Walmart International Head Sees Difficult Operating Environment

By Dow Jones Business News, 
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By Amy Guthrie

MEXICO CITY--The new head of Wal-Mart Stores Inc.'s international operations said Monday the company is seeing economies and consumers struggle around the world, making for a difficult operating environment.

"We're seeing economies under stress pretty much everywhere we operate," David Cheesewright, chief executive of Walmart International, said during a presentation to investors in the company's Mexican unit, Wal-Mart de Mexico.

While Wal-Mart has a huge market share in the U.S. the company wants to protect, Mr. Cheesewright said, the company expects that much of its future growth will come from outside the U.S. Meanwhile, consumer habits are quickly changing everywhere, with customers increasingly opting for smaller store formats and online orders of merchandise.

Wal-Mart de Mexico is one of Wal-Mart's biggest international operations, providing around $27 billion in annual sales, or around 6% of the Arkansas-based company's global sales.

Wal-Mart represented 32% of sales at Mexican brick-and-mortar retail establishments last year, according to company data and to Mexican retail association Antad. Euromonitor International estimates that the company accounts for at least 19% of Mexican grocery sales, including those at convenience stores.

Yet Mexico showed weak results in 2013, as economic growth underperformed and consumer confidence tumbled. The Mexican economy expanded by 1.1% last year, falling well short of early government and private projections for 3.5% growth. This year the government projects an above-consensus 3.9% expansion, although many analysts are seeing a weak first quarter.

Wal-Mart de Mexico Chief Executive Scot Rank said the company had also started out 2013 with optimism, but weak money transfers from Mexicans living abroad, combined with slow government spending, quickly dashed those hopes.

"We were not satisfied with our 2013 results," Mr. Rank said.

Write to Amy Guthrie at amy.guthrie@wsj.com

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  (END) Dow Jones Newswires
  02-24-141930ET
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