Wal-Mart Stores Inc.’s global operations were designed to help it become less reliant on its mature U.S. business. Now Wal-Mart is grappling with possible bribery in Mexico, its second-largest foreign market, potentially putting the global strategy in peril.
On April 21, the world’s largest retailer confirmed it had started a probe into its Mexican operations in response to allegations that executives bribed officials to fast-forward expansion. The U.S. Justice Department is also investigating, according to a person familiar with the matter.
Wal-Mart’s house-cleaning is seen to threaten growth in Mexico, which last year generated about 21 percent of foreign sales growth. Meanwhile, Wal-Mart is losing market share in Brazil and China. It has no retail stores in India. And in Canada Wal-Mart is about to clash with Target Corp. (TGT) (TGT), which next year will open the first of as many as 150 locations there.
“They will probably have to cool international growth,” said Brian Sozzi, chief equity analyst at independent research firm NBG Inc. in New York. “The international business has not lived up to expectations. It’s not what it needs to be to offset what’s happening in the U.S.”
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