In an economy weighed down by uncertainty and an ongoing trade war, many retailers are cutting costs by scaling back investments and restructuring their businesses.
However, Walmart has avoided the widespread mass closures affecting the industry, instead opting to remodel stores and expand its footprint. That’s why its latest move comes as a surprise to many.
Walmart revealed it will close its store and pharmacy at 1900 South 314th Street in Federal Way, Washington, on October 31, affecting around 250 employees. The retail giant said it plans to help the impacted workers transfer to nearby locations or find other roles within the company.
For Federal Way residents, the closure leaves just two Walmart stores nearby.
Nearby Walmart stores
- 762 Outlet Collection Way, Auburn, Washington 98001
- 34520 16th Ave S, Federal Way, Washington 98003
Walmart still operates 63 stores across Washington and over 5,200 nationwide, including Sam’s Club locations, and has not announced additional closures.
Image source: Jones/Bloomberg via Getty Images
Walmart’s new store strategy
The company didn’t provide a specific reason for the shutdown, but it has been reassessing its store fleet since last year to better align with shifting retail trends and evolving consumer demands.
Walmart (WMT) has been investing heavily in growth. In January 2024, it unveiled its “Investing in America” plan, a multi-million-dollar strategy to modernize stores, expand operations, and create more jobs nationwide.
Within a year, the retail giant remodeled 650 stores in 47 states and Puerto Rico, creating thousands of new jobs. Over the next five years, it plans to build or convert more than 150 stores and continue upgrading existing ones.
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Walmart is also implementing new in-store technology to blend its physical and e-commerce businesses. It began placing digital QR codes at its newest Supercenter in Cypress, Texas, the retailer’s first Supercenter in four years and the debut U.S. location of its “Store of the Future” concept.
These investments have been paying off. In the second quarter of fiscal 2026, revenue grew 4.8% year-over-year to $177.4 billion, with U.S. sales up 4.8% to $121.6 billion.
Walmart’s e-commerce sales grew 25% globally and 26% in the U.S., with all segments exceeding 20% growth.
“While we’re making a profit in e-commerce, it’s not at the same level as the profitability of our in-store business. But there will be a point in time when that changes, and it’s within our planning horizon,” said Walmart CFO John David Rainey in an investor follow-up call.
Uncertain link between Walmart closure, tariff pressures
The sudden closure of the Federal Way store could also be linked to recent changes in its business due to rising costs caused by the newly imposed tariffs.
In an Investment Community Meeting on April 9, Walmart withdrew its earnings guidance for fiscal 2026, citing uncertainty in the global market resulting from the recent tariff changes.
Nonetheless, the company expressed confidence in its ability to navigate the environment, continue boosting growth, and maintain low prices for consumers.
“History tells us that when we lean into these periods of uncertainty, Walmart emerges on the other side with greater share and a stronger business,” said Walmart’s CFO, John David Rainey, in a statement. “We have fundamentally changed our business model through years of thoughtful, strategic investments and now have a financial model that yields much higher returns,” he added.
However, during the follow-up call with investors, Walmart warned about upcoming cost increases. This could be a potential driver for decisions like the Federal Way store closure, as the company may be shedding less profitable locations to reduce costs.
“Costs will be higher than what they have been in this prior period going back two decades. But that’s built into our guidance. And nothing about this higher cost makes us think differently about the financial trajectory that we’ve outlined already. It’s disappointing that this is a larger amount and surprising to all those on the call. But the practical reality of this is — the surprises that happen sometimes when you run a business of our size and complexity,” said Rainey.
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