BENTONVILLE, AR: Walmart is closing 269 stores in the US and globally, but president and CEO Doug McMillon emphasized the retail behemoth plans to open more than 300 new stores worldwide over the coming year.
Walmart communicated the mixed message via press release on Friday morning, followed by a Q&A blog post with McMillon, sharing more about the factors that led to this decision, how the retailer will assist impacted associates, and plans for future growth.
Such a scale of store closures is unusual, and in 2015 Walmart closed just three stores. But it was projecting between 231 and 252 store openings in the same year, so the projected 300 figure for 2016 is not unusual.
In 2014, the company had 375 store openings, Randy Hargrove, company spokesperson, told PRWeek.
"If you look at our US stores' businesses, we have had positive comparitive sales for the last five quarters," he said.
Dan Bartlett is the retailer’s EVP of corporate affairs and heads global communications.
@WalmartNewsroom posted several tweets linking to the blog and press release on Friday morning. The posts emphasized several points from McMillon’s Q&A, including the fact that Walmart plans to open more stores; the retailer "cares" about associates impacted by the closures; and that actively managing its portfolio of assets is essential to maintaining a healthy business.
A chunk of the closures include the company’s 102 small format stores, Walmart Express, which had been on pilot since 2011. McMillon said in the Q&A that Walmart has decided not to proceed with the express stores because the retailer feels it can better serve customers by focusing on Supercenters and Neighborhood Markets and by investing in e-commerce and services like Pickup.
McMillon explained in the release that the company came to its decision after reviewing each of its stores’ financial performances, as well as strategic alignment with long-term plans. Walmart has 11,600 stores worldwide, and the impacted sites represent less than 1% of both global square footage and revenue, McMillon added.
"Actively managing our portfolio of assets is essential to maintaining a healthy business," said McMillon in the release. "Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future. 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."
In the US, Walmart intends to open 50 to 60 Supercenters and 85 to 95 Neighborhood Markets in fiscal year 2017, which begins February 1. In the same period, Sam’s Club plans to open in up to 10 new locations. Internationally, Walmart plans between 200 and 240 new stores during the year.
McMillon also explained in the Q&A that the closures are not related to Walmart’s investment in wages – referring to his announcement last year that the retailer would institute a minimum wage of $9 an hour for all its employees. This minimum wage is to increase to $10 in 2016.
"Our investment in associate wages and training is a long-term investment that is already paying off," he said. "Our customers are benefiting from a faster checkout process, better in-stock across stores, a clean shopping environment and friendly associates. As a result, we are seeing improvements in our comparable sales, customer traffic, and customer satisfaction scores."
Roughly 16,000 employees will be impacted by the decision - 10,000 of them in the US. More than 95% of the closed stores in the US are within 10 miles on average of another Walmart, so the company plans to place affected employees in nearby locations. Where that isn’t possible, the company will provide 60 days of pay and, if eligible, severance, as well as résumé and interview skills training, the release said.
"Decisions like this are difficult and we care deeply about the associates who will be impacted," McMillon said.
Shortly after making the announcement, Walmart’s social media team was responding directly to confused consumers on Twitter, clarifying the company’s decision.
@KristinaRibali Our investment in associate wages and training is a long-term investment, and we'll continue to invest there going forward.— Walmart Newsroom (@WalmartNewsroom) January 15, 2016