Wal-Mart May Be Planning a British Excursion

Even if Wal-Mart is able to overcome regulatory resistance, some question whether a further investment in the British market is the best use of the company's cash. Like other European countries, Britain's economy and population are going to be growing slowly in the future, noted Richard Hastings, chief retail economist at credit-rating firm Bernard Sands. Wal-Mart should be focusing on Asian countries such as India and China that will have huge growth in the next 10 to 15 years, Hastings argued.

"I don't understand why they are interested in Britain," he said. "I think they are wasting their money."

But other analysts say Britain represents a safe bet. The country's consumers have already bought into Wal-Mart's "every day low price" strategy. In contrast, other countries represent a higher risk, analysts say.

"Here is a country that has a lot of similarity to the U.S.," said Miller. "They have a highly successful organization that's already in place. This is a natural opportunity for them to pursue."

Meanwhile, Wal-Mart generated about $10 billion in operating cash flow last year and the company needs to find somewhere to invest its money, Johnson said. A company that made about $245 million in net income on about $15 billion in sales in its 2002 fiscal year, Safeway is not a bad bet, he said.

"Those properties don't come on the market (often)," he said. "This is an opportunistic thing."

>To order reprints of this article, click here: Reprints