How Will Wal-Mart’s International Segment Perform Going Forward?
Wal-Mart‘s (NYSE:WMT) domestic has maintained its consistent performance in recent quarters, largely on the back of strong performance from its neighborhood markets. However, Wal-Mart’s international segment saw its net sales decline by 9.4% y-o-y in 2015. In particular, its overseas revenue (excluding Canada) declined 12% y-o-y to $101 billion in 2015.
Wal-Mart’s Canadian business continues to perform well, with strong sales and solid profit performance. Brazil, however, is proving to be an increasingly challenging economic environment, and the competitive intensity and food deflation in the UK continues to increase. International sales (excluding Canada) made up around 24% of total revenue in 2015, and the table below breaks down the company’s sales by region, as well as our outlook for the company’s revenue composition.
We expect the international store count to increase at CAGR of 3.8% in the next three years, whereas the domestic store count is likely increase at a slightly lower CAGR over the same time frame.
The revenue per store between 2012 to 2015 declined at a CAGR of 1.6% but the revenue per square foot for these stores increased marginally. This trend can be explained by the fact that Wal-Mart U.S has been expanding its small format stores with a major focus on selling groceries.
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