By Judy McKinnon and David George-Cosh
TORONTO-- Wal-Mart Stores Inc. will invest nearly 500 million
Canadian dollars ($451 million) in its Canadian operations over the
next year, a move that signals a continued push by U.S. retailing
giants into Canada's key grocery category.
The investment will see the retailer's Canadian unit spend more
than C$376 million to add 35 supercenter stores, which carry
everything from groceries to apparel and home décor, and house
specialty services like pharmacies and garden centers.
Wal-Mart's investment plans come at a time when intense
competition in the Canadian grocery space is forcing many big
domestic players to bulk up to go head-to-head with discounters.
Toronto-based Loblaw Cos. announced plans last year to acquire
drugstore chain Shoppers Drug Mart Corp. in a deal worth more than
C$12 billion, while Empire Co.'s Sobeys unit agreed to buy Safeway
Inc.'s Canadian operations for around $5.7 billion.
Walmart Canada said Tuesday that its investment will include
C$91 million on distribution network projects to boost its
fresh-food offerings and C$31 million for e-commerce projects.
The move will bring its total store count to 395 by the end of
January 2015, including 282 supercenters.
Keith Howlett, an analyst with Desjardins Securities, said
Wal-Mart has added between 30 to 40 stores in Canada every year,
and he expects it to maintain that pace over the next several
years. Much of the company's latest investment will be focused in
Quebec and Atlantic Canada, Mr. Howlett said.
Just last week, U.S.-based rival Target Corp. said it would
continue its expansion in Canada, adding another nine stores to the
124 it opened across the country over the past year.
Along with Costco Wholesale Corp.'s addition of three stores in
Canada this year, "the planned expansions in 2014 of the three
national U.S. grocers that are present in Canada are about as
expected," Mr. Howlett said.
Nonetheless, U.S. retailers' growing presence in Canada has
created an increasingly competitive retail arena that has left some
big retailers struggling.
Target's expansion into Canada, its first major international
foray, has been costly. The company acquired sites for its Canadian
stores in 2011 and spent more than $4 billion to roll them out
beginning in March 2013. But traffic has been weak, and Target lost
more money there than it expected to in the first year. At times it
has had to cut prices by up to 90% to clear products. In early
January, the company said efforts to clear Canadian inventory hurt
its profit in the last quarter of the fiscal year.
Last week, Sears Canada Inc. announced it would cut another 624
jobs, eliminating a "midtier level" of employees in its full-line
stores. That followed previously announced job cuts totaling about
2,400.
Meanwhile, Best Buy Co.'s Canadian unit said last week it would
lay off 950 full-time employees, or just over 5% of its
workforce.
Write to Judy McKinnon at judy.mckinnon@wsj.com
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