Wal-Mart to lay off 2,300 Sam’s Club workers

Wal-Mart says it is laying off 2,300 Sam’s Club workers, the club chain’s largest job-cut since 2010. Nearly half of the layoffs will involve salaried assistant managers.

All the Sam’s Club outlets currently have the same number of employees in management positions, regardless of how much money each one generates.

Sam’s Club has about 116,000 employees, so the current layoff represents approximately 2% of its workforce. The company reported sales of $56.4 billion in 2013, nearly 12% of Wal-Mart’s total revenue.

The club chain laid off about 3,000 salaried management personnel in 2007 for similar reasons. Since then, the number of managers has increased.

The company says laid off workers will be paid for the next sixty days while they look for other positions within the Wal-Mart group. Severance packages will be offered to those who do not manage to find anything by March.

Sam’s Club has become top heavy

In an interview with The Wall Street Journal, Rosalind Brewer, President and Chief Executive Officer of Sam’s Club, said:

“Over the years, we’ve migrated to a top-heavy structure in our management. What this does is align the number of assistant managers to the sales of the club and to where our growth areas are.”

Brewer says her aim is to double Sam’s Club revenue and turn it into a $100 billion business. This is no mean feat, considering the growing competition the club chain is facing from Amazon, Costco and other retail organizations.

Brewer’s career with Wal-Mart started in 2006 where she became regional vice-president over operations in Georgia, and later division president of Wal-Mart’s Southeast market, and then president of Wal-Mart East. She was named President and CEO of Sam’s Club in 2012.

In 2012, Brewer raised membership fees for the first time in seven years, and began an employee bonus scheme linked to the number of new customers who signed up.

Weak holiday sales and price cuts affected retailers

Employees in the retail sector have had a bad year regarding job security. Several companies have been laying people off:

  • JC Penney Co. Inc. said it is to close 33 under-performing stores and will lay off 2,000 workers.
  • Macy’s Inc. plans to lay off 2,500 employees.
  • Target Inc. announced plans to close 8 stores. The company added that it will cut 475 jobs at its head office and other offices in Minnesota, and will not fill 700 job vacancies worldwide.

Most retailers reported weak sales over the holiday period on already steeply discounted products.

Sam’s Club net sales for the third quarter of 2013 were $14.08 billion, 1% higher than in Q2 2013.