Wal-Mart Stores announced Friday that the company would close its smallest store format, Walmart Express. As part of a restructuring that will affect 16,000 employees, 269 stores worldwide will be closed, including 154 in the United States.
Wal-Mart, the world’s largest retailer, said the move would reduce diluted earnings per share by 20 cents to 22 cents, with almost all of the amount to be booked in the fourth quarter ending this month. In November, the company forecast annual earnings of $4.50 to $4.65 per share.
Shares of Wal-Mart, which said the store closures represented less than one percent of the company’s global retail space and sales, fell 2.4 percent to $61.57.
The move comes three months after CEO Doug McMillon announced plans to review the retailer’s global operations and close poorly performing stores. – Reuters
Friday’s announcement represents the first step in these restructuring efforts.
Wal-Mart announced it would close 102 of its Express stores. At 12,000 to 15,000 square feet, these are less than a tenth the size of a typical Supercenter. The format had been in the pilot phase since 2011 but did not produce the desired results.
The other 52 stores in the United States are a mix of supercenters (Wal-Mart’s largest business model), discount stores, a grocery store called Neighborhood Market and branches of the group’s wholesale chain Sam’s Club.
“Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future,” McMillon said in a press release.
In other markets, Wal-Mart announced the closure of 115 stores in Latin America, including 60 in Brazil. Reuters reported on the Brazilian closures on Thursday.
The store closures underscore the challenges Wal-Mart faces in finding growth opportunities both in its home market, which the company covers with about 4,500 stores, and abroad, where the company has grown to more than 6,000 locations but is struggling to generate consistent earnings.
The Arkansas-based retailer said it was still seeking investment and was sticking to its plan to open 142 to 165 stores in the U.S. in the year ending January 2017. It also announced for the first time plans to open 200 to 240 stores abroad next year.
The closures are expected to affect about 10,000 people in the U.S. and 6,000 abroad. The company said it would try to accommodate employees in nearby stores. It is estimated that 95 percent of the closed stores in the U.S. are located on average less than 10 miles from another company store.