Walmart has unveiled plans to close around 10% of its Sam´s Club branded wholesale stores and make thousands of workers redundant. The US retailing giant presented a bitter-sweet pill for its workforce as it also announced an increase in minimum wages.
Walmart is to close over 60 of the Sam´s Club cash-and-carry type stores, as part of plans to refocus the chain to target higher-earning households, those with incomes of between $75,000 and $125,000.
"Transforming our business means managing our real estate portfolio — we need a strong fleet of clubs that are fit for the future. 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. We've decided to right-size our fleet and better align our locations with our strategy,” said Sam Club chief executive John Furner.
News that Walmart was raising its minimum wage was seized upon by the US government as evidence that companies were sharing the benefits of the Trump administration´s recent cut in the top rate of corporate tax from 35% to 21%.
Walmart said it would increase the starting wage rate for all hourly associates in the US to $11, expand maternity and parental leave benefits and provide a one-time cash bonus for eligible associates of up to $1,000.
The company claimed the wage and benefit changes would benefit the company’s more than one million US hourly associates.
“We are early in the stages of assessing the opportunities tax reform creates for us to invest in our customers and associates and to further strengthen our business, all of which should benefit our shareholders. However, some guiding themes are clear and consistent with how we’ve been investing -- lower prices for customers, better wages and training for associates and investments in the future of our company, including in technology. Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the US,” said Doug McMillon, Walmart president and chief executive.
In 2017, Walmart chose to reduce new store development and thereby slow growth in its physical store space in favour of remodelling existing stores and increasing the spend on e-commerce.
While spending on store and club development dropped from $1.7bn to $712m in the first nine months of 2017, investment in e-commerce jumped by 10% to around $2.9bn.
Walmart shares ended Thursday´s session up 0.35%. The stock has risen by just over 30% over the past year.