A Chicago Walmart on Black Friday. (Reuters/John Gress)
In 1996, Sylvester Johnson left his post as a commanding officer in the US Army and began a career managing logistics at Walmart’s corporate headquarters in Bentonville, Arkansas. Once there, he received a series of rapid promotions, eventually overseeing the HR management of over 26,000 employees in five states. He became friendly with Walmart executive Mike Duke, who became CEO in 2009. In 2002, Johnson received the Sam M. Walton Hero Award, a prestigious company distinction. In 2003, he moved to North Carolina where he oversaw eleven Walmart Supercenters. The company fired him in 2009 for allegedly giving orders to manipulate inventory counts, a claim Johnson denies.
Instead, Johnson believes he was ultimately terminated because he is black. He also alleges—in an interview with The Nation and in a federal discrimination lawsuit—that the company engaged in widespread inventory manipulation.
“We're talking about hiding tens or hundreds of millions of dollars in losses here—inflating the profits of a store, a district, a region, a division and ultimately the entire company,” Johnson told The Nation. In theory, such a practice could have artificially inflated the company’s profit margins and stock price, amounting to a form of federal securities fraud.
Johnson claims that during his tenure as a Walmart district manager he was pressured by the company’s high command to hide losses due to “shrinkage”—defined as lost or stolen inventory—in order for stores to appear more profitable than they really were. Throughout the course of over six hours of interviews with The Nation, Johnson maintained that top management set shrinkage targets for Walmart Supercenter stores under his supervision that were “not ethically attainable” and then used methods of “fear and intimidation” against him in an attempt to compel him to meet those targets. Shrinkage represents a loss to any firm’s bottom line. It is a major factor in retail profitability, costing US retailers an estimated $34 billion in losses annually, according to the National Retail Federation.
Johnson’s case, which goes to trial on April 22 in a North Carolina federal district court, seeks to prove that he was treated differently than his white counterparts. He argues that while white district managers were manipulating inventory counts to make their stores appear more profitable, he refused to engage in such a practice and was fired on false charges of doing so.
In recent years Walmart has faced a series of high-profile discrimination suits, including the largest class action discrimination case in American history, Wal-Mart v. Dukes, which was thrown out by the Supreme Court in 2011. In 2009, the company paid $17.5 million to settle a suit alleging the company had discriminated against African-American job applicants.