Struggling to Grow, Walmart to Close Stores in the US and Beyond


Walmart Greeter

Right on cue with the worst US retail sales report since 2009, Walmart rocked Wall Street (and Main Street) with the announcement that it’s planning to close 154 of its more than 5,000 stores in the United States and shutter another 115 of its 11,600 stores worldwide. That will affect the jobs of 10,000 U.S. workers and 6,000 more elsewhere.

“Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future,” said Walmart CEO Doug McMillon in a release. “It’s important to remember 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.”

Even more significant for Walmart’s future may be the fact that 102 of the 154 stores in the US will be all of the small outlets opened over the last few years under its Express format, which Walmart was testing largely in urban areas as a way of competing with dollar stores and other new formats. They had been in pilot since 2011.

The stores it plans to shut account for only about 0.5 percent of Walmart’s global revenues. Walmart said it would focus on strengthening its supercenters, optimizing Neighborhood Markets, growing the e-commerce business and expanding pickup services for customers. And the company said that it will try to find workers new jobs in Walmart stores nearby the locations it is changing, or give them 60 days’ severance pay, and help in finding new jobs.

Still, the decision partly reflects the stagnant mode that has afflicted Walmart for the last few years; only in 2015 did it reverse stagnation in same-store sales. Walmart’s decision also obviously reflects that accelerating shift of American retailing from brick-and-mortar stores to e-commerce—a seachange that was seen in the fact that December-holiday online sales for the first time exceeded sales at physical stores.

Walmart’s decision is in line with indications of stresses being felt by other  major American retailers too. Macy’s has announced the closures of 36 stores across the United States, which will eliminate 4,500 jobs, in the wake of disappointing holiday sales. Kohl’s is considering going private as it struggles with slow growth, the Wall Street Journal reported, or it may be an acquisition target. And more than two dozen Kmart stores that are closing this spring also reflects woes Walmart has had growing.

At some level, all of these decisions also speak to the financial stress that many American consumers still feel, more than five years after the US economy began a very erratic recovery. Their uncertainties were partly reflected in the December sales report, which came in at a drop of 0.1 percent compared after a 0.4 percent gain in November. For the year, the 2.1 percent gain was the smallest of the current economic expansion and the weakest since 2009.

While gasoline prices have plunged and labor markets are recovering, analysts said, the woes of retailing in part indicate that wary Americans are socking away much of their savings these days, leaving them less overall to spend in ways that keep the economy humming.

“There isn’t anything encouraging in this [retail sales] report,” Thomas Simons, an economist at Jefferies Group, told Bloomberg. “It’s very disappointing. The labor market is in good shape, which suggests the outlook is probably better than this.”