Walmart cut its profit outlook. Here’s why that might worry rivals.
A person familiar with the layoffs, who spoke on the condition of anonymity because they were not authorized to speak on the matter, said about 200 corporate jobs will be cut. Walmart employs about 1.6 million people in the United States.
Its announcement comes as the US job market is cooling. Companies are reducing the pace of new hires, and consumers are spending less on non-essential goods amid rising fuel and food costs. Walmart cut its quarterly and full-year profit outlook last week, spooking investors and sending its stocks into an 8 percent tumble at one point.
“The signal this sends is not a good one,” said Neil Saunders, managing director and retail analyst at GlobalData, a London-based data company. Although the labor market has remained robust in recent months, decisions by retailers such as Walmart to cut jobs to save on costs “could further sour the economy and consumer confidence with it,” he added.
This week, the Bureau of Labor Statistics said that the number of job openings — while still strong — had fallen from more than 11.3 million in May to 10.7 million at the end of June. The largest drop came from retail, with 343,000 job openings disappearing, it said. The figure is the lowest since November.
Even before the figures were released, Apple and Meta were putting hiring plans on hold, The Washington Post reported last month. Convenience store chain 7-Eleven had laid off 880 corporate workers. Ford was planning to cut 8,000 roles, while electric-car maker Rivian was cutting 700 jobs. Delivery start-up Gopuff was laying off 1,500, while mortgage lender LoanDepot was shedding 4,800 jobs this year, according to reports.
The job market is beginning to show cracks
Economists have blamed the highest inflation in 40 years as a key reason for the job market cool-off.
Walmart chief executive Doug McMillon said in a report last month that increasing prices of necessities such as food and fuel were forcing consumers to spend less on other goods such as apparel. He said the company would go heavy on discounts to push general merchandise into shopping carts, a tactic that lowers profits.
In the same report, Walmart said its operating income for the second quarter and full year would decline by up to 14 and 13 percent, respectively.
The report sent Walmart’s stocks into a drop, as well as those of other retailers. Target shares fell 3.6 percent; Best Buy, 5.1 percent; Amazon, 5.2 percent; Dollar Tree, 6.3 percent; Macy’s, 7.2 percent; and Kohl’s, 8.9 percent. (Amazon founder Jeff Bezos owns The Washington Post.)
Walmart will report its quarterly earnings on Aug. 16.
Jaclyn Peiser contributed to this report.