Wal-Mart to close 269 stores as it retools fleet

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Cramer: Wal-Mart job cuts had to be done
Wal-Mart closing 269 locations
Wal-Mart closing 269 locations
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Wal-Mart starts 2016 strong

Wal-Mart said Friday it will close 269 stores across the globe, including 154 in the U.S. The world's largest retailer also will open as many as 405 stores globally in the coming fiscal year, as it shifts its focus toward Supercenters and Neighborhood Markets in profitable locations.

In all, 16,000 employees will be impacted by the store closings, about 10,000 of whom are in the U.S.

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Stifel Nicolaus analyst David Schick told investors that Wal-Mart's thoughtful review of its real estate portfolio is evidence it's undergone an "evolution" in its approach toward physical stores, as it aims to reposition the business longer term.

"Net net, we like these developments and see them as part of increasing focus on quality (versus quantity) of Wal-Mart operations," Schick said.

A woman pushes her shopping cart through a Walmart store in Secaucus, New Jersey.
Lucas Jackson | Reuters

The domestic store closures will mostly impact the company's Walmart Express stores, which account for 102 of the closings. These small stores, which are comparable in size to a dollar store, had been in pilot since 2011. They were rebranded as Neighborhood Market in 2014.

Also domestically, Wal-Mart will also close 23 Neighborhood Market stores, 12 Supercenters, seven stores in Puerto Rico, six discount centers and four Sam's Clubs.

Internationally, Wal-Mart is closing 115 stores, including 60 recently shuttered, unprofitable stores in Brazil, which represent about 5 percent of that market's sales. The remainder of the stores are primarily small, money-losing stores in other Latin American markets.

The world's largest retailer also said it will open 50 to 60 Supercenters and 85 to 95 of its smaller Neighborhood Market locations in the U.S. during the fiscal year that starts Feb. 1.

That's in addition to between 200 and 240 international stores, and seven to 10 new Sam's Club locations.

More than 95 percent of the closed U.S. stores are within 10 miles of another Wal-Mart store. When possible, it will transfer store associates to nearby locations.

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"Although the extent of the store closures, which amount to fewer than 1 percent of Wal-Mart's global store footprint, should not be overplayed, they represent a change in focus for the world's largest retailer," said Neil Saunders, CEO of Conlumino retail research firm.

"It is notable that Walmart has opted to shutter all 102 of what was once called its Express format stores. While this store type is aligned with the trend of shopping more locally, it has faced stiff competition from the rise and rapid growth of dollar stores."

Wal-Mart CEO Doug McMillon told analysts in October that the retailer would be evaluating its store portfolio.

"No doubt our business has become both large and broad. It is more important now than ever that we evaluate our portfolio," he said. "We have closed stores across several markets and we will continue reviewing our fleet in a disciplined way."

Wal-Mart is just the latest retailer to announce a large number of store closings. Macy's said this month that it will shutter another 36 stores early this year, and Finish Line said that it would close 150 stores by 2020.

Meanwhile, after closing nearly 600 stores in a one-year period, Sears Holdings is shuttering another round of locations across the U.S.

Wal-Mart shares were up roughly 3 percent on the year ahead of the announcement.