Amid the silly debate whether 2 consecutive quarters of negative GDP are enough to trigger a recession, or we have to wait for a 3rd, 4th, 5th and so, on if the president is a Democrat before the NBER will starts paying attention, today Walmart – which recently reported horrific earnings when it warned that low-income America is careening into the abyss, decided to take a shortcut to the promised recession land after the WSJ reported that the giant US retailer was cutting hundreds of corporate roles in a restructuring effort one week after it warned of falling profits.
The retailer began notifying employees in its Bentonville, Ark., headquarters and other corporate offices of the restructuring, which affects various departments including merchandising, global technology and real-estate teams, the people said. Around 200 jobs in total are being cut, said one of these people.
To mitigate the media fallout, a Walmart spokeswoman confirmed to the WSJ that there were roles being eliminated as the company updated its structure, but said that the company was also investing in other areas and creating some new roles.
Last week, Walmart stunned investors when it slashed guidance again and warned that its profit would decline in the current quarter and fiscal year because it was having to mark down apparel and other merchandise that has piled up in its stores. The retailer said higher prices for food and fuel were causing U.S. shoppers to pull back on other categories that are more profitable for it. In response its stock price suffered its biggest one day drop in decades.
As we had warned two months ago, Walmart ended up being one of several retailers caught off guard by the “reverse bull whip” effect this spring as shoppers shifted their spending away from products that have been in high demand throughout much of the pandemic. In addition, some products arrived late due to supply-chain snarls, causing oversupply as shopper interest waned. Similar to Walmart, Target issued a profit warning in June after it reported quarterly results that showed a surge in inventory levels. And last week, Best Buy crashed after it cut its sales and profit goals, saying consumers had pulled back on electronics.
Walmart is the largest private employer in the U.S. and while much of its workers are hourly staff, it has thousands of people in corporate roles. Walmart employed 2.3 million worldwide, including 1.7 million in the U.S., as of Jan. 31. If corporate – i.e., muscle – is being cut, expect stealthy mass layoffs among the fat in the coming weeks.
While the overall U.S. job market has been seen as strong – even if erroneously because as we first explained last month the Household survey has been a disaster…
…. a handful of major US employers have pulled back on hiring or are outright cutting jobs. Ford is preparing to cut thousands of white-collar workers, while technology giants such as Microsoft and Facebook parent Meta Platforms, and many others have pulled back.
And while the ADP is busy fudging its numbers and did not publish a monthly private payrolls report this month, investors get another update on the health of the U.S. job market on Friday when the government releases data for July. Economists expect only 250,000 to be added in July, compared with 372,000 in June. We expect a huge miss.
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