Wal-Mart’s Urban Expansion to Include D.C. in 2012

Wal-Mart Stores Inc., the world’s largest retailer, will open its first stores in Washington, D.C. in 2012, looking to larger U.S. cities to revive stagnant sales nationally.

The four locations will offer a full grocery selection, spokesman Steven Restivo said in an interview today. The company also may open more sites across the city, including the areas east of the Anacostia River.

Wal-Mart’s sales at U.S. stores open more than a year have fallen for six straight quarters as the retailer vied with dollar stores for recession-weary consumers. Chief Executive Officer Mike Duke’s efforts to move into cities such as New York have been stymied by opposition from labor unions and community activists, though he did succeed in Chicago.

“The economic slowdown means that Wal-Mart’s expansion into cities could not come at a more opportune time,” David Schick, an analyst at Stifel Nicolaus & Co., said in an interview. “Local governments don’t have the luxury of saying they don’t want Wal-Mart anymore, as Wal-Mart creates jobs.” The Baltimore-based analyst recommends holding the shares of the Bentonville, Arkansas-based retailer.

The stores around Washington will be 80,000 to 120,000 square feet, Wal-Mart said. The retailer may eventually add smaller stores of about 30,000 square feet, according to Restivo. Wal-Mart expects the move to help create about 1,200 new jobs and 400 construction jobs locally.

Success in Chicago

“Because of the slow economic recovery, communities are at risk of accepting any jobs offered rather than insisting on jobs that meet their standards,” said Jennifer Stapleton, spokesman for the United Food and Commercial Workers International Union in Washington, in an interview. “We must use our power to stop a race to the bottom.”

Restivo said the Washington jobs would offer “a competitive wage.” Wal-Mart’s average hourly wage in that region is $12.49, according to a statement released today.

After wooing local politicians and labor unions, Wal-Mart won approval for its second and third stores in Chicago toward the middle of the year, four years after opening its first. Wal- Mart envisages adding several dozen stores and creating 10,000 hourly positions and 2,000 construction jobs across the city.

The retailer said last month it would open 30 to 40 smaller-format stores in the year ending January 2012. The company plans to open medium-sized stores of 30,000 to 60,000 square feet, as well as smaller stores. Wal-Mart supercenters average about 185,000 square feet.

Wal-Mart rose 21 cents to $53.98 at 4 p.m. in New York Stock Exchange composite trading. The shares have risen 1 percent this year.

Wal-Mart said Nov. 16 that third-quarter net income rose 9.3 percent to $3.44 billion, or 95 cents a share. Sales grew 7.9 percent abroad on a constant currency basis, offsetting a drop of 1.3 percent in revenue from U.S. stores open at least a year.

To contact the reporters on this story: Matt Townsend in New York at mtownsend9@bloomberg.net; Matthew Boyle in New York at Mboyle20@bloomberg.net.

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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