Walmart, faced with a toughening economy and falling profits, plans to eliminate hundreds of corporate jobs, the Wall Street Journal reports this morning.
According to the story, "The retailer began notifying employees in its Bentonville, Ark., headquarters and other corporate offices of the restructuring, which affects various departments including merchandising, global technology and real-estate teams, the people said. Around 200 jobs in total are being cut, said one of these people."
Walmart tells the Journal that it isn't all cuts. Part of the restructuring means that the company is "also investing in other areas and creating some new roles," a spokesperson said.
Some analysis from the Journal:
"Walmart was one of several retailers that was caught off guard this spring as shoppers shifted their spending away from products that have been in high demand throughout much of the pandemic. In addition, some products arrived late due to supply-chain snarls, causing oversupply as shopper interest waned. Target Corp. in June issued a profit warning after it reported quarterly results that, like Walmart, showed a surge in inventory levels. Last week, Best Buy Co. cut its sales and profit goals, saying consumers had pulled back on electronics.
"Walmart is the largest private employer in the U.S. and while much of its workers are hourly staff, it has thousands of people in corporate roles. Walmart employed 2.3 million worldwide, including 1.7 million in the U.S., as of Jan. 31."
The Washington Post writes that in a statement, "spokesman Jimmy Carter said the company is 'updating our structure and evolving select roles to provide clarity and better position the company for a strong future.' It will invest more in e-commerce, technology, health and wellness, supply chain and advertising sales, the statement said, while also creating new roles in services for customers and suppliers."
- KC's View:
I'm sure some of this has to efficiency and making decisions about where to invest and where to back off, but it also seems like it is a pretty good bet that Walmart also is concerned about investor perceptions. When profit growth slows, investors and analysts want to know that retailers are tightening their belts.
That said, the argument could be made that as one of the world's biggest companies, Walmart is better served by a strategy of expanding its investments and commitment to new things, and that cutting people isn't necessarily the best way to do this. But that's a hard argument to make to people who only have short-term returns and dividends on their minds.