Wal-Mart to close 269 stores, 154 of them in the U.S.

Jan 18, 2016

Wal-Mart is closing 269 stores, more than half of them in the U.S. and another big chunk in its challenging Brazilian market.

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.

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, Ark., company said it is working to ensure that workers are placed in nearby locations.

The store closures will start at the end of the month.

Two Walmart Express stores in Chicago will close on Sunday – the store at 3636 N. Broadway St. in Lakeview and the store at 225 W. Chicago Ave. in River North.

Around 110 sales associates who work at the stores will be given the chance to transfer to larger nearby Neighborhood Market and full-size supercenter stores, or will receive severance, according to Wal-Mart spokeswoman Delia Garcia.

Analyst Neil Saunders, CEO of Conlumino, said increased competition from dollar stores hurt the Walmart Express stores. Wal-Mart felt compelled to experiment with the smaller format to try to cash in on a growing trend for shoppers to prefer local stores, but didn’t enjoy the same competitive advantage in the smaller spaces that its big box stores afforded it, Saunders said.

“You can in many cases shop as cheaply at Wal-Mart as you can at a dollar store, but the perception among consumers is that dollar stores are cheaper,” he said. “The other problem is that dollar stores have a more limited range of goods, and are geared up for the simplicity of a smaller store.”

Wal-Mart’s mid-sized Neighborhood Market stores – of which there are seven in the Chicago area – are a better fit for Wal-Mart’s economic model that still allow it to target shoppers who don’t want to make the trek to a superstore, he added.

The announcement comes three months after Wal-Mart 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.

"No doubt our business has become both large and broad," McMillon told analysts in October. "It is more important now than ever that we evaluate our portfolio."

Wal-Mart operates 4,500 in the U.S. Its global workforce is 2.2 million, 1.4 million in the U.S. alone.

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.

Of the closures announced Friday, 154 locations will be in the U.S., including the company's 102 smallest-format stores called Walmart Express, which were opened as a test in 2011.

Walmart 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.

Also covered in the closures are 23 Neighborhood Markets, 12 supercenters, seven stores in Puerto Rico, six discount stores and four Sam's Clubs.

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 between 200 to 240 stores.

Here is the Complete list of Wal-Mart store closings

Source: Chicago Tribune