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Sam's Club store to close in Natomas
[January 24, 2010]

Sam's Club store to close in Natomas


Jan 24, 2010 (The Sacramento Bee - McClatchy-Tribune Information Services via COMTEX) -- The Sam's Club in Natomas will close this month along with nine others nationwide in a housecleaning move to eliminate underperforming stores, the parent company announced on Monday.



The Natomas store, which opened in 2007 in the midst of one of the region's most commercially saturated communities, will close Jan. 22 and the pharmacy will close Jan. 25, according to Sam's Club representatives.

Sam's Club, a division of Wal-Mart Stores Inc., is a membership warehouse club with five other locations in the region.


The 144 full- and part-time employees at the Natomas location were told about the closing on Sunday and are among 1,500 nationwide who will lose their jobs.

In a written statement, regional general manager and vice president of Sam's Club Paul Stone said: "Over the years, we have worked to improve this club's financial performance. Despite our efforts, the club continued to lose money, and we have decided to close it." The company, which owns the 136,000-square-foot building and leases the land it's on, has no immediate plans for the property, according Kory Lundberg, a company spokesman.

Sam's Club was an anchor in the 663,000-square-foot lifestyle center, The Promenade at Natomas, that opened several years ago near the intersection of Interstate 80 and Truxel Road. Another anchor, Linens 'N Things closed in 2008, leaving Target, Barnes & Noble, Old Navy and other retailers.

The shopping center was the last major one to open in Natomas and might have come too late to the table, said Garrick Brown, research director at the Sacramento office of Colliers International real estate.

"It was banking on a lot of housing that didn't happen," he said.

After the center gathered a healthy collection of retail banner names, the housing market collapsed, hitting particularly hard in the sprawling, new suburb.

The nail in the coffin came in 2008 when the Federal Emergency Management Administration declared once-booming Natomas a hazardous floodplain. As a result, building stopped and won't restart until levees are fortified enough to reach the 100-year flood-protection level, which means they can withstand a flood that has a one in 100 chance of occurring in any given year. The moratorium could last until 2011.

When it comes to retail, "you really have an overbuilt market in Natomas," Brown said, given the expectations were based on another estimated 4,000 homes there.

The Promenade is across the street from another large center with a Walmart, Michael's and other shops and movie theaters. Kohl's department store anchors another large Natomas shopping center.

Because much of Natomas housing sold during a time when subprime loans were handed out, residents there could have taken a disproportionately bigger hit by the mortgage crises, Brown said, and could be struggling to cover mortgage payments that have adjusted to higher rates.

Wal-Mart's Sam's Club division is doing well overall, said Joel Bloomer, an analyst with Morningstar, an investment research firm based in Chicago. Most Sam's Clubs that close reopen in larger, newer locations, Bloomer said.

Certainly, the 10 stores closing this month doesn't signal a change in the company's commitment to grow the brand, he said.

"They haven't grown in the last couple years, but they're dedicated to the concept," he said.

Though Sam's is a discounter, a category that has weathered the recession better than others, it still needs a base population and traffic to succeed, Bloomer said.

Though the per-unit price of Sam's products might be lower or competitive with grocery stores or even its retail brother Walmart, shoppers must pay a higher upfront cost at discount warehouses, he said.

There are few individual servings for sale at warehouse discounters, which rely on families who can afford bulk purchasing, Bloomer said.

Another customer base is small businesses that buy in bulk, he said. A lack of small- business growth would cut into Sam's Club customer base, he said.

"If that didn't pan out for the community, the small retail that pops around a new population, then you don't have that customer base for a Sam's Club," he said.

Though memberships at Sam's Club can be used at any location, the company will give refunds to members who want them. Representatives will be at the store to answer questions or provide refunds.

------ Bee staff writer Mark Glover contributed to this report. Call The Bee's M.S. Enkoji, (916) 321-1106.

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