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Struggling Walmart Finds Early Success In Scaled-Down Stores

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CHICAGO (Jessica Wohl) - After hitting a couple of easy layups by opening small stores in its home state, Wal-Mart Stores Inc (WMT.N) is ready to take some more difficult shots that will show whether it can win over shoppers from small towns to big cities, a top executive said on Wednesday.

Wal-Mart, the world's largest retailer, opened its first "Walmart Express" store in Gentry, Arkansas, about six miles from the nearest Wal-Mart supercenter, in early June.

Sales there and at another brand new Walmart Express in Arkansas have been "very, very good," Walmart U.S. President and Chief Executive Bill Simon said during a William Blair conference in Chicago.

Walmart Express stores, at around 15,000 square feet, are roughly one-tenth the size of a Walmart supercenter and sell everything from fresh and frozen food to sheets and towels.

As Simon noted, the first Walmart Express stores were essentially built in Wal-Mart's backyard, where the openings received a lot of attention. Wal-Mart even took analysts and reporters to see the store in Gentry on June 2, the day before the company's annual meeting in Fayetteville, Arkansas.

On Wednesday, Walmart is opening its first Walmart Express outside of its home state, in the small town of Richfield, North Carolina. One of the biggest tests will come in July, when it opens the first urban Walmart Express.

"We've got a jump shot coming today in North Carolina and we're optimistic, and hopefully we'll be able to hit the jump shot, and the real three-pointer opens next month here in Chicago," Simon said during his presentation, comparing the Express openings with progressively more difficult basketball shots.

The company's first Walmart Express store in Chicago, only its second store within the city limits, is set to open in the Chatham neighborhood that is part of the city's South Side.

Opening 15 to 20 of the small stores as it tests the format this year is one way that Walmart hopes to attract shoppers who have been shopping at dollar stores, online and elsewhere.

Walmart is also adding thousands of items such as fishing lures and plus-sized women's clothing back to its larger U.S. stores after sales at existing locations fell for two straight years due to a failed streamlining effort and the lingering economic concerns pressuring low and middle-income shoppers.

Walmart is still banking on its supercenters as well, with plans to open 152 this year, up from 135 in 2010.

It is also moving faster to build more of its mid-sized Neighborhood Market stores, which are being renamed Walmart Market. Those stores, which more like traditional grocery stores, are delivering returns on the same level as supercenters and can be approved and built in less time.

Walmart should have about 300 of the Market stores by fiscal 2013, up from 185 now, Simon said. Those stores showed 4 percent same-store sales growth during the first quarter, while overall U.S. same-store sales fell 1.1 percent.

Shares of Wal-Mart were down 1.3 percent at $52.20 in afternoon trading amid a broad market decline.

(Editing by Gerald E. McCormick)

Copyright 2011 Thomson Reuters. Click for Restrictions.

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