Wal-Mart Bids Auf Wiedersehen, Ends Nine-Year Grind in Germany

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BENTONVILLE, ARK. - Wal-Mart may not have been successful in Germany but the lessons learned during a struggle that lasted nearly a decade in Europe's largest economy are evident today throughout the retailer's global operations and its approach to acquisitions.

It was an expensive lesson. The decision to sell its 85 stores to German retoiler Metro AG will result in a $1 billion pretax loss during the second quarter, but the move is in keeping with WaIMart's renewed focus on achieving higher rates of return on its invested capital. Successful execution of that strategy, even if it means shedding pieces of its business, is viewed as a key to helping the company's long-suffering stock price break out of its six-year slump.

"As we focus our efforts on where we can have the greatest impact on our growth and return-on-investment strategies, it has become increasingly clear that in Germany's business environment it would be difficult for us to obtain the scale and results we desire," said WalMart vice chairman Mike Duke in reference to the decision to exit Germany.

Those comments are nearly identical to a statement in late May when Wal-Mart announced the sale of its 16 stores in South Korea.

"As we continue to focus our efforts where we can have the greatest impact on our growth strategy, it became increasingly clear that in South Korea's current environment it would be difficult for us to reach the scale we desired," Duke said.

Both decisions were viewed positively by financial analysts who saw the moves as evidence that Wal-Mart is serious about improving its returns and a possible indication of an eventual slowdown of square-footage growth in the United States.

The decisions to exit Germany and South Korea are part of a major reshuffling of WaIMart's international portfolio which has seen the company increase its focus in Brazil and Central America…...

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