Updated from 5:50 p.m. to include comments from Sam's Club.
The Sam's Club layoffs, the biggest since 2010, are an effort to reduce salaried assistant managers and hourly employees at underperforming stores, the Wall Street Journal first reported on Friday.
Sam's Club has the same amount of associates and management in all of its stores, whether it had $50 million or $100 million in revenue.
Sam's Club CEO Roslaind Brewer told the Journal the job cuts will "align the number of assistant managers to the sales of the club and to where our growth areas are."
Brewer is looking to double revenue, and turn Sam's Club into a $100 billion business in order to better compete with Costco Wholesale (COST). For the 2013 fiscal year, the members-only warehouse club had 630 stores, employing 116,000 workers, with revenue of $56 billion.
"This is not the type of situation where we are showing people the door and handing people a check," Bill Durling, head of corporate communications for Sam's Club, told TheStreet. "Everyone who is impacted today gets paid for 60 days and [we are] encouraging our associates to look for other opportunities at other Sam's Club or Wal-Mart," noting that the company is hiring at its higher-growth potential clubs. Durling wouldn't comment on which stores were higher growth.
Durling added that if employees could not find a position with the company, then severance would kick in after the 60 days. "We're trying to do everything we can [to provide] opportunities to look for other roles inside the company," he says.
Shares of Wal-Mart fell 0.72% to $74.42 on Friday. The stock was down 0.04% in post-markets trading to $74.39.
--Written by Laurie Kulikowski in New York.