Wal-Mart Stores Inc.'s top U.S. executive told investors Thursday that the company is considering acquiring retailers with smaller stores to help turn around its weakened U.S. business.
The world's largest retailer also told investors at a Bank of America investor conference that it plans to build hundreds of smaller stores in coming years.
Wal-Mart is facing stiff competition in the United States from dollar chains and drug stores, which often are more convenient for shoppers. Sales at its U.S. namesake stores open at least a year fell 1.8 percent, the seventh quarterly decline in a row for that key indicator, and overall U.S. sales at Walmart stores fell 0.5 percent.
The company said last month that it will open 30 to 40 small stores this year on a faster schedule than originally planned.
Half of those will be Neighborhood Markets, which vary from 25,000 square feet to 70,000 square feet. The other half of the new stores will be in the company's latest format, Walmart Express, which are about 15,000 square feet, and another new concept, called Walmart on Campus. Walmart Express stores are slated to open in the second quarter in both urban and rural areas. The company declined to disclose any more details.
The average size of Wal-Mart's supercenters is about 185,000 square feet.
"The aim here is to get the right model so that we can rapidly roll these things out," said Bill Simon, president and CEO of Wal-Mart's U.S. division, referring to Walmart Express. "At our peak, we built about 350 supercenters in a year, so when we get this thing right, these are going to come real fast, and we're real excited about this format."
The first Walmart on Campus opened at the University of Arkansas and is doing well, Simon said. It includes a pharmacy. Simon said there's "a lot of interest" from other colleges.
Wal-Mart isn't rushing into acquisitions, he said.
"We don't like anybody else's business enough to acquire it right now; what we really want to do is to get our business in the right shape so that we can roll it out with gusto," Simon said. "And once we've got it in the right shape, an acquisition could certainly be a way to accelerate that."
Wal-Mart's overall revenue is still rising, helped by its strong and growing international business. It hit $421.8 billion in the fiscal year that ended Jan. 31, including $2.95 billion in Sam's club membership fees and other income.
But the seven quarterly declines in revenue at U.S. stores open at least a year is the longest streak since at least 1980 when Michael Niemira, chief economist at International Council of Shopping Centers, started tracking the figures.
Revenue at stores open at least a year is a key indicator of a retailer's health because it excludes stores that recently opened or closed.
For the past year, Wal-Mart's namesake discount stores also have seen fewer customers walking in the doors.