Wal-Mart de Mexico Q2 profit drops on store openings
Wal-Mart de Mexico SA has reported that second-quarter profit fell 3.4% as the chain increased spending to open new stores and integrate Central American operations.
The Mexican unit of Wal-Mart Stores reported a net income of 4.49 billion pesos ($380 million) in the April-June period, down from 4.65 billion pesos during the same three months of 2010. Revenue rose 9% to 88.37 billion pesos ($7.49 billion).
CEO Scot Rank said spending to open new stores cut into profits but will help performance in the second half of the year.
The company has opened 176 stores so far in 2011, with the majority of the openings in late June.
Independent garden centers win with co-op alliance
Home & Garden Showplace and Master Nursery Garden Centers have announced an alliance to benefit independently owned and operated garden centers.
Home & Garden Showplace, a business unit of True Value, will align its understanding of product assortments, growth opportunities and merchandising power along with Master Nursery Garden Centers, a national cooperative of about 700 independent garden centers.
"Supporting and strengthening the independent retailer in today’s competitive marketplace is the cornerstone of the True Value co-op," said Lyle Heidemann, CEO of True Value. "This alliance supports those cornerstones, providing a greater opportunity for our combined retailers to win at retail with the lawn and garden as well as nursery consumer."
"I anticipate this alliance with True Value will prove very beneficial to our members," said Bill Jameson, president and CEO of Master Nursery Garden Centers. "True Value’s network of 12 regional distribution centers will allow us to better serve members in many regions of the country."
The alliance will benefit each co-op in the following ways:
• Master Nursery Garden Centers will have the ability to purchase True Value’s 60,000-plus warehouse-stocked products.
• Home & Garden Showplace retailers will be able to participate in Garden Elements, a proprietary program of Master Nursery Garden Centers, including a branded annual program and a new line of organic plant foods.
Mixed expectations for forest product M&A
An article just released by Standard & Poor’s Ratings Services predicted that mergers and acquisitions among forest product companies will continue to increase over the next few quarters due to strong balance sheets and attractive financing terms. But this M&A activity will largely be contained to the paperboard and packing sectors, according to "Top Investor Questions For The U.S. And Canadian Forest Products Sector In 2011." Consolidation in the “highly fragmented” building products sector is unlikely to occur over the next 12 months, the report said, without a recovery in housing.
"We expect most of our ratings on industry players to remain stable, in light of a gradual economic recovery in the U.S. and moderate recovery in new residential construction in 2011 after a steep and prolonged downturn," said Standard & Poor’s credit analyst Tobias Crabtree.
Most U.S. and Canadian forest product companies have modest debt maturities over the next two to three years, and S&P is not particularly concerned about their credit worthiness. But in its “risk assessment” for each category over the next 12 months, converted wood products — which takes in most lumber, panel and engineered wood product suppliers — were given a “higher-than-average” risk. This was due to the highly cyclical housing market; substantial industry overcapacity; and fragmented supply base, especially in lumber. Timber, on the other hand, was categorized as a “lower-than-average” investment risk because of harvest flexibility, market diversity and long-term reductions in Canadian supply.