mart Stores Inc, said that the store closings are "part of the transformation process" for Wal-Mart's "businesses in both countries". News of Wal-Mart's plans to close 54 stores in China (29) and Brazil (25) surfaced during an analysts meeting in October.

"Despite the closure of some underperforming stores, we're continuing to grow our business," Gardner told China Daily Thursday in an email. "This lays the groundwork for delivering our financial priorities — growth, leverage and returns."

Wal-Mart — the world's largest retail outlet — is a multinational retail conglomerate headquartered in Bentonville, Arkansas, that runs a chain of department stores, including Walmart Supercenter and Sam's Club.

On Feb 20, Wal-Mart announced its fourth-quarter and fiscal year results.

The company's 12-month net revenue climbed to $476.3 billion and fourth-quarter revenue was $129.7 billion — year-on-year increases of 1.6 and 1.5 percent, respectively.

Wal-Mart's fourth quarter net sales in Brazil grew 5.3 percent while China saw sales climb by 3.7 percent, according to Gardner.

Walmart Brazil and Walmart China both began in the mid 1990s, with two supercenters opening in Sao Paulo in 1995 and a megastore in Shenzhen in 1996. The two countries now account for 960 total retail units and more than 176,000 employees, according to Gardner.

The company's plans in China and Brazil center on the growing trend of e-commerce sales, but the opening of more than 100 new stores in China will create close to 20,000 jobs in the next three years, according to an Oct 24 press release from the company.

Doug McMillon, president and CEO of Wal-Mart, said Wal-Mart's "ability to combine online and mobile with the assets of the world's largest retailer" gives the company a "competitive advantage" in the growing online marketplace.

"Each operating segment strengthened its e-commerce platforms [in 2013], and customers responded, driving annual global e-commerce sales above the $10-billion mark, a 30 percent increase from 2013," McMillon said during the company's fourth-quarter earnings conference call.

In October 2012, Wal-Mart announced an additional investment in Yihaodian — a Chinese business-to-consumer e-commerce site serving over 100 cities in China — bringing its ownership stake to about 51 percent.

During an October visit to Beijing, Walmart China President and CEO Greg Foran told reporters that Wal-Mart's plans to close underperforming units and open new outlets in China would help accelerate the company's development in the world's second-largest economy.

"These closures represent up to 9 percent of our total store portfolio, but … taking this action is appropriate and enables us to grow in China," Foran said in a company press release.

Reuters reported on Feb 21 that Wal-Mart's international business has been the subject of increased attention after accusations of bribery in Mexico surfaced in 2012. Later that year, the company launched investigations into its business in China, Brazil and India.

David Cheesewright, president and CEO of Walmart International, said the company has been focusing on ways to secure growth and returns on its investments.

"As we've said for some time now, we're operating in a challenging global environment," Cheesewright said during a conference call on Feb 20. "We've initiated actions in Mexico, Brazil, China and India to improve our operating model … and this will continue to be a priority this year. Having said that, we're confident that our teams are aligned on the right strategies to succeed and deliver our core mission."