A few days after Walmart cut its profit outlook citing high inventory and rising prices, the retailer announced that it will be reducing its corporate workforce. The latest Walmart layoffs are a result of rising costs, high inventory, and weakening demand for goods, as customers prioritize necessities.
America’s biggest retailer had earlier stated that inventory has stockpiled as high inflation squeezed household budgets, forcing the company to reduce price in a bid to clear backlogs.
Walmart Corporate Layoffs
The retailer informed its employees at the Bentonville, Arkansas, headquarters and other offices that it will restructure roles across departments, including merchandise, real-estate, and technology. Approximately 200 employees will be affected by the Walmart layoffs, said people familiar with the matter.
Anne Hatfield, a Walmart spokesperson, declined to reveal how many workers will be affected and what divisions have experienced cuts. She said Walmart is still hiring in parts of its business that are growing, including supply chain, e-commerce, health and wellness, and advertising sales. “Shoppers are changing. Customers are changing,” she said. “We are doing some restructuring to make sure we’re aligned.”
“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.”
Last month, Walmart had highlighted that customers are spending more on food and gas, and have reduced spending on things like apparel. As high inventory piled up, the retailer announced plans to reduce the prices of these goods to help move stock. Doug McMillon, Walmart Inc. president and chief executive officer said that they were forced to offer discounts to bring down its inventories which hurt its profit margins. The company stated that it expects its yearly profits to fall by as much as 13%. Competitors like Target and Bed Bath & Beyond also confirmed the changing trends in shopping, and worried over the effects of high inflation.
Restructuring Amidst Inflation
According to a filing, Walmart employees over 100,000 professional and management workers in the US alone. The global conglomerate provides jobs to nearly 1.6 million people in America, and employs 2.3 million worldwide. A retail analyst with Bloomberg, Jennifer Bartashus, mentioned that the Walmart layoffs are not surprising considering its history. The company had earlier cut jobs in 2020 citing a need for efficiency and productivity. The company is expected to announce its second quarter earnings by mid-August. A person familiar with the matter told CNN that the company has started laying off people from this week.
The rise in inventory can also be attributed to post-pandemic behavior as people focus more on spending for experiences, like entertainment and travel, rather than accumulating goods. Inventories also surged as supply chain issues resulted in goods arriving after demand for them had waned.
Rising inflation has spooked everyone from Wall Street investors to high brands, which have put a freeze on hiring or slowed hiring for the latter half of 2022. Tech companies across the US paused hiring or started layoffs as worries over a four-decade high inflation crushed growth expectations. Tech companies like Microsoft, Apple, and Google, have put a brake on hiring while electric carmaker Tesla shut one of its autopilot offices. Tesla CEO Elon Musk was previously quoted as saying that he has a “very bad feeling” about the economy. Robinhood recently trimmed almost a quarter of its workforce citing over-hiring during a period of growth.
The Walmart layoffs were first reported by The Wall Street Journal. Walmart is expected to provide an update on its overall headcount when it announces its second quarter earnings a few days from now.
