Wal-Mart Cuts Worker Hours at Some Stores to Lower Expenses
August 31 2015 - 3:03PM
Dow Jones News
By Sarah Nassauer
Wal-Mart Stores Inc. is cutting employee hours at some stores,
in an effort to reduce costs as the world's largest retailer
addresses declining profitability.
In recent weeks, Wal-Mart executives have told store managers at
some of its 4,600 U.S. stores to more closely follow predetermined
staffing plans that are based on a store's sales projections, says
Kory Lundberg, a spokesman for the Bentonville, Ark.-based
retailer. That means reducing worker hours at stores that have been
"scheduling significantly above what has been allocated," said Mr.
Lundberg.
The push to save on staffing comes as Wal-Mart is pouring money
into making stores more efficient, pleasant places to shop. In
April, Wal-Mart increased the companywide minimum wage to $9 and
plans to boost pay to $10 for many employees by February.
The company has also increased store staffing at peak hours so
shoppers move quickly through checkout lines and see stocked
shelves, said executives during the company's quarterly earnings
call earlier in August. Those efforts contributed to a 15% drop in
second-quarter net income compared with a year earlier, said
executives.
The store managers being told to cut back have been exceeding
those already expanded employee hours, said Mr. Lundberg. "It's
about watching expenses," said Mr. Lundberg, as well as making sure
stores don't waste funds that could be put into lowering prices for
shoppers, he said.
In the latest quarter, Wal-Mart also lowered its profit target
for the rest of the year despite gains in sales and shopper
traffic. Shares of the retailer are down 25% so far this year.
The reduction to worker hours was first reported by Bloomberg
News.
After its quarterly results, Wal-Mart Chief Executive Doug
McMillon has promised to keep costs in check. "For the back half of
the year, we will manage these items closely with a continued
commitment to efficiency, cutting costs where appropriate," Mr.
McMillon said during the company's second-quarter conference
call.
Wal-Mart's struggle to manage store investments comes as other
retailers are also spending on wage increases and working to keep
shelves stocked. Dollar General Corp. plans to raise wages in about
a third of its more than 12,000 stores, in part to improve in stock
levels. Target Corp. has also increased its companywide minimum
wage and is focused on keeping shelves stocked consistently.
The retailer's head of U.S. stores, Greg Foran, has been driving
Wal-Mart store managers to improve their stores by October to take
advantage of the holiday shopping season. During the recent
earnings call, Mr. Foran laid out a long list of store initiatives,
including reducing on-hand inventory, stocking shelves more
quickly, working to reduce theft and raising wages. Some store
managers have overscheduled to meet Mr. Foran's goals, according to
a person familiar with the efforts.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 31, 2015 14:48 ET (18:48 GMT)
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