Wal-Mart's Closing of 10 Sam's Stores Called 'Sign of Health'

by Mark Friedman  on Tuesday, Jan. 12, 2010 9:34 am  

A retail consultant praised Wal-Mart Stores Inc.'s announcement Monday to close 10 money-losing Sam's Clubs.

"I think it's a sign of health," Howard Davidowitz, chairman of Davidowitz & Associates Inc., a retail consulting and investment banking firm in New York, said Tuesday. "Every retail company, no matter who they are, should constantly be culling their portfolio of real estate. There's a saying nothing is forever."

On Monday, Wal-Mart said it would close the Sam's Club stores in Nampa, Idaho; La Quinta, Calif.; Louisville, Colo.; Vista, Calif.; Rolling Meadows, Ill.; Clay, N.Y.; and Irvine, Calif. Houston, Phoenix and Sacramento, Calif., will each lose one Sam's Club store.

The store closings will eliminate 1,500 jobs. Wal-Mart said it would try to place the employees at other Wal-Mart locations.

"The smart retailer is the retailer who constantly has their portfolio under a microscope," Davidowitz said. "And I think that's a sign of intelligence and good management. I don't view it as a negative. I view it as a huge positive."

He also added that he didn't think the move had anything to do with the economy.

In fact, Wal-Mart said it was still adding Sam's Club stores. By the end of its current fiscal year, which ends this month, it will have added six Sam Clubs and completed 52 remodels. In its fiscal year that starts in February, Wal-Mart plans to add between five and 10 new, expanded or relocated Sam's Clubs and remodel between 60 and 80 Sam Clubs.

"We're confident we have the right strategy in place to ensure we run a high-performance business, one that is even more competitive going forward," Sam's Club President and CEO Brian Cornell said in a statement to employees on Monday.

For the nine months that ended Oct. 31, Sam's Club had $70.5 million in sales, down from $74.1 million for the same period in 2008.

As of Dec. 31, Wal-Mart had 605 Sam's Clubs.



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