Wal-Mart has announced thousands of layoffs since publicizing bonuses and benefits expansion

February 1, 2018 in News by RBN Staff


Source: Market Watch | TONYA GARCIA

Wal-Mart has talked up investments in staff while making staff cuts nationwide

Since Wal-Mart Stores Inc. announced it would hand out bonuses and expand benefits to more than 1 million associates thanks to new tax reform measures, the retail giant has also laid out plans for store closures and thousands of layoffs at both the store and corporate level.

Wal-Mart WMT, -1.01%   confirmed about 1,000 layoffs in California on Monday, including 650 associates in Sam’s Club locations in Los Angeles, Sacramento and Orange County, and 359 at a Wal-Mart location in Sacramento.

A company spokesperson said these cuts were part of the company’s effort to manage its fleet effectively.

“We are working with our associates to help find them other local opportunities where possible, at either nearby clubs and stores, or elsewhere,” the company said in an email to MarketWatch.

Last week, the company cut as many as 500 workers in the corporate headquarters in Bentonville, Ark. More than 360 associates will be promoted into positions of “higher authority,” a company spokesperson said, with these promotions focused on areas of interest like online grocery.

On Jan. 11, Wal-Mart announced that it would raise the minimum hourly wage for all associates to $11, expand maternity and parental leave benefits and offer a one-time bonus to eligible associates. Bonuses could total up to $1,000, but the maximum amount is reserved for those veterans with 20 or more years of service with the company.

Wal-Mart said these benefits would impact more than 1 million hourly U.S. associates. The company had about 2.3 million associates around the world at the time of that announcement.

See: Wal-Mart to offer one-time bonus of up to $1,000 – only for 20-year veterans

“As you know, the president and Congress have approved a lower business tax rate,” wrote Chief Executive Doug McMillion in a note posted on the company website. “Given these changes, we have an opportunity to accelerate a few pieces of our investment plan.”

On the same day, it was revealed that Wal-Mart would cut about 10,000 jobs as a result of 63 Sam’s Club store closures. About a dozen of the locations will be converted to fulfillment centers, with the first to open in Memphis.

Also: Wal-Mart offers customers a new opioid crisis solution: Get rid of old meds safely, at home, free

And: Amazon has made a point of targeting low-income customers

Wal-Mart is in the process of identifying other fulfillment center locations and will have more information in the coming weeks and months, the company said. There will be 597 clubs after the closures.

Wal-Mart will take a charge of about 14 cents per share associated with the Sam’s Club reorganization.

“We’ve said that we will balance growth in the portfolio with continued assessments of performance, will conduct annual reviews of stores’ performance and will close individual stores in the ordinary course of business just like many other retailers,” Wal-Mart said in a statement.

Announcements have also included details about various outplacement services and severance the company will provide for eligible workers.

Read: Wal-Mart teams with Japanese online retailer Rakuten to battle Amazon

Many companies have announced new bonuses or accelerated schedules on pre-announced perks since tax reforms passed. But only 2% of American adults say they’ve gotten a raise, bonus or other benefits because of the new tax law, according to a recent study.

Don’t miss: Sam’s closures quashed PR bonanza of Wal-Mart pay hikes and bonuses, but analysts have eye on longer term

And: Here’s the truth behind the PR blitz of bonuses after tax cuts

Many of Wal-Mart’s moves are tied to its continuing efforts to beat back competition against retailers like Amazon.com Inc. AMZN, -4.20%   and Costco Warehouse Corp.COST, -0.72%   Wal-Mart’s head-to-head with Amazon has extended into online grocery, voice commercespeedy online order delivery and other areas.

Wal-Mart shares are up 21.2% for the last three months, and 61% for the past year. The Dow Jones Industrial Average DJIA, +0.14%   is up 31.5% for the last 12 months.