Warehouse clubs like Costco and BJ's are weathering the recession quite well, except for Wal-Mart's Sam's Club. The retail giant is closing 10 stores as it seeks to lower costs and rework merchandising and operations in the division.
Ten stores out of 600 may not seem like much, but that's 1,500 jobs lost and a very unusual move for a company like Wal-Mart to shutter stores without replacing them due to profitability issues.
Usually when a store close, it's due to a shift in trading areas as populations change. The company then closes the older units and opens new locations in updated formats.
In fact, notes Mike Troy, editor of Retailing Today and Connecting Northwest Arkansas, this is the first time in Sam's Club's 25-year history that it will end a fiscal year with fewer stores than when it started. Sam's Club opened just six locations in 2010, and next year we can expect more Sam's Club closings, says Troy in the Wal-Mart News Now newsletter e-mailed to subscribers.
"Plans call for between five to 10 new units and 60 to 80 remodels. Don't be surprised if the company comes in at the low end of the range for new units and the high end on remodels," he writes.
That's right, in an effort to control costs and focus on merchandising initiatives, Sam's Club will likely opened the fewest number of stores in this stated range.
The Sam's Clubs due to close next week are in Nampa, Idaho; Louisville, Colo.; Rolling Meadows, Ill.; Clay, N.Y.; Houston, Phoenix and La Quinta, Vista, Irvine and Sacramento, Calif.
Sam's Club closing stores, laying off 1,500