The mass-channel merchant plans to lay off roughly 200 people among its corporate workforce, according to sources familiar with the situation.
“We’re updating our structure and evolving select roles to provide clarity and better position the company for a strong future,” Jimmy Carter, a Walmart spokesperson, confirmed with WWD. “At the same time, we’re further investing in key areas like e-commerce, technology, health and wellness, supply chain and advertising sales and creating new roles to support our growing number of services for our customers, suppliers and the business community.”
Carter declined to say how many new job openings Walmart has to offer, or the types of corporate jobs that were eliminated. (Sources said the layoffs are spread across Walmart’s merchandising, global technology and real estate departments.) The company also declined to say whether the layoffs were made for financial reasons, or as an effect of inflationary pressures. Carter stressed instead that Walmart’s workforce continues to evolve to accommodate the changing customers’ needs.
Still, the layoffs come just one week after Walmart issued a profit warning — informing investors that earnings per share could be down as much as 13 percent for the year — thanks to consumers’ shifting shopping habits as many juggle inflationary pressures.
“Food inflation is double digits and higher than at the end of the first quarter,” Walmart said in July. “This is affecting customers’ ability to spend on general merchandise categories and requiring more markdowns to move through the inventory, particularly apparel.”
Walmart is just one of many firms throughout the economy that is grappling with rising supply chain and fuel expenses as employees continue to ask for higher wages. But the pull-back in fashion items also made a sizable dent in Walmart’s balance sheet, since apparel and accessories tend to have better margins than food and beverage categories. Excess inventory left over from previous quarters and the faster-than-expected shift in shopping habits earlier this year has also cut into profits.
Adding to the confusion, Walmart revealed plans in June to raise the hourly rate of Walmart and Sam’s Club pharmacy technicians, bringing the average hourly wage to more than $20 an hour.
“We are sending a strong signal to pharmacy technicians everywhere that Walmart is serious about attracting top talent and giving them the tools to build a successful career,” Kevin Host, senior vice president of Walmart Health & Wellness, Pharmacy, and Sean Jackson, senior vice president of Sam’s Club, Health & Wellness, Consumable, wrote in a joint blog post at the time.
But the added wages came after the company’s quarterly earnings call in May, in which Walmart president and chief executive officer Doug McMillon said the company actually hired too many people — at least in stores — during the Omicron surge last December.
Unlike other retailers, however, the headwinds faced by Walmart could trickle down throughout the retail industry, as well as the greater the economy. And as the nation’s largest retailer, its pessimistic outlook could signal the start to a bear market.
Some critics wave off recession fears, pointing to the low 3.6 percent unemployment rate — with many firms struggling to fill front-line and other low-paying jobs — as proof of a still booming economy.
Still, early signs point to a changing tide for some office workers, depending on the industry. In June, unemployment claims started to tick upward. Some companies, especially those in technology fields, have responded by imposing hiring freezes.
And while many who are employed have reported higher wages since the onset of the pandemic, they too are dealing with rising prices on commodities. Inflation rates continue to rise with seemingly no end in sight (topping more than 9 percent in June) even as the Fed continues to raise interest rates.
The effects have rippled out across Wall Street. The Dow Jones Industrial Average has lost 6.7 percent of its value in the last year, while the S&P 500 is down 5.6 percent, year-over-year. In the case of Walmart, company shares closed down 3.78 percent to $125.57 apiece Thursday. Year-over-year, the retailer’s stock is down 13.6 percent.