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Wal-Mart Expanding into Mexico

July 10, 1991

LITTLE ROCK, Ark. (AP) _ Wal-Mart Stores Inc., the largest retailer in the United States, is expanding into Mexico in a joint venture with that country’s biggest retailing company.

Wal-Mart spokesman Don Shinkle said Wednesday the venture with CIFRA SA will open the first discount warehouse store in Mexico City by the end of this year.

″It’s an untpped market, a very, very large untapped market,″ he said.

Shinkle said he did not know how many stores Wal-Mart would open in Mexico City or if the venture would lead to Mexican markets outside the capital.

″With the announcment of our entry into Mexico City it certainly would pave the way for Wal-Mart Stores into Mexico, but there’s nothing to announce at this time,″ he said.

Wal-Mart brings plenty of experience in warehouse stores to the venture. The company operates 181 Sam’s Clubs in the United States.

The joint venture with CIFRA would develop trade between the United States and Mexico, Wal-Mart said a statement Tuesday. However, the company did not say what Mexican products might be sold in its U.S. stores.

″We believe this is an excellent opportunity to work with a quality group of people and enter new markets,″ said David Glass, Wal-Mart’s president and chief executive officer.

CIFRA operates 192 stores in central Mexico. That includes 35 Almacenes Aurrera combination stores, 22 Bodeguarrera discount stores, 34 Superama supermarkets, 27 Suburbia department stores and 74 Vips restaurants.

The company had total sales of $550.5 million in the quarter ended March 31, a 21 percent gain over last year after discounting for inflation.

Wal-Mart operates 1,598 Wal-Mart stores and four HypermartUSA units as well as its Sam’s Clubs outlets. The company reported sales of $32.6 billion last year, surpassing all other U.S. retail companies.

Edward Weller, a retail analyst with Montgomery Securities in San Francisco, said the relationship would be far more important for CIFRA than for Wal-Mart because of the Arkansas company’s management expertise and buying power.

″The potential for warehouse clubs in Mexico is high,″ Weller said. ″I don’t know how many warehouse clubs would be justified in Mexico, but this could be one of a number of ventures. This will add to their growth opportunities in coming years.″

Weller said Mexico City’s dense population made it an attractive market for a discount club.

″I can’t believe in two years they’re not going to be looking around in Canada,″ he said of Wal-Mart.

Shinkle said Wal-Mart would be operating discount stores and Sam’s Clubs in Puerto Rico by early 1992.

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