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 Business News | September 2005 
Walmex Eyes 371 Cities
 Wire services
Wal-Mart de Mexico SA, Latin America's largest retailer, almost doubled the number of locations it is considering for new stores, as the company shifts its growth strategy from large urban centers to small cities in Mexico.
Walmex, which is controlled by Wal-Mart Stores Inc., the world's largest retailer, has identified 371 small cities in Mexico that could support Wal-Mart stores, Chief Executive Eduardo Solorzano said in a speech at Goldman Sachs' 12th Annual Global Retailing Conference in New York that was broadcast on the company's Web site. Earlier this year, Solorzano said the company had identified 200 cities.
"Mexican customers in small cities have the need for another retailer to serve all of the needs that they have," Solorzano said. "We are moving now to smaller and rural areas" taking a different approach from Wal-Mart in the United States.
Solorzano's comments elaborated on previous statements about the company's expansion plans. In a statement on Tuesday to the Bolsa exchange, Walmex said it plans to add 20 stores to an expansion announced earlier in the year.
Walmex said in the statement that it now will open 90 stores by yearend, including 12 Wal-Mart Supercenters. In February, company shareholders approved a plan to invest 8.2 billion pesos (US737 million) to open 70 stores and remodel an undisclosed number of units in Mexico.
Shares Rise
Walmex shares rose after Solorzano's remarks, gaining 1.82 pesos, or 3.7 percent, to 50.47 pesos. The shares have gained 31.8 percent this year.
"It's clear evidence that the company is taking advantage of the economic conditions in the country," said analyst Rogelio Urrutia at ING Wholesale Banking in Mexico City of the company's expansion in a telephone interview. Walmex is able to grow more rapidly, taking market share from its rivals, because it has little debt compared to its cash flow, he said.
Walmex reported 11.4 billion pesos (US1.1 billion) in cash at the end of the second quarter.
After his speech in New York, Solorzano said he would like to develop credit programs through Walmex stores that the nation's lowest-income residents could use. He did not provide details of the program. |
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