Headquarters of Wal-Mart Stores Inc., Bentonville
NEW YORK – 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 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. They include 11 in Arkansas, which are listed at the end of this story.
The announcement comes three months after Wal-Mart Stores Inc. 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.”
The move close the stores was praised by a retail analyst.
“I think this is the right thing to do,” Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm in New York, told Arkansas Business on Friday. “I think what this shows is good management, because what this shows is you’re dealing with your problems.”
He said the move will allow Wal-Mart to increase its margin. “It’s almost automatic when you close weak stores you allocate inventory more effectively. Your inventory turnover goes up; your margin goes up.”
Davidowitz said the moves should have been made earlier. In October, he called Wal-Mart “a total mess,” and was among critics who wondered whether the retailer had become too big to manage.
“But better late than never,” Davidowitz said on Friday.
Gov. Asa Hutchinson commented on the layoffs on Twitter on Friday.
“Walmart made an announcement today about closing some pilot stores,” Hutchinson said. “I have been assured that Wal-Mart will continue to expand in other places as well, and there will be a net increase in jobs in Arkansas this year. In the retail market, adjustments have to be made to stay lean and on top.”
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 Wal-Mart Express, which were opened as a test in 2011.
Wal-Mart 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.
Headquarters Layoffs
Also Friday, Sam’s Club laid off 70 employees from the retailer’s Bentonville headquarters, according to spokesperson Bill Durling.
Durling said that there are about 1,500 Sam’s Club employees who work at the corporate office and that the cuts were part of a “strategic plan.”
“It was part of an organizational realignment that came from a strategy we began talking about in October 2015,” Durling said. “We’re really just aligning our resources to line up with that strategy.”
In October, Wal-Mart announced 450 layoffs at its Bentonville headquarters, including management positions. At the time, Wal-Mart employed about 18,000 people at its home base.
Durling said a lack of membership prompted the closure of the four Sam’s Club stores.
“They’re closing basically because the club model relies on a certain number of member to be successful, and we’ve been unable to get the number of members we need to make those successful,” he said.
The Sam’s Club stores are located in Seekonk and Fall River, Massachusetts; Warwick, Rhode Island; and Waterford, Michigan. All four locations were closed Friday but will reopen Saturday through Feb. 5 and then permanently close.
Arkansas Closures
Closing Jan. 17:
Neighborhood Market:
- #5783: 117 Audubon Drive, Maumelle
Closing Jan. 28:
Walmart Express:
- #2498: 720 N Hwy 71, Mansfield
- #2578: 3500 Mulberry Hwy 64 W, Mulberry
- #2601: 814 W. Main, Charleston
- #2669: 1531 E Hwy 64, Coal Hill
- #3819: 8848 N Hwy 59, Van Buren
- #3878: 5 Hwy 124 West, Damascus
- #4217: 154 E Roller, Decatur
- #3032: 905 S Gentry Blvd, Gentry
- #3033: 800 1st Ave SE, Gravette
- #3034: 881 W Buchanan, Prairie Grove
Arkansas Business Senior Editor Mark Friedman and Online Reporter Alexis Hosticka contributed to this story.
(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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