Retail

BJ's Wholesale's Bold Move to Hire Sam's Club Workers

Douglas A. McIntyre

Published: January 12, 2018 6:25 am

Last Updated: January 12, 2020 4:33 am

BJ’s Wholesale has announced that it is willing to take job applications from workers laid off by Wal-Mart Stores Inc. (NYSE: WMT), which cut workers due to the shuttering of 63 Sam’s Club locations. The news was first reported by CNNMoney. It is a bold move by a rapidly growing retailer and a slap at one that is struggling, at least at its warehouse business.

The BJ’s invitation read:

[We’ve] had numerous inquiries from Sam’s Club employees. BJ’s Wholesale Club is hiring, and anyone interested in joining our team can go to bjs.com/careers or visit their local club.

The decision by Walmart appears odd at first. Sam’s Club has been a good performer for the world’s largest retailer. However, like all retailers with a large number of stores, some underperform based on a broad range of things, which could include new competition that opens close by, population attrition near some locations and efforts to serve more customers online.

Overall, Sam’s Club outperformed Walmart’s other two units in the most recently reported quarter. Its sales rose 4.4% to $14.86 billion. Its operating income rose a healthy 12.9% to $447 million. Walmart’s international operation posted a 4.1% increase in revenue to $29.55 billion. Operating income dropped 12.2% to $1.19 billion. Domestic revenue rose 4.3% to $77.72 billion. Operating income for Walmart’s largest unit rose 8.0% to $4 billion.

Even with the strong performance at Sam’s Club, Walmart is clearly driving relentlessly for improved margins.

BJ’s Wholesale is much, much smaller than Walmart and Sam’s Club. Its sales in 2016 were $12.5 billion, according to the National Retail Federation’s list of the 100 largest retailers. It is a “club-based” operation, similar to Sam’s Club and Costco. Therefore, it derives some of its revenue from club membership payments. The base cost of a BJ’s membership is $55 a year. In exchange for that, BJ’s management says, members get large discounts on groceries, lower prices for gas and savings on its in-house brands, Wellsley Farms and Berkley Jensen.

The announcement about BJ’s job offers to laid-off Sam’s Club workers is not a PR stunt. BJ’s focus on a club-based business is clearly working. For Walmart, it’s a challenge.