Word: marteli
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...Nonetheless, president and ceo Lee Scott calls Wal-Mart's international operations-which also include Canada, Latin America and Asia-a "bright spot," where operating profits were up 36% to $1.1 billion. Profits of $1.1 billion may sound robust, but Wal-Mart has invested at least $17 billion overseas, giving it a return of just over 6%. "You'd be better off putting the money in a bank-or under a mattress," maintains Richard Hyman, chairman of British retail consultancy Verdict Research. Indeed, in the U.S., Wal-Mart regularly enjoys a return on investment of around...
...biggest retailer entered the European market in December 1997 when it bought Germany's Wertkauf chain of hypermarkets. Thirteen months later, it picked up a second German chain, Interspar. In June 1999 it paid $10.8 billion for Asda, Britain's No. 3 supermarket chain. Expectations were high that Wal-Mart would quickly become a major European presence by leveraging its super-efficient sales techniques, high-tech inventory-tracking systems and global sourcing prowess...
...Germany, where its 95 stores command only a 1.1% share of the food-sales market, Wal-Mart is floundering in red ink. The company won't say what its German losses total-analysts peg them at a whopping $200 million a year-but admits profitability is at least two years away. In Britain, Asda is a successful, moneymaking enterprise, but analysts doubt it can realize the ambitious targets set by Wal-Mart to cover the high price of admission. In its fiscal year just before the acquisition, Asda had operating profits of $702 million, and Wal-Mart vows to double...
...Among the problems bedeviling Wal-Mart in Europe are the loss of key senior managers, cultural differences, an inability to get inventory systems running quickly and fully, and strong competitors. In Germany, it's hard to be the lead price-cutter when retailers historically offer low prices and operate within ultra-tight margins...
...Mart's real problem in Europe is a lack of scale. In the U.S., where it can shift massive volumes of stock through its mammoth supercenters, the company wrings price concessions from suppliers and passes on the savings to customers. Wal-Mart's 3,118 stores in the U.S. average 38,109 sq m each; Asda's 241 outlets are barely one-third that size. Moreover, Asda is primarily devoted to food, not higher-margin general merchandise...