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Wal-Mart to Open ‘Hundreds’ of Small Stores Over Three Years

Wal-Mart Stores Inc. (WMT), the world’s largest retailer, will ramp up development of smaller stores as it looks to jump-start sales in the U.S.

The retailer plans to add “hundreds” of smaller-format stores over the next three years, U.S. Chief Bill Simon said at an investor conference in New York today. Wal-Mart is considering acquisitions that could add to that growth, Simon said, declining to name specific targets.

Chief Executive Officer Mike Duke is seeking to spur growth in the U.S. as comparable-store sales at Wal-Mart’s namesake locations have fallen for seven straight quarters. The retailer had said it planned to open 30 to 40 smaller units this year in rural and urban areas and that there were “thousands” of potential sites in the U.S.

“The recent tepid U.S. sales growth increases the urgency to explore new store formats,” said Tim Hoyle, director of research at Haverford Investments. “But I remain skeptical that they could develop enough real estate in the near-term to move the needle.” Hoyle is based in Philadelphia and helps oversee $6 billion in assets, including Wal-Mart shares.

Wal-Mart, based in Bentonville, Arkansas, fell 2 cents to $52.65 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 1.8 percent over the past 12 months.

Express Expansion

Next week in Arkansas, Wal-Mart will start building its first three Express stores, a format less than a 10th the size of an average supercenter, according to building permits obtained by Bloomberg News. The first urban Express store will open this summer on Chicago’s South Side, Crain’s reported yesterday.

Wal-Mart spokesman Steve Restivo confirmed the Arkansas store openings in an e-mail yesterday. He didn’t respond to e- mailed questions yesterday or today about stores in Chicago.

The new stores will include mid-sized Neighborhood Market locations of 30,000 to 60,000 square feet, and the rest will be smaller. Simon said today that the Neighborhood Market format will be renamed “Walmart Market.” The company also will introduce more stores on university campuses, he said.

Simon has said that “there are hundreds, if not thousands of opportunities in the U.S.” for stores smaller than the retailer’s supercenters, which accounted for more than three- fourths of Wal-Mart’s U.S. locations as of Jan. 31. Supercenters average 185,000 square feet with about 142,000 items, according to the company’s website.

Wal-Mart is building out small-format stores abroad partly through acquisitions, including the 778 million pound ($1.2 billion) agreement last year to buy the Netto discount chain in the U.K.

Separately, Wal-Mart today said it debuted a nationwide program for same-day pickup of items ordered online. The program, dubbed “Pick Up Today,” will be available in 3,600 stores by June and encompass as many as 40,000 items across categories including toys, electronics, and home décor.

To contact the reporter on this story: Matthew Boyle in New York at mboyle20@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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