Job Cuts at Sam’s Club

Posted by on Apr 26, 2007 in updates | No Comments

Wal-Mart Moves to Trim Manager Jobs at Sam’s Club [Wall Street Journal]

Wal-Mart Stores Inc., under pressure to boost productivity at its Sam’s Club wholesale unit, is cutting a small number of store-management jobs at the operation as part of a rare nationwide job cut.

The world’s largest retailer by revenue plans to consolidate about 3,000 salaried-manager positions at some 580 U.S. Sam’s Club stores, according to people briefed on the situation. It isn’t clear how many people will lose their jobs. The unit has more than 100,000 employees world-wide.

A Sam’s Club spokeswoman confirmed the restructuring, calling it a move to improve customer service in the stores. “This is not about cost reduction; it’s about providing better service to our members,” she said. The spokeswoman said there are no other restructuring actions under way.

About 3% of affected managers so far have opted to accept the severance package, she said. The employees were notified in mid-March and have until May 2 to accept a management job elsewhere in the company, stay on as an hourly employee or accept the severance.

Alan Peto, a former Sam’s Club employee familiar with the changes, said the company is returning to a store-management structure it used in the early 1990s. “They pumped up management all over” during a fast-growth phase, he said. The change will eliminate the now-separate managers overseeing the stores’ receiving, bakery, meat, photo and front-end departments, he and others said, consolidating five positions down to three at stores.

While profitable, Sam’s Club has lagged behind its main rival, Costco Wholesale Corp., based in Issaquah, Wash. Sam’s reported an operating profit of $1.5 billion on $41.6 billion in revenue in its latest fiscal year. But sales at stores open at least a year rose just 2.5%, compared with a 7% increase at Costco.

As part of a study into ways of boosting its stock price, the Bentonville, Ark., retailer last year considered a plan to spin off and establish Sam’s as an independent company with headquarters in Dallas. However, the spinoff was rejected, said people familiar with the matter.

Managers who accept the severance plan must relinquish any claims against the company, according to the Sam’s Club Assistant Manager Restructure Agreement provided to employees. Wal-Mart faces some 67 lawsuits alleging wage violations in 36 states, according to its latest annual report. The largest is a sex-discrimination suit that covers more than 1.5 million past and present female workers.

Wal-Mart has some 1.4 million U.S. workers. Last year, it reorganized its U.S. Wal-Mart Stores field operations, leading to a small number of management departures. In 2005, it cut some 1,000 jobs at its Asda unit in the United Kingdom.

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