Wal-Mart Cuts Costs Investors Hope For More
Wal-Mart decided to lay off 450 employees Friday at their headquarters in Bentonville Arkansas. Currently there are 18,600 employees working there. The stock rallied a little bit on Friday after the announcement, about 0.2%. The company at the same time has begun hiring seasonal workers.
The company made a statement stating that customers have changed and they need to make changes to stay competitive. The stock of Wal-Mart is down 22% year to date as investors fear competition from Amazon and flat revenue. Same store sales have increased 1.5% in the second quarter and 1.1% in the first quarter, so it's not all bad news.
The company has recently increased the minimum wage at all of it stores causing some concern. The current wage moved from $7.25 an hour to $9 an hour and they plan to increase it again at the beginning of next year to $10 an hour. The company needs to see an increase in productivity for the rise in hourly wage to make sense and to maintain current profit levels.
Investors are hoping the cuts announced on Friday represent a continued effort by management to reduce costs. If management continues to cut costs, earnings could improve moving forward without a revenue increase.
Wal-Mart Prepares for Layoffs Before Holiday Season