A mural outside a Walmart store
Source: Walmart Facebook

Walmart Is Shutting Some Stores, but Is It Going Out of Business?

Mohit Oberoi, CFA - Author
By

Mar. 25 2022, Published 9:05 a.m. ET

The COVID-19 pandemic was a death blow for many U.S. businesses despite the government providing generous stimulus. Retail giant Walmart has been shutting down some of its stores, leaving some shoppers wondering whether the company is going out of business.

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Founded in 1962 by Sam Walton, Walmart is the biggest brick-and-mortar retailer worldwide. The company is credited with revolutionizing the retail industry with its everyday low price strategy. It runs 10,500 stores across 24 countries, under a total of 46 banners. The company employs 2.3 million people globally, of which 1.6 million are in the U.S.

Walmart runs several businesses

In addition to its brick-and-mortar Walmart stores, the company runs several other businesses, including Sam’s Club in the U.S., Flipkart in India, and Massmart in Africa. Furthermore, to take on Amazon, Walmart started selling online, and it's now the second-largest e-commerce company in the U.S.

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walmart edlp
Source: Walmart Facebook

In fiscal 2022 (ended Jan. 2022), Walmart's online sales accounted for around 13 percent of its sales. The company’s sales grew by a strong double-digit percentage in 2020, boosted by the rise of e-commerce amid the COVID-19 pandemic.

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Why has Walmart been closing stores?

Walmart had to temporarily close some of the stores amid COVID-19 lockdowns, and some customers are worried these closures may be permanent. The company has also announced it will be closing two stores, in Kentucky and Ohio, in April 2022. It said that the stores are being closed due to performance issues.

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That said, Walmart has also been pivoting toward e-commerce while shutting some stores, meaning it could be transitioning to a hybrid retail model. Gaming retailer GameStop has been making a similar transition, though more aggressively. Walmart may be taking a softer approach because its stores are a key part of its digital strategy, acting as fulfillment centers.

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walmart is focusing o e commerce
Source: Walmart Facebook

Walmart isn't going out of business but transforming

In its transition, Walmart has also sold its majority stakes in Japanese supermarket chain Seiyu and British supermarket chain Asda. Furthermore, the company has sold its Argentinian business to Grupo de Narváez, exited its business in Brazil, and discontinued e-commerce site Jet.com, for which it paid $3 billion in 2016.

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Those moves don't mean that Walmart is giving up on international business, though. In 2018, the company bought a majority stake in Indian e-commerce company Flipkart for $16 billion, marking its biggest acquisition ever.

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