Walmart Closing Four Stores in Chicago, Citing Years of Losses

The pullback in urban stores is significant because Walmart has tried for years to find a profitable way to do business in those markets, seeing them as an opportunity to grow beyond its base of shoppers in suburbs, smaller towns and rural areas.

“Collectively our Chicago stores have not been profitable since we opened the first one nearly 17 years ago,” said Walmart Tuesday. “These stores lose tens of millions of dollars a year, and their annual losses nearly doubled in just the last five years.” 

Walmart is keeping four Chicago stores open and hopes that the closure of the others will help it keep those open long-term, the company said. A spokesman for Walmart said there was no single cause for the increase in losses and that theft wasn’t a driving factor. “We think closing these sites gives us the best chance to help keep the remaining four stores open,” he said.

The closures sparked criticism from Chicago Mayor

Lori Lightfoot.

“I’m incredibly disappointed that Walmart, a strong partner in the past, has announced the closing of several locations,” she said. “ Unceremoniously abandoning these neighborhoods will create barriers to basic needs for thousands of residents.” The spokesman for Walmart declined to comment.

Inside Walmart, top executives have debated how to grow inside urban centers profitably for decades, according to people familiar with the situation. One sticking point has been that some top executives, including Chief Executive

Doug McMillon,

believe product prices should be largely the same at every Walmart store regardless of location, said some of these people. 

That stance is, in part, why Walmart has never opened a store in New York City. Many other retailers that have expanded in urban areas, such as

Target Corp.

, charge different prices for some products depending on the cost of doing business in a region and the competitive landscape. A spokesman for Walmart declined to comment.

So far this year, Walmart has announced plans to close 19 stores, with some of those closures happening outside of large cities. It typically closes a handful of stores each year as part of regular real-estate planning. This year, Walmart is being particularly aggressive, as the company is reviewing “our fleet of stores as sales and performance have normalized postpandemic,” said a company spokesman.

As of Jan. 31, the company operated more than 4,700 Walmart stores in the U.S. and employed 1.6 million people across its operations, which include Walmart and Sam’s Club stores and its distribution centers.

Walmart has reported strong sales throughout the Covid-19 pandemic and in recent quarters as shoppers pressured by rising prices turn to the retailer for lower-cost groceries and other essential items. The company has worked to cut costs in recent quarters as consumers shift spending toward necessities and cut expenditures on items that generally carry higher profit margins such as clothing and home goods.

“Customers are still spending money,” said Mr. McMillon during an analyst presentation in February. “It’s obviously not as clear to us what the back half of the year looks like.”

Over the past year, Walmart has cut some corporate staff and closed three technology hubs. In recent weeks it has cut thousands of jobs in e-commerce fulfillment centers as online sales slow compared with earlier in the pandemic and it fulfills more e-commerce orders from store inventory than in past years. Walmart executives have said in recent weeks that the overall number of U.S. employees at the company will likely stay the same, but job types will change. 

The company is adjusting staffing to better prepare for the future and is helping workers find jobs at other locations, said a spokesman.

The first Walmart store in Chicago opened in 2006. That location continues to operate, and Walmart has since built other stores, including its smaller-format sites that primarily sell groceries. It also has Walmart Health community health centers in the city, and built a Walmart Academy training center. 

Leaders in urban areas, often with support from labor unions and smaller merchants, around the country have, at times, presented stiff opposition to Walmart.

After Walmart obtained approval to locate in Chicago in 2004, the city’s aldermen passed a law mandating large retailers pay employees a $10-an-hour wage and health benefits equal to at least $3 an hour. Then-Mayor

Richard Daley

vetoed the law and persuaded the city council not to override his decision.

Walmart said it has tried strategies to improve business in Chicago, including building smaller stores and localizing product assortment. For the closing sites, the company said it would work with local leaders to find building-reuse options. Employees at affected stores will be paid through Aug. 11 and can transfer to other locations. 

“We will continue working with local organizations, creating solutions to challenges faced by the city and country, including racial inequity and food deserts,” the company said.

Write to Sarah Nassauer at Sarah.Nassauer@wsj.com

The pullback in urban stores is significant because Walmart has tried for years to find a profitable way to do business in those markets, seeing them as an opportunity to grow beyond its base of shoppers in suburbs, smaller towns and rural areas.

“Collectively our Chicago stores have not been profitable since we opened the first one nearly 17 years ago,” said Walmart Tuesday. “These stores lose tens of millions of dollars a year, and their annual losses nearly doubled in just the last five years.” 

Walmart is keeping four Chicago stores open and hopes that the closure of the others will help it keep those open long-term, the company said. A spokesman for Walmart said there was no single cause for the increase in losses and that theft wasn’t a driving factor. “We think closing these sites gives us the best chance to help keep the remaining four stores open,” he said.

The closures sparked criticism from Chicago Mayor

Lori Lightfoot.

“I’m incredibly disappointed that Walmart, a strong partner in the past, has announced the closing of several locations,” she said. “ Unceremoniously abandoning these neighborhoods will create barriers to basic needs for thousands of residents.” The spokesman for Walmart declined to comment.

Inside Walmart, top executives have debated how to grow inside urban centers profitably for decades, according to people familiar with the situation. One sticking point has been that some top executives, including Chief Executive

Doug McMillon,

believe product prices should be largely the same at every Walmart store regardless of location, said some of these people. 

That stance is, in part, why Walmart has never opened a store in New York City. Many other retailers that have expanded in urban areas, such as

Target Corp.

, charge different prices for some products depending on the cost of doing business in a region and the competitive landscape. A spokesman for Walmart declined to comment.

So far this year, Walmart has announced plans to close 19 stores, with some of those closures happening outside of large cities. It typically closes a handful of stores each year as part of regular real-estate planning. This year, Walmart is being particularly aggressive, as the company is reviewing “our fleet of stores as sales and performance have normalized postpandemic,” said a company spokesman.

As of Jan. 31, the company operated more than 4,700 Walmart stores in the U.S. and employed 1.6 million people across its operations, which include Walmart and Sam’s Club stores and its distribution centers.

Walmart has reported strong sales throughout the Covid-19 pandemic and in recent quarters as shoppers pressured by rising prices turn to the retailer for lower-cost groceries and other essential items. The company has worked to cut costs in recent quarters as consumers shift spending toward necessities and cut expenditures on items that generally carry higher profit margins such as clothing and home goods.

“Customers are still spending money,” said Mr. McMillon during an analyst presentation in February. “It’s obviously not as clear to us what the back half of the year looks like.”

Over the past year, Walmart has cut some corporate staff and closed three technology hubs. In recent weeks it has cut thousands of jobs in e-commerce fulfillment centers as online sales slow compared with earlier in the pandemic and it fulfills more e-commerce orders from store inventory than in past years. Walmart executives have said in recent weeks that the overall number of U.S. employees at the company will likely stay the same, but job types will change. 

The company is adjusting staffing to better prepare for the future and is helping workers find jobs at other locations, said a spokesman.

The first Walmart store in Chicago opened in 2006. That location continues to operate, and Walmart has since built other stores, including its smaller-format sites that primarily sell groceries. It also has Walmart Health community health centers in the city, and built a Walmart Academy training center. 

Leaders in urban areas, often with support from labor unions and smaller merchants, around the country have, at times, presented stiff opposition to Walmart.

After Walmart obtained approval to locate in Chicago in 2004, the city’s aldermen passed a law mandating large retailers pay employees a $10-an-hour wage and health benefits equal to at least $3 an hour. Then-Mayor

Richard Daley

vetoed the law and persuaded the city council not to override his decision.

Walmart said it has tried strategies to improve business in Chicago, including building smaller stores and localizing product assortment. For the closing sites, the company said it would work with local leaders to find building-reuse options. Employees at affected stores will be paid through Aug. 11 and can transfer to other locations. 

“We will continue working with local organizations, creating solutions to challenges faced by the city and country, including racial inequity and food deserts,” the company said.

Write to Sarah Nassauer at Sarah.Nassauer@wsj.com