Wal-Mart has warned that its earnings for the fiscal year starting next month will be down as much as 12% as it invests further in online operations and pours money into improving customers' experience.
Wal-Mart is closing 269 stores, more than half of them in the US 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% of its global revenue.
More than 95% of the stores set to be closed in the US are within 10 miles of another Wal-Mart. The Bentonville, Arkansas, 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. 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.
"Actively managing our portfolio of assets is essential to maintaining a healthy business. 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 statement.
Wal-Mart operates 4,500 in the US. Its global workforce is 2.2 million, 1.4 million in the US alone. Wal-Mart has warned that its earnings for the fiscal year starting next month will be down as much as 12% as it invests further in online operations and pours money into improving customers' experience.
Of the closures announced on Friday, 154 locations will be in the US, 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 US on supercenters, Neighbourhood Markets, the e-commerce business and pickup services for shoppers.
The retailer is closing 60 loss-making locations in Brazil, which account for 5% 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.
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