Walmart's timing in raising wages and closing stores is 'ridiculous,' 'there's no strategy here,' says brand analyst

Key Points
  • Walmart's announcements, within hours of each other, that it would be raising wages and closing dozens of Sam's Club locations was "ridiculous," said brand analyst Dean Crutchfield.
  • "The wonderful thing it's done by increasing permanent wages for a million employees is now being defined by, sadly, 11,000 people being let go," said Crutchfield.
  • "There's no strategy here," he said.
Brand expert on Walmart bonuses and Sam's Club closures: It's an absolute sham

What was Walmart thinking?

The big-box retailer announced Thursday it was hiking pay and handing out one-time bonuses, which was applauded by many, including Treasury Secretary Steven Mnuchin.

A few hours later, Walmart abruptly announced it was closing 63 of its Sam's Club stores.

"The timing is ridiculous," branding analyst Dean Crutchfield of Dean Crutchfield Associates said in an interview with CNBC's "Power Lunch" on Friday.

"I can only look at this one and think you were trying to skip this one under the carpet," said Crutchfield. "There's no strategy here. There's nothing really professional here apart from them trying to cover up."

Walmart said it would raise the minimum hourly wage from $9 to $11, a move that would cost up to $400 million a year. The company also said it would hand out one-time bonuses of up to $1,000, depending on the length of each employees' individual service. That will cost it another $400 million.

A Sam's Club store in Peoria, Illinois.
Daniel Acker | Bloomberg | Getty Images

Walmart representatives credited the new Republican tax plan for the added funds.

"The wonderful thing it's done by increasing permanent wages for a million employees is now being defined by, sadly, 11,000 people being let go," Crutchfield said.

"Walmart should have been doing a big pre-dance with bright lights and trumpets, and now it's staring at floodlights," he said. "It's done something bad."

Walmart told CNBC on Friday its priority was its people, not the publicity it was creating.

"When it came down to managing the issues around Sam's Club, our focus was on the associates impact, the clubs and the community, not the media," Walmart spokesperson Greg Hitt said.

The company will be working to help employees at the closing Sam's Clubs transfer to other locations or Walmart stores, Hitt said. All employees at closing stores receive 60 days pay and a severance, he added.

Crutchfield said for Walmart to regain consumer trust, it will need to concentrate on the good news the company is generating and the reason it raised wages in the first place.

"You've got to drown out that bad news," he said. "Go on about it, go on about it. Give reasons why you did it. Show examples of all these millions of people who are delighted to have more money in their pocket."

Walmart is one of the largest retailers in the world, with more than 260 million customers visiting stores each week.

"There's obviously a lot of people out there who still want to shop with them and buy from them," Crutchfield said. "A lot of consumers get over bad news quite quickly. It depends on what you put in front of them. In a couple of weeks, no one's going to really be thinking about this."

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