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Aug 3, 2022

Walmart cuts about 200 corporate jobs as costs, inventory sap profit

Walmart cuts profit outlook for Q2 and 2023

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Walmart Inc. is eliminating about 200 corporate jobs as it contends with rising costs, bloated inventories and weakening demand for general merchandise. 

The cuts include staffers in last-mile delivery and merchandising, said people familiar with the matter, who asked not to be named because the matter is private. Walmart will also add an unspecified number of jobs in areas such as e-commerce, health and wellness, ad sales and supply chain, said one of the people.

“We’re updating our structure and evolving select roles to provide clarity and better position the company for a strong future,” the company said in an email Wednesday. “At the same time, we’re further investing in key areas and creating new roles to support our growing number of services for our customers, suppliers and the business community.”

The retail giant is tightening its belt a week after slashing its annual profit forecast for the second time in less than three months. US consumers are pulling back on clothing and durable-goods purchases as soaring inflation raises the cost of food and basic items. That’s prompting Walmart to cut prices on general merchandise even as grocery sales -- which are less profitable for the retailer -- continue to rise. 

The shares fell less than 1 per cent in extended trading in New York. Walmart has dropped 9.8 per cent so far this year, while an S&P 500 index of consumer-staples companies slipped 2.9 per cent. 

Walmart has more than 100,000 management and professional workers in the US, according to a federal filing. The company, the country’s largest private-sector employer, has a total US workforce of almost 1.6 million people. The job cuts were reported earlier by the Wall Street Journal.

 

INVENTORY SURGE

Trimming the corporate workforce isn’t an unusual move for Walmart, said Jennifer Bartashus, a retail analyst at Bloomberg Intelligence. The Bentonville, Arkansas-based company eliminated hundreds of corporate jobs around the same time of year in 2020. 

“While job cuts are always a difficult decision, Walmart’s growth as a technology-focused company has likely helped introduce more efficiencies and productivity into its operations,” Bartashus said. 

Inventories surged during the company’s fiscal first quarter, in part because of a mismatch between customer demand and its merchandise. Walmart is scheduled to report second-quarter earnings Aug. 16.

In addition to spending more on groceries because of the highest US inflation in four decades, consumers who were cooped up in their homes earlier in the pandemic have been shifting some dollars to services such as travel and restaurants. Some may also be stepping back from home deliveries as they go out more. 

As concerns rise about economic activity slowing in the US, other companies have also been shrinking their workforces or tapping the brakes on hiring plans. Ford Motor Co. is preparing to cut as many as 8,000 jobs, Bloomberg News reported last month, citing people familiar with the plan. Meta Platforms Inc., the parent of Facebook, said it was slashing its hiring goals for engineers by at least 30 per cent this year. Alphabet Inc.’s Google told employees last month it would slow hiring the rest of the year.

The US Labor Department is scheduled to release its July jobs report Aug. 5. US nonfarm payrolls probably expanded by 250,000 jobs last month, based on estimates compiled by Bloomberg.