Wal-Mart - the epitome of the fair employer who is currently being sued by the Feds for unfair labor laws and employment practices, is now cutting 2300 jobs from its membership only company, Sam's Club.
Today, Wal-Mart employs 2.2 million people worldwide and serves 200 million customers each week at more than 10,000 stores in 27 countries.
The layoff is approximately 2 percent of the club's U.S. employee count, which now totals 116,000. It's the second largest layoff by Sam's since 2010 when 10,000 workers were let go because Sam's decided to outsource its food sample carts that are demonstrated at their U.S. stores.
Sam's Club is striving to compete with Costco Wholesale Corp. and online companies like Amazon.com's Prime.
Or could they just be following other layoffs by major retailers in January, such as Macy's, J.C. Penney and Target?
Bill Durling, a spokesman at Sam's Club, explained that just under half of the cuts were directed at salaried assistant managers, and some hourly workers.
"We felt this was the right move to make sure we are positioning ourselves for growing in the future," said Durling in an interview with the Associated Press. "We are trying to rebalance our resources in the field to make sure we are investing in the clubs that have the higher growth potential and balancing resources across the chain."
There are a total of 630 Sam's Club stores in the U.S. and Puerto Rico, and in the coming fiscal year, which begins on February 1st, 15 more clubs are going to be added.
So why the layoffs? Sources say that although Wal-Mart has not yet released its Sam's Club holiday sales figures, its recent financial performance has been underwhelming. And although Wal-Mart beat sales expectations in the third quarter, the company trimmed its earnings forecast due to economic difficulties among its core customers which were affecting the retailer’s bottom line.
When you eliminate fuel sales at Sam's Club, the stores that were open for a year or more only produced 1.1 percent more profit in the third quarter, which is what ultimately caused the layoffs.
The membership only company generates 12 percent of Wal-Mart’s net sales, or about $56.4 billion annually.
On the brighter side, Durling said that those workers who received notices will continue to get paid for the next 60 days giving them ample time to re-apply for opportunities at Wal-Mart or other areas of Sam's Club's operations. After that time expires, they will receive severance.
"We're trying to treat our associates with utmost care and respect," he added.