Walmart to expand Canadian footprint

by The City Wire staff ([email protected]) 93 views 

Walmart confirmed today (Feb. 7) plans to spend $750 million in Canada to complete at least 73 projects this year, which will add 4.6 million square feet for retail giant.

The investment comes a full year ahead of its discount competitor — Target — who recently announced its entry into Canada with 24 new stores by the spring of 2013.

Walmart Canada has been a strong player in the retailer’s international portfolio, consistently outperforming the overall market in terms of growth by 2% annually, according to David Cheesewright, CEO & president of New Walmart Regional Management for Wal-Mart Stores Inc.

Cheesewright oversees Walmart’s business in Canada, United Kingdom and Sub-Saharan Africa.

He shared with analysts in October that Walmart Canada is the No. 2 player in that highly competitive market. Walmart already operates 333 stores in the country, 158 super-center formats, which came online five years ago and are by far driving the best results, according to Cheesewright.

The 73 projects on tap for this year will include building new stores and expanding, remodeling or relocating existing stores, according to Walmart’s release. More than half of the projects will be super centers, the company said. Walmart also estimates the work will create more than 14,000 store, trade and construction jobs.

In June 2011, Walmart Canada purchased 39 Zellers stores which will reopen as Walmarts this year, taking one former local competitor out of the market.

Shelley Broader, President and CEO of Walmart Canada noted in the release, “This is an exciting year for Walmart Canada. We are proud of our 18-year record of growth, and of the investment we make in the Canadian economy. As the country’s fastest growing retailer, every year we create thousands of new jobs, spend billions of dollars with Canadian suppliers, and invest millions in Canadian communities.”

Recent interest in Canadian expansion has been raised by several retailers besides Walmart and Target, according to IGD senior analyst Stewart Samuel. IGD provides international research and analysis for food and grocery retailers.

Samuel noted in October, other recent developments include Dollar Tree’s acquisition of Canadian Dollar Giant, and Amazon gaining approval to open a fulfillment center in Canada, paving the way for an expansion in the range of products which it offers Canadian shoppers.

He said a wide range of general merchandise retailers including Kohl’s and Marshalls are also considering expansion opportunities in Canada.

Samuel said the reason for more retailer expansion just above the northern border is financially motivated.

He said not only is the Canadian economy forecast to out-perform the US over the short term, but also it offers a more favorable environment for consumer spending. The geographical proximity also enables retailers to use existing supply chain networks and the exchange rate is relatively stable.

Link here (PDF) for the Walmart statement on its Canada expansion.

Shares of Bentonville-based Wal-Mart were trading around $61.75 in mid-afternoon trading, up from its opening price of $61.62. During the past 52 weeks, the share price has ranged from a $62.63 high to a $48.31 low.