Sam's Club closing dozens of stores; some being converted to distribution centers

Charisse Jones | USA TODAY

Show Caption Hide Caption Sam's Club closing stores across the U.S. 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.

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.

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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.

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.

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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