Wal-Mart Taking A Second Crack At Germany?

After German holding company Arcandor, which owns major e-shopping and brick-and-mortar businesses in Germany had faced a year of declining sales, their shares shot up 12 percent today on news Wal-Mart may be interested in a deal. This market swing is surprising given Wal-Mart’s failure in the country as recently as 2004; the company proved unable to adapt to Germany’s unique retail and labor laws which forbid opening stores on Sundays or selling items below cost, and have tough provisions to protect unionization and collective bargaining. And Arcandor’s largest brick-and-mortar location, Kaufhaus Des Westens, sells upscale clothing lines and accessories, a far cry from Wal-Mart’s strengths. Only time will tell whether Wal-Mart really is serious about breaking into such a difficult market, albeit through a partnership.

Arcandor up on talk of Wal-Mart interest [Reuters]

Shares in Arcandor rose more than 12 percent on Wednesday as traders cited market talk Wal-Mart Stores, the world’s largest retailer, was interested in the German retail and tourism group.

“Wal-Mart apparently wants to buy a stake in Arcandor,” one trader said.

Arcandor and Wal-Mart were not immediately available for comment.

Shares in Arcandor have lost more than 80 percent of their value in the past 12 months as the German retailer, which also controls Europe’s second-largest travel company Thomas Cook, struggled to cope with weakening consumer demand, particularly at its department store unit Karstadt.

It recorded a loss of 746 million euros ($988.8 million) in its past fiscal year.

By 11:05 a.m. British time, trading volume in Arcandor’s shares represented 49 percent of the stock’s 90-day average daily volume, compared with 22 percent for the MDAX index.

Posted by Chris C on Wednesday, January 28, 2009

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