Wal-Mart Stores Inc. is preparing to cut hundreds of jobs before the end of its fiscal year as part of the retailer's ongoing efforts to protect profits by improving efficiency.
The layoffs are expected by Jan. 31, the last day of the retailer's fiscal 2017, according to a report from the Wall Street Journal. The planned cuts will largely affect Wal-Mart's human resources department at the home office in Bentonville and in regional offices. Other departments could also be affected. The report cited people familiar with the situation as saying executives within the company believe the human resources department could be more efficient or have its duties handled by outside consultants.
Wal-Mart would not confirm any job cuts Tuesday, but spokesman Randy Hargrove said the company is "always looking for ways to operate more efficiently and effectively."
"While we continually look at our corporate structure, we have not made any announcements," Hargrove said. "Like any organization, we make decisions based upon what's best for our business and the customers we serve."
The job cuts are not expected to represent a significant percentage of workers at the company's home office, which has about 18,000 employees. The retailer employs 1.5 million workers nationwide.
The move comes as Wal-Mart has spent heavily on initiatives like employee wages, store improvements and e-commerce growth. The retailer is investing $2.7 billion on its in-store employees through wage increases and training over a two-year period. Wal-Mart also spent $3.3 billion to acquire online retailer Jet.com last year.
Brian Yarbrough, a retail analyst with Edward Jones, said job cuts at the home office would be another sign of how difficult the changing retail environment is for Wal-Mart with competitors like Amazon.com. He said Wal-Mart is looking at all avenues in efforts to trim expenses and boost earnings.
"You're afraid to cut from the stores, because if you do that and you cut into customer-facing jobs, does that go back to the issues you had two and three years ago, which were bad store environments and unhappy customers?" Yarbrough said. "So I think they're in a tough position."
"I wouldn't be surprised if they continue to try to get leaner," Yarborough added.
The last significant job cuts at the home office came in October 2015, about four months after Chief Executive Officer Doug McMillon told retail analysts that employees should remember "there are no cash registers in the office." The retailer eliminated about 450 employees across several departments during the round of layoffs.
Last September, Wal-Mart eliminated about 7,000 back-office jobs at its U.S stores. The positions covered mostly accounting and invoicing workers as the retailer moved to automate and centralize those operations to improve efficiency.
Kathy Deck, a University of Arkansas economist, said it's not unusual for a company the size of Wal-Mart to trim its workforce in search of improved efficiency. She said Northwest Arkansas "has to always be prepared that there is going to be churn in the headquarters-type jobs at Wal-Mart."
"Northwest Arkansas needs Wal-Mart to be an efficient and a well-functioning company," Deck said. "With any kind of company as big as Wal-Mart, that's going to mean that they occasionally switch strategies and switch the kind of skills they need to implement their strategic plan."
Cameron Smith of the recruiting firm Cameron Smith and Associates said Tuesday he has "heard the rumblings" about potential layoffs, and his company would be ready to assist affected workers. Cameron Smith and Associates specializes in working with Wal-Mart vendors and suppliers.
"We're going to do whatever we can to counsel them on what their marketability would be and what the job landscape looks like for them in Northwest Arkansas," Smith said.
Wal-Mart's recent investments in employees, store improvements and e-commerce have affected earnings per share. The company said last October during an annual meeting with investors that those earnings were expected to be flat in fiscal 2018 compared with the fiscal year ending this month. Wal-Mart also said during the meeting it plans for $11 billion in capital expenditures during fiscal 2018 with a larger chunk of the investment going toward strengthening its e-commerce business instead of new store openings.
McMillon said during the meeting that Wal-Mart had a new financial framework in place that was focused on three areas: strong, efficient growth; operating discipline; and strategic capital allocation.
"We must grow this company for Wal-Mart to have a future, but we need to do it in an efficient way," McMillon said during the October meeting. "It's not a growth-at-all-cost mindset. We need to manage expenses even better, which includes changing how we do work inside the company."
Business on 01/11/2017