THE FRIDAY 5: Costco Increases Pay for Employees; King Soopers Workers on Strike

1. Costco Gives Hourly Employees a Pay Bump

Readers were interested this week in news that Costco Wholesale is increasing pay for its hourly employees. The company will raise the hourly wage for workers at the top of its pay scale over the next three years, CEO Ron Vachris wrote in a memo to staff, with these workers seeing their hourly rate rise by $1 per hour to $30.20, with additional $1 increases coming in each of the next two years.

Workers at the bottom of the scale will get raises of 50 cents to $20, according to the memo. The pay changes apply to employees at non-union locations.

The wage hike came amid contract talks with unionized employees. While Costco Teamsters nationwide voted to authorize a strike on Feb. 1, that strike was averted after a last-minute deal was made with the Teamsters union. Costco Teamsters reportedly represents less than 10% of the company’s roughly 219,000 U.S. employees.

2. Smucker Sells Several Brands

News came in this week that The J.M. Smucker Co. agreed to divest its Cloverhill and Big Texas value brands, along with certain private label products, in an effort to optimize its sweet baked snacks portfolio, including the Hostess brand. The deal with JTM Foods, LLC, worth approximately $40 million, includes relevant trademarks and licenses, as well as Smucker’s Chicago manufacturing facility.

"This divestiture reflects our continued commitment to portfolio optimization to prioritize resources to support the execution of our Sweet Baked Snacks strategy, focused on growing the Hostess brand, and advancing our leadership in the sweet baked goods category," said Dan O'Leary, SVP and general manager, sweet baked snacks and pet at Smucker. "This decision continues the ongoing work to ensure our manufacturing network is optimized to mitigate costs and reduce complexity."

3. Did Grocery Outlet Violate the Securities Exchange Act?

Grocery Outlet Holding Corp. is the focus of a proposed class-action lawsuit alleging that the company possibly violated the Securities Exchange Act of 1934. Several law firms are asking investors if they want to join the complaint, filed under Liberato v. Grocery Outlet Holding Corp. in the northern district of California.

At the crux of the complaint is losses sustained by investors from November 2023 to May 2024. The federal securities case maintains that Grocery Outlet and its then-leaders shared what the plaintiff deems to be misleading statements and potentially concealed information related to the retailer’s transition to new and upgraded tech platforms. 

In May 2024, Grocery Outlet reported worse-than-expected results and a lowered full-year outlook, which it attributed to tech challenges, among other factors. According to a release from the Faruqi & Faruqi law firm, the lead court-appointed plaintiff in the complaint is a Grocery Outlet investor. 

4. King Soopers Workers Strike

This week, all unionized King Soopers store workers across Colorado’s Adams, Arapahoe, Broomfield, Denver, Douglas and Jefferson counties, as well as at the Kroger banner’s locations in the cities of Boulder and Louisville, Colo., went on a two-week strike protesting what their union alleges are unfair labor practices. 

Last week, those workers voted by 96% to authorize the strikes, following months of contract negotiations and the expiration of their labor contract in January. 

According to UFCW Local 7, unfair labor practice strikes are permitted under federal law when workers have tried to resolve a conflict or dispute with their employer and have formalized that complaint in a ULP charge against the employer with the National Labor Relations Board.

In a statement, King Soopers President Joe Kelley said: “We want to be clear — the Union’s call for a strike is not about wages, health care, or pensions. It is based on allegations we believe lack merit.”

5. Walmart Closing N.C. Office 

In a move meant to streamline its corporate operations and move more of its corporate staff to its main offices in California and Arkansas, Walmart shared this week with employees that it is eliminating some positions and also closing its office in North Carolina. According to a company memo viewed by Reuters, Walmart is also asking employees in Hoboken, N.J., and some of its other offices to relocate.

"We are making these changes to put key capabilities together, encouraging speed and shared understanding," said the memo from Walmart’s Chief People Officer Donna Morris. "Through this review process, we have eliminated some roles as we streamline how we work and will also be exiting our office in Charlotte, North Carolina." 

The move comes just after the retailer held a grand-opening celebration for its new 350-acre Home Office campus in Bentonville, Ark.