Wal-Mart executive: No plans now for own Japan superstores

By

Posted 12:59PM on Monday, April 8, 2002

TOKYO - Wal-Mart Stores Inc. has no plans to open its own "superstores" in Japan and will instead concentrate on working with its new local partner, a senior executive said Monday. "We've got a relationship here, and I think we'll focus on the relationship that we already have," Wal-Mart Senior Vice President Jay Fitzsimmons told CNBC Asia Pacific. "I don't see us developing a separate set of stores." The world's biggest company said last month it was buying a strategic stake in supermarket operator Seiyu Ltd. The U.S. retailer's tie-up with Seiyu is quite similar to Wal-Mart's strategy in Mexico in 1991, which marked the company's first foray into an international market, Fitzsimmons said. Wal-Mart expanded its small joint venture with a Mexican retailer and "eventually took controlling interest in the company," he said. Wal-Mart will initially pay about $46 million for a 6.1 percent stake in Seiyu, with the option of injecting up to roughly $2 billion of new equity to raise its stake as high as 66.7 percent by 2007. As part of the deal, Japanese trading house Sumitomo Corp., Seiyu's biggest shareholder, will invest $38 million in new shares, raising its stake in Seiyu to 15.6 percent. Japan is now struggling to emerge from its third recession in a decade. But despite its economic woes, its personal financial assets continues to make the country a lucrative target for foreign retailers. Wal-Mart joins a lineup of hopeful international retailers that already includes U.S. membership-warehouse store Costco Wholesale Corp. and French supermarket operator Carrefour SA. Costco and Carrefour entered Japan without local partners, and both companies have so far failed to achieve their initial sales targets due to sluggish growth in the number of customers and per-customer sales. "We chose a different format than some of the global retailers in that we came in here with partners," said Fitzsimmons. "We think that will put us in a better position to be successful in this market." For the year ended Jan. 31, about 16 percent of Wal-Mart's total sales of $218 billion came from outside the United States. Wal-Mart last month bumped oil giant Exxon Mobil Corp. off the top spot in the Fortune 500 list, which the magazine compiles in terms of companies' annual revenue.