Wal-Mart to Close 10% of Its 660 Sam's Club Stores

Sam's Club, the warehouse chain owned by Wal-Mart Stores Inc., said it will close around 10% of its 660 U.S. stores over the next few weeks, the latest retailer to shrink its footprint as Americans shift more spending online.

Around a dozen of the 63 stores will become e-commerce fulfillment centers to help support e-commerce efforts, said a person familiar with the plans. Sam's Club is closing underperforming stores in Alaska, Texas, New Jersey and other states, this person said.

The average Sam's Club employs around 160 workers, so the closures will eliminate around 10,000 jobs. Some workers will be offered roles at other locations, the company said.

The move comes the same day that Wal-Mart said it plans to raise wages for its U.S. hourly workers to $11 and pay a special bonus of up to $1,000 per individual. Sam's Club employees affected by the closures will be offered 60 days paid severance and receive the one-time bonus announced Thursday, said the person familiar with the plans.

In recent quarters Sam's Club has reported higher sales, helped by rising e-commerce sales and a focus on fresh food. That has helped reverse a long period of flat to lower sales, but the unit's performance has lagged behind rival Costco Wholesales Corp. In the most recent quarter Sam's reported sales in existing stores rose 2.8%, while Costco reported sales rose 7.9%.

Sam's Club, the warehouse chain owned by Wal-Mart Stores Inc., said it will close around 10% of its 660 U.S. stores over the next few weeks, the latest retailer to shrink its footprint as Americans shift more spending online.

Up to a dozen of the 63 stores will become e-commerce fulfillment centers to help support e-commerce efforts, the company said. Sam's Club is closing underperforming stores in Alaska, Texas, New Jersey and other states.

"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," said Sam's Club Chief Executive John Furner in a memo to staff Thursday.

The average Sam's Club employs around 160 workers, so the closures will eliminate around 10,000 jobs. Some workers will be offered roles at other locations, the company said.

Wal-Mart expects to record a charge of about 14 cents a share for the Sam's Club actions, mostly in the fourth quarter.

The move comes the same day that Wal-Mart said it plans to raise wages for its U.S. hourly workers to $11 and pay a special bonus of up to $1,000 per individual. Sam's Club employees affected by the closures will be offered 60 days paid severance and receive the one-time bonus announced Thursday.

In recent quarters Sam's Club has reported higher sales, helped by rising e-commerce sales and a focus on fresh food. That has helped reverse a long period of flat to lower sales, but the unit's performance has lagged behind rival Costco Wholesale Corp. In the most recent quarter Sam's reported sales in existing stores rose 2.8%, while Costco reported sales rose 7.9%.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

January 11, 2018 19:50 ET (00:50 GMT)