Wal-Mart is exploring the retail market in Russia, with an office open in Moscow
Wal-Mart is exploring the retail market in Russia, with an office open in Moscow.
The Bentonville-based retailer also joined the Russian Association of Retail Companies, a trade association similar to the National Retail Federation in the United States, said Richard J. Coyle, Wal-Mart's senior director for international corporate affairs.
"Wal-Mart has been exploring opportunities in Russia for several months," Coyle said, and joined the retail companies association "to participate in meetings and forums" and to follow retail trends.
Doug McMillon, who becomes president and chief executive officer of Wal-Mart International Feb. 1, "would like to grow the international business," Coyle said.
Mike Duke, who was international division president and CEO, will succeed Lee Scott as president and CEO of Wal-Mart Stores Inc. on Feb. 1. Wal-Mart has not yet named McMillon's successor as president and CEO of Sam's Club.
Wal-Mart has no immediate timeline to open a store in Russia, and company representatives do not know which store formats would be used, if any, Coyle said. He also would not disclose how many employees are in the Moscow office.
"We really aren't saying much because there is not much to say yet," he said.
Russia is an attractive potential market because it is the eighth-largest economy in the world, Coyle said.
"Versus the other markets where Wal-Mart currently operates, Russia is already larger than Canada and Mexico in terms of retail sales," Coyle said.
The International Monetary Fund's world economic outlook published in April predicted overheating of the Russian economy with accelerating inflation and shrinking of account surpluses due to soaring imports. However, Russia's natural resources, including oil and natural gas, insulate it somewhat from bumps in the world markets.
Russia was Europe's fourth-largest retail market after Germany, France and Great Britain in 2007, the newsletter from Suomen Pankki Finlands Bank stated.
"Flush with cash, the well-heeled segment of the (Russian) population tends to go for pricier items, while the hoi polloi go for cheap stuff -- but in bigger amounts," said Suomen Pankki Finlands Bank.
The average monthly wage in Russia in March 2008 was 16,400 rubles, the bank said, or about $502.58 in U.S. dollars. Wal-Mart won't be the first Arkansas-based company to operate in Russia. Springdale-based Tyson Foods Inc. sold $236.8 million of products in Russia, or 9 percent of the company's total international revenue. Russia is Tyson's second-largest international poultry customer, behind first place Mexico.
Wal-Mart also is exploring markets in Chile and filed Tuesday documents related to the possible purchase of a Chilean retailer with the U.S. Securities and Exchange Commission.
Wal-Mart announced Dec. 19 its offer to buy at least 50.01 percent of Distribucion y Servicio D&S S.A. and that offer expired at midnight Thursday. D&S is based in Santiago and has about 180 stores. "We have not made any announcements yet. We are still in the tender offer process," said Kevin Gardner, Wal-Mart spokesman, late Thursday afternoon.
Wal-Mart would pay 40.8 cents per common share of D&S stock, a premium of approximately 37.4 percent over the average closing price for 30 days prior to the buyout announcement.
Shares of Wal-Mart (NYSE: WMT) closed Thursday at $48.87, down 27 cents. The share price ranged from a $63.85 high to a $47.40 low in the past 52 weeks.