In a decided bid to recapture its retailing dominance after a spate of flat or declining sales, Wal-Mart Stores Inc. will close 269 stores and warehouse clubs worldwide – including 102 of its small-format Walmart Express locations, which had been in pilot since 2011 – in conjunction with a major overhaul of its nearly 11,600 stores worldwide.
While the affected stores represent less than 1 percent of the Bentonville, Ark.-based retailer's global square footage and revenue, the news is a concrete acknowledgment of the difficulties the once-unstoppable retailer has faced in a fast-changing, hypercompetitive retail landscape.
A total of 154 U.S. locations, including 23 Neighborhood Markets, seven stores in Puerto Rico, six discount centers, and four Sam’s Clubs, are slated to close, while the company will instead focus on bolstering its Supercenters, optimizing its remaining Neighborhood Markets, growing its e-commerce business and adding more Pickup services.
Internationally, Walmart is closing 115 stores, among them 60 recently shuttered underperforming locations in Brazil, representing only 5 percent of sales in that market. The rest of the affected stores are mainly small, loss-making stores in other Latin American markets.
The exhaustive companywide review, announced last October, looked at financial performance and strategic alignment with long-term plans.
“Actively managing our portfolio of assets is essential to maintaining a healthy business,” noted Doug McMillon, president and CEO of Bentonville, Ark.-based Walmart. “Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future. It’s important to remember that we’ll open well more than 300 stores around the world next year. So we are committed to growing, but we are being disciplined about it.”
Despite the closures, Walmart still plans to open 50 to 60 Supercenters and 85 to 95 Neighborhood Markets during its fiscal year 2017, which begins Feb. 1. During the same period, Sam’s Club plans to roll out seven to 10 new locations. Outside of the U.S. Walmart intends to open between 200 and 240 stores this year.
Walmart estimates that the financial impact of the closures will be about 20 cents to 22 cents of diluted earnings per share from continuing operations, with about 19 cents to 20 cents expected to affect the fourth quarter of fiscal year 2016. The rest of the impact will hit during the first half of fiscal 2017. Around 75 percent of the impact relates to U.S. closings, with the remaining portion involving Walmart International, particularly the Brazilian locations. The estimated financial impact won’t be included in the company’s fiscal 2016 fourth-quarter and full-year earnings guidance, which will be released next month.
Helping Affected Associates
About 16,000 associates will be affected by the decision, with about 10,000 of them in the United States. The company expressed the hope that affected employees would find work at nearby locations. Otherwise, Walmart said it would provide 60 days of pay and, if eligible, severance, in addition to offering resume and interview skills training.
“The decision to close stores is difficult, and we care about the associates who will be impacted,” said McMillon. “We invested considerable time assessing our stores and clubs and don’t take this lightly. We are supporting those impacted with extra pay and support, and we will take all appropriate steps to ensure they are treated well.”
The company will continue to serve the needs of shoppers in affected U.S. markets through its other nearby locations and online. A list of all U.S. stores that are closing will be available today on the company's website.
Walmart operates stores under 72 banners in 28 countries, and e-commerce websites in 11 countries.