Sam's Club is shutting down 63 stores, and some employees and customers say it did so without warning.
In a press release issued Thursday evening, Walmart (WMT), which owns Sam's Club, said 12 of the 63 locations will be converted into fulfillment centers. The move reduces the number of Sam's Club locations in the United States to 597.
Walmart spokesperson Greg Hitt estimated that roughly 9,450 people are employed across the 63 stores.
Workers and customers learned about the store closures on the same day Walmart drew praise from the White House for raising pay and giving out worker bonuses because of the new lower corporate tax rate.
Early in the day, news broke about the sudden shutdown of an unspecified number of Sam's Club locations. Sam's Club, using its official Twitter account, at first said that 53 locations were being shut, and 10 would be converted into fulfillment centers.
Those figures were later revised in the Walmart press release.
Throughout the day, customers took to social media with questions about why their local Sam's Club stores were closing. Some demanded refunds for their Sam's Club memberships, which cost between $45 and $100 a year. Sam's Club replied to some questions with a brief statement.
"After a thorough review of our existing portfolio, we've decided to close a series of clubs and better align our locations with our strategy," Sam's Club wrote in one reply. "Closing clubs is never easy and we're committed to working with impacted members and associates through this transition."
Sam's Club shutdown? Employees at this S Loop store tell me they showed up to work and were told store is closed effective today. Sign on door says same thing. Hearing other stores also affected. Waiting on answers from parent company, Walmart #khou11 pic.twitter.com/RtbY7EhiIK — Jason Miles (@JMilesKHOU) January 11, 2018
The company also said via Twitter that pharmacies at Sam's Club locations will remain open for "at least two weeks" while the company works to transfer prescriptions and contact customers.
In the press release, Walmart said it will offer "support and resources to those associates who are affected, including the bonus announced today and 60 days of pay, as well as severance to those eligible."
Related: Walmart is raising its minimum wage and handing out tax cut bonuses
The federal Worker Adjustment and Retraining Notification Act requires big employers to give workers 60 days notice before closing a plant or issuing mass layoffs.
Sam's Club posted one such alert, referred to as a WARN notice, to the Indiana state government's website. That notice says three locations in the state were slated to be closed on January 26. The move will impact 419 employees.
Several other states where CNNMoney confirmed stores will be closing did not have such notices posted as of Thursday afternoon.
Hitt, the Walmart spokesperson, told CNNMoney that he was unfamiliar with exactly where Walmart issued WARN notices. But he said the company would have issued them "where appropriate."
Throughout the day, local news outlets across the country -- including from Houston, Syracuse, Baton Rouge and Dallas -- reported that closures happened without notice. Some reported that bewildered employees showed up to work to find out they no longer had a job.
Alex Corona -- who has worked in the tire department at a Sam's Club in Wheeling, Illinois for six years -- told CNNMoney he walked into work Thursday to find the door guarded by two security guards with a sign saying the store was closed.
Eventually, a manager vouched that he was an associate and he was allowed inside, Corona said. He said he and his coworkers were told by a representative from Sam's Club's corporate office that their store was closing. Employees were offered severance based on how long they had been employed at the store, or the opportunity to transfer to a nearby location, Corona said.
For his part, Corona, who made $12 per hour at Sam's Club, said he's not looking to transfer.
"I don't want to deal with Sam's Club," he said. "What they're doing is absolutely wrong."
Corona said he will still be working at the store until it closes on January 26, a requirement to receive his severance.
Hitt declined to provide a list of addresses for the 63 Sam's Clubs locations that will be shut down.
Thirty-nine stores called by CNNMoney had recorded messages saying the store was closed Thursday but would reopen Friday.
When asked about this message, Hitt confirmed stores were shut down for one day so that management could inform employees about the decision to close the location -- but the "majority" will reopen Friday to begin liquidation sales.
Nine stores said they were closed effective Thursday, and two more said they would close January 26.
Related: All the companies giving out raises and bonuses because of tax reform
Later -- when asked about Walmart's double-barreled decision to raise wages but close Sam's Club stores -- White House press secretary Sarah Sanders praised the company.
"They raised minimum wage," Sanders told reporters at a press briefing. "They are increasing salaries to over a million American workers. We think that's a positive."
Treasury Secretary Stephen Mnuchin also thanked Walmart for raising wages and pointed to the move as evidence that the new Republican tax law is good for American workers. The law, which passed before the New Year, offers companies a drastic tax cut by bringing the corporate rate down to 21% from 35%.
Several companies besides Walmart have announced wage hikes or one-time bonuses for workers, citing the tax cut as the incentive.
When asked about the workers who will lose their jobs as a result of the Sam's Club closures, however, Mnuchin responded: "Different companies will do different things. Some companies will invest capital, some companies will return money to workers. Lots of things are going on in the economy, and we appreciate what Walmart is doing.
--CNNMoney's Chris Isidore, Kathryn Vasel, Jill Disis and David Goldman contributed to this report.
The Latest on Walmart's decision to boost starting salaries for U.S. workers while also closing dozens of Sam's Club stores around the country (all times local):
3 p.m.
A Walmart official says the company is closing 63 Sam's Club stores across the country. About 10 of those stores will be repurposed into e-commerce distribution sites.
The official said at least eight stores closed Thursday and the rest would shutter in the coming weeks. The official spoke on condition of anonymity because he was not authorized to discuss details of the decision publicly.
The closures came on the same day that Walmart announced it would boost its starting salary for U.S. workers to $11 an hour and hand out one-time cash bonuses.
The Walmart official said it would too soon to know how many jobs would be eliminated with the Sam's Club closures. He said some employees would be re-hired at other Walmart locations or at the newly created e-commerce distribution sites.
———
8:14 a.m.
Walmart is boosting its starting salary for U.S. workers to $11 an hour, giving a one-time $1,000 cash bonus to eligible employees and expanding its maternity and parental leave benefits.
The retailer said Thursday changes that to its compensation and benefits policy will impact more than a million hourly workers in the U.S., with the wage increase effective next month.
The company is also creating a new benefit to assist employees with adoption expenses.
CLOSE Walmart has announced it is raising its starting hourly wage from $9 to $11 and Sam's Club is set to close a series of clubs across the United States. USA TODAY
Sam's Club is closing 63 locations. (Photo: Dan MacMedan, USA TODAY)
Sam's Club, the membership warehouse owned by retail giant Walmart, is shutting down or converting 63 stores.
The company attributed the decision to the need to better fulfill online orders, less population growth than expected in some markets and too many competing locations.
The Sam's Club closures were confirmed the same day Walmart said it would lift the hourly minimum wage in the U.S. to $11 and give out bonuses of up to $1,000.
Of the Sam's Club locations, about 50 will be going out of business for good. Roughly 10 of those locations are closing their doors as of Thursday, while the remainder will be shuttered over the next three to four weeks.
More: See if your Sam's Club closing. Here's the list
More: Walmart boosts minimum wage to $11, hands out bonuses up to $1,000 for hourly workers
More: Retail outlook: Will 2018 be Walmart's best year yet?
About 10 to 12 of the stores are slated to be closed temporarily as the retailer converts them to regional distributional centers to help fulfill online purchases. Workers previously employed at those sites are not guaranteed one of the new positions.
Walmart piloted delivering groceries right into customers' refrigerators, one of the creative ideas retailers rolled out in 2017. (Photo: SAUL LOEB, AFP/Getty Images)
In a note to staff, Sam's Club President and CEO John Furner said that a review found stores that were hindering business at other locations or operating in areas that had not seen the population growth that was expected.
"We’ve decided to right-size our fleet and better align our locations with our strategy,'' he wrote. "We will be closing some clubs, and we notified them today. We’ll convert some of them into eCommerce fulfillment centers — to better serve the growing number of members shopping with us online and continue scaling the SamsClub.com business.''
News of the closures began to slowly trickle out Thursday. Notices filed with the Indiana Department of Workforce Development revealed that three Sam's Club stores in Indiana would be shutting down, while news outlets across the U.S. began reporting possible closures in cities from Memphis to Atlanta to Houston.
CLOSE Walmart is doing what their competitor Amazon can't do, throw holiday parties. Buzz60
The company would not provide a list of the specific locations that will be closed or the number of employees that would be impacted, but public filings examined by USA TODAY revealed that at least 3,802 workers will be affected.
There are 419 employees at the three Indiana locations, according to filings required by the U.S. Department of Labor when there are significant layoffs.
Public filings also revealed locations in other parts of the U.S. that would be shutting their doors. In Illinois, seven Sam's Clubs employing 1,138 people were slated to close Jan. 26, The notifications said that the termination of hourly workers would be effective as of March 16, and for managers as of April 13.
In Louisiana, a Sam's Club in Baton Rouge that employs 176 workers was scheduled to close Thursday, with hourly staff being terminated as of March 16 and managers as of April 13. Ohio has two stores closing in Cincinnati and Loveland, with a total of 285 workers potentially affected. Their date to be laid off, according to the public notifications, is March 16.
In Texas, four stores employing 633 workers will shut, with three closing Thursday and another in San Antonio being shuttered Jan. 26. Four stores in California that employ 656 people will close their doors Jan. 26, and another 495 workers at three stores in Washington will also be out of work.
Furner said that the company would try "to place as many associates as possible in new roles at nearby locations.''
The retail landscape has been upended by the rise of Amazon and the growing shift by consumers to shopping online. Though warehouse-based retailers such as Sam's Club and Costco have a steady revenue stream fueled by member fees, they are also having to adjust to an environment in which customers can buy groceries, electronics and other products from a growing array of e-commerce and stores.
While Walmart reported that Sam's Club's sales rose 4.4% in the most recently completed quarter, Furner says that the store closures will free up resources that can be focused on bolstering Sam's Club's website as well as its in-store technology. There are also plans to improve the club's fresh-food offerings, overall product selection and its private label, Member's Mark.
Rival Costco has experienced significant online sales growth in the wake of improvements to its site, the launch of two new delivery options and the introduction of an option for shoppers to buy items such as computers and jewelry online and then pick them up at a store. Last month, Costco reported that its online sales had leaped 43.5% in the most recent quarter.
Meanwhile, BJ's, a membership warehouse club concentrated in the East, says it is benefiting from the Sam's Club closures. "We’ve had an immediate increase in Sam’s Club members joining BJ’s Wholesale Club,'' the company said in a statement, adding that it's also gotten queries from Sam's Club workers.
"BJ’s Wholesale Club is hiring.''
Contributing: Kevin McCoy, USA TODAY and Justin L. Mack, Indy Star
Read or Share this story: https://usat.ly/2D5TSlD
Walmart (WMT) is closing dozens of Sam's Club stores nationwide, according to numerous media reports.
The retail giant announced late Thursday that it will shutter 63 of the stores, where member customers can buy products at discounted prices. Walmart said it will convert up to a dozen of those clubs into fulfillment centers for online orders. The other stores will be closed in the coming weeks.
"We know this is difficult news for our associates, and we are working to place as many of them as possible at nearby locations," Sam's Club CEO John Furner said in a statement.
Walmart said it will provide support and resources for workers who are laid off, including 60 days pay and severance to eligible employees.
The closures affect stores in Alaska, 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.
"Change is never easy, but we're making these decisions as part of running a healthy business," Furner said.
Sam’s Club shutdown? Employees at this S Loop store tell me they showed up to work and were told store is closed effective today. Sign on door says same thing. Hearing other stores also affected. Waiting on answers from parent company, Walmart #khou11 pic.twitter.com/RtbY7EhiIK — Jason Miles (@JMilesKHOU) January 11, 2018
The chain, which competes with Costco (COST), has more than 650 locations employing more than 100,000 people, with an average of 175 employees per store, according to the company.
Walmart will have 597 Sam's Club stores after the restructuring is complete.
The company drew criticism from people on Twitter who objected to the lack of notice about the closings.
My problem isn't with you closing stores. It's closing stores without telling the employees. How would you, as a social media rep, like to come in to work tomorrow and find out you were fired? — YourMCAdmin (@YourMCAdmin) January 11, 2018
The closures come on the same day that Walmart announced it was raising its minimum wage to $11 per hour.
Same day Walmart raises worker wage to $11 "due to tax bill", Sam's Club announces 419 Hoosier workers are losing their jobs. — Stephen Terrell (@StephenTerrell) January 11, 2018
On Thursday, the company was offering refunds on memberships as well as free 3-month extensions.
