What started out as an announcement by Walmart to garner positive coverage and PR instead drew scathing backlash.
Walmart is raising wages for new employees from $10 an hour to $11, expanding paid parental leave and offering a one-time bonus to eligible workers, actions that the company says will affect more than 1 million employees in the U.S.
On Thursday, Walmart tweeted the news:
Excited to share some news today! We’re raising our starting wage for all hourly associates in the U.S., expanding benefits & offering a one-time bonus! 💛 Learn more from CEO Doug McMillon: https://t.co/vgBJ1KRLB6 pic.twitter.com/pPEdZCYSr1— Walmart (@Walmart) January 11, 2018
However, the goodwill garnered by the announcement was dampened hours later, when reports circulated that Sam’s Club was shuttering stores nationwide—63 in all.
Sam's Club has not said how many employees are losing their jobs. Each Sam's Club warehouse employs about 175 people, meaning more than 11,000 people could be impacted.
In some cases, employees were not told their store had closed before showing up to work on Thursday. Those employees learned their store would be closing when they found the store's doors locked and a notice announcing the closing, Sam's Club workers told Business Insider. At some stores, employees were turned away by police officers.
The company’s chief executive, John Furner, sent a letter to employees. It read, in part:
Transforming our business means managing our real estate portfolio — we need a strong fleet of clubs that are fit for the future. 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. We've decided to right-size our fleet and better align our locations with our strategy. 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. The first of these conversions will be in Memphis, Tennessee.
We know these decisions impact people we care about deeply — our associates and their families, as well as our members and their neighbors — and we did not make them lightly. A Sam's Club is a place of community and memories, and we are so appreciative of our associates who have worked hard over the years to serve our members. Our immediate focus will be on helping those impacted by today's news. We will work to place as many associates as possible in new roles at nearby locations, and we'll provide them with support, resources, and severance pay to those eligible. Many of our associates and members will move to nearby clubs. If you work in such a club, please make them feel welcome.
… Change is never easy, but we're making these decisions from a position of strength. As you've seen in our recent quarterly results, our traffic and comps have improved, and that's because of the work you do to serve our members. We have momentum, and now is the time to accelerate our transformation efforts. Thank you.
[FREE DOWNLOAD: 13 tips for preparing for a crisis]
Though Furner’s letter said the company “did not make [the decisions to close stores] lightly,” it did make them abruptly. Many reporters tweeted scenes of Sam’s Club stores with “closed” signs on its doors and employees who were given little or no notice of store closings.
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
Was told by an employee at the Buckland Hills Sam's Club store that it, and several other area stores, will close permanently on Jan. 28. Employees were informed in a morning meeting. The only remaining Sam's Club in CT will be the one in Newington.— Joe O'Leary (@JTOL3ARY) January 11, 2018
The Washington Post’s Christopher Ingraham tweeted that the Sam’s Club closings will make up roughly half of the amount Walmart is spending on increased wages and bonuses:
Some speculative Wal-Mart math: 63 Sam's Club locations closing, average of 175 employees each, means up to about 11,000 layoffs. Say wages are $10/hr each, that works out to total payroll savings of $220 million, or half the amount of the $400 million in bonuses announced today.— Christopher Ingraham (@_cingraham) January 11, 2018
Podcaster Nick Jack Pappas tweeted that only those employees who have worked for Walmart for more than two decades will receive bonuses:
Even if we take away Sam's Club laying off 11,000 people, that "generous" $1,000 bonus only goes to Walmart employees who have been there for 20 years.— Nick Jack Pappas (@Pappiness) January 11, 2018
That's $50 per year of service. (Or less.)
The Waltons make about $26,000 per minute from their Walmart dividends alone.
As more details surfaced, many Twitter users lashed out at Walmart and Sam’s Club:
Walmart: We're raising our starting wage to $11.00 an hour!— Heel Turn Haden (@_TheSonOfMars_) January 11, 2018
Us: Yeah, but aren't you closing dozens of Sam's Club stores to make this happen?
Wow, a whole lot of @SamsClub locations shut down today while giving 0 notice to workers. That sounds like the management team alright. They are heartless people. I feel terrible for the thousands of people who just lost their jobs.— YourMCAdmin (@YourMCAdmin) January 11, 2018
The social media team for Sam’s Club has been responding to concerned and angry customers on Twitter with tweets such as the following:
Walmart this morning: We're giving everyone pay raises and bonuses!— Bob Bryan (@RobertBryan4) January 11, 2018
Walmart this afternoon: We're also closing a slew of Sam's Club stores and laying off thousands https://t.co/SmcBI9Xm9b
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. Closing clubs is never easy and we’re committed to working with impacted members and associates through this transition.— Sam's Club (@SamsClub) January 11, 2018
Pharmacies will stay open for at least two weeks, and we will work with each state’s Board of Pharmacy to help guide this transition. You will also be contacted about your prescriptions and transitioning them to another club.— Sam's Club (@SamsClub) January 11, 2018
We can help with that. Please private message us and we can share all you need to know.— Sam's Club (@SamsClub) January 11, 2018
How would you advise Walmart and Sam’s Club to handle this crisis moving forward, PR Daily readers?