Wal-Mart Stores, Inc (NYSE:WMT) will cut 2,300 jobs at its Sam’s Club warehouse unit, which is the largest workforce reduction to be implemented by the retail giant in four years.
The employees that will be affected by the job cuts are those salaried assistant managers and hourly employees working at Sam’s Club warehouse’s that are not doing well.
At present, Wal-Mart Stores, Inc (NYSE:WMT) have the same number of management position at all of its Sam’s Club warehouses regardless of its sales performance.
According to the company, the number of jobs that will be eliminated accounts 2% of its total employees of Sam’s Club in the United States. Wal-Mart Stores, Inc (NYSE:WMT) has 620 Sam’s Club and the business unit generated $56 billion revenue last year.
“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,” said Rosalind Brewer, president and CEO of Sam’s Club as quoted by the Wall Street Journal.
Wal-Mart Stores, Inc (NYSE:WMT) promoted Brewer to become the CEO of Sam’s Club in 2012. Her growth strategy for the business unit is focused on technology and innovation, local merchandise, and expanded footprint. Her objective is to strengthen the competitiveness of Sam’s Club against brick and mortal retailers such as Costco Wholesale Corporation (NASDAQ:COST) as well as e-commerce giant, Amazon.com, Inc (NASDAQ:AMZN). Brewer aims to double the revenue of the business unit to around $100 billion.
According to the retail giant, the employees who will be laid off will still receive wages for 60 days while re-applying for other jobs within the company. For those who will not be able to take other positions by March will be given severance packages.
Wal-Mart Stores, Inc (NYSE:WMT) did a similar workforce reduction at Sam’s Club back in 2007. The retail giant terminated 3,000 salaried managerial positions including those serving as managers for its bakery, meat, and other departments.
Other retailers such as Macy’s Inc (NYSE:M), Target Corporation (NYSE:TGT), and JC Penney Company, Inc (NYSE:JCP) announced decisions to cut jobs.