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NEW YORK (AP) -- 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, 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," McMillon said in a statement. "Closing stores is never an easy decision. But it is necessary to keep the company strong and positioned for the future."
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 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 200 to 240 stores.
The financial impact of the closures is expected to be 20 cents to 22 cents per diluted earnings per share from continuing operations with about 19 cents to 20 cents expected to affect the current fourth quarter. The company is expected to release fourth quarter and full year results on Feb. 18.
Shares of Wal-Mart Stores Inc. fell $1.12, or 1.7 percent, to 61.94 in morning trading.
COMMENTS
Retail Sales in U.S. Decrease to End Weakest Year Since 2009
www.bloomberg.com
Sales at U.S. retailers declined in December to wrap the weakest year since 2009, raising concern about the momentum in consumer spending heading into 2016.
The 0.1 percent drop matched the median forecast of 84 economists surveyed by Bloomberg and followed a 0.4 percent gain in November, Commerce Department figures showed Friday in Washington. For all of 2015, purchases climbed 2.1 percent, the smallest advance of the current economic expansion.
The slowdown, including electronics stores, clothing merchants and grocers, indicates Americans probably preferred to sock away the savings from cheaper fuel instead of splurging during the holiday season. While hiring has been robust in recent months, faster wage gains remain elusive, one reason household spending may have a tougher time accelerating as the new year gets under way.
“There isn’t anything encouraging in this report,” said Thomas Simons, a money-market economist at Jefferies Group LLC in New York. “It’s very disappointing. The labor market is in good shape, which suggests the outlook is probably better than this.”
Estimates in the Bloomberg survey for retail sales ranged from a decline of 1 percent to a 0.3 percent advance. The November tally was revised up from a previously reported 0.2 percent increase.
Weak 2015
The increase for all of 2015 followed a 3.9 percent gain the prior year. It was the smallest advance since demand slumped 7.4 percent in 2009, when the recession ended in June of that year.
A separate report from the Labor Department showed inflation remained contained at the wholesale level. The producer price index decreased 0.2 percent in December from the prior month and was down 1 percent year-over-year.
The retail sales report showed six of 13 major categories showed declines in demand in December from the prior month, with a 1 percent slump at general merchandise stores that was the biggest since February, the report showed.
Receipts at gasoline stations dropped 1.1 percent. The Commerce Department’s retail sales data aren’t adjusted for prices, so lower fuel costs depress filling-station receipts.
Regular gasoline at the pump has dropped to a seven-year low, falling below $2 a gallon this week to reach $1.93 on Thursday, according to AAA, the biggest U.S. motoring group.
Clothing, Electronics
The retail report also showed sales decreased 0.9 percent at clothing chains and 0.2 percent at electronics stores.
Automobile dealers’ sales were little changed.
Industry figures earlier this month showed purchases of cars and light trucks came in at a 17.2 million annualized rate in December, the slowest since July, after an 18 million pace the prior month, according to Ward’s Automotive Group. Even so, industry sales data shows 2015 was a record year for automakers.
The figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores and service stations, unexpectedly dropped 0.3 percent, the biggest decrease since February, after the prior month’s 0.5 percent increase in the so-called retail control group that was smaller than previously estimated.
Warm December
Warmer than usual weather last month probably curtailed purchases of winter gear including clothing. This was the warmest December on record for the contiguous U.S., according to the National Oceanic and Atmospheric Administration.
Some economists may lower estimates for fourth-quarter gross domestic product and consumer spending following the retail sales results. The median forecast in a Bloomberg survey shows household purchases rose at a 2.2 percent annualized rate from October through December, after a 3 percent pace in the prior three months.
Recent reports had signaled the November-December holiday season was a mixed one for retailers. Same-store sales fell in the two months for chains ranging from Macy’s Inc. to Best Buy Co. while those who snagged an increase included J.C. Penney Co. Same-store sales for the industry as a whole account for about 17 percent of total retail sales, which make up almost half of consumer spending.
Beige Book
“Growth of consumer spending ranged from slight to moderate in most Districts,” according to the Federal Reserve’s Beige Book economic survey based on reports from late November to early January by regional Fed banks. “Auto sales were somewhat mixed, as activity has begun to drop off from previously high levels in some Districts.”
Employers added 292,000 workers in December and payrolls for the previous two months were revised higher, the Labor Department reported last week. The jobless rate held at a more than seven-year low of 5 percent. Wages stagnated, with average hourly earnings unchanged from November and up 2.5 percent from a year earlier. They’ve been in the 2 percent range since the expansion began in 2009.
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