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Walmart Announces Sam’s Club Closures, Enhanced Benefits Packages

On the same day Walmart announced that it was using the boon from tax reform to provide a better benefits package for its hourly workers, the company announced it would close 63 Sam’s Club locations.

On Thursday, Walmart announced plans to shutter 63 of its 660 Sam’s Club stores. In a sign of the times—and the company’s current focus on growing its digital business—12 of the affected stores will be converted to e-commerce fulfillment centers.

“Transforming our business means managing our real estate portfolio and Walmart needs a strong fleet of Sam’s Clubs that are fit for the future,” said John Furner, president and CEO of Sam’s Club. “We know this is difficult news for our associates and we are working to place as many of them as possible at nearby locations. Our focus today has been on those associates and their communities, and communicating with them.”

The company will incur a 14-cent charge per share related to these developments, most of which will occur in the fourth quarter.

[Read about the predictions for 2018 store closuresCushman & Wakefield’s Retail Predictions for 2018 Are Not What You Want to Hear]

Earlier in the day, the big-box retailer announced it would boost its starting hourly wage, expand maternity and parental leave to 10 weeks and provide a one-time cash bonus of up to $1,000 to eligible hourly employees thanks to the recent tax reform legislation. The new minimum wage will be $11 an hour, up from the $10 rate, which was set in early 2016. The benefits package also includes $5,000 toward adoption costs.

The new compensation, which will affect more than 1 million workers, will take effect next month. The boosted wages will cost the company an additional $300 million in next fiscal year, and the bonuses will cost the company $400 million in the current fiscal year, ending Jan. 31.

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The company said it hasn’t fully determined the full scope of the benefits related to tax reform but where possible it will use it to ensure low prices, provide better wages and training for employees and invest in the business, especially in the area of technology. “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S,” said Doug McMillon, Walmart president and CEO.

In a note to employees, McMillion also stated, “As we look to the future and how we’ll win with customers, we’ll be assessing what additional investments are needed, and we’ll make those decisions with you, our customers, and our shareholders in mind.”

In response to a story about the minimum wage boost on Fox Business, President Trump tweeted, “Great news, as a result of our TAX CUTS & JOBS ACT!”

While retailers are benefiting from low unemployment in the form of improved consumer confidence, they’re also dealing with a more competitive job market.

In October, Target raised its minimum hourly wage to $11, a move that affected more than 100,000 workers, and announced its intention to boost it to $15 by the end of 2020.

Tying the two developments from Walmart together, Michael Mandel, chief economic strategist at the Progressive Policy Institute, told ABC News. “This is about the evolution of retail. The rise of e-commerce is leading to higher wages.”