In this Supply Chain Matters capsule update commentary, we highlight published reports this week indicating that retailer Walmart is initiating added salaried staff reductions.
In late May, reporting on Q1-2022 quarterly financial performance, the retailer stunned Wall Street with a reported 25 percent decrease in net income. Inventory levels reportedly increased more than 33 percent during the quarter, a reflection of what was described as an aggressive buying strategy amid supply chain disruptions.
At the time, this news, coupled with rival Target’s disappointing quarterly performance relative to profitability and excess inventory, stunned the retail industry, as well as the industry’s supply network ecosystem.
Regarding outlook for the current quarter, operating income expectations were adjusted to a decrease up to 14 percent. For the full year, operating income was expected to decline by 13 percent. The company’s CEO Doug McMillon indicated to investors that inflationary costs related to rising fuel and inventory costs created more pressures on margins than previously expected and that the retailer is now adjusting.
This retailer is reportedly the largest employer across the U.S. with upwards of 1.7 million employees.
Latest Development
This week, business and industry media reported that the company now plans to cut, what The Wall Street Journal noted as hundreds of corporate roles in an overall restructuring effort. Notifications to employees reportedly began this week in both the Bentonville, Arkansas corporate office and other corporate offices.
Informed sources have indicated to two media outlets that these rounds of cuts amount to upwards of 200 people and involve areas of merchandising, global technology and real estate. A corporate spokesperson indicated to the Washington Post that the restructuring will include added investments in E-commerce, technology, supply chain, and advertising sales.
Additional Perspectives
Restructuring has been a common practice for Walmart, especially over the past 2-3 years.
In October of last year, the company announced a change involving the role of chief operations officer of the retailer’s U.S. business unit, just prior to the start of the holiday fulfillment period. Chis Nicholas, who previously led the U.S. business unit’s finance operations, assumed the U.S. COO role, Steve Schmitt was appointed as the new CFO, and Seth Dallaire assumed the new role of Chief Revenue Officer for the U.S. business unit. Walmart’s U.S. business unit accounts for two-thirds of total revenues and the lion’s share of company profits. At the time, Bloomberg cited sources indicating that U.S. stores were “an operational disaster area with rampart out-of-stocks” and “significant operational inconsistencies.”.
In September, the company initiated an effort to hire an additional 20,000 workers across more than 250 distribution, fulfillment, and transportation facilities. Roles reportedly included that of order fillers, freight handlers, lift drivers, technicians and operational management positions. Reported at the time was that these new hires will be permanent part or full-time positions designated to support needs not only for the 2021 holiday fulfillment season but ongoing operational needs as well.
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