Wal-Mart, Sam’s Club expected to make significant corporate job cuts

Retail giant Wal-Mart Stores and its Sam’s Club division are in the process of cutting up to 1,000 corporate headquarter jobs by Nov. 1, according to several sources familiar with the situation. The cuts would happen through layoffs and attrition, and may include up to 200 vice presidents.

Wal-Mart Stores did not confirm nor deny the layoffs are planned and would not provide a statement. This is the second local corporate layoff by the retail giant this year after about 50 positions were eliminated in February.

New executive management under the leadership of Walmart U.S. CEO Greg Foran is leaving no stone unturned in the effort to run an efficient operation. His boss, Wal-Mart Stores CEO Doug McMillon, recently made it clear to analysts following the shareholders meeting that the top priority of the home office is to serve the stores.

“There are no cash registers in the home office,” McMillon said.

The paring down of corporate jobs aligns with other restructuring moves recently by Foran. Wal-Mart management has vowed to add lower level managers back its 4,500 stores as well as bump up hourly worker pay to the tune of a $1 billion impact to the retailer’s bottom line.

A highly competitive retail climate, lackluster comp-store sales and heightened spending on e-commerce fulfillment capabilities also recently prompted the retailer to raise its contract fees with its supplier base in an attempt to expand margins on slower moving products.

Company shares (NYSE: WMT) have also had a tough few months. The share price closed Friday at $73.12, up 34 cents but near its 52 week low. During the past 52 weeks the share price has ranged from a $90.97 high to a $70.36 low.

The home office restructure also is on trend with what other retailers are doing. Target, recently announced 1,700 jobs eliminated at its corporate headquarters in Minneapolis. That came on the heels of 1,500 jobs cuts announced in January. Dallas-based J.C. Penney cut 300 corporate jobs earlier this year, and last week American Apparel announced plans to slice $30 million in operating expenses over the next 18 months with corporate layoffs and store closures.

NORTHWEST ARKANSAS ECONOMIC IMPACT
When higher-income jobs are eliminated in a region like Northwest Arkansas there is cause for concern. Benton County was recently tagged as one of the fastest income growing metros in the country, no doubt because of Wal-Mart, Sam’s Club and the retail mini-sector that surrounds it.

Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas, did not have comment on the layoffs but said retail is a sector in flux because of the shortening of supply chains, online fulfillment and increased efforts to bridge online with brick and mortar. 

Deck said a 5% cutback would be normal in terms of what companies today are making but that if the number is higher the impact would have wide negative implications on the region and state.

“It’s unclear if the supplier community would need to respond immediately or proportionally to the Wal-Mart, Sam’s Club moves,” Deck said.

Mike Harvey, chief operating officer for the Northwest Arkansas Council, said Benton County has played to its strengths over the years which has been retail and its supporting suppliers. That said, Harvey adds that the main reason the Council began advocating for a diversified region economic plan was because the business giants of Wal-Mart, Tyson Foods and J.B. Hunt Transport are cyclical in nature.

Though Harvey had no information about the Wal-Mart and Sam’s Club layoffs, he did say the headlines often read worse than the net effect especially given that there is a tight labor market in Northwest Arkansas.

“Every HR director I know is clamoring for qualified candidates,” he said.