Walmart Has Too Many Stores

By Douglas A. McIntyre Published Aug 24, 10:11AM EDT

Quick Read

Walmart's US comparable store sales grew just 2.6%, the slowest pace in six years, while peers like Target posted 3.6% growth last quarter.
$WMT operates 4,615 US stores, barely more than the 4,516 it had a decade ago, while Amazon's revenue tripled over the same period.
Walmart's e-commerce surged 24%, yet its physical footprint keeps 90% of Americans within 10 miles of a store, a costly overlap in a digital-first era.
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Walmart Has Too Many Stores — © Walmart (CC BY 2.0) by Mike Mozart

Many large retailers posted good-to-very-good same-store sales last quarter. Even Target (NYSE: TGT | TGT Price Prediction), which is usually weak, had same-store sales up 3.6%. Walmart’s (NYSE: WMT) figures were well below that trend. US comparable store sales rose 2.6%, the slowest in six years. (Notably, e-commerce was up 24%.)

Given its e-commerce success and the industry-wide shift away from in-store shopping, Walmart may have too many locations. Walmart had 4,516 US locations in 2015. That number is currently about 4,615.

Walmart brags that it has enough stores so that 90% of Americans live within 10 miles of a Walmart. Walmart has 113 stores in its home state of Arkansas. In several states with much larger geographic footprints, that figure is smaller. New York, for example, has 98. Maybe it doesn’t work that way. Maybe people in the South are more likely to shop at Walmart.

It is odd, however, that in a retail world increasingly dominated by e-commerce, Walmart’s store count has not changed in over a decade. Although it is not an exact comparison, Amazon’s (NASDAQ: AMZN) revenue has grown by 3x during that time. (Granted, AWS is part of that, but it is much smaller than the e-commerce operation.)

Retailers with weak numbers close stores. At least, that’s the trend. However, in a world where retail is driven as much by e-commerce as by in-store traffic, Walmart’s store count is a strange pattern.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.