Walmart breaks deal to build stores in working-class D.C. district

[steve2470]

http://money.cnn.com/2016/01/21/news/companies/walmart-stores-washington-dc/

I found this part to be the most interesting:

Walmart's decision to abandon the projects is problematic because, according to a spokesperson for Alexander, Walmart was only permitted to open stores in D.C. under a 2012 agreement that it would also open stores in Ward 7's lower-income community.

Three new Walmart stores have opened in D.C. in higher-income areas with greater gentrification, but the company backed out of the deal to build the other two stores last Friday.

A Walmart spokesperson said the stores in D.C. were built in the order that the construction sites were ready.

The spokesperson also said the decision to abandon the two stores in Ward 7 was part of Walmart's plan to close 269 stores around the world. In the U.S., 154 stores are closing.

I'm not a lawyer and not privy to the exact details, but it looks like they are in breach of the agreement or contract.

eta: A quote by Councilwoman Yvette Alexander states it was a contract.

[branford]

1. Councilwoman Alexander also admits not knowing the precise details of the contract.

Walmart could have a number of quite reasonable mechanisms to abandon the project in compliance with the contract, and certain portions of the contract may not even be legally enforceable.

It also appears that the other stores in the region are not profitable. It's entirely possible all the stores will close, and thus technically comply with the councilwoman's understanding of the contract, although it would certainly not be either her or many other representatives preferred outcome.

I am also always perplexed by Walmart stories. The company seems to be widely abhorred by many here for a vast variety of reasons, yet lower income areas (and much of everywhere else), primarily minority and Democrat, desperately want them for both their direct services and to anchor other businesses. Walmart engenders significant political schizophrenia in our Party.

[steve2470]

2. it would be interesting to know if they had an "escape clause"...

meaning, if business conditions were bad enough, they could break the contract. I wouldn't doubt that was written into the contract somehow. It's too bad those communities won't have another shopping opportunity. You make good points about the attitudes within our party. Yes, I know Wal-Mart has a bad track record in labor relations and in having a role in destroying small businesses, but that's another thread topic.

eta: In skimming the article, I missed an entire paragraph. From what Walmart says, they did have that exact escape clause.

[KentuckyWoman]

3. The penalties of breaking must be cheaper than the cost to actually build and open the store.

Every store not reaching the net profit targets is getting closed. Some employees will be offered jobs in nearby stores and to new stores already under construction that they do plan to open. Walmart is calling them "new hires" in the media.

Walmart is also touting the raise in hourly wage but leaving out the fact the total percentage of gross sales allowable per store on labor & benefits is going down by 1.6% of gross sales.