- Walmart is preferring off hundreds of workers despite posting record sales during the pandemic.
- The news proves no one is immune to the effects of Covid-19, not unchanging Walmart.
- Walmart’s decision is a red flag for the stock market and economy given the retailer’s strong performance during the pandemic.
Meet layoffs have become somewhat of the norm these days as the coronavirus pandemic causes businesses to cut costs dramatically.
This week, overlook retailer Walmart (NYSE:WMT) conducted a series of layoffs, the scale of which is still unknown. You could forgive investors for glossing done with the news as just another corporate belt-tightening, but considering Walmart has been one of the biggest beneficiaries of the pandemic, it’s a terrible gesture for the future.
According to a Bloomberg broadcast, sources close to the company claim the retailer is laying off hundreds of its staff and reorganizing its stores to save. The firm dropped to outline the specifics of its plans, saying the changes were an effort to drive productivity.
We are continuing on our journey to create an omni-channel structuring within our Walmart U.S. business and we’re making some additional changes this week.
Before the pandemic struck, Walmart was making a successful omni-channel experience by merging its brick-and-mortar stores with its online presence, so the move isn’t totally out of the blue.
The settlement raises a red flag about how the firm sees the pandemic evolving. Anecdotal evidence suggests the company is laying off personnel in divisions disposed to transportation and product design—a questionable move if things are seen returning to normal in the months ahead.
It could be that Walmart is battening down the breeds for a potential second wave of infections in the autumn and the economic aftermath of another outbreak. Walmart has been delivering arousing results throughout the pandemic and is usually considered a defensive play in times of economic hardship.
Employee Lawsuits
One what it takes reason Walmart may be keen to save a bit of cash is the potential for coronavirus-related lawsuits that could come crashing down on the retailer. Mnages of coronavirus victims that worked at Walmart and other grocery stores have begun to file gross remissness suits against their employers, claiming they didn’t adequately protect their workers.
The families are demanding compensation, but the legal troubles don’t end there. Employees who contracted the virus and survived are also suing for everything from medical accounts to future earnings.
As the cases pile up, companies like Walmart are likely wondering how they’ll get through the second billow of infections without racking up more lawsuits.
Worker Protection Expense
Whether the precautions Walmart has taken were adequate or not—they were extravagant. For many businesses, the cost to outfit staff in protective equipment and restructure offices and warehouses is enormous.
Walmart spout $900 million on coronavirus-related expenses in the first quarter, and a similar spend is expected in Q2. While some of that is due to careful equipment and changes to stores and warehouses, much of it was employee bonus payments.
With the pandemic still in full wigwag in the U.S., additional pandemic pay is unlikely to go anywhere, leaving Walmart in a precarious position.
In the first, and likely second, quarter, Walmart’s surging purchasings were able to offset the jump in spending. As people adjust to life with coronavirus and shops remain unsealed, it’s unclear whether or not the rush of new shoppers will continue.
Walmart News Should Worry You
Walmart’s layoffs should send investors reason to question where the economy, and the stock market, are headed.
To see one of the pandemic’s biggest winners cut hundreds of employees is a warning sign not only about WMT stock but for some of the more vulnerable players on the market as well. Airlines, gear retailers, restaurants, and any other businesses that have been hurt by the pandemic have an even rockier procedure ahead.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless on the other hand noted, the author has no position in any of the stocks mentioned.
Last modified: August 2, 2020 4:41 PM UTC