Wal-Mart Stores Inc is taking control of a Central American retail chain that it first bought into last September as it expands in Latin America to bolster its international growth, the company said on Wednesday.
The world's largest retailer said it had raised its stake in Central American Retail Holding Co (CARHCO) to 51 percent from the 33 1/3 percent it bought last year. Terms of the latest deal were not disclosed.
CARHCO is Central America's leading retailer with 375 supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica. It has about 23,000 employees and had sales last year of about US$2.2 billion, Wal-Mart said.
The new stake gives Wal-Mart control of the company, which will be renamed Wal-Mart Central America, and adds to its growing interests in the expanding economies of Latin America. The region is a key part of Wal-Mart's strategy of growing internationally, including China, Japan and Korea in Asia and Britain and Germany in Europe.
"Central America is a very strong region. In general, Latin America is a very strong region for us. We certainly intend to keep growing in the region," Wal-Mart spokeswoman Amy Wyatt said.
Wyatt declined to say if Wal-Mart would increase its stake in CARHCO.
It bought its first minority stake in CARHCO from Dutch retailer Royal Ahold NV. CARHCO's remaining owners are the Paiz family, the major shareholders of La Fragua, with headquarters in Guatemala, and Corporacion de Supermercados Unidos (CSU), with headquarters in Costa Rica.
Wal-Mart's international division is growing faster than its flagship US operations. Late last year it extended its overseas business by buying 140 Sonae stores in Brazil and increasing its stake to a majority in Japan's Seiyu Ltd, which has 405 stores.
Wal-Mart already has a strong presence in Mexico but before its CARCHO stake last year had no storefronts in Central America. Wal-Mart has long bought apparel from the region. The company said it imports more than US$350 million worth of goods from Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica.
CARHCO president Rodrigo Uribe will become chairman of Wal-Mart Central America's board of directors.
Uribe said Wal-Mart's investment "will enable the corporation to provide a larger assortment, better service and prices to consumers in Central America."
Wal-Mart, which had stores in 15 countries as of its quarterly report, said its international division's operating income in the quarter rose 14 percent to US$1.12 billion. Still, the retailer said its international sales of US$18.4 billion fell short of its goal amid softer-than-expected sales at its Asda stores in the UK This was offset partially by strong results at Wal-Mart de Mexico SA, where sales rose 15 percent. Wal-Mart built 95 stores in Mexico last year.