Kmart and Woolworths Expand in Mexico

Mexican shoppers eager to spend petrodollars will soon be able to choose between bargain basements in K mart and Woolworth's. Both U.S.-based retail chains last month announced plans to compete in the Mexican market-K mart by buying 44% of an already existing Mexican chain, and F. W. Woolworth by selling 51 % of its Mexican subsidiary to two Mexican firms so that it can legally expand operations there.

The F. W. Woolworth Co. opened a branch in Mexico City in 1956 and has operated 24 stores in Mexico for years, but was prevented from opening new ones by the country's foreign investment law of 1973, which mandated no expansion by firms not owned at least 51% by Mexicans. Woolworth's decision to sell 25% of its Mexican subsidiary to Banco Nacional de Mexico, the second largest private banking group in the country, and 26% to the mining firm Luis Min, has made it possible for the chain to boost its investments in Mexico. "We plan to open new (stores) just as soon as it becomes feasible," said Joseph Carroll, Woolworth's vice president for public affairs.

Meanwhile, K mart has opted to purchase a 44% interest in Mexico's sixth-largest retail chain, the Astra Co., which operates 16 stores in northeastern Mexico. Astra is the retailing arm of the Gentor group, an industrial and real estate conglomerate which is the .61st-largest company in Mexico. The price paid by K mart for Astra was not disclosed, but K mart will provide Astra with management training and access to its international buying network.

K mart's Mexico push is part of a drive to consolidate its North American position in the retail market. Last year, 91% of the firm's total net income of $260.5 million came from its 2,400 stores within the U.S. Its only wholly-owned foreign subsidiary is a chain of 110 stores in Canada.