Wal-Mart Buys Stake in Central American Retailer
Bentonville, Ark., Wal-Mart Stores announced it has purchased a 33.3% stake in Central American Retail Holding Co., or CARHCO, from Dutch retailer Royal Ahold NV. Financial terms of the deal were not discussed. CARHCO is the larger retailer in Central America, with stores in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica. It posted sales of $2 billion in 2004.
The investment is Wal-Mart’s first in Central America, although the region is a major source of apparel for the chain. As part of the agreement, Wal-Mart will acquire additional interests over time in CARHCO, with the goal of achieving majority ownership in the company.
“We are delighted to have this opportunity to invest in the future of Central America,” said John Menzer, president and CEO of Wal-Mart International. “We are joining a strong partnership that is delivering outstanding service to customers throughout the region.”
Significant investments are planned in the years ahead to open new stores, Menzer said. In addition, specialized training programs are planned for CARHCO associates and for suppliers to assist in business development.
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Report Expects e-Commerce Growth
Cambridge, Mass., As on-line technology continues to flourish, so too will on-line retail sales burgeon. According to Forrester Research, the $172 billion in U.S. on-line retail sales in 2005 will nearly double to $329 billion by 2010.
The 14% compound annual increase of e-commerce mainly can be attributed to retailers’ new approaches to on-line consumers. Rather that seeing on-line stores as a low-cost supplement, retailers now view the e-commerce as a channel to improve customer service and retention.
Several top retailers reflect this growing trend of on-line promotion and improved consumer relations, among them Target, Gap and Nike.
Tesco Team Eyes Albertson’s
London, Reuters reported that Tesco, Britain’s most prominent retailer, sent representatives stateside to consider a bid for Albertson’s, one of America’s top grocery chains.
Despite having 2,500 stores and annual revenues of more than $40 billion, Albertson’s has been facing intense competition from retail powerhouse Wal-Mart. As a result, the grocery chain recently hired investment bankers in order to explore its options on the market.
With a reported price tag of $7.6 billion, Albertson’s seems to have caught Tesco’s eye, at least momentarily. As the British retail giant reports half-year results this week, it continues to look for a way to tap the lucrative U.S. market. Tesco has already begun expanding into eastern Europe and east Asia.
In addition to Britain’s largest—and rapidly expanding—food retailer, France’s Carrefour and Belgium’s Delhaize have expressed interest in Albertson’s. The world’s largest retailer, Wal-Mart, is also courting the grocer.
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