An experiment that has lasted more than four years ended with a whimper Friday morning with an announcement from Wal-Mart Stores Inc. (NYSE: WMT) that the company will close all 102 of its U.S. Walmart Express small-format stores and 152 other U.S. stores. Including 115 international stores also tagged to close, Wal-Mart will close a total of 269 stores worldwide.
Approximately 10,000 Wal-Mart U.S. employees will lose their jobs and another 6,000 jobs will be lost internationally.
Wal-Mart estimated that the financial impact of the store closings will be $0.20 to $0.22 per share, with $0.19 to $0.20 expected to hit the fourth quarter of the current 2016 fiscal year. About 75% of the impact relates to U.S. closings and the remaining 25% involves Walmart International, with a large majority of the international impact relating to the closures in Brazil.
The financial impact of the closings had not been included in Wal-Mart’s most recent guidance, calling for $4.50 to $4.65 in fiscal year earnings per share and $1.40 to $1.55 in fourth-quarter earnings per share. Analysts have pegged fourth-quarter earnings at $1.46 per share and full-year earnings at $4.56 per share.
The 102 Walmart Express stores represented the company’s attempt to create a convenience store to compete with the likes of 7-Eleven. The company had hoped that the small (about 15,000 square feet) stores would increase its share of a convenience store market that generated $415 billion in sales in 2014, and of which Wal-Mart said at the time that it took 10% of the market compared with about 25% of the U.S. grocery market.
Other stores that are closing in the U.S. include 23 Neighborhood Market locations, 12 Supercenters, seven stores in Puerto Rico, six discount centers and four Sam’s Club stores.
Wal-Mart said that it plans to open 50 to 60 new Supercenters, 85 to 95 Neighborhood Markets and seven to 10 new Sam’s Club stores in the United States in fiscal year 2017, which begins on February 1. International store openings are pegged at 200 to 240 new stores.
The company said a list of the store closures will be posted at its website after 11 a.m. Central time Friday.
Wal-Mart shares traded down about 2% early Friday, at $61.79 in a 52-week range of $56.30 to $89.26. The consensus price target on the stock is $63.54.
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