The number of Walmart sites in one of the biggest cities in the nation will be cut in half with the closure of four stores, adding to a growing list of closures in urban regions.
The largest retailer in the country has closed stores in DC, Portland, and Atlanta so far this year, marking a shift away from its plan to draw in new clients outside of suburbia and small towns.
Walmart ascribed the Chicago shop closings to a lack of profitability, noting that since they first opened 17 years ago, locations there have consistently posted losses.
The firm stated in a release that the stores that are closing “are losing tens of millions of dollars a year, and their annual losses have nearly doubled in the last five years alone.” The remaining four Chicago locations are still having problems.
Walmart warned of a possible belt tightening this year in its earnings call in February. Despite a strong holiday season, executives offered a muted outlook for the next quarter, and they’re not alone: Home Depot offered a similar display. Retailers noted that shoppers are feeling the strain of inflation and continue to cut discretionary spending from their budgets. Total retail sales fell 0.4 percent last month and although government data shows inflation has moderated in recent months – prices rose 5 percent in March – costs remain at historic highs.
Both companies are seen as guard rails for consumer behavior, so it’s not surprising that several major retailers are taking a cautious stance on 2023. Whole Foods closed its flagship store in downtown San Francisco.
Retailers evaluate store-by-store performance to see which are profitable and gauge their growth prospects, said Neil Saunders, managing director of analytics firm GlobalData. He expects this to continue for the rest of the year.
“I think the overall message is that we can’t carry dead wood in this very tight environment and we need to throw it overboard,” added Saunders.