Summary
Walmart Inc. announced on January 14, 2016, a significant decision to close 269 underperforming stores and clubs. This action, while impactful, represents a small fraction of Walmart's global footprint and revenue (less than 1%). The closures are expected to affect earnings per share (EPS) by an estimated $0.20 to $0.22, with the majority of this impact, approximately $0.19 to $0.20, recognized in the fourth quarter of fiscal year 2016. The remaining financial impact will extend into the first half of fiscal year 2017. Geographically, approximately 75% of the impact stems from U.S. store closures, with the remainder attributed to international operations, particularly in Brazil. It is important for investors to note that this estimated financial impact is not currently included in Walmart's previously issued guidance for the fourth quarter and full year of fiscal 2016. The company plans to report its full fiscal year 2016 results on February 18, 2016, at which time further details will likely be provided.
Key Highlights
- 1Walmart is closing 269 stores and clubs globally.
- 2The closures represent less than 1% of Walmart's total global square footage and revenue.
- 3Estimated negative impact on diluted EPS is $0.20 to $0.22.
- 4Approximately $0.19 to $0.20 of the EPS impact is expected in Q4 FY2016.
- 5The remaining EPS impact will occur in the first half of FY2017.
- 6About 75% of the financial impact relates to U.S. closings.
- 7International closures, especially in Brazil, account for the remainder of the financial impact.