Walmart has announced plans to increase the company's compensation for its instore associates as it reaps financial rewards from recent changes in tax law. The major retailer will increase starting wage rates for all hourly associates in the U.S. to $11, expand maternity and parental leave benefits, and provide a one-time cash bonus for eligible associates of up to $1,000.
Additionally, the retailer announced plans to restructure Sam’s Club as part of a continuing effort to shift focus onto e-commerce—shuttering 63 stores and converting up to 12 locations to e-commerce facilities.
“Today, we are building on investments we’ve been making in associates, in their wages and skills development,” said Doug McMillon, President and CEO, in a press release on the company's recent wage hikes and additional benefits. “It’s our people who make the difference, and we appreciate how they work hard to make every day easier for busy families.”
Wage hikes will take effect in February, and are expected to add approximately $300 million incremental to what was already included in next fiscal year’s plan. One-time bonus, the company noted, will represent an additional payment to associates of approximately $400 million in the company’s current fiscal year.
“We are early in the stages of assessing the opportunities tax reform creates for us to invest in our customers and associates and to further strengthen our business, all of which should benefit our shareholders,” added McMillon “However, some guiding themes are clear and consistent with how we’ve been investing—lower prices for customers, better wages and training for associates and investments in the future of our company, including in technology. Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.”
The company noted that new tax laws will create financial benefit for the company and will allow the company to offer incentives to its employees. Walmart also noted that the company is still in the early stages in the process of assessing potential additional investments—which will benefit both its associates, customers, and shareholders and strengthen the company’s position.
In a separate press release, Walmart announced significant changes to take effect in the next few months—the company plans to close 63 facilities and convert up to 12 of the impacted clubs to e-commerce fulfillment centers in a move that will speed delivery of online orders.
“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.”
Will reinvested savings from changes in tax policy and restructuring efforts pay big dividends for the major retailer? Deli Market News will continue to report.