Wal-Mart Bets on Store Expansion to Reverse Sales Drop in China

(bloomberg.com) 04/28/15 - Wal-Mart Stores Inc. said it will expand by more than 25 percent in China and renovate existing stores in a bid to reverse sales declines after a series of food scares and accounting missteps.

The world’s largest retailer plans to add 115 stores and spend 370 million yuan ($60 million) renovating about 50 of the more than 400 it currently has in China, Wal-Mart said in a statement. The new stores will create about 30,000 jobs, according to the statement.

Wal-Mart is fighting to win back customers in China after the Bentonville, Arkansas-based retailer shut unprofitable stores last year and cut jobs amid stiff competition from local companies such as Sun Art Retail and China Resources Enterprise. The government’s campaigns to eliminate extravagant spending and graft have cut sales of gift cards and continue to pose challenges, according to the company.

“China is a key strategic market for Wal-Mart,” Chief Executive Officer Doug McMillon said at a briefing in Beijing. “Over the next three years we will increase investment across our diverse business operations in China.”

Net sales in China fell 0.7 percent in the fourth quarter last year, while sales at stores open more than a year dropped 2.3 percent, Wal-Mart’s head of international operations said on a Feb. 19 earnings call. Full Story