UPDATE 2-Wal-Mart Canada closing all 6 Sam's Club locations

Thu Feb 26, 2009 6:10pm EST

Related Topics

* Wal-Mart closing its 6 Sam's Club stores in Canada

* Lowe's says it is evaluating those locations

* Wal-Mart to instead focus on opening supercenters (Recasts, adds byline, analyst comment, stock price)

By Nicole Maestri

NEW YORK, Feb 26 (Reuters) - Wal-Mart Stores Inc's (WMT.N) Canadian division said on Thursday it is closing all six of its Sam's Club stores to focus instead on opening more Wal-Mart supercenters.

Wal-Mart said it is in discussions with a major U.S. retailer to purchase Wal-Mart's interest in five of the locations, but it did not give the name of the retailer.

A spokeswoman for Lowe's Cos (LOW.N) said the home improvement retailer is evaluating those real estate locations, as well as other real estate opportunities in Canada.

The Canadian Sam's Club stores are all in Ontario.

"Despite our best efforts and the commendable work of our Sam's Club associates, our six Clubs have not met our expectations," said David Cheesewright, president and chief executive of Wal-Mart Canada, in a statement.

Wal-Mart entered Canada in 1994, and in 2006 it began opening its first Canadian supercenters, which offer groceries along with general merchandise.

Wal-Mart has since expanded the number of supercenters it operates in Canada to 56. It did not have the same success with its Sam's Club warehouse stores after opening its first one in 2003.

Joseph Beaulieu, an analyst with Morningstar, said it was not surprising to see Wal-Mart close its Canadian Sam's Clubs.

"When something doesn't work, it might take them a while but they finally get around to closing it down," he said.

Wal-Mart Stores Inc also has seen sales weakness at Sam's Club stores in the United States, where it operates in more than 600 locations.

Wal-Mart Canada said it intends to open 26 new supercenters in Canada this year, bringing the number of Canadian supercenters to 82 and Wal-Mart Canada's overall store count to 316 by the end of the year.

Wal-Mart shares closed down nearly 2 percent, or 96 cents, at $48.25 on the New York Stock Exchange. (See here for "Shop Talk" -- Reuters' retail and consumer blog) (Reporting by Nicole Maestri; editing by Jeffrey Benkoe; editing by Carol Bishopric)

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