Wal-Mart plans $450 million expansion in Canada

Tue Jan 22, 2013 10:07am EST
 
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(Reuters) - Wal-Mart Stores Inc's Canadian unit will expand its distribution network and open a handful of new stores in the coming fiscal year, as rival discounter Target Corp prepares to open its first stores in the country this spring.

Wal-Mart's planned $450 million investment pales in comparison with the more than $750 million it earmarked for expansion in the current fiscal year, which wraps up at the end of January.

That said, it has been a particularly active year, thanks to Hudson's Bay Co's decision to mothball its discount banner Zellers. Target secured its first Canadian locations from HBC, and Wal-Mart took over 39 former Zellers outlets.

Wal-Mart said it expected to have about 388 Canadian locations by the end of January 2014, compared with 379 as of January 31, 2013, and 333 a year earlier. Target plans to open 124 stores in Canada, starting in March or April.

The world's biggest retailer has been converting many of its Canadian stores to "supercenters," which feature more grocery items than standard stores, putting pressure on profit margins at Canadian grocers. It plans to complete at least 37 supercenter projects next fiscal year.

Target is expected to shake up the retail landscape across Canada, challenging Wal-Mart in a market it has dominated for nearly two decades.

"This year, we are ramping up our focus on lowering prices and helping customers lower their cost of living, as we continue to bring our supercentre format to more Canadians," said Shelley Broader, CEO of Walmart Canada.

The plan, which includes construction of new stores, expansion, remodeling or relocation of existing stores, is expected to generate more than 7,000 store, trade and construction jobs, the company said.

Wal-Mart, which entered Canada in 1994, said it would also introduce the supercentre format to locations in the Maritime provinces in eastern Canada this year.

(Reporting by Bhaswati Mukhopadhyay in Bangalore and Allison Martell in Toronto; Editing by Frank McGurty and Sofina Mirza-Reid)

 
A Wal Mart store front is seen in Toronto March 5, 2009. REUTERS/ Mike Cassese