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  • Shoppers cart their purchases from a Wal-Mart store in Mexico City, Apr. 24, 2012

    Shoppers cart their purchases from a Wal-Mart store in Mexico City, Apr. 24, 2012 | Photo: Reuters

The American retail giant is reducing its operations in Brazil after a year of falling profits.

Wal-Mart Stores Inc. has closed approximately 60 stores in Brazil, or more than 10 percent of its outlets in the South American country, as the retail giant looks to restructure one of its most important overseas markets, sources close to the company said Thursday.

People familiar with Wal-Mart's Brazil operations told Reuters that in the past few weeks the company has closed tens of its locations across the nation, mostly smaller stores, due to falling profits margins.

Wal-Mart has declined to publicly comment but the company did announce that Flavio Cotini, currently the chief financial officer of the Brazilian operations, would become the CEO, replacing Guilherme Loureiro, who was named the head of the Mexican business. Cotini is the fourth CEO of Brazilian operations since 2008.

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The plan to shut flagging stores and decrease its workforce was revealed by the Brazilian business newspaper Valor last month after Chief Executive Officer Doug McMillon said it would "close the stores that should be closed."

At the time, it was believed by sources close to the organization that it would shut down only 5 percent of its bases in the South America’s largest country, or around 30 stores.

Wal-Mart, which has around 12,000 stores in 28 countries, entered Brazil in 1995, becoming the country's third-largest retailer. However, it has struggled to challenge the dominance of more established supermarket chains, such as Companhia Brasileira de Distribuição (GPA SA) and Carrefour, who have a stronghold in key cities like Rio de Janeiro and Sao Paulo.

Wal-Mart has focused instead on setting up stores in the country’s deep south and far north.

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According to its corporate website, before the recent cuts Wal-Mart Brazil had 544 stores, 200 pharmacies, 50 restaurants and 10 gas stations in 18 states and the country's capital, in addition to an electronics business.

The move to downsize comes after Brazil’s economy fell into its biggest recession in 25 years after a decade-long credit and commodities boom.

The crash has resulted in rising unemployment, unprecedented inflation and higher interest rates, which have battered consumer confidence and led to tumbling retail sales.

Adjusting for inflation, Wal-Mart Brazil’s sales shrunk by 1.6 percent from January 2015 to November 2105 compared to the same period in 2014.

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