Wal-Mart Stores Inc.’s efforts to acquire Latin American assets from Carrefour SA are slowing as the French retailer focuses on turning around its European business, said people familiar with the matter.
Wal-Mart has pressed Carrefour to sell stores in Colombia and also Brazil, said the people, who declined to be identified as the negotiations were private. Carrefour’s Colombian unit generated 1.69 billion euros ($2.11 billion) in sales last year.
Wal-Mart is targeting stores overseas as revenue abroad climbs at 10 times the pace of U.S. sales. Doug McMillon, head of Wal-Mart’s international business, said last month the retailer is open to purchases in Japan and Latin America, and signaled that Colombia could be a possible site of expansion.
“Wal-Mart is realizing that the best strategy is buying something” rather than building something new, Bryan Gildenberg, an analyst with Kantar Retail, said in a telephone interview. “Colombia is a growing market and Wal-Mart isn’t there.”
Wal-Mart and Carrefour have held on-and-off negotiations for more than two years, with Wal-Mart initiating many of the talks, said one of the people. After some conversations this year, Carrefour has slowed the pace of talks as it deals with deteriorating conditions in Europe, according to this person.
While Wal-Mart remains interested in the operations, no deal is imminent, said two of these people. A spokesman for Bentonville-based Wal-Mart declined to comment, as did a spokeswoman for Boulogne-Billancourt, France-based Carrefour.
Wal-Mart’s international sales climbed 15% in the year ended Jan. 31 to $125.9 billion, compared with a 1.5 percent increase for the U.S. operations.
Carrefour is in the midst of cost cuts to improve its performance in France, its largest market. Hypermarket same- store sales there sank 3.1% last quarter, excluding gasoline and currency moves. Shoppers are abandoning those types of stores as they seek out more convenient options, like smaller local shops and online retailers.
Carrefour’s Brazilian business may have a value of 5 billion to 7 billion euros, according to estimates from Caroline Gulliver, an analyst at Execution Noble in London.