GREENSBORO, North Carolina — Wal-Mart Stores and potential acquisition targets in Russia have disagreed over prices, creating a roadblock to the retailer's plans to operate stores there, international chief Doug McMillon said in an interview.
"One of the things that has been a hindrance in Russia is just an agreement on price," McMillon said Thursday. "If you wanted to have some scale to start out, you have to have a willing seller and therefore you have to come together on valuation. Until something is done, it's not done."
Wal-Mart, the world's largest retailer, has pursued several opportunities as it seeks to enter Russia using an acquisition, said McMillon, who has visited the country twice in the past year. Buying a retail chain would give Wal-Mart a faster presence than opening stores on its own, he said.
The retailer has grown to 30 employees in Russia since 2008, when the Arkansas-based company opened an exploratory office in Moscow, said Kevin Gardner, a spokesman.
That team is evaluating how to differentiate Wal-Mart from Russian retailers, Mitch Slape, senior vice president of international business development, told reporters in Rogers, Arkansas, before Wal-Mart's annual meeting.
“It’s premature to say that we’ve made a decision, one way or the other,” on an acquisition or building stores, Slape said. “The fact that we’ve got a team on the ground is evidence of a commitment to focusing in on getting that right answer.”
McMillon said the presence has also helped them learn more about doing business in Russia.
"We have benefited from having a team in Russia and learning how Russia works," McMillon said. "What you think about is, what is the risk, and how do you mitigate it? You have to have a plan going in."
He declined to provide a timeline for Wal-Mart's expansion into Russia, considering the uncertainty of completing a deal.
"We think, long term, Russia is a big enough market that it's certainly worthy of attention," he said. "But we don't have to be there this year."
Wal-Mart's international division is on track to spend $4.5 billion to $5 billion on capital expenditures in the fiscal year that ends Jan. 31, McMillon said, based on the company's projection on Oct. 22. That total covers new stores consisting of 2.3 million square meters, up from 2.1 million square meters last year.
"If we spend a little bit more than $5 billion, I don't think I'd get in trouble for it," he said.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.