Sam's Club, the $86 billion division of Walmart Inc (NYSE: WMT), introduced a fresh workforce compensation plan, which boosted pay for close to 100,000 frontline associates and provided guidance for longer-term financial futures.
More engaged workers proved productive, offered better service, and were more likely to stay, especially as competition heated up in the retail space.
Sam's Club's new plan proposes increasing associate hourly wages by 3%-6% based on years of service. The plan sets predictable pay increase milestones.
With these new compensation investments, the average hourly rate for Sam's Club associates will likely exceed $19, with the potential to earn thousands of dollars annually in bonuses. In the last five years alone, Sam's Club raised the average hourly wage by close to 30%.
In July, Walmart Canada raised the hourly wage for close to 40,000 of its store associates amid easing inflation and rising unemployment in Canada. In June, the company announced bonuses for U.S. hourly store workers benefiting 700,000 front-line staff.
Amazon.Com Inc (NASDAQ: AMZN) is aggressively chasing Walmart's U.S. grocery market share by expanding Prime benefits, including discounts on over 3,000 grocery items. Walmart led the U.S. grocery market with a 23.6% market share in 2023, as per Statista.
Walmart reported second-quarter sales growth of 4.8% to $169.34 billion, beating the analyst consensus of $168.57 billion. At Sam's Club, same-store sales rose 5.2% year over year, excluding fuel.
Walmart stock is up 46% in the last 12 months. Investors can gain exposure to the stock through iShares Russell 1000 Value ETF (NYSE: IWD) and Vanguard Consumer Staples ETF (NYSE: VDC).
Price Action: WMT stock is down 2.53% at $78.52 at last check Tuesday.