Walmart is thinking small again — in more ways than one.
After disclosing a dismal fourth-quarter loss on sluggish consumer spending, the world’s biggest retailer said it’s doubling the size of a rollout of smaller-size stores this year.
The result, however, is that the retail giant will roll out between 270 and 300 new locations — a measly figure, critics say, compared to the nearly 4,200 US stores it already operates.
“Walmart has a long history of embracing change,” Doug McMillon, who became Walmart’s youngest CEO this month, said Thursday on a conference call.
But critics are wondering what McMillon is talking about, noting that the big discounter has been fiddling inconclusively with smaller formats for a decade-plus.
Indeed, Walmart has fallen so far behind fast-growing dollar stores that some analysts say it would make more sense to simply acquire one of the biggest players in the niche.
Mark Montagna, an analyst at Avondale Partners, is one such analyst thinking Walmart would be better off buying an established chain of smaller stores than growing them organically.
Family Dollar, which operates upwards of 7,000 stores, would make a particularly good acquisition candidate, said Montagna.
“They’d get there a heck of a lot quicker rather than building 300 lousy stores,” Montagna said.
“When you look at Family Dollar, they have decades worth of cumulative experience at running dollar stores, and they know how to be nimble.”
However, Bill Simon, Walmart’s US stores chief, said the company is focused on creating a new distribution system for the smaller Neighborhood Market grocery stores and Walmart Express convenience stores.
Still, some industry experts are scratching their heads over how this will make a dent in Walmart’s overall results, as the retailer’s cash-strapped shoppers continue to defect to dollar stores and clamp down on spending.
On Thursday, the retailer blamed everything from curtailed food-stamp benefits to winter storms for a 21 percent drop in fourth-quarter profits.
Smaller stores were a bright spot, with sales up 5 percent. But same-store sales overall dropped 0.4 percent, their fourth consecutive quarterly decline.
With consumer spending still sluggish, Walmart warned that first-quarter earnings will likely miss Wall Street’s forecasts.
Walmart shares, which have advanced just 6.1 percent during the past year, fell 1.8 percent on Thursday, to $73.52.