News that Walmart was rewarding employees with bonuses and higher starting wages came about at the same time the retailer was closing multiple locations of its Sam’s Club membership warehouse chain.
“Transforming our business means managing our real estate portfolio and Walmart needs a strong fleet of Sam’s Clubs that are fit for the future,” John Furner, president and CEO of Sam’s Club, said in a statement. “We know this is difficult news for our associates and we are working to place as many of them as possible at nearby locations. Our focus today has been on those associates and their communities, and communicating with them.”
Walmart confirmed 63 locations would be closing; and up to 12 would be turned into eCommerce fulfillment centers. Some of the stores closed abruptly Thursday, while others are expected to close in coming weeks.
Furner in a memo to employees published online cited cannibalization between neighboring Sam’s locations and slower-growing markets for the “right-sizing” of the business.
The growing clout of Walmart’s own eCommerce—evidenced by the plan to reuse some locations as fulfillment centers—presumably also contributed to the decision to close stores.
“After a thorough review, it became clear we had built clubs in some locations that impacted other clubs, and where population had not grown as anticipated,” the memo said. “We've decided to right-size our fleet and better align our locations with our strategy. We will be closing some clubs, and we notified them today. We'll convert some of them into eCommerce fulfillment centers to better serve the growing number of members shopping with us online and continue scaling the SamsClub.com business.”
Sam’s Club over the past year had regained modest sales momentum under Furner, who succeeded Roz Brewer a year ago.
Walmart said it would record a discrete charge of approximately 14 cents per share related to the closures, with the vast majority in its current fourth quarter.
This story was updated with comment from Walmart.
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