Sayonara Wal-Mart (WMT)

October 24, 2007 by Douglas A. McIntyre

It is a painful irony that a UK newspaper would have to point out to Americans that one of their largest companies is trying to move most of its business overseas.

According to the FT: "Wal-Mart ,the world’s largest retailer, is planning to increase spending on new international stores while further slowing its US growth, in a move that highlights its growing saturation of the US market." The need to do this was old news to everyone except Wal-Mart management.

The retailer says that by 2010 it will be spending 40% of its budget for new stores on locations outside the US. Why the number is not higher is hard to say.

Wal-Marts are now so close together in some locations that any two stores can share the same parking lot, a novel way to save on building. With same-store sales in the US running below 2% most months, it is hard to imagine that Wal-Mart is not closing stores here to cut costs and improve sales efficiency.

But, old habits go away slowly. Sam Walton is buried on American soil, not in some cemetery in Mexico or China. Wal-Mart management is still hanging on too long, hoping that it can do well in the US. It’s time to let go of that fiction.

Douglas A. McIntyre