Closing Sam’s Club can be a not bad move for Walmart, says ex-US CEO

The closure of some Sam’s Club locations can be a not bad move for Walmart, the retail giant’s former U.S. chief Bill Simon told CNBC on Thursday.

Walmart, which owns Sam’s Club, announced on Thursday the idea can be shutting down or converting 10 percent, or 63 of the membership-only retail warehouse stores around the country.

“the idea’s allowing them to focus on things which are working,” Simon said on “Closing Bell.”

The things which are working for Walmart, according to Simon, are the Walmart branded brick-as well as also also-mortar stores as well as also also its online shopping destination.

“This specific can be endemic of the transition which retail can be in,” said Simon, who served as president as well as also also CEO of Walmart U.S. coming from 2010 to 2014.

“Retailers who figure out a sweet spot, or something they need to be famous for, have been very, very effective,” he added. “however those who have just been OK at executing their plan haven’t done very well.”

Walmart has made its mark as a leader in low cost as well as also also wide variety.

Despite the closure of many brick-as well as also also-mortar stores across the country, Walmart shares have gained about 60 percent inside the past two years.

Meanwhile, stores like Sam’s Club, which lacks a clear specialty as well as also also faces stiff competition with Costco, have not done well.

The announcement came on the same day Walmart announced its minimum wage for hourly employees might rise to $11 an hour coming from $9, as well as also also employees might receive a one-time bonus of up to $1,000, depending on length of tenure. Some critics argued the move was a publicity stunt to deflect attention coming from the closure of Sam’s Club.

A spokesperson coming from Walmart told CNBC which Walmart as well as also also Sam’s Clubs, while they fall under the same parent company, are in two different parts of the business.

Walmart, which has two million employees globally, got one of the biggest breaks under the completely new GOP tax plan which cut the corporate rate coming from 35 percent to 21 percent.

The raise in wages will cost Walmart between $300 million as well as also also $400 million a year as well as also also another $400 million in one-time bonuses. The company credited the raise in wages to the tax break.

Simon called the wage increase as well as also also bonuses “just the tip of the iceberg” when the idea comes to the money Walmart will see coming from tax reform.

“They have a lot of powder as well as also also a lot of money to invest,” he said.

Meanwhile, Natixis Americas chief economist, Joseph Lavorgna, appearing with Simon, called Walmart’s pay raises as well as also also bonuses not bad news for the company’s workers. however he argued the recent announcements about companies giving back to employees have been isolated cases.

“To get faster wage growth, the economy needs faster productivity growth,” he said. “If This specific tax package can be to work, the idea will work because the idea galvanizes companies to spend on capital to get capital deepening, give workers the tools to actually get paid more because they’re more productive.”

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