Wal-Mart Stores, Inc.(NYSE:WMT) will cut hundreds of jobs this month as it looks to trim its wage bill as part of an effort that seeks to shore up earnings. Most of the cuts will affect its headquarters as well as regional offices rather than stores. In September last year the giant retailer announced plans to slash about 7,000 back-office jobs given that most of the functions can be filled by consultants.
Cost Reduction Plans
The upcoming cuts represent a small number compared to the total number of people that Walmart currently employs. The nation’s largest retailer employs 1.4 million people making it the largest private employer in the US. Even so, the cuts just show how the company is exploring ways of operating efficiently and effectively while taking into consideration operation costs.
“As we have previously shared, we are always looking for ways to operate more efficiently and effectively. While we continually look at our corporate structure, we have not made any announcements, “ said Greg Hitt Wal-Mart Spokesman
The job cuts come at a time when the company is in the process of investing $2.7 billion in programs that seek to train workers. The cost compounded by the increase in minimum wage hourly pay appears to have taken a toll on the company’s profit margins. The retailer has since warned that its adjusted earnings for 2018 fiscal year could be flat compared to 2017 fiscal year given increased operational costs.
Slowing Growth
Walmart has since resorted to investing big in other areas of growth such as e-commerce as it responds to a decline in traffic to brick and mortar stores as consumers shopping trends shift online. Paying more attention to e-commerce helped Walmart report strong online sales growth, helping offset weaknesses in comparable store sales.
Walmart cutting some jobs to shore up earnings does not come as a surprise given the way its peers have been performing in the recent past. Macy’s Inc (NYSE:M) is currently in the process of shutting down 68 stores and cutting 10,000 jobs after posting disappointing quarterly earnings. The Limited has also laid off 4,000 workers having closed all its stores.
Walmart stock was down by $0.46 In Tuesday trading session ending the day at lows of $68.23 a share.