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Wal-Mart looks at many partners for Russia entry
June 3, 2010 / 8:31 PM / 7 years ago

Wal-Mart looks at many partners for Russia entry

<p>Walmart International's President and CEO Doug McMillon speaks to reporters in Rogers, Arkansas June 3, 2010. REUTERS/Sarah Conard</p>

ROGERS, Arkansas (Reuters) - Wal-Mart Stores Inc (WMT.N) has talked with several potential partners in Russia, but continues to search for the best way to enter the country, the retailer’s international chief said on Thursday.

Walmart executives have entered tentative price negotiations several times since setting up offices in Moscow to explore the best way to enter the sought-after market that has turned in eye-popping sales for some western brands.

“We’ve been there with several different opportunities over more than a year. They come and go,” said Doug McMillon, Walmart International’s president and chief executive.

In May, sources said the company was in preliminary talks to acquire Russian retailer Lenta.

The world’s largest retailer has had an office in Moscow for about two years.

Russia is an attractive market for retailers, with a population of around 140 million and low retail penetration. But it has also been hit hard by the global economic downturn.

“We did make a decision, particularly when the economic downturn occurred, that an acquisition is probably the best way to enter the market. To make an acquisition, a buyer and seller have to come together on terms,” McMillon said.

“We’ll make a decision when it’s the right time and we have the right entry opportunity and not before then.”

BUYING IN

Walmart International’s chief financial officer, Cathy Smith, did not comment on particular acquisitions, but said the company tends to make an acquisition to enter a new market. Such purchases help Wal-Mart start off with a large enough presence to save costs through scale, letting it stick with its model of low prices for shoppers.

Walmart’s international sales, at more than $100 billion, accounted for about 25 percent of the company’s total revenue last year. Smith said the company does not have a target for how much that percentage should grow going forward. Walmart aims to boost growth in overseas markets such as China as its U.S. discount stores see same-store sales languish.

Walmart International has 4,110 stores in 14 countries and breaks its expansion opportunities up in four ways.

The company wants to continue to grow in what it calls its “big three” markets: Britain, Canada and Mexico.

Right behind those, the company is seeking more growth from its operations in markets such as China and Brazil, where it already has a significant presence.

Then there are countries where Walmart is “planting seeds,” such as Chile, Argentina and India.

Russia falls into another group of “obvious” candidates for acquisition that have large populations and not enough retail presence, Smith said.

Walmart shares closed unchanged at $51.72 on the New York Stock Exchange.

Reporting by Brad Dorfman and Lisa Baertlein; editing by Dave Zimmerman, John Wallace and Andre Grenon

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