Walmart sets up London team to lead European drive

The retail giant seeks takeover targets on the continent, as sales stagnate in Britain and America

Walmart, America's cheap and cheerful retailer, is setting up a London team to launch into Europe.

The $193bn US retail giant, which is finalising the details of buying a South African grocery chain this week, will bring a team to London – close to Heathrow airport – to look at opportunities for European mergers or takeovers.

Walmart, which also owns UK supermarket chain Asda, first entered mainland Europe in 1997 when it bought German hypermarket chain, Wertkauf, but the move was not as profitable as hoped and it pulled out by selling the chain in 2006.

But now European expansion is back on the cards as there is less growth for Asda in the UK and Walmart's home market is also stagnating.

Walmart has hired Cushman & Wakefield to search for office space in west London to house around 35 to 55 people – a small team to launch the European search. A spokesman said: "We are always looking for business opportunities all over the world."

West London is a popular area for US businesses to base their UK and European operations; Starbucks has its UK headquarters in Chiswick.

Walmart, which last week published its first quarter results, showed that the US and UK are tough and the move into Europe is the next logical step for the world's largest retailer.

Mike Duke, the chief executive, said US store sales declined 1.1 per cent – the eighth consecutive quarterly decline in its US stores. Its UK results showed sales in Asda shops that have been open over a year rose only 0.1 per cent, excluding fuel and VAT.

Mr Duke said: "Walmart International continues to be the growth engine for the company, increasing sales at 11.5 per cent." It already owns 4,500 stores in 15 countries including India and Mexico, and 338 shops in China.

In South Africa, it is agreeing a deal to takeover Massmart, which has 288 stores in 14 African nations. Massmart, which was set up in 1990 by the entrepreneur Mark Lamberti, is South Africa's biggest food and general goods retailer with giant warehouse stores similar to Walmart in the US.

Arkansas-based Walmart's ethos is large out-of-town general stores selling everything from food to clothes – to guns (in the US) – at the cheapest possible prices. In Europe, it will look at rival supermarket and retail chains that it could buy and expand – its usual route into a new country.

David Cuthbert, a partner at property agent Hanover Green, said: "West London has great rail, road and underground connections. The demand for office space has grown – better than in the past two to three years. The market is tightening and rents are rising."

The Europe move is separate to Asda, which is based in Leeds and has a fashion team for its George brand based in Carnaby Street, London, which is expanding into larger offices.

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