Walmart CEO Doug McMillon Discusses Store Closures

Doug McMillon, president and CEO of Wal-Mart Stores Inc., details the factors that led to the company's decision to pull the plug on 269 stores and warehouse clubs – including 102 of its small-format Walmart Express locations – as well as how the move will influence its future plans and impact associates.

McMillion's comments below are reprinted from a blog post on Walmart's corporate website.

Why is Walmart closing these stores and clubs?

We said in October at our analyst meeting that it's more important now than ever to review our portfolio and close the stores and clubs that should be closed.

Managing our portfolio is essential to maintaining a healthy business. This allows us to create an even stronger Walmart by winning with our proven store formats and deepening our relationships with customers. Ultimately, this is in the best interest of our company and reflects the priorities of our growth plan. That plan is focused on winning with stores, deepening our digital relationships with customers and enhancing critical capabilities through technology and data, a next generation supply chain and talent.

How were the stores and clubs selected?

We conducted a thorough review of our stores and clubs worldwide that took into account a number of factors, including financial performance as well as strategic alignment with long-term plans. In total, the impacted stores represent less than 1% of both global square footage and revenue.

The large majority of U.S. stores closing are Walmart Express stores. While we have learned a lot from this pilot, including a deeper understanding of the everyday needs of our customers, we have decided not to proceed with this offering. We feel we can better serve our customers by focusing on Supercenters and Neighborhood Markets and by investing in e-commerce and services like Pickup.

How many associates will be impacted by these closings? What will they do?Approximately 16,000 associates will be impacted, including around 10,000 in the U.S. Decisions like this one are difficult and we care deeply about the associates who will be impacted. We spent considerable time assessing our stores and clubs and don’t take this lightly. Our goal is to help these associates and we will take all appropriate steps to ensure they are treated well.

More than 95 percent of the stores closing in the U.S. are within 10 miles on average of another Walmart, and the hope is that these associates will be placed in nearby locations. All affected Walmart U.S. associates will receive 60 days’ pay and, if eligible, severance. Walmart will also help associates find their next job opportunity, with a goal of placing as many associates as possible who would like to continue with the company at other nearby locations. Our objective is to help all associates find their next job opportunity, whether with Walmart or somewhere else.

Our goal is to help these associates and we will take all appropriate steps to ensure they are treated well.

We will be giving impacted associates priority for open positions at other nearby stores. We expect that some associates will transfer to another location and others will take severance and pursue other job opportunities. As we’ve seen with other store closures in the past, the majority of associates who wished to transfer were able to.

How do these closings fit into your vision for where the company is going?

We are continuing to grow, and we’re making smart choices in managing our portfolio. Even with today’s actions, Walmart will continue to invest in its future, with plans to open more than 300 new stores worldwide over the coming year – in the U.S. Walmart intends to open 50 to 60 Supercenters, 85 to 95 Neighborhood Markets and seven to 10 Sam’s Clubs. We will also open 200 to 240 stores internationally.

We’ve said that it's more important now than ever that we evaluate our portfolio, and doing so will allow us to build an even stronger Walmart. 

We intend to win in our stores in the U.S. by strengthening the Supercenter format and optimizing Neighborhood Markets. We'll focus on adding capabilities to our supply chain by building out a fulfillment network to create a seamless customer experience.

What Walmart can do that no one else can is marry e-commerce with our existing assets to deliver a seamless shopping experience at scale. That is our vision and our mission, and managing our portfolio is essential to accomplishing our goals.

Are you having to close stores and clubs because of Walmart’s investment in wages?

Not at all. This is about managing our portfolio smartly. Our investment in associate wages and training is a long-term investment that is already paying off. Our customers are benefiting from a faster checkout process, better in-stock across the stores, a clean shopping environment and friendly associates. As a result, we are seeing improvements in our comp sales, customer traffic and customer satisfaction scores.

Our customers have told us they’re happy with the improvements we’re making in their shopping experience, as evidenced by our customer experience scores. To date, 70 percent of our stores have achieved the initial clean, fast, friendly goal we set for them, and we’ll raise the bar for the coming fiscal year. As always, our people make the difference. And we’ll continue to make investments in them going forward.

Locations and dates of the closures are available on Walmart's corporate website.

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