Retail

Walmart Workers Brace for Thousands of Layoffs

The Washington Post has speculated that Walmart Inc.’s (NYSE: WMT) new “Great Workplace” plan will trigger job cuts among “hourly supervisor and assistant store manager positions.” Some of these jobs may be replaced. Based on Walmart’s store footprint of almost 4,800 locations in the United States, job cuts almost certainly will be in the thousands.

Walmart needs the improved margins. Revenue in the United States rose by 1.9% in the most recently reported fiscal quarter to $92.3 billion. However, operating income fell 12.7% to $4.4 billion. E-commerce sales rose by 37%. However, analysts are suspicious that Walmart loses money in this part of its business. Also, Amazon is well ahead of it in revenue, which means the Walmart losses will continue.

Walmart certainly has plenty of intelligence about the operation of its stores. If it means to downsize staff, the assumption must be that it can do so without affecting sales.

Walmart is in a position better than any other large retailer that faces the “retail apocalypse.” It has an iron-clad balance sheet, revenue that is still rising (albeit slowly) and merchandising buying power that cannot be equaled. None of these will protect workers from management’s strategic moves to cut costs without affecting results. At least, management hopes it works that way.

Walmart’s likely layoff of thousands of people may seem modest as other retailers cut tens of thousands. It is nevertheless another sign that brick-and-mortar retailers continue to struggle.