Walmart steps up small store growth, reports dismal Q4 earnings

Walmart (NYSE: WMT) is revving up expansion of small format stores. The retailer announced plans to build 270 to 300 small stores in the next 12 months, doubling its initial forecast of 120 to 150.

Walmart's smaller store locations are outperforming supercenter sales and have delivered positive comp store sales and traffic increases each quarter. In an earnings report released Thursday, comp store sales for Neighborhood Market stores grew 4 percent for fiscal year 2014, driven by fresh and pharmacy. This compares to overall U.S. negative same-store sales of 0.4 percent posted for the same period.

"Customers' needs and expectations are changing. They want to shop when they want and how they want, and we are transforming our business to meet their expectations," Bill Simon, Walmart U.S. president and CEO, said in Thursday's earnings report.

Walmart's Neighborhood Market stores were developed to reach more customers in urban settings and geographies that can't support the size of a traditional supercenter. Neighborhood Market stores are sized on average at 38,000 square feet, whereas supercenters average around 182,000 square feet.

Walmart also operates Walmart Express, its smallest concept, with store sizes, on average, around 15,000 square feet. This unit has 20 stores which are still in the pilot phase in three markets.

Walmart's small store growth initiative comes on the heels of bleak Q4 earnings news in which the retailer reported a 21 percent decline in profit compared to last year. Walmart said comparable sales at stores open at least a year in the United States - its biggest unit - fell for a fourth straight quarter, by 0.4 percent. For fiscal 2014, the company reported earnings per share of $4.85, well below analysts' forecast of $5.11 per share.

For more:
-See this Walmart press release
-See this Walmart earnings report

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