Walmart U.S. to close three stores as leases expire, all smaller formats

by Kim Souza (ksouza@talkbusiness.net) 379 views 

While the three recent announced store closures by Walmart U.S. are just a tiny slice of the retailer’s larger national footprint, the move does reinforce management’s focus on performance and connecting physical stores to online sales.

Walmart U.S. plans to close two discount stores in west Texas and one campus store in Columbia, Mo., in the coming weeks as the leases on these properties expire. This is in-line with the retailer’s strategy to simplify business operations and cut loose stores that don’t fit into Walmart U.S. CEO Greg Foran’s game plan to run high-performing stores with grocery including online orders and store pickup options.

Walmart spokeswoman Anne Hatfield said the Texas closures involve a pair of older discount stores in Lamesa and nearby Brownfield, Texas. Both were built around 1987, predating supercenters and have limited grocery items and far more general merchandise.

About 155 workers from the two stores will have the opportunity to transfer to other stores in the region, but there are no other Walmart stores in those small Texas towns. Hatfield said the retailers will work with the displaced employees to help them find other jobs. She said Walmart offers reviews of resumes and interview skills to any workers being displaced.

The Lamesa store will close later this month and its workers will be paid through Dec. 9. The Brownfield stores will remain open through the holidays and close in late January. Those workers will be paid through the first week of February. Hatfield said Walmart also offers severance pay after those date for eligible workers. Hatfield said full time workers who have been with the company for more than one year would be eligible for severance. Generally, full-time employees receive a week’s pay for every year of continuous service.

Hatfield said store performance is one of the metrics used by the retailer to determine which stores are closed. Both Texas stores were leased properties and Hatfield said when the lease came up for renewal, Walmart opted to close the locations. As of Aug.10, Walmart operated 22 of the older Discount Stores across Texas. There will be two less before the company’s fiscal new year in February.

In its home state of Arkansas there are still seven of the older Discount Store models in operation. Nationwide there are 428 of the older Discount Stores which are candidates for closure if they underperform financially given they don’t offer a full-line of grocery. Earlier this year Walmart U.S. closed 154 of its stores, which included 102 of the smaller Express formats, 23 Neighborhood Markets, 12 Supercenters, 7 stores in Puerto Rico, 6 Discount Stores and 4 Sam’s Club.

Also on the chopping block is the small Walmart Campus Store at the University of Missouri in Columbia, which was founder Sam Walton’s Alma Mater. Walmart spokeswoman Della Garcia said the store is in a leased space and it will close at the end of this week. Garcia said the 11 workers in the test format will be given priority hiring at three supercenter stores and one Sam’s Club located within three miles of the campus store.

“Walmart remains committed to offering convenience shopping options in Columbia. This week we rolled out online grocery to the Columbia market,” Garcia said.

She said the campus store in Columbia was part on an ongoing test for convenience formats on college campuses. There are three other campus stores still involved in the test and they are not being affected by this closure. Those locations are: University of Arkansas (Fayetteville), University of Richmond (Richmond, Va.), and Arizona State University (Tempe, Ariz.).

Garcia said profitability is a factor in the campus stores and they only carry about 5,000 items, compared to 40,000 items in a Neighborhood Market and 120,000 items in a supercenter. The Discount stores carry around 100,000 items but very limited grocery and no fresh foods.

Foran told the media in June that a well-run supercenter remains the best profit center for the retailer. He said the new generation Neighborhood Markets with fuel and pharmacy also hold their own. Smaller formats present issues because they they do not allow for fresh meat and produce, bakery, deli and other areas on which the retailer is focusing.

The store closures are more fodder for the union-backed groups like Making a Change at Walmart who called the store closures “a callous move by Walmart.”

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