Wal-Mart Backs Away From Assault on L.A. : Retailing: The discount chain giant quietly abandons plans to develop a large shopping center in Burbank. Stores have opened only in suburban areas.

More than a year after Wal-Mart Stores Inc. seemed poised to invade metropolitan Los Angeles, the nation’s largest retailer is still only nibbling around the edges of the nation’s largest consumer market.

The Bentonville, Ark.-based discount chain of clothing, food and general merchandise said eight months ago that it was planning a direct assault on metropolitan Los Angeles by opening a store in Burbank. The retailer proposed to build a store and accompanying major retail “power center” on 89 acres being vacated by Lockheed Corp. near the Burbank Airport at Victory Place and Empire Avenue.

According to Burbank city officials, Wal-Mart offered $71 million to buy the land. The center was to have been anchored by a 110,000-square-foot Wal-Mart store and include a Sam’s Club office supplies outlet that is also owned by Wal-Mart.

But very quietly, Wal-Mart backed out of that plan a few months ago. Burbank officials said Wal-Mart told them that it preferred to let someone else develop the shopping center, but Wal-Mart would still consider renting space in it.

“Now Wal-Mart is waiting until Lockheed picks a developer for the site and then they will enter negotiations with that developer,” said Robert Tague, Burbank’s community development director. A Wal-Mart spokeswoman declined to comment on why the company decided not to build the shopping center itself, but said “we are still interested in the city of Burbank.”

Such a store would be the first real test of Wal-Mart in the highly competitive metropolitan Los Angeles marketplace. A Burbank Sam’s Club would compete head-on with Price Club in Burbank. One of Kmart Corp.’s largest stores is in nearby Glendale. Dayton Hudson has several Target stores in the San Fernando Valley.

Wal-Mart has 1,923 stores in 43 states and posted sales of nearly $56 billion last year. The retail giant first moved into California in 1990 with a store in Lancaster, and has since opened another store in Palmdale--both in Los Angeles County.

For the moment, the giant retailer’s only planned new stores for metropolitan Los Angeles are in similarly outlying communities. Three other new Wal-Marts scheduled to open this year are in Riverside and Lake Elsinore in Riverside County, and Upland in San Bernardino County.

Two more Wal-Mart stores inside Los Angeles County--just barely--are scheduled to open in Cerritos and Paramount in early 1994. Both communities are nearly 20 miles from downtown.

Meanwhile, in Ventura County, Wal-Mart has agreed to pay the cost of a special November referendum in which voters will decide whether to amend a local planning rule to permit a Wal-Mart store in the city of Simi Valley.

Wal-Mart’s founder Sam M. Walton started his empire in 1962 by opening his stores in small towns, typically with populations of less than 15,000. By the time Walton died at age 73 last year, the company had begun expanding beyond that rural strategy to locate more and more of its stores in larger markets. Wal-Mart stores are now open in Chicago, Dallas, Houston and Miami.

Although Wal-Mart remains the most profitable general-merchandise discounter, the battle for market share in those urban areas seems to have put pressure on its profit margins. Last year, Wal-Mart’s profit on every one dollar of sales slipped to 3.6 cents, compared with 4.1 cents per dollar five years ago. While that is not a big decline, the recent trend has been downward. Wal-Mart still earns at least a penny more on each sales dollar than Kmart and Dayton Hudson, however.

Lockheed is eager to sell the Burbank property. The aerospace company used the land for about 60 years as a manufacturing facility for almost all of its aircraft. The company has since moved the Burbank operations to Palmdale and Marietta, Ga. The Burbank site has been vacant since late 1991. Other ideas for the site being debated include a proposal to build a 20,000-seat sport arena for the Los Angeles Clippers basketball team.

Lockheed has received proposals from two shopping-center developers so far, but hopes to get a few more bids before picking one. “We want to have a short list of developers for the site by the end of July, so we can start coming to some decisions,” a spokesman for Lockheed said.

Vestar Development Co. of Phoenix, which is building the Wal-Mart-anchored centers in Cerritos and Paramount, said it submitted a plan to Lockheed about six months ago for a $100-million, 900,000-square-foot shopping center on 103 acres of the Burbank site.

Vestar said it would seek a major discount retailer to anchor the center, but not necessarily Wal-Mart. “We’ve had calls from a lot of potential tenants, Wal-Mart being one,” said Rick Kuhle, a senior vice president for Vestar. The company has built seven shopping centers anchored by Wal-Marts. But it has also developed an equal number of centers anchored by Target stores and three centers where Kmart is a major tenant.

Another developer, Ronald A. Simms Commercial Development of Los Angeles, has proposed building the same sort of big retail center on the Lockheed site. Principal Ron Simms said the company has not had any discussions with Wal-Mart, although it has had interest in the site from several other large retailers.

Cleaning up toxic contamination by chemicals Lockheed used in manufacturing aircraft on the Burbank property may slow its development. The clean-up is only just getting under way and the company can not estimate how long it will take, the Lockheed spokesman said.