WMT Walmart Inc

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

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(END) Dow Jones Newswires

August 31, 2015 14:55 ET (18:55 GMT)

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