The Associated Press May 23, 2012, 7:40PM ET

Wal-Mart sees early success in Walmart Express

Wal-Mart Stores Inc. says it is seeing early success in its small stores called Walmart Express.

Bill Simon, president and CEO of the company's U.S. Walmart stores division, told investors Wednesday that its Walmart Express stores, which are less than one-tenth of the size of Walmart supercenters, are profitable less than a year after the company started opening them.

Wal-Mart opened the first Walmart Express store in rural Gentry, Ark., last June. It now has 10; they're in other rural areas in Arkansas and North Carolina and in the densely populated Chicago area.

"So far, so good," Simon said during a Morgan Stanley Retail Conference that was broadcast over the Web. "The next phase is, how big this could be."

Simon said the company might roll out hundreds of Walmart Express stores at a time. At the peak of its expansion of its supercenters in 2005 and 2006, it opened about 350 units per year.

Walmart Express has been a response to the growing threat of dollar stores since the recession. At 12,000 square feet to 15,000 square feet, they aim to carry everything a shopper might need on the spur of the moment, from milk and eggs to DVDs -- just not everything under the sun like a supercenter does. Walmart Express fits into cities where space is at a premium and is small enough to locate in rural areas that can't support a superstore.

Simon also said Wal-Mart plans to open an additional 100 supercenters this year. Earlier this year, the Bentonville, Ark.-based company said it will add 210 to 235 stores, including new ones, expansions, relocations, conversions and 80 to 100 stores in small formats, primarily Neighborhood Markets. Neighborhood Markets are about a quarter of the size of a supercenter -- so, bigger than Walmart Express -- and offer groceries, pet supplies and beauty products

Wal-Mart operated more than 4,000 stores in the U.S, including more than 3,000 supercenters, as of the end of its latest fiscal year.

The update on its Walmart Express stores comes as the discounter has turned around its overall U.S. namesake business after a more than two-year slump. Last week, the company said that its first-quarter revenue at its U.S. Walmart stores open at least a year rose 2.6 percent from a year earlier. The comparison is an important yardstick for measuring a retailer's health, and that's the unit's best performance in more than three years.

Recent allegations that Wal-Mart failed to notify law enforcement after its own investigators found evidence that $24 million in bribes was funneled through its Mexican unit to fast-track expansion in Mexico hasn't affected its expansion in the U.S, Simon said.

"We have a robust real estate pipeline that is already in place," Simon told investors at the conference. "We haven't seen any impact like that in the U.S. to date."

Shares rose 85 cents to close Wednesday at $64.58, keeping near the new 52-week trading high of $64.60 they reached during the day. The stock's low for the year, $48.31, came last August.


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