Walmart: Let’s Get Small

At its analysts meeting today, Wal-Mart Stores Inc. (NYSE: WMT) talked up its expansion into smaller stores, particularly its Neighborhood Market stores. Sales at the more than 200 Neighborhood Market locations were up 5% on a same-store basis, more than double the 2.2% same-store sales growth at the company’s large stores and supercenters.

The company has also opened 10 Express stores and plans to have a total of 500 Neighborhood Market Stores and 12 Express stores by the 2016 fiscal year. Considering the success of the new format stores, that doesn’t seem to be awfully aggressive.

The new, smaller format stores are taking aim both at convenience stores and drug stores. Both Express and Neighborhood Market stores include pharmacies, competing directly with the likes of Walgreen Co. (NYSE: WAG) and CVS Caremark Corp. (NYSE: CVS).

Walmart has now recorded four straight quarters of growth after nine quarters of declines. The company’s early start to its holiday layaway program has already garnered $400 million worth of layaway merchandise, half last year’s total before the holiday shopping season even gets started. The company even eased up on some of the program’s requirements this year.

We’ve already noted today some labor troubles at Walmart, but the analysts’ day presentations overcame any downside. Shares have posted a new 52-week high today of $76.73 and are trading now at $76.64. The prior range was $54.48 to $75.55.

Paul Ausick