Wal-Mart Stores, Inc. (NYSE:WMT) has plans to shut down 30 underachieving retail stores in Japan managed under the Seiyu unit of the retailer. The retailer is planning to remodel its stores in Japan with more focus towards its fresh food offerings.
Japan was once one of the most promising growth markets for the retailer but the company has struggled in recent quarters. According to the spokesperson for Wal-Mart, the overall operations in Japan are profitable with special mention of Seiyu’s growing online business. The retailer indicated store remodeling for up to 50 stores in 2015 and the chain would offer more fresh food and deli food categories.
A spokeswoman for Seiyu said,
“The store closings are part of the strategy to accelerate growth in Japan. We are also considering M&A and reforming existing stores to better serve customer needs.”
Further, according to the official release on Wal-Mart Stores, Inc. (NYSE:WMT)’s website, Seiyu would invest in its deli manufacturing capacities and the company plans to hire inspection teams for the quality control of its fresh food offerings.
While talking about the online retail website, seiyu.com, the press release mentioned “In the Greater Tokyo area, where demand for online grocery home delivery is growing, Seiyu will increase its fulfillment and service capacities in the next three years.”
As of now, Wal-Mart Stores, Inc. (NYSE:WMT) has over 434 stores in Japan and the current closure is likely to affect its EPS by 4 to 5 cents over the next several quarters. The retail chain has over 6,000 stores overseas and considering the 3.1% increase in its international division’s revenue in the last quarter, the company is likely to focus over new growth areas.
With the online shopping trend increasing throughout the globe, the retailer has plans to develop high-tech warehouses and ship the products directly to its customers instead of opening new stores in the United States. The company is likely to open only 70 supercenters next year as compared to the 120 opened during 2014.
This article has been written by Prakash Pandey.