If Wall St analysts thought Wal-Mart (WMT) has problems in the US, they ought to stop by the retailer’s operations in Japan some time. According to Reuters the company said on Tuesday that "it likely lost twice as much money last year as previously forecast due to slumping sales and asset write-downs." Sales at the unit fell 1.2% on a drop-off in same-store sales of 1.1%. At least in the US, the yield-per-store is still increasing.
After pulling out of Germany and Korea it would be hard for Wal-Mart to raise the white flag in Japan. The market is simply too big for the US company to walk away. That would leave it out of three of the largest developed counties in the world.
Investors would like to think that Wal-Mart’s future is in large counties like China, and eventually, perhaps India. But, political consideration in those regions could slow Wal-Mart’s growth there any time. Outside the US, Wal-Mart’s two really successful markets are Mexico and China. It is going to have to expand that to at least a half a dozen markets to keep it powerful international sales engine running.
Things in Japan may be bad for Wal-Mart, but it is just going to have to tough it out.
Douglas A. McIntyre
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