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Walmart Pulls the Plug on Walmart Express Pilot

BENTONVILLE, Ark.— Convenience stores are facing one less competitor with Wal-Mart Stores Inc.'s decision to close its smallest format stores.

The Bentonville-based retailer said on Friday it is closing 269 stores in the United States and globally. Among these closings are its 102 Walmart Express locations. In all, the retailer is closing 154 U.S. locations.

Walmart began piloting its smallest format stores in 2011. With the closings, the retailer will focus on strengthening its Supercenters, optimizing Neighborhood Markets, growing its e-commerce business and expanding Pickup services for customers.

Also covered in the closures are 23 Neighborhood Markets, 12 Supercenters, seven stores in Puerto Rico, six discount centers and four Sam's Clubs.

Walmart began an active review of its portfolio in October. Friday's action follows a thorough review of nearly 11,600 worldwide stores 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 percent of both global square footage and revenue.

"Actively managing our portfolio of assets is essential to maintaining a healthy business," said Doug McMillon, president and CEO of Wal-Mart Stores. "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 that 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."

The company is also closing 115 stores outside the United States. This includes 60 recently closed, loss-making stores in Brazil, which represents only 5 percent of sales in that market. The company has already been able to relocate many affected associates in Brazil to other stores. The remaining 55 stores are primarily small, loss-making stores in other Latin American markets. Walmart will disclose more detail about these actions, including the number of stores per market, after completing local associate and community outreach.

Despite the closings, Walmart said it will continue to invest in its future, with plans to open stores worldwide in the coming fiscal year. Domestically, Walmart intends to open 50 to 60 Supercenters and 85 to 95 Neighborhood Markets in fiscal year 2017, which begins Feb. 1. In the same period, Sam's Club plans to open seven to 10 new locations. Internationally, Walmart intends to open between 200 and 240 stores during the coming year.

According to Walmart, the financial impact of the store closings is estimated to be approximately 20 cents to 22 cents of diluted earnings per share from continuing operations, with approximately 19 cents to 20 cents per share expected to impact the fourth quarter of fiscal 2016. The remainder of the impact will fall into the first half of fiscal 2017.

Approximately 75 percent of the impact relates to U.S. closings and the remaining portion involves Walmart International, with a large majority of the international impact relating to the closures in Brazil.

Approximately 16,000 associates will be impacted by the decision, about 10,000 of them in the U.S. More than 95 percent of the closed stores in the U.S. are within 10 miles, on average, of another Walmart. The retailer hopes these associates will be placed 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 decision to close stores is difficult and we care about the associates who will be impacted," McMillon said. "We invested considerable time assessing our stores and clubs and don't take this lightly. We are supporting those impacted with extra pay and support, and we will take all appropriate steps to ensure they are treated well."

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