Walmart lowered its earnings forecast. Here’s why competitors are worried.
A person familiar with the layoffs, who spoke on condition of anonymity because he was not allowed to speak on the matter, said about 200 jobs will be cut at companies. Walmart employs about 1.6 million people in the United States.
Her announcement comes as the US job market is cooling. Companies are reducing the pace of new hires, and consumers are spending less on non-essential goods amid rising fuel and food costs. Walmart cut its quarterly and full-year earnings forecasts last week, spooking investors and sending its shares down 8 percent at one point.
“The signal this is sending is not good,” said Neil Saunders, managing director and retail analyst at GlobalData, a London-based data company. He added that although the labor market has remained strong in recent months, decisions by retailers such as Walmart to cut jobs to save costs “could further deteriorate the economy and consumer confidence in it.”
This week, the Bureau of Labor Statistics said the number of job openings – while still strong – has fallen from more than 11.3 million in May to 10.7 million at the end of June. It added that the largest decline occurred in the retail trade, with the disappearance of 343,000 jobs. The number is the lowest since November.
The Washington Post reported last month that even before the numbers were released, Apple and Meta were delaying hiring plans. The convenience store chain 7-Eleven has laid off 880 workers at the company. Ford was planning to cut 8,000 roles, and electric car maker Rivian was to cut 700 jobs. Gopuff that began delivering was laying off 1,500 jobs, and mortgage lender LoanDepot had cut 4,800 jobs this year, according to reports.
The job market has begun to emerge
Economists blamed the highest rate of inflation in 40 years as a main reason for the labor market cooling.
Walmart CEO Doug McMillon said in a report last month that increased prices for essentials like food and fuel are forcing consumers to spend less on other goods, such as clothing. He said the company will focus on discounts to drive sales of general merchandise, a profit-slashing tactic.
In the same report, Walmart said its operating income for the second quarter and full year would decline by as much as 14 and 13 percent, respectively.
The report caused Walmart stocks and those of other retailers to fall. Target stocks fell 3.6 percent. Best Buy, 5.1 percent; Amazon 5.2 percent; Dollar Tree, 6.3 percent; Messi, 7.2 percent; and Cole, 8.9%. (Amazon founder Jeff Bezos owns The Washington Post.)
Walmart will announce its quarterly earnings on August 16th.
Jacqueline Besser contributed to this report.