Wal-Mart Says It’s Losing Money in Germany

Wal-Mart Stores Inc. said on Monday that its German business had fallen behind schedule for breaking even, according to Reuters, the British news agency.

In a presentation to investors, Tom Schoewe, Wal-Mart’s chief financial officer, said the company’s 94 stores in Germany would “probably not” break even in the 36 months since the purchases, as its Canadian business did.

“We’ve fallen behind,” Schoewe said.

Wal-Mart entered the German market in 1997 with the purchase of 21 Wertkauf hypermarkets and later bought the Interspar hypermarket chain. Wal-Mart plans to open its first two stores built from the ground up in Germany by the end of 2002.

Some analysts estimate the world’s largest retailer is losing $250 million a year in Germany, which is Europe’s largest economy. But to a retailer with $191 billion in sales last year, $250 million is not a significant loss for an “experiment” involving 94 stores half way around the world from its Bentonville headquarters. Nevertheless, the fact that Wal-Mart has been unable to make a profit in Germany after more than three years seems to be a reality check for the company, which has had little trouble taking over the retailing market in most countries where it has decided to do business.

Schoewe mentioned some of the company’s early missteps with the German business, including a disruptive consolidation of three headquarters into a fourth location, Reuters said.

A week ago, The Wall Street Journal reported that Wal-Mart had abandoned its plan to open 50 new stores by the end of 2002. The company responded the next day saying it never established that goal. Instead, Allan Leighton, Wal-Mart’s former head of European operations, had casually mentioned the number to a Germany newspaper reporter.

Wal-Mart said it was still focusing on renovating the former Interspar and Wertkauf stores. Wal-Mart renovated 24 of its stores in Germany last year.

Shares of Wal-Mart (NYSE: WMT) were up 5 cents by 10:45 a.m. Tuesday to $51.79 from a closing price of $51.74 on Monday.