December 7, 2016 / 6:46 PM / a year ago

Retailer Wal-Mart de Mexico to invest $1.3 billion in Mexico

MEXICO CITY/ CHICAGO (Reuters) - Retailer Wal-Mart de Mexico (WALMEX.MX) said on Wednesday it will invest $1.3 billion in logistics in Latin America’s No. 2 economy, in what is perceived as a show of commitment to Mexico at a time of uncertainty after the election of Donald Trump.

A person walks outside a Wal-Mart store in Mexico City January 11, 2013. REUTERS/Edgard Garrido

The investment in Mexico will not result in any jobs being moved from the United States, Wal-Mart spokeswoman Jo Warner told Reuters.

“The investment is funded by Walmex and is necessary for expansion of Wal-Mart’s Mexican business,” she said.

Warner did not comment on whether Wal-Mart had heard from Trump after it made the announcement in Mexico. She said the investment is not the same as companies moving jobs to Mexico.

Recently, United Technologies Corp’s (UTX.N) Carrier unit decided to keep half of the 2,100 Indiana jobs it was to shift to Mexico after the U.S. president-elect worked out an agreement with the company’s CEO, Gregory Hayes.

The election has thrown Mexico’s business world into uncertainty, as Trump has attacked U.S. companies investing south of the border and threatened to renegotiate or scrap a major trade agreement with Mexico.

A large part of Wal-Mart’s investment will be over the next three years, including in back-end infrastructure, said the company’s chief executive, Guilherme Loureiro. He said it would create some 10,000 permanent new jobs.

“It will involve the building of new distribution centers, as well as the expansion of ones we already have,” he said at an event with President Enrique Pena Nieto at the president’s office.

Loureiro said the company had already invested 80 billion pesos ($3.93 billion) in the past four years.

Wal-Mart has been looking to double sales in Mexico by 2024 by boosting its core business of running discount retail and membership stores, and expanding its fresh food business.

In August it sold its Suburbia clothing chain to El Puerto De Liverpool (LIVEPOLC1.MX) for about $852 million in order to streamline operations in the country.

At Wal-Mart’s shareholder meeting in June, David Cheesewright, head of the overseas division, singled out the Mexican market as a top priority. Mexico has Wal-Mart’s largest number of stores outside the United States.

Wal-Mart has struggled in overseas markets, including Britain and China, but Walmex has remained a bright spot with third-quarter revenue growing 10.8 percent to 126.86 billion pesos ($6.25 billion).

($1 = 20.3110 Mexican pesos)

Reporting by Mexico City Newsroom and Nandita Bose in Chicago; Editing by Nick Zieminski and Matthew Lewis

Our Standards:The Thomson Reuters Trust Principles.
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