Walmart laid off about 200 corporate employees this week, the retail giant said Wednesday. The news came after Walmart surprisingly cut its profit outlook because consumers are focusing more on essentials as food and fuel costs rise. The layoffs are part of a restructuring of its corporate offices.
The retailer started notifying employees at its Bentonville, Arkansas headquarters and other corporate offices, sources told The Wall Street Journal. The restructuring affects the merchandise, global technology, and real-estate teams. A Walmart spokeswoman later confirmed the layoffs, adding the company was "updating" its structure and investing in other areas to create new positions.
Last week, Walmart predicted its profits would decline during the current quarter and fiscal year because it had to clear out apparel and other merchandise sitting in stores. This is because U.S. shoppers began buying more essentials, like food, which is less profitable for the company. Walmart and other retailers have been surprised to see shoppers no longer buying things that were hot commodities during the early days of the coronavirus pandemic. Some products once in high demand also arrived after they were popular because of supply chain holdups.
Walmart employs more workers in the U.S. than any other private company. Most of its employees are hourly staff, but the company also has thousands of people in corporate jobs. The company employs 1.7 million U.S. workers, as of Jan. 31, notes the Wall Street Journal. It's unclear if Walmart slowed its pace of hiring at stores and warehouses, notes CNBC. Walmart will provide more information about the company's position when it releases its quarterly earnings report on Aug. 16.
Back on July 25, Walmart spooked Wall Street when it announced that its upcoming profit outlook might not be great. In May, the company said it was stuck with too much unsold stock, and in the July announcement, the company said it would have to cut prices on all that stock to move it. This will likely cause profits to fall in its second fiscal quarter.
The company expects same-store sales in the U.S. to rise 6% compared to the previous year, but that will be from the rising costs of essentials that come with less profit margins for the company. "The increasing levels of food and fuel inflation are affecting how customers spend... and while we've made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars," Walmart Chief Executive Doug McMillon said in a statement last month, reports the Wall Street Journal.