Today, the Financial Times reported that Wal-Mart is expanding its overseas expansion. Well color me surprised! Currently, international sales constitute 26% of the company’s net sales and this is while Wal-Mart is lowering its capital expenditures. In layman’s terms, this means that they’re slowing growth- or rather, they are being forced to by the market. So in order to sustain the company, Wal-Mart is looking to conquer new markets abroad. Thankfully, Asia and Eastern Europe are still up for grabs!
Wal-Mart readies for overseas expansion
Wal-Mart, the world’s largest retailer, is embarking on a further round of international expansion on the back of a systematic overhaul of the way it runs its business, which is expected to deliver more than $100bn in sales this year.
The retailer is actively exploring a first move into Russia and neighbouring countries, while preparing to open its first wholesale warehouse stores in India next year in a joint venture with Bharti Enterprises.
Wal-Mart already has operations in 13 countries, which accounted for 26 per cent of its net sales last year.
Wal-Mart’s international square footage growth rate is now above that in the US, where it has now slowed the expansion of its profitable Supercenter format in the face of market saturation.
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Posted by Vasudha Desikan | Permalink
First steps taken for inquiry into Asda’s plans [Press and Journal (U.K.)]
A preparatory hearing to set a date for a public inquiry into plans for the first Asda supermarket in Inverness will be held next month.
The Scottish Government called in the plans for the store planned for Slackbuie on the outskirts.
The meeting will be on June 16 at 7pm, at a venue to be decided.
The proposed 70,000sq ft store would also include a petrol station and five small shops, creating up to 400 jobs and representing a £25million investment.
Highland councillors overwhelmingly approved the plans in January and there has been support from the local community, but ministers called in the development because it is contrary to the Inverness local plan.
Property communications manager Lisa Rooke said: “We remain fully committed to bringing an Asda store to the people of Inverness. The new store would bring our commitment to low cost fuel to shoppers.
“We have received a fantastic level of support for our proposals so far and we are keen to deliver our store to meet the desires of the majority of local people.”
Posted by Alex Goldschmidt | Permalink
Several weeks ago, the National Advertising Division of the Council of Better Business Bureaus called on Wal-Mart to stop running a series of ads claiming the retailer saves consumers $2,500 a year. The NAD called the $2,500 figure misleading, adding yet more criticism on an ad campaign already in question by the Economic Policy Institute.
Wal-Mart’s UK arm Asda now finds itself in a similar situation. After claiming to have lower prices than competing grocer Morrisson’s, Asda was taken to task yesterday for mistruth in advertising. The U.K.’s Advertising Standards Authority upheld Morrison’s complaint that Asda’s ads were misleading and unfairly calculated.
Wal-Mart is not always the cheapest option, but more important to note is the fact that the company focuses more on spin than the truth. If Wal-Mart’s savings claims are fake, what can be said for the company’s other types of ads?
Asda told to shelve ‘we’re cheaper’ ads [Guardian (U.K.)]
The advertising watchdog has criticised Asda over a misleading campaign comparing its prices with rival supermarket Morrisons.
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Posted by Alex Goldschmidt | Permalink
This is the third in a series of posts on Wal-Mart’s 2008 shareholder resolutions. The full list of resolutions - and Wal-Mart’s statements regarding them - can be found in the company’s 2008 proxy here (PDF).
Resolution #7 on this year’s proxy proposes the establishment of a human rights committee at Wal-Mart. Below, the details of the proposition, why Wal-Mart’s shareholders would benefit and how the company has reacted to the proposal.
Wal-Mart’s Public Image Problem
Reports of human rights violations have dogged Wal-Mart for years - particularly in the company’s supplier factories, most of which are overseas. These violations have thoroughly damaged Wal-Mart’s reputation, with everyone from U.S Senators to Wal-Mart employees to factory workers themselves speaking out about the inhumane conditions in Wal-Mart’s supplier factories. Bama Athreya, director of the International Labor Rights Forum, testified before Congress on the issue of toy safety, explaining that “Wal-Mart bears a lion share of responsibility for pushing the toy industry to a place where worker health and safety are basically nonexistent.”
Wal-Mart also holds the ignominious title of being the only company investigated by Human Rights Watch for its domestic labor practices. The group’s 2007 report labeled Wal-Mart’s union-busting policies a violation of basic human rights, saying:
It pursues its anti-union agenda relentlessly, often from the day a new worker is hired, devoting considerable time and resources at all levels of the company to the anti-union drumbeat.
The constant stream of allegations have damaged Wal-Mart’s reputation and in turn, its profits. In 2007, a Bank of America analyst’ report found that Wal-Mart’s profits had suffered as a result of organized labor’s opposition to the company and its unethical labor practices. The report noted that the union’s campaign “has cost WMT [Wal-Mart] real estate sites in key locations, adversely impacted comp store sales to some degree, and has distracted m management from focusing on its retail strategy. Additionally, Lee Scott now spends a large amount of time improving WMT’s image domestically and abroad, and WMT has been forced to focus advertising dollars on defending their brand.”
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Posted by Research Team | Permalink
Wal-Mart’s UK arm Asda has decided to part ways with long-time spokeswoman Coleen McLoughlin. The reason? Asda’s decided to go ‘upmarket.’ Like its U.S. counterpart, it seems Asda has its sites set on wealthier customers. Will the U.K. retailer’s plan similarly backfire?
Coleen McLoughlin dumped as face of Asda as retail giant bids to go upmarket [Daily Mail (U.K.)]
Asda has dumped Coleen McLoughlin as the face and shape of its women’s clothing range as it seeks to move upmarket.
Wayne Rooney’s 22-year-old fiancee was told her services were no longer required when her £3million, two-year contract came to an end last month.
The supermarket giant is setting its sights high in the quest for a replacement with targets such as Joanna Lumley, Helen Mirren, Sienna Miller and, according to one source yesterday, French president’s wife Carla Bruni.
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Posted by Alex Goldschmidt | Permalink
Yarmouth Asda plan rejected [Eastern Daily Press (U.K.)]
A supermarket chain’s plans to extend its Yarmouth store have been turned down despite a promise of a £100,000 investment in improving one of the town’s eyesores.
Asda’s application to increase its Acle New Road store by 844 sq m and create 40 jobs was rejected by Yarmouth Borough Council because the new look site would impact on town centre shop sales.
Last night councillors heard the new extension would pose a threat to other retailers because it would have housed its George clothing range and other non-food items.
In December similar plans were thrown out by the council but Asda resubmitted its scheme with the proviso that it would spend £100,000 on enhancing the dilapidated Vauxhall Bridge and the surrounding area.
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Posted by Alex Goldschmidt | Permalink
Wal-Mart was at the epicenter of several food-related recalls last year, prompting questions about the company’s food sourcing practices. At the time, Wal-Mart brushed off the concerns, but it seems the recalls have continued to worry company execs. Wal-Mart announced today plans to adopt food safety standards currently used by the European Union. The EU’s standards are more rigorous than those currently in place in the U.S. and will hopefully result in across the board improvements for food safety.
Many concerns still remain about industrialized food, including environmental problems, animal treatment issues and continuing debate over the chemicals used to sustain mass food production. This isn’t necessarily something Wal-Mart can address, but as local food movements grow, more and more people are questioning big box-style food production.
Private Food Standards Gain Favor [Wall Street Journal]
Amid growing fears about food safety and impatience with government response, standards set by the private sector in Europe are starting to spread to other parts of the world, including the U.S.
In 1997, some of Europe’s biggest food retailers responded to food scares like an outbreak of mad-cow disease by banding together to write new global guidelines for those wanting to sell meat, fruit and vegetables in Europe—the world’s biggest importer of food, buying some $20 billion last year from outside the EU. Today, such privately enforced quality programs are becoming more popular in the U.S., too. In a key move, Wal-Mart Stores Inc. said last month it would buy produce, meat and seafood only from suppliers accredited by private-inspection offices.
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Posted by Alex Goldschmidt | Permalink
Wal-Mart has been struggling with its U.K. stores for some time, facing both stiff competition in the country and strict development rules that prohibit the company’s normal expansion practices. It seems that Wal-Mart’s problems in Britain are even worse than they’ve appeared: the company considered leaving the U.K. last year. The news has analysts questioning the stability of Wal-Mart’s U.K. branch, and is drawing comparisons to the company’s failures in Germany and South Korea. Asda is one of the major components of Wal-Mart’s international expansion plan, an increasingly important part of the company’s growth strategy as U.S. expansion slows.
Could Asda be kicked out of Wal-Mart? [Telegraph (U.K.)]
When Wal-Mart swooped to buy Asda in 1999 for £6.7bn analysts predicted that the arrival of the world’s largest retailer would change the UK high street forever - sparking a savage price war and a wave of mega mergers.
But the doom-laden predictions of 1999 have proved wide of the mark. The combination of intense competition and planning restrictions have frustrated Wal-Mart’s ambitious plans for Asda and the UK.
In fact, The Sunday Telegraph can reveal that Wal-Mart president Lee Scott became so dismayed at the failure to crack the UK market and the constraints on future growth that last year he ordered a strategic review that could have seen Wal-Mart float a minority stake in Asda or even pull out of the UK entirely.
According to sources the strategic review has - for now - been shelved. Asda refused to comment.
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Posted by Alex Goldschmidt | Permalink
Not long ago, Lee Scott was complaining about Tesco’s monopolistic tendencies in Britain. They were ignored and instead of complaining more, Wal-Mart/ASDA decided to take a different route. Now, ASDA is looking to acquire a part, if not all of, the supermarket group, Somerfield. ASDA recently announced its plans for greater expansion, while still under the watchful eye of the Competition Commission for being too aggressive and competitive. Funny case of pot calling kettle black huh?
Break-up of Somerfield ‘looks likely’ [The Telegraph U.K.]
Shareholders in Somerfield may be forced to accept a break-up bid for the supermarket group.
Barclays Capital, private equity group Apax Partners and property entrepreneur Robert Tchenguiz had hoped to secure an offer for the entire business, but observers believe a break-up is now more likely.
Asda, the Wal-Mart-owned store group, is sounding out potential retail partners for a carve-up of Somerfield. It has made an indicative offer for the chain, which its owners hope will attract a price tag of £2bn to £2.5bn.
However Asda, which has 347 large stores, is now talking to others about selling Somerfield’s smaller town centre stores.
Meanwhile, the Co-op, which is also interested in Somerfield, has appointed Credit Suisse to assess its options about the retailer.
Somerfield was bought for £1.8bn by the private equity consortium in December 2005. Citigroup was appointed to sell the business late last year.
An executive close to Somerfield said: “Somerfield is feeling positive about the process. The business is trading well and it is in good shape.” Somerfield made a pre-tax profit of £26.4m for the year to April 28, 2007.
Posted by Vasudha Desikan | Permalink
A flurry of stories in the news today about Wal-Mart in the United Kingdom. After announcing 2007’s fourth quarter sales yesterday, Asda came out as one of Wal-Mart’s strongest units. Not surprisingly, a second series of announcements make known Wal-Mart’s intentions to expand in the country. Up until now, Wal-Mart has had trouble expanding in Britain, as the country’s strict zoning laws make Wal-Mart’s sprawling supercenters difficult to build. But as Wal-Mart meets increasing opposition and market saturation in the U.S., foreign markets - even with all their challenges - are starting to look pretty good.
Wal-Mart unveils strong overseas growth, led by Asda [Reuters]
Sales from Asda stores open at least a year, a key gauge in the industry, rose in the “mid-single digits” excluding the positive impact from fuel…
Wal-Mart, the world’s largest retailer, is increasingly turning to its international operations to dazzle investors as its U.S. business struggles with limited growth and flagging sales at its near-4,100 stores.
Asda set to call an end to its recovery plan [Financial Times]
Much of the credit for the continued improvement in Asda’s performance will go to Andy Bond, who was brought in as chief executive in March 2005. Mr Bond is expected to say at a news conference today that much of the recovery has been achieved and Asda will concentrate on growth…
After missing profit targets in his first year, Mr Bond has since turned the business round and Wal-Mart said yesterday that Asda had beaten internal sales and profit forecasts.
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Posted by Alex Goldschmidt | Permalink
Wal-Mart has long had a monolithic development strategy in the U.S.: build supercenters with massive parking lots outside town centers where natural areas or agricultural land once was. Using this strategy in the United Kingdom has proved a difficult task. Not only is the U.K. geographically much smaller than the U.S., the country also has comprehensive national zoning regulations aimed at combating sprawl. As it tries to expand in the U.K., ASDA (Wal-Mart’s British division) is proving that sprawl and environmental destruction are still very much a part of its business plan, despite the company’s recent environmental efforts. Wal-Mart is continuing to lobby for changes which would destroy what little green space is left in the U.K.
Instead of adapting to a U.K. market, which requires downtown development, ASDA is instead seeking to impose the poor planning strategies of the U.S. Wal-Mart has been lobbying U.K. officials to make England’s strict development restrictions optional. An article in today’s Telegraph examines the latest in a long line of lobbying efforts by the retailer.
Most of this has been in an effort to better compete with British retailer Tesco, ASDA’s main rival. Tesco’s influence over the British market is significant, but ASDA offers an alternative that relies on unsustainable land use policies and the destruction of the local environment. Tesco has focused heavily on downtown re-development and flexible design in the UK, but this method does not fit in to Wal-Mart’s cookie cutter business model. Tesco has excelled largely by its ability to tailor stores to downtown areas and move away from sprawling big-box developments. Wal-Mart’s inability to follow suit is a huge weakness for the company, here and in England. The Supercenter mentality has lead to a significant amount sprawl development in the U.S. and has, in turn, created problems in many downtown areas in the States. The United Kingdom created a progressive land use policy to ensure vital downtown areas. Tesco created a business strategy focused on these areas, but ASDA, unaccustomed to downtown development, has only proposed making things worse.
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Posted by Research Team | Permalink
WAL-MART KILLED THE MAGAZINE STAR
After Wal-Mart’s decision to stop selling over 1,000 magazine titles this week, not only are magazine publishers running to their mommies, but magazine readers are asking, “Whaaaa?” Does Wal-Mart think its shoppers are illiterate? I mean, who doesn’t enjoy Better Homes and Gardens?
Wal-Mart’s Magazine Purge [Jossip]
What happens when a retail giant who controls 20 percent of magazine newsstand sales drops 1,000 titles from its racks? Untamed terror!
Wal-Mart this week announced the major trimming, dropping the heaviest anvil on Meredith Corp., ousting circulation stunners Better Homes & Gardens and Ladies Home Journal, as well as Fitness. Fellow heavyweight Town & Country, from Hearst, will also disappear, as will Hachette’s Home and Metropolitan Home.
Wal-Mart Thinks Customers Don’t Read Magazines [Media Bistro]
This is a piece about Wal-Mart in which we’re not going to take any cheap shots. We’re not going to say anything about how their stores have wrecked rural economies worldwide, their hostile stance towards unions, their gross underpayment of workers, their demeaning public relations campaigns… we’re not going to mention anything about that. Because that would be unfair.
But Wal-Mart, who are responsible for more than 20% of retail magazine sales in the United States, have decided to stop carrying more than 1,000 magazines in their stores.
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Posted by Alex Goldschmidt | Permalink
In February, Wal-Mart “hinted of expansion into Russia”. While Russia is a tough market for most corporations to crack, the following story suggests the opportunities for Wal-Mart would be incredible.
Chinese toys still popular among Russian gift buyers [Peoples’ Net (China)]
“If possible, I would like to have all these toys,” says a golden-hair boy Andriy Ivanov, 6, who is grabbing a teddy bear almost his height in the French chain supermarket Auchan on the Ryazansk Street, southeastern Moscow.
Most of the toys, from miniature plastic Christmas trees, baskets of glittering trinkets, to The Simpsons dolls piling up at the entrance, have the same brand “Made in China.”
Chinese toy exports to Russia reached hundreds of millions of U.S. dollars in 2006, taking a considerable share of the Russian market, and many Russians prefer Chinese-made toys as gifts for their beloved ones or friends.
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Posted by Research Team | Permalink
Tesco May Beat Wal-Mart to Russia [Kommersant (Russia)]
The English retailer Tesco, the third largest in the world with expected turnover of $103 billion this year, has announced that it may open stores in Russia. Tesco CEO Sir Terry Leahy announced the chain’s expansion into India and possibly Russia in an interview with the British Times. The company’s headquarters could not provide additional information. Tesco now operates in 13 countries and it plans to double the proceeds it receives from abroad (currently 27 percent) in the next ten years.
Tesco was founded in 1919 and operates over 3000 stores. Its ranks third in the world, after the American Wal-Mart and French Carrefour, in retailing. Carrefour is opening a 12,000 sq. m. store in the Fili shopping center in Moscow next year and Wal-Mart representatives have stated that the chain would like to expand into Russia with a local partner. The Russian X5 Retail Group has announced that it is in negotiations with all three of those retailers.
Russian retailing is growing at between 14 and 16 percent a year, according to various reports, and is expected to maintain that pace through 2010. The Russian retail market was worth $233 billion in 2006, with only 5 percent of the market conducted in “modern format,” compared to 57 percent in Great Britain and 87.4 percent in Sweden. Russia’s five largest retailers control 5 percent of the market. X5’s market share is expected to grow to 5 percent by 2010.
Posted by Alex Goldschmidt | Permalink
So what’s Wal-Mart doing with an office in Florence, Italy, you ask? Going to see The David? Sipping a latte or nibbling a biscotti? Nope. It’s trying to evade Illinois State Tax, of course.
According to today’s Wall Street Journal, Wal-Mart has been claiming that all of its employees and operations in Illinois are based out of Italy, and you guessed it - wants to pay less taxes to the state. The company, which operates no Wal-Mart stores in Italy, is claiming to be a so-called “80/20 Company,” which conducts at least 80% of its business overseas and should be shielded from most state tax. Illinois, which has been cracking down on corporate tax loopholes in recent years, apparently took offense and charged Wal-Mart “$26.4 million in back taxes, interest and penalties.” Wal-Mart paid the fine, has sued for a refund, and the case remains in court.
A Wal-Mart spokesman offered a prepared statement and “declined to explain why Italy was chosen as the home of this particular foreign operation or whether Wal-Mart has other such arrangements.”
We’re sure Sam Walton is proud.
Why Wal-Mart Set Up Shop In Italy [Wall Street Journal]
More than 4,500 miles separate a small Wal-Mart Stores Inc. office in Florence, Italy, from the company’s dozens of Illinois retail outlets. But thanks to a convoluted tax arrangement, court records show, Wal-Mart’s Italian operation has helped the giant retailer cut its state tax bill in Illinois by millions of dollars a year.
Wal-Mart set its affairs so that its Italian outpost is the only operating unit of a real-estate subsidiary that controls billions of dollars of the retailer’s property in Illinois and other states. Because technically its only employees are based in Italy, the real-estate unit claims its operations are foreign, exempt from Illinois corporate income taxes.
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Posted by Eric Bull | Permalink
D-day for ASDA plan [Bury Free Press (U.K.)]
Tomorrow (Thursday) could see ASDA finally receive planning permission for a store in Western Way, Bury St Edmunds.
It will bring an the end to a long fought campaign, which saw members of the Howard Estate Over 60s Club collect signatures in the town and an online petition run by the Citizen’s sister newspaper the Bury Free Press collect 384 signatures in favour of the scheme and five against.
The new superstore could create up to 350 jobs.
It is being recommended for planning approval by St Edmundsbury Borough Council’s development control committee, which meets at 10am tomorrow at its offices on Angel Hill.
ASDA campaigner Ernie Broom, chairman of the Howard Over 60s Club, said: “We started our campaign in 2005. It has been a long hard campaign, it has been tiring, but at last the end is in sight.
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Posted by Alex Goldschmidt | Permalink
Nov07
ASDA Goes Halal
Asda Under Fire Over Plan To Sell Halal Meat [U.K. Telegraph]
Animal rights activists criticised a supermarket chain yesterday for its decision to stock halal meat.
Asda will next month sell the produce from animals that have not been stunned before their throats are cut.
A spokesman for Asda told trade magazine The Grocer that it was aware the decision would cause controversy.
The meat was being tested in a Birmingham store in response to customer demand.
“It is not being run by us, it’s being run by the National Halal Food Group which sells the Mr Halal brand,” the spokesman said.
“It’s just a trial in a single store. The reason it’s there is because of customer demands in that area. Similar demands have not been made elsewhere.”
Muhammed Yaqoob, the chief executive of the National Halal Food Group, defended the traditional method of killing the animal, claiming the beast suffered less than those that were stunned.
But Vegetarians International Voice for Animals condemned the decision by Asda.
Viva’s associate director, Tony Wardle, said: “Most Muslims are happy to eat stunned Halal meat. When used properly the captive bolt pistol is without doubt the lesser of two horrible evils.”
A spokesman for the RSPCA said the organisation was disappointed by Asda’s move.
Posted by Vasudha Desikan | Permalink
Asda prosecuted over misleading prices [TalkingRetail]
Asda has been forced to fork out more than £3,000 after Trading Standards fined the group for not honouring a booze promotion at three stores in Manchester.
Earlier this month, Asda pleaded guilty to seven offences of giving misleading pricing indications under Section 20 of the Consumer Protection Act.
The supermarket group was fined £3,500 and ordered to pay £3,700 in costs.
The move relates to complaints from customers made in 2005 that stores in Eastlands, Longsight and Hulme had failed to meet a cut price offer on alcohol.
Two of the misleading price offers included a 20% off on ales and ciders promotion in all three stores. The Eastlands store also refused to honour their price match offer on a BOGOF promotion.
“These stores have a responsibility and a duty of care to their customers to not renege on any deals or mislead their customers through the prices they are offering,” a spokesman said.
Posted by Alex Goldschmidt | Permalink
Looks like Wal-Mart is still feeling the effects of its German retail blunder.
Wal-Mart Lowers 2Q Profit by $153M [Associated Press]
Wal-Mart Stores Inc. reduced its reported second-quarter profit by $153 million due to expenses from selling its German retail operations, the world’s largest retailer reported Monday.
In a regulatory filing, Wal-Mart said the added cost reduced its earnings per share for the quarter that ended July 31 to 72 cents from the 76 cents it originally reported Aug. 14. That compares with 50 cents per share in the year-ago quarter.
Wal-Mart said the late charge came after “recent nonbinding discussions with Metro at the end of August 2007.” Germany’s Metro AG agreed last year to buy Wal-Mart’s German operations.
Wal-Mart called the new charge a “post-closing adjustment.”
Metro bought Wal-Mart’s 85 sites in Germany last year for an undisclosed sum as Wal-Mart quit Germany and South Korea after losses in both markets.
Posted by Web Team | Permalink
From The Guardian:
Asda has retained its position as Britain’s cheapest supermarket for the 10th consecutive year, according to a report today. The chain beat Tesco by 75p to keep the title in an annual survey by trade magazine The Grocer, which compares the cost of 33 household items in Britain’s six major food retailers.
Asda, which has 336 stores and a 16.7% share of the market, provided the cheapest groceries for 32 of the 50 weeks covered by the 2006-07 survey. Its average price for a basket of shopping was £45.23 compared with the Tesco basket price of £45.98. An Asda spokesman said: “Low prices are part of our DNA - winning the Grocer award for over a decade proves it.”
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Posted by Vasudha Desikan | Permalink
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