Wal-Mart Stores, Inc. (WMT: NYSE) announced its decision to close 269 stores globally including its experimental small-format Express outlets and money-losing locations in Brazil.
The retail giant made its decision after conducting a thorough review of its nearly 11,600 stores worldwide. Wal-Mart evaluated the financial performance and the strategic alignment of its stores with its long-term plans.
Wal-Mart said its store closures include 154 locations in the United States, 23 Neighborhood Markets, 12 Supercenters, 7 stores in Puerto Rico, 6 discount centers and 4 Sam’s Clubs.
The retail giant will also shut down 60 money-losing locations in Brazil and 55 other small, unprofitable stores in different markets in Latin America.
Wal-Mart estimated that the financial impact of the shutdowns to its financial results will be around $0.20 to $0.22 per share. As much as $0.20 per share will be coming in the fourth quarter of 2016 and the remainder will fall on the first half of 2017.
Wal-Mart store closures affect thousands of associates
Wal-Mart estimated that its store closures will affect approximately 16,000 associates globally. In the United States, 10,000 workers will be affected, but the retail giant is hoping to relocate them in other locations.
The retail giant said if it’s not possible to transfer some of the workers to other stores, it will provide 60 days of pay and severance (if eligible) as well as resume and interview skills training.
In a statement, Wal-Mart president and CEO Doug McMillon, said, “The decision to close stores is difficult and we care about the associates who will be impacted. We invested considerable time assessing our stores and clubs and don’t take this lightly. We are supporting those impacted with extra pay and support, and we will take all appropriate steps to ensure they are treated well.”
Wal-Mart plans to open 300 stores next year
McMillon said, “Actively managing our portfolio of assets is essential to maintaining a healthy business. “ He added that the decision is “necessary to keep the company strong and positioned for the future. It’s important to remember that we’ll open well more than 300 stores around the world next year. So we are committed to growing, but we are being disciplined about it.”
According to the retail giant, it will continue to invest in the future with store openings worldwide next year. Wal-Mart plans to open 50 to 60 Supercenters and 85 to 95 Neighborhood Market in 2017. It will open 7 to 10 Sam’s Club in new locations and around 200 to 240 stores internationally.
