Walmart lays off corporate employees after lowering expectations

An exterior view of a Walmart store on August 23, 2020 in North Bergen, New Jersey

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Walmart has begun laying off its employees, the company confirmed Wednesday, about a week after it cut its profit forecast and warned that consumers are holding back on discretionary spending due to inflation.

In a statement to CNBC, the retail giant described the layoffs as a way to “improve the company’s position for a strong future.”

Ann Hatfield, a spokeswoman for Walmart, declined to say how many workers would be affected and what divisions had been cut. She said Walmart is still hiring in parts of its growing business, including supply chain, e-commerce, health and wellness, and advertising sales.

“Shoppers change, customers change,” she said. “We’re doing some restructuring to make sure we’re aligned.”

Corporate layoffs were first reported by The Wall Street Journal.

Walmart is the nation’s largest employer, with nearly 1.6 million workers in the United States. The company, which is seen as a leader in the country’s economy, had investors worried on July 25 when it lowered its forecast for quarterly and full earnings guidance. The warning had a chilling effect on the retail sector, sending shares of companies including Macy’s and Amazon down, and unleashing a wave of debate over the health of the American consumer.

Walmart said at the time that as shoppers were spending more on necessities like groceries and fuel, they were skipping higher-margin merchandise including clothing. It said it would have to cut prices to sell more of those items, especially as it builds up large amounts of inventory in its stores and at competitor stores like Target and Bed Bath & Beyond.

Later that same week, Best Buy lowered its earnings and sales forecast, saying it was seeing a drop in demand for consumer electronics — expensive and discretionary purchases that some shoppers can put off.

As recession fears persist, the US labor market appears increasingly divided.

U.S. job opportunities fell sharply in June, but the labor background remains narrow, with 1.8 jobs available for every available worker. Several companies that have thrived during the pandemic, including Walmart’s main competitor Amazon, have begun to cut back on hiring.

Amazon’s number of employees shrank by 99,000 to 1.52 million globally at the end of the second quarter. The company’s workforce nearly doubled in size during the Covid health crisis as it scrambled to keep up with customer demand for groceries, puzzles, and more online.

That reduction is primarily due to diminishing returns, Amazon Chief Financial Officer Brian Olsavsky said on a call with reporters after the company’s second-quarter earnings report last week.

Other companies, including Shopify and Robinhood, have also recently announced layoffs. Still others, like Meta, a parent on Facebook and parent Alphabet of Google, said they would slow hiring or focus on being more productive with existing workers.

It’s unclear whether Walmart has also slowed the pace of hiring in stores and warehouses, which will allow the attrition to shrink its workforce. The company will announce its quarterly earnings on August 16, and is likely to provide an update on the total number of employees.

– CNBC channel Annie Palmer Contribute to this report.

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