Wal-Mart to shutter 269 stores, 154 of them in the US
Walmart is ending its Express concept and closing 269 stores
(35 minutes later)
NEW YORK — Wal-Mart is closing 269 stores, more than half of them in the U.S. and another big chunk in its challenging Brazilian market.
Walmart said Friday it plans to shutter 269 stores this year, including all 102 of its small-format Express stores. The move reflects a shift in strategy in which the retailing giant will focus more on building up its e-commerce firepower and improving its massive supercenters and its grocery-centric Neighborhood Market stores.
The stores being shuttered account for a fraction of the company’s 11,000 stores worldwide and less than 1 percent of its global revenue.
As part of this strategy, the company will not move forward with plans to build two new supercenters in the District — one that was planned for Skyland Town Center in Southeast Washington and the other at Capitol Gateway Marketplace in Northeast Washington.
More than 95 percent of the stores set to be closed in the U.S. are within 10 miles of another Wal-Mart. The Bentonville, Arkansas, company said it is working to ensure that workers are placed in nearby locations.
A spokesman said the store closures would affect 16,000 jobs internationally, some 10,000 of those positions in the United States.
The store closures will start at the end of the month.
Even as Walmart plans to close hundreds of locations, it also intends to open more than 300 stores in the next year, including 50 to 60 supercenters in the United States and 85 to 95 Neighborhood Markets. The stores that are to be shuttered are ones that the retailer says account for less than 1 percent of global revenue.
The announcement comes three months after Wal-Mart Stores Inc. CEO Doug McMillon told investors that the world’s largest retailer would review its fleet of stores with the goal of becoming more nimble in the face of increased competition from all fronts, including from online rival Amazon.com.
“Our experience over the last three years operating our current stores in DC has given us a fuller view on building and operating stores in the District,” the company said in a statement. “This decision will not affect our three existing stores and we look forward to continue serving these customers in the future.”
“Actively managing our portfolio of assets is essential to maintaining a healthy business,” McMillon said in a statement. “Closing stores is never an easy decision. But it is necessary to keep the company strong and positioned for the future.”
Walmart had been testing the Express concept since 2011 as a way to reach a different kind of shopper or a different kind of shopping trip. Walmart Express stores were something of mashup between a dollar store and a small grocery, offering convenience-oriented food products but not a wide array of fresh produce or meats. The idea was that it could help Walmart capture more of shoppers’ dollars on smaller “fill-in trips,” when a customer isn’t necessarily aiming to restock their pantry. And the store’s smaller footprint was also a way to allow Walmart to shoulder into shopping centers and neighborhoods where a supercenter wouldn’t fit.
Wal-Mart operates 4,500 in the U.S. Its global workforce is 2.2 million, 1.4 million in the U.S. alone.
The retreat from this concept suggests the retailer did not see it getting the kind of traction in had initially hoped.
Wal-Mart has warned that its earnings for the fiscal year starting next month will be down as much as 12 percent as it invests further in online operations and pours money into improving customers’ experience.
“We believe Walmart’s announcement of store closings this morning is just a ‘pruning’ of its voluminous network, with the continuation of Supercenter and Neighborhood Market expansions positives,” said Charlie O’Shea, lead retail analyst at Moody’s, in a statement.
Of the closures announced Friday, 154 locations will be in the U.S., including the company’s 102 smallest-format stores called Wal-Mart Express, which were opened as a test in 2011.
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Wal-Mart Express marked the retailer’s first entry into the convenience store arena. The stores are about 12,000 square feet and sell essentials like toothpaste. But the concept never caught on as the stores served the same purpose as Wal-Mart’s larger Neighborhood Markets: fill-in trips and prescription pickups.
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Also covered in the closures are 23 Neighborhood Markets, 12 supercenters, seven stores in Puerto Rico, six discount stores and four Sam’s Clubs.
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Wal-Mart will now focus in the U.S. on supercenters, Neighborhood Markets, the e-commerce business and pickup services for shoppers.
The retailer is closing 60 loss-making locations in Brazil, which account for 5 percent of sales in that market. Wal-Mart, which operated 558 stores in Brazil before the closures, has struggled as the economy there has soured. Its Every Day Low price strategy has also not been able to break against heavy promotions from key rivals.
The remaining 55 stores are spread elsewhere in Latin America.
Wal-Mart said that it’s still sticking to its plan announced last year to open 50 to 60 supercenters, 85 to 95 Neighborhood Markets and 7 to 10 Sam’s Clubs in the U.S. during the fiscal year that begins Feb. 1. Outside the U.S., Wal-Mart plans to open 200 to 240 stores.
The financial impact of the closures is expected to be 20 cents to 22 cents per diluted earnings per share from continuing operations with about 19 cents to 20 cents expected to affect the current fourth quarter. The company is expected to release fourth quarter and full year results on Feb. 18.
Shares of Wal-Mart Stores Inc. fell $1.12, or 1.7 percent, to 61.94 in morning trading.
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