January 8, 2020 / 10:05 PM / a month ago

UPDATE 1-Walmart opened 134 stores in Mexico in 2019, biggest expansion in 6 years

(Recasts, adds detail and context on store openings)

By Daina Beth Solomon

MEXICO CITY, Jan 8 (Reuters) - Walmart last year launched its biggest expansion in Mexico since 2013, opening 134 new stores in its top foreign market and boosting its presence by nearly 5%, the retailer said Wednesday.

Walmart now runs 3,407 stores in Mexico, where it has more locations than in any other country outside the United States, its Mexican unit, Walmart de Mexico, said in a monthly report.

Nearly all the new units belong to the Bodega Aurrera family of stores, including the small, no-frills Bodega Express that is cheaper and quicker to build than Walmart's bigger formats.

The emphasis on the Bodega chain, which offers cheaper goods in line with Walmart's "Everyday Low Prices" strategy, is also part of the retailer's push to compete with informal marketplaces and win over low-income shoppers.

"This is where you find the great population mass that Walmart is going after," said Valentin Mendoza, an equity analyst at Banorte.

Although analysts expect Walmart to maintain its pace of growth as it seeks to generate a higher percentage of sales from new stores, Mendoza noted expansion can create headaches for a company that is already Mexico's biggest retailer.

"Where is the ideal point where you can keep growing without cannibalizing the sales you already have?" he said.

Walmart hit a recent record for new stores in 2011, when it opened 365 locations in Mexico.

The following year, the firm became embroiled in allegations it paid bribes to fuel its real estate expansion, and the pace of new openings slowed dramatically in the aftermath.

Last year's new openings were the highest since 2013, when Walmart opened 214 stores across Mexico.

In Central America, where the weak regional economy has dampened business, Walmart opened 27 stores in 2019.

Sales at Walmart stores open for more than a year in Mexico rose 2.6% in December compared with the same month in 2018, while total sales in the country rose 4.1%. (Reporting by Daina Beth Solomon; Editing by Cynthia Osterman)

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