Wal-Mart to Close 154 US Stores, Affecting 10,000 Workers
Wal-Mart Stores plans to close 154 stores in the United States and 269 worldwide, including its experimental small-format Express outlets, in a push to streamline the chain that will eliminate 16,000 jobs.
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The move by the largest private employer in the United States affects 154 locations domestically, according to a statement Jan. 15. Overseas, the effort includes the closing of 60 money-losing stores in Brazil, a country where Wal-Mart has struggled. The plan will affect less than 1% of its total square footage and revenue, the company said.
CEO Doug McMillon took the step after reviewing the chain’s 11,600 stores, evaluating their financial performance and fit with its broader strategy. The move also marks the end of its pilot Wal-Mart Express program, a bid to create a network of small corner stores that began in 2011. Wal-Mart will continue its larger-size Neighborhood Markets effort, though 23 poor-performing stores in that chain also will be closed.
“We invested considerable time assessing our stores and clubs and don’t take this lightly,” McMillon said. “We are supporting those impacted with extra pay and support, and we will take all appropriate steps to ensure they are treated well.”
Wal-Mart shares fell 2.1% in early morning trading in New York on Jan. 15, in line with a broader market decline. They have lost 29% of their value over the past 12 months, dragged down by slow growth and profit declines.
Some investors may be disappointed that the cuts aren’t deeper, said Brian Yarbrough, an analyst with Edward Jones.
“I don’t think this is enough to move the needle,” he said. “I think they need to exit some markets totally and close a lot more than they are closing.”
The shutdowns will reduce earnings from continuing operations by about 20 cents to 22 cents a share, the Bentonville, Arkansas-based company said, with as much as 20 cents of that coming in the fourth quarter.
Twelve of its massive supercenter stores, which employ an average of 600 people, will be shuttered. Most of the closings will occur by the end of the month. Last year, Wal-Mart shut three supercenters.
The cutbacks will affect 10,000 workers in the United States, but Wal-Mart will give employees the chance to relocate to nearby stores. It also will provide 60 days of pay and one week of severance for each year with the company. Wal-Mart has 1.4 million employees in the United States and 800,000 abroad.
McMillon had signaled during the company’s investor meeting in October that he was considering closing some stores. Still, the move doesn’t mean Wal-Mart is reducing its overall U.S. footprint, the retailer said. It plans to open 50 to 60 supercenters in the United States this year and 85 to 95 neighborhood markets, which are about the size of a typical grocery store.
Wal-Mart has come under increased pressure to cut costs after giving a gloomy profit forecast for the next fiscal year. Earnings are expected to decrease 6% to 12% in the year ending January 2017. Sales haven’t been growing fast enough to offset the billions of dollars that Wal-Mart is spending on higher wages for its workers and improvements to its website.
