Corporate layoffs at Walmart add to signs of labor market slowdown
Walmart cut its earnings outlook. Here’s why that might worry rivals.
A person familiar with the layoffs, who spoke on condition of anonymity because he was not authorized to speak on the matter, said around 200 jobs at the companies would be cut. Walmart employs approximately 1.6 million people in the United States.
His announcement comes as the US labor market cools. Businesses are reducing the pace of new hires and consumers are spending less on non-essential goods amid rising fuel and food prices. Walmart slashed its quarterly and full-year earnings outlook last week, spooking investors and sending its shares plummeting 8% at one point.
“The signal this sends is not good,” said Neil Saunders, managing director and retail analyst at GlobalData, a London-based data firm. Although the labor market has remained robust in recent months, decisions by retailers such as Walmart to cut jobs to save costs “could still hurt the economy and consumer confidence”, he said. added.
This week, the Bureau of Labor Statistics said the number of job vacancies – although still high – had fallen from more than 11.3 million in May to 10.7 million at the end of June. The biggest drop came from retail, with 343,000 job vacancies gone, he said. The figure is the lowest since November.
Even before the numbers were released, Apple and Meta were suspending hiring plans, The Washington Post reported last month. Convenience store chain 7-Eleven had laid off 880 company employees. Ford planned to cut 8,000 positions, while electric car maker Rivian cut 700 jobs. Delivery startup Gopuff has laid off 1,500 people, while mortgage lender LoanDepot has cut 4,800 jobs this year, according to reports.
The labor market is starting to show cracks
Economists have blamed the highest inflation in 40 years as one of the main reasons for the slowdown in the labor market.
Walmart chief executive Doug McMillon said in a report last month that rising prices for basic necessities such as food and fuel were forcing consumers to spend less on other goods such as clothing. . He said the company would make deep discounts to push general merchandise into shopping carts, a tactic that cut into profits.
In the same report, Walmart said its second-quarter and full-year operating profit would decline by as much as 14 and 13 percent, respectively.
The report sent Walmart’s inventory plummeting, as well as that of other retailers. Target shares fell 3.6%; Best Buy, 5.1%; Amazon, 5.2%; Dollar Tree, 6.3 percent; Macy’s, 7.2%; and Kohl’s, 8.9 percent. (Amazon founder Jeff Bezos owns The Washington Post.)
Walmart will release its quarterly results on August 16.
Jaclyn Peiser contributed to this report.