Wal-Mart Tells Employees It Will Cut 11,200 Jobs

Wal-Mart Stores, the nation’s largest retailer, is cutting about 11,200 jobs at its Sam’s Club warehouses, the company told its employees in a memo on Sunday.

The chain is eliminating about 1,200 membership recruiting jobs, or two jobs in each of the more than 600 Sam’s Club stores. Wal-Mart is also laying off 10,000 workers who demonstrate products in its Sam’s Club stores. Those demonstrations, like food sampling, will be outsourced to Shopper Events, a marketing company based in Arkansas that already handles some demonstrations at Wal-Mart stores.

David Tovar, a spokesman for Wal-Mart, said the layoffs were not a cost-cutting measure in response to a bad economy. He said that the 10,000 Sam’s Club employees who demonstrate products could apply for jobs with Shopper Events, which plans to hire roughly the same number of workers being laid off.

Still, Sam’s Club has faced stiff competition from Costco and other warehouse club stores, which have thrived as frugal consumers seek out the best deals on necessities like food and other everyday essentials. Separately this month, Wal-Mart said it would close 10 underperforming Sam’s Club stores and lay off around 1,500 workers.

“Our demos can be a competitive advantage, and we want to take this member experience to the next level,” Brian Cornell, president and chief executive of Sam’s Club, said in the memo.

Retailing analysts say that the quality of Sam’s Club store demonstrations has been inconsistent across stores, sometimes even amateurish.

Mr. Tovar said Shopper Events had expertise and experience in that area. A new demonstration plan in development for Sam’s Club stores will focus on several categories, including food and beverages, personal wellness and electronics.

Wal-Mart is a $400 billion company, and Sam’s Club accounts for only about 12 percent of the company’s overall sales, according to research published by Bill Dreher, senior research analyst with Deutsche Bank Securities. It is the behemoth retailer’s least profitable business, Mr. Dreher has reported. Wal-Mart’s international division, for instance, is twice the size of Sam’s Club and is considered a major growth vehicle.

Some retailing analysts said that the more significant news in the memo was the elimination of the 1,200 membership recruiter positions. They said the reduction might signal a change in Sam’s Club’s strategy: a shift away from small businesses and toward individual households that can afford the price of membership, like those that shop at Costco. Analysts have described Costco as one of the few companies capable of competing with Wal-Mart.

In the memo on Sunday, Mr. Cornell said Sam’s Club could more effectively drive membership through store events with its suppliers.