Wal-Mart Stores Inc said on Friday that it was pulling the plug on its smallest store format, Walmart Express, and closing 269 locations globally, including 154 in the United States, in a restructuring that will affect 16,000 workers.
Wal-Mart, the world's largest retailer, said the move would reduce diluted earnings per share by 20 cents to 22 cents, with nearly all of that to be booked in the fourth quarter ending this month. In November, the company forecast a full-year profit of $4.50 to $4.65 per share.
Shares of Wal-Mart, which said the store closures represented less than 1% of its global square footage and revenue, fell 2.4% to $61.57.
The move comes three months after Chief Executive Officer Doug McMillon disclosed plans to review the retailer's global operations and shut underperforming stores. Friday's announcement marks the first step in that restructuring effort.
Wal-Mart said it planned to close 102 of its Express format stores, which at 12,000 to 15,000 square feet are less than one-tenth the size of a typical Supercenter. The format had been in pilot since 2011 but did not deliver the desired results.
The other 52 U.S. stores are a mixture of Supercenters, Wal-Mart's largest format; discount stores; a grocery format called Neighborhood Market; and outlets in the company's Sam's Club bulk-selling wholesale chain.
“Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future," McMillon said in a release.
In other markets, Wal-Mart said it was closing 115 stores in Latin America, including 60 in Brazil. Reuters reported the Brazil closings on Thursday.
The closings highlight the challenges Wal-Mart faces in finding growth opportunities in both its home market, which it has blanketed with some 4,500 stores, and overseas, where it has grown to more than 6,000 locations but has struggled to generate consistent returns.
The Arkansas-based retailer said it was still looking to invest and stuck to its plan to open 142 to 165 stores in the United States in the year ending in January 2017. It also for the first time disclosed plans to open 200 to 240 stores overseas in the coming year.
The closings are set to affect about 10,000 people in the United States and 6,000 overseas. The company said it would try to place workers in nearby locations, estimating that 95% of the closed stores in the United States are on average within 10 miles of another that it owns.
Wal-Mart said it would provide 60 days of pay and severance for eligible workers not placed.