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Wal-Mart China Store Openings on Track

04/01/2013 | 07:25am US/Eastern
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BEIJING--Wal-Mart Stores Inc. (>> Wal-Mart Stores, Inc.) plans to invest 500 million yuan ($79.8 million) to upgrade Chinese stores and said it is on target with store openings there, following local media reports that said recent store closures are derailing store growth plans in one of the retailers' key markets.

The Bentonville, Ark., retailer plans to remodel 50 of its 380-plus stores there and will open 30 new stores this year the country, according to a company statement on Monday. In the next six months, store openings are expected in cities such as Xinyu in eastern Jiangxi province and Shantou in southern Guangdong province, the statement said.

Wal-Mart also plans to invest in distribution-center networks and to improve its warehouses, the statement said, adding that enhancements are aimed at improving food safety and reducing costs.

Wal-Mart's announcement follows local media reports that questioned whether it is stepping back from its growth targets. The reports said Wal-Mart is closing China stores throughout April following struggles with high rent and increasing labor costs.

Wal-Mart is standing by an announcement it made in the past year to open 100 new stores in China over three years, Greg Foran, president and chief executive of Wal-Mart's China division, said in the statement.

"China is one of the Wal-Mart's most strategic markets," said Mr. Foran in the statement, adding "our aim is to strengthen our business foundation to enable our long-term development in China."

A spokeswoman for Wal-Mart said store closures are a normal part of the company's operations.

China is a key growth market for Wal-Mart, which is currently No. 2 in market share in China behind rival Sun Art Retail Group Ltd. (6808.HK), a joint venture between Taiwanese conglomerate Ruentex Group and France's Groupe Auchan SA.

Company executives said last year they would add 18,000 jobs to Wal-Mart's roster of 100,000 in China. Yet they also said they planned to reduce the pace of investment in the country, adjusting to slower growth of the world's second-largest economy. Wal-Mart had been opening in China 50 to 60 stores a year.

Some foreign retailers have faced uphill challenges in China in recent months. European retailer Metro AG (>> METRO AG) announced in January plans to pull out of the consumer-electronics business. Last year, Home Depot Inc. (>> The Home Depot, Inc.) said it was closing all seven of its big-box home improvement stores in China.

Wal-Mart said it will open soon new two new Sam's Club outlets and has completed the remodeling of 31 stores it began last year, today's statement said.

The retailer has been expanding its online operations in China. It bought last year a 51% stake in Chinese e-commerce company Yihaodian.

Write to Laurie Burkitt at Laurie.Burkitt@wsj.com

Stocks mentioned in the article : Wal-Mart Stores, Inc., The Home Depot, Inc., METRO AG
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