Wal-Mart (WMT) is up pre-market Thursday, on news it is bringing its ""compact hypermarket"" format developed in its Latin American markets to rural China. The retailer is making a bid to woo lower-income Chinese consumers. The CEO of the company's international business, Doug McMillon, told the Financial Times that the costs to operate these new units will be less, so the return on investment will be doubled. The stores built in this format are smaller, built with cheap materials and can have no air conditioning.
The superstore's French competitor, Carrefour, already has 100 ""hypermarkets"" in China. Walmart is looking to plant 300 hypermarket stores in the People's Republic.
The risk of investment is whether the population in mid-sized cities and rural areas have the funds to shop at Walmart.
International revenues represent near 25% of the retailer's $400 billion in yearly sales. However, overseas business accounts for just a third of operating income. U.S. sales grew at a rate of 1.4% in the 3Q a year ago, while foreign sales grew 9.3% in the same quarter."