Sam's Club cuts 2,300 jobs, about 2% of workforce (Updated)

Sam's Club is laying off 2,300 workers as the warehouse club seeks to reduce the level of middle managers. The staff reduction is roughly 2% of Sam's workforce, and is the largest staff reduction by the retailer since 2010.


It is unclear if any of these layoffs will come from the corporate headquarters in Bentonville. The retailer has not returned multiple requests for additional information. 


Bill Durling, a Sam’s Club spokesman, reportedly said the layoffs would target a combination of salaried assistant managers and hourly employees. Certain positions, like telephone attendants, will be eliminated.

“We realized we had pretty much the same club structure whether a club had $50 million in revenue or $100 million in revenue,” Durling said of the distribution of assistant managers. “What we’re trying to do is balance our resources.”

Sam’s Club, operating as division of Wal-Mart Stores Inc. has about 116,000 employees, Durling said, and the job cuts will affect about four employees a store. 
Employees will have 60 paid days to find another job at the company. If they are not successful, they will be eligible for severance.


Sam’s Club will open at least 15 new stores over the course of the next fiscal year, which begins in February.


Last year Wal-Mart Stores recorded sales of $466 billion, and $56.423 billion of that came from Sam’s Club. While Sam’s Club generates 12% of the sales revenue for the corporation, it only represents 7% of the retailer’s bottom line.

Under the direction of CEO Rosalind Brewer, Sam’s Club raised its annual membership fee last year to $45. The rate increase was softened with a coupon book offering $3,500 in savings. The rate increase had the potential to raise revenue by $82 million this year. 

Nearly half of $56 billion in revenue came from membership fees, according to Michael Dastugue, chief financial officer for Sam’s Club. He said in June there had been very little push back from the fee increase.

Analysts said this streamlining effort by Sam's Club is another tale-tell sign of troubles brewing in the retail sector. This announcement is third of its kind since the new year began.

Earlier this week Target announced said it would cut approximately 475 jobs from its corporate headquarters as part of a cost-cutting effort. Target also reduced its earnings guidance for the recent holiday period and through the first half of 2014 as it continues to deal with fallout from the massive security breach that impacted 110 million Target customers.

Last week, J.C. Penney announced 2,000 job cuts and the closure of 33 underperforming stores. This was widely seen as a symptom of that company’s continued struggles after several tumultuous years of flux in its management and its strategy.

Macy’s, often seen as a shining star in the retail sector, also announced it would lay off about 2,500 workers in the coming weeks, despite decent holiday sales results.

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Analyst said retailers on the whole saw lackluster holiday sales and continue to battle declining store traffic as they lose share to Amazon and other online retailers.

Wal-Mart and Sam’s Club will report their holiday sales Feb. 20, but the retailer already gave lower guidance at the end of third quarter, before ramping up inventory and advertising for the holiday season. Sam’s Club and Walmart U.S. each suffered from underwhelming same-stores in the past two quarters, and gave guidance from 0% to 2% growth for the balance of the year.

Sam's largest competitor – Costco – continues to set the bar high for the industry in terms of same-store sales growth and customer loyalty. For December Costco reported same-store sales growth of 3%, nearly twice the 1.8% expected by analysts.

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Walmart is trying to save it's stock price

Looks like a miss may be on the way plus it has already fallen from an all time high and this type can fall to a half or more and still be there when the grass is being mowed over you. Sad to say this would knock out about a months pay for 2300 people and have little added cost show up for unemployment benefits between now and Feb 20 so the savings would go straight to the bottom line plus as an added consideration it will not help union organizers around the country one bit either. If we have at least 2300 who give up looking for jobs next month the unemployment numbers may come out Ok however. This is not because they aren't making money it is because one of the largest benefactors of government handouts in the US wants to make more.

This or That

Walmart is in business to make money for its stock holders, provide service to its customers, pay taxes, pay its employees, and collect payroll taxes to support government. When Walmart makes more money, the Government makes more money, so do you have a problem with that?

In business to pay taxes and it's employees you say?

Utilizing your logic, we probably wouldn't need the IRS which appears to also include laying off 2300 workers even while making profit is an indication one of it's primary goals is to pay employees. To further address your very curious rationale above, the world's largest retailer which likely derives over 45% of it's food sales in the US from the tax base is to be commended for contributing perhaps 3% to that total itself? What happened in the recent meltdown..wasn't it caused by concentrating too much on profits and too little on people?

No Dog In The Hunt

"contributing perhaps 3% to that total itself" is a weird statement because they are contributing real help to our economy and not taking handouts offered by you know who! People shop at Walmart because they think they are saving money and Walmart seems to be the store of choice for most Americans and again, you know who and his give away administration has only about a 40 something approval rating by Americans.