Wal-Mart eyes e-commerce in fast-growing Brazil
SAO PAULO/NEW YORK (Reuters) - Wal-Mart Stores Inc said on Thursday it will branch out into electronic commerce this year in Brazil, where it plans to invest 1.2 billion reais ($722.8 million) to keep up with fast-growing consumer demand.
Hector Nunez, chief executive of Wal-Mart Brazil, said the plunge into e-commerce will be a crucial part of the U.S. retailer's growth strategy in Latin America's largest country, where an economic boom is lifting millions out of poverty.
"We're ... entering into new channels, the most important being e-commerce that we will launch in the second half of this year," he said at the company's international analyst field trip in Salvador, in northeastern Brazil.
Nunez, who declined to provide further details on the e-commerce project, also reiterated Wal-Mart's investment plans to open 36 new outlets this year in Brazil, almost twice as many as in 2007.
"We will continue aggressively expanding all of our formats," he said in a speech broadcast over the Internet.
The discount behemoth has been focusing on expanding its international operations to supplement its U.S. business, where growth is slowing as it saturates many markets and now operates more than 4,100 stores.
The Wal-Mart Stores segment had net sales of $239.5 billion in its latest fiscal year ended January 31, up 6 percent from $226.3 billion a year earlier, while its Sam's Club warehouse store division had sales of $44.36 billion, up almost 7 percent from $41.58 billion a year earlier.
In contrast, international sales for its latest fiscal year were $90.6 billion, up more than 17 percent from $77.1 billion a year earlier.
"Clearly, international is becoming a more important part of our operations," said Charles Holley, Wal-Mart's treasurer.
In Brazil, Wal-Mart's sales have been growing at more than twice the pace than in the United States, reaching 15 billion reais ($9.04 billion) in 2007.
It has also invested heavily to expand, both organically and through acquisitions, helping it to narrow the gap on its top two rivals -- France's Carrefour and home-grown retailer Companhia Brasileira de Distribuicao.
Wal-Mart, which opened its first store in Brazil in Sao Paulo in 1995, now has 314 units in 17 of the country's 26 states. It is also looking to expand into the vast central states where it is absent.
"We have clarity that we want to expand in the 26 states of Brazil and we will do so," said Nunez, who recently took over as head of the Brazilian unit. "We will continue to grow very aggressively in number of units over the next five years."
Asked if Wal-Mart was eyeing more acquisitions in Brazil, executives said they were confident the company could keep growing organically for a long time.
Like other retailers in Brazil, Wal-Mart expects to keep growing by reaching out to low-income consumers with small-scale discount stores like its Todo Dia chain in the impoverished northeastern part of the country.
"Our primary target focus is the emerging customer, because it is the key to growth in this country," said Jose Eduardo Cabral, chief marketing officer for Wal-Mart Brazil. "This is not the only customer, but the main focus for growth."
($1=1.66 reais)
(Writing by Todd Benson, editing by Phil Berlowitz)
