Wal-Mart's David Cheesewright sees two big challenges: Customers are moving online and growth rates around the globe are slowing. Wesley Hitt for The Wall Street Journal
David Cheesewright, who started his career as a gym teacher, faces a big challenge as the newest chief executive of Wal-Mart Stores Inc. 's international division: Get the retailer's overseas operations back in shape.
Following years of double-digit sales growth, sales at its 6,100 international stores rose 1.3% in the year ended Jan. 31 as the company struggled to turn around what was once its fastest-growing division.
Wal-Mart's international business, which brought in $137 billion in revenue last year and makes up 29% of the retailer's sales, has struggled over the past few years as consumers in key international markets like Mexico and China have pulled back spending and are making fewer visits to its stores.
Meanwhile, the company faces regulatory hurdles in China and has had to shelve plans to open retail stores in India, a setback for the retailer after it spent years trying to gain traction in one of Asia's largest but most heavily regulated markets.
In a recent interview at the company's Bentonville, Ark., headquarters, Mr. Cheesewright, a 52-year-old native of the U.K., outlined how he plans to jump-start the flagging international business and how e-commerce will help the company expand into countries where it might never build physical stores.
Edited excerpts:
WSJ: You took over as Wal-Mart's head of international operations in February, overseeing nearly a million employees in 26 different countries. What was the first charge Wal-Mart's CEO Doug McMillon gave you when you took the job?
Mr. Cheesewright: Look, it's the first charge I gave myself. With 80% of retail industry growth that is going to happen over the next 10 years coming from outside of the U.S., I have to be the growth engine for our business. We are disappointed with the growth levels from last year, so that's going to have to be the priority.

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WSJ: How exactly do you plan to do that?
Mr. Cheesewright: I have four specific initiatives. First, create a platform for sustainable growth in China because based on where growth is coming from, if you get it right there, life becomes a lot easier.
Second, turn around our operations in Brazil. We've talked about that for a while but I think we've got some high caliber people there and we're encouraged by recent results there.
Third, we have to rejuvenate Mexico. Some of it has to do with cyclical economic issues, but some of it is self-imposed [as the company tries to improve the quality and price gap versus competitors]. I don't think we'll get back to the high growth levels from years past, but there's a lot we can do to help them become a more mature business.
And fourth, we have to drive e-commerce.
WSJ: Are there common challenges that you are seeing around the world?
Mr. Cheesewright: There are two key trends we see in every country. First, a rapidly changing customer that is rapidly moving online. Second, declining growth rates.
Looking at any metric, whether it's gross domestic product or retail sales growth, virtually everywhere we are seeing a slowdown. The nice thing about international is that there are still markets with pretty good growth rates, including Brazil, China and Mexico.
If you look at the countries we currently operate in and look forward to the next 10 years, we have access to more than 50% of the growth that's going to occur on the planet. That's pretty good coverage versus our competitors and the biggest chunk of that will be outside the U.S.
Once you know which countries you're going to focus on, then you have to think about whether you have the right formats. E-commerce is going to be incredibly important to us and it doesn't matter which market we're in. We have to excel at the fundamentals of e-commerce and then the big advantage for Wal-Mart will be the intersection between online and the physical stores. No one else has the portfolio of assets that we have to do that.
WSJ: Are there any countries that you'll enter into with e-commerce sites but not with physical stores?
Mr. Cheesewright: We'll always consider that. Ultimately the aim is to allow people to access anything they want from anywhere, so to be able to order anything from anywhere and get it shipped.
You don't necessarily have to start with countries integrating physical stores and e-commerce, but I think every business will end up with a physical-digital integration. Right now we are focused on getting the businesses we already have right, which is in Brazil, China and the U.K.
We are going to grow very fast in e-commerce and Yihaodian, the online grocer in China that Wal-Mart owns a 51% stake [of], has been a good investment, posting triple-digit growth at twice the rate of the market.
WSJ: Wal-Mart has been talking about creating a good foundation in China for decades. Why do you think it is taking so long?
Mr. Cheesewright: Well, it's a difficult market to operate in. If you look back, we acquired some stores that probably weren't the right assets. So why would it be different this time? We have a great leadership team led by our newly appointed China head Sean Clarke, there is a lot of e-commerce potential that uniquely positions us in that market and we've taken some pretty tough decisions about tidying up the portfolio.
You never get everything right and when you've made mistakes you should deal with them. Our appetite to deal with issues and get rid of some of the stores that quite frankly are never going to make money and allow the teams to focus on the ones that are, is a good indication that we are pretty determined to make it work in China.
WSJ: Wal-Mart recently shelved its plans to open retail stores in India amid difficulties navigating regulations on foreign investment in the country. What's next?
Mr. Cheesewright: Wal-Mart India is refocusing on the business-to-business market, rather than selling to consumers directly, with both cash and carry stores and e-commerce.
India is going to be like a classic developing market, where the vast majority of sales increases are going to come from people emerging from informal into formal shopping, and that's primarily the early days of mom-and-pop stores and small supermarkets. To supply those stores is the most sensible place to start. Somewhere down the road there might be retail stores and an item-to-home type of e-commerce business, but for the moment, the business-to-business proposition is the right way to go.