The world's largest retailer announced Thursday evening that it will close 63 Sam's Club stores and convert up to 12 of them to eCommerce fulfillment centers for the brand. After the actions, Sam's Club will have 597 clubs in operation.
Walmart said it will provide support to those employees affected, including a bonus announced earlier today and 60 days of pay. A charge of about 14 cents a share will be booked, mostly in the fourth quarter.
"We have taken a really hard look at the real estate portfolio and decided to exit clubs that cannot, or will not, be successful under our new strategy and in some cases -- historically have not been," Sam's Club CEO John Furner told TheStreet in an interview. "Some of the places we are exiting today have geographies with low population or geographies with more clubs than the market will support."
Furner, a long-time Walmart executive who took over as CEO of Sam's Club in February 2017, declined to share the sales and profits of the closed stores. Sam's Club has no plans to open new stores this year and will focus on its remodeling program, Furner said.
The closings make up about 10% of its total number of U.S. stores, which may surprise some investors considering the warehouse discounter's consistent growth. Same-store sales rose a solid 2.8% in the third quarter, faster than the year ago pace of 1.4%.
"We believe the closures and new [fulfillment] centers support Walmart's long-term growth strategy of increasing online selection and speed of delivery," said CFRA analyst Joseph Agnese.
Walmart didn't have a total rough end to the week, however.
In addition to raising wages to $11 per hour and doling out a one-time $1,000 bonus for long-time employees, Walmart announced Thursday that it's expanding parental and maternity leave coverage, offering 10 weeks of paid maternity leave for full-time hourly associates and six weeks of paid parental leave.
Under its previous policy, full-time hourly associates were granted six to eight weeks of half-paid maternity leave and no parental leave, according to a Walmart representative.
The new benefits are extended to employees that have worked at Walmart for a year or more.
-Cathaleen Chen contributed to this story.
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