Wal-Mart to Cut 450 Jobs at Headquarters -- 2nd Update
October 02 2015 - 1:24PM
Dow Jones News
By Sarah Nassauer
Wal-Mart Stores Inc. said 450 people will be laid off at the
company's headquarters in Bentonville, Ark., as the world's largest
retailer confronts slow sales and shifts in the retail
business.
"After months of evaluation, we've concluded there is an
opportunity to better position our Home Office teams to move with
speed and purpose," CEO Doug McMillon wrote in a memo sent Friday
to staff. The company is at "an important time in our history," he
added. "This in part means pulling back in some areas and investing
in others."
The reductions include some managers and vice presidents. A
Wal-Mart spokesman declined to detail what departments or types of
employees are being eliminated. Broadly the goal of the layoffs is
to align "the staff in the home office with the corporate
priorities," mainly growing e-commerce sales and improving the
overall experience of shopping in U.S. stores, said the spokesman.
Laid off employees will receive 60 days of pay, plus two weeks of
pay for every year of employment with the company, he said.
In August the retailer reported a 15% drop in quarterly net
profit from the previous year and cut its earnings outlook for the
full year. The Wall Street Journal had reported this week that
Wal-Mart was preparing a round of layoffs at its headquarters.
Other U.S. retailers have moved this year to cut corporate jobs
or close stores as they confront slow sales growth and a shift to
Web shopping. Rival Target Corp. this year has laid off more than
2,700 corporate jobs in Minneapolis and India as part of CEO Brian
Cornell's plan to eliminate more than $2 billion in costs by the
end of next year. And large consumer goods companies that sell
their wares at Wal-Mart and other retailers are facing similar
challenges. Earlier this week, ConAgra Foods Inc. said it would cut
1,500 office jobs.
Rumors of layoffs have for months preoccupied the community in
northwest Arkansas where Wal-Mart employs 18,600 and has created an
ecosystem of companies that sell their products on Wal-Mart
shelves. Nearly every part of the local economy, including the
real-estate market and donations to charities, is linked to the
world's largest retailer.
Some Wal-Mart department directors had been told to cancel
travel this week or make sure they came to the office Friday, said
a person who spoke with the Wal-Mart employees. Wal-Mart human
resources employees also reserved many of the meeting rooms at the
headquarters as well as small rooms typically used by suppliers to
pitch products to the retail giant, according to another person
familiar with the matter.
Rosalind Brewer, the CEO of Sam's Club, Wal-Mart's warehouse
retailer also sent a memo Friday to staff outlining new priorities
for the retailer and a staff reshuffle, according to an email
viewed by The Wall Street Journal. Sam's will focus on growing
business with "higher household-income members" and eight consumer
groups like large families and new moms and convenience store
owners, said Ms. Brewer in the memo. Almost a dozen executives will
be shuffled into positions to focus the business on these groups as
well as growing sales of Sam's own brands. "We intend to build
fewer, much stronger private label brands," said Ms. Brewer. Sam's
Club accounts for about 12% of Wal-Mart's nearly half a trillion
dollars in annual revenue.
Wal-Mart is facing strong competition from other retailers,
online and offline. At the same time, the company's store sales
have suffered in recent years because shoppers too often found
items out of stock and complained of messy stores and unfriendly
service. Wal-Mart is investing heavily in making stores clean,
fast, friendly and well-stocked, executives said in presentations
to investors and reporters this summer. At the same time, the
retailer is investing in boosting its e-commerce infrastructure and
raising wages for store employees. In April the company raised the
minimum wage it pays store employees to $9 and will raise that to
$10 for most in February.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 02, 2015 13:09 ET (17:09 GMT)
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