So now the Street likes the China story for Wal-Mart
That's kind of an unusual pronouncement for Wal-Mart, and the fact it was uttered at all shows just how seriously Bentonville is considering China. Joe Hatfield, chief executive of Wal-Mart Asia, made the remarks during a Reuters interview over the weekend. A Wal-Mart spokesperson confirmed the figure Monday.
Of course, it's no secret that China is the sauce for a lot of maturing American companies. The price of Motley Fool Stock Advisor pick Starbucks
But as a direct seller to the people, Wal-Mart's opportunity will be among the biggest. Tht's why investors might want to do a little back-of-the-napkin math to figure out how many stores we're talking about. Let's take a crack at it via that employee count.
As of last year's 10-K, Wal-Mart U.S.A. employed about 351 people per store. Worldwide operations employ about 260 per store. To judge by the China figures bandied about in the press today (30,000 employees and about 56 stores) you'd get more than 530 employees per store. Since Hatfield suggested that Wal-Mart's currently hiring employees in China in excess of its need, I think we can assume that this won't be the final count. Still, dividing our 180,000 potential China employees by the U.S. 351 per store yields a possible count of 513. Using the higher, current China number, you still get 340 stores. That suggests that Bentonville is looking to open between 284 and 457 stores over the next half-decade. That's between 60 and 90 stores a year in China alone.
If that sounds like a lot, consider that in the U.S., the recent clip of net Wal-Mart openings has been about 140 per year. Given the way that Wal-Mart tends to squeeze out profits with scale, I'd say that Wal-Mart investors are looking at a pretty decent opportunity. I may need to get to the rest of the math and rethink these shares myself.
Seth Jayson doesn't like shopping at Wal-Mart, but that's never stopped him from buying a stock. At the time of publication, he had shares of Home Depot, but no positions in any other company mentioned. View his stock holdings and Fool profile here. Fool rules are here.