One day after WalMart surprised the nation when on the same day it publicly announced it is raising its starting hourly wage to $11/hour, expanding employee benefits and offering worker bonuses of up to $1000 while at the same time it quietly closed shuttered 63 Sam's Club stores, the WSJ reports that WalMart is preparing to hand out a thousand pink slips at its headquarters. This in addition to the thousands of part-time jobs that will be affected by the mass Sam's Club closure.
The giant retailer, which employs more than 1.5 million people in the U.S., plans to cut more than 1,000 corporate jobs, according to the WSJ.
The job cuts are expected to be broad based, focused on workers primarily at the company’s headquarters, the people said. The cuts are expected to be completed by the end of the company’s fiscal year on Jan. 31, they added.
“We’ve been looking at our structure for some time as we explore ways to operate more effectively,” a Wal-Mart spokesman said, without confirming that job cuts are planned this month.
As we reported yesterday, according to Gordon Haskett analyst Chuck Grom, prior to today's layoffs, Wal-Mart's wage investment is just 15% of the tax gain. Grom said that "Wal-Mart may see tax rate of ~23% in FY19 (year ended Jan. 2019) vs current 32%, which would provide $2b windfall". As such the "labor investment of ~$300m represents just 15% of total; assumes a similar amount will go toward investments in price."
Well, make that under $300m after today's layoffs.
Meanwhile, for those wondering what the company will use the rest of the money on: why higher dividend payments and accelerated buybacks of course according to Grom.
Oh, and free advertising: "with WMT being first retailer "out of the gate," it should get some “free media." Although a few more mass layoff announcements, and the free publicity may not be so sterling.