Wal-Mart Raises Its Starting Wage; Then Fires 1000s The Same Day

By now you’ve probably seen the news that Walmart has announced it’s raising starting wages, giving employees bonuses, and increasing benefits as a direct result of the Trump/GOP tax cuts, making it the latest of many companies to announce similar plans. However, the retailer also had some not-so-good news on Thursday that it wasn’t as eager to publicize.

Zero Hedge noticed that on the very same day, the company confirmed that it was closing 63 of its Sam’s Club locations. Sam’s Club says the decision was made “after a thorough review of our existing portfolio,” for the purpose of “better align[ing] our locations with our strategy”:

That compares with a total of five wholesale club stores the company has closed since fiscal 2013, securities filings show.

Ten to 12 of the closed stores could be converted to e-commerce facilities, the spokesperson said. The news is consistent with Sam’s Club’s ongoing plans to optimize its stores to fulfill more online orders and keep pace with internet retailers such as Boxed.

The closures also affect stores in New Jersey, upstate New York, Georgia, Illinois, Indiana, Ohio, Louisiana, North Carolina, Tennessee and Texas. In some locations, per social media, people showed up to work only to be told that their location was closing, with nearly no advance notice.

The chain, which competes with Costco , has more than 650 locations employing more than 100,000 people, with an average of 175 employees per store, according to the company.

“Wal-Mart may see tax rate of ~23% in FY19 (year ended Jan. 2019) vs current 32%, which would provide $2b windfall,” predicted Gordon Haskett analyst Chuck Grom. “Labor investment of ~$300m represents just 15% of total; assumes a similar amount will go toward investments in price.”

One Walmart official speaking on condition of anonymity told the Associated Press that the company does not yet know exactly how many jobs will be eliminated by these closures, but assures people that a number of the Sam’s Club workers laid off will be offered new jobs at Walmart locations or at the new e-commerce facilities. Even so, Business Insider estimates that as many as 11,000 people could be out of work; how many of them can count on being re-hired?

But what is providing just as much consternation to current Sam’s Club employees, Business Insider notes, is the abominably short notice provided to them that they’ll need to start hunting for a new job:

The remaining stores will stay open for several weeks before closing permanently. All of the affected stores were scrubbed from the Sam’s Club website on Thursday morning […]

Some Sam’s Club employees were informed of the closings via notices that were sent through FedEx on Thursday.

“FedEx showed up at my door with a package from Sam’s Club and I was thinking that maybe it was my W-2,” Nic Townsend, an employee of a Sacramento, California Sam’s Club, told Business Insider. “It was a letter saying they are closing down… I’m unsure of what to do I have a baby and a mentally sick mother. I’m lost. I’m heartbroken. I’m scared.”

What do you think about all of this? Sound off in the comments below.