story by Kim Souza
ksouza@thecitywire.com
Retail insiders and consultants to Wal-Mart Stores have told The City Wire the annual job elimination drill at corporate headquarters has been ongoing for the past two months with several hundred jobs between Wal-Mart and Sam’s Club home office operations being shaved from the payrolls as fiscal 2014 winds to a close.
The underlying reason cited for what some sources say are deeper than normal home office job cuts is tight budgetary constraints as the retailer’s fiscal year ends Jan. 31. Numbers from numerous sources contacted by The City Wire indicate a job cut and/or hiring freeze range between several hundred and up to 1,000.
There has no been release of this information from the company, and there seldom is where Wal-Mart is concerned as this is generally chalked up to routine annual job re-evaluation. As an employer of some 2 million, the retailer sees an active turnover rate, even at the upper income levels in the corporate office.
The last time Wal-Mart made a home office layoff announcement was 2010, when the retailer trimmed 300 jobs from the corporate payrolls. In January 2009, between 700 and 800 jobs were cut in the corporate office.
“As you probably know we haven’t announced any home office organizational changes since 2010 and we aren’t planning any broad announcements this year. It’s correct to say that individual departments look at their teams on an ongoing basis to ensure the structure is consistent with the strategy but the numbers you are suggesting is not anything I’m aware of,” Wal-Mart spokesman David Tovar noted Monday (Jan. 27) in an email.
Wal-Mart was asked to substantiate the number of open positions recently pulled from job listings and to quantify their recent home office layoffs, but the retailer said they have nothing planned like the “rumored cuts and speculation.”
The retailer is within its 30-day quiet period mandated by the federal Securities and Exchange Commission for speaking to the media on sensitive issues ahead of earnings. Wal-Mart Stores Inc. will report its fiscal 2014 earnings on Feb. 20.
Three independent consultants interviewed by The City WIre on Monday said they knew of internal streamlining underway at Sam’s Club and Wal-Mart corporate offices. Sam's Club CEO Rosalind Brewer recently revealed that the Wal-Mart division is laying off 2,300 workers as the warehouse club seeks to reduce the level of middle managers. The staff reduction is roughly 2% of Sam's workforce, and is the largest staff reduction by the retailer since 2010.
At Sam’s Club, the membership and the marketing units have been consolidated into one department eliminating several positions with that synergy. At Wal-Mart corporate some downsizing is also underway through attrition, pulled open positions (aka, hiring freeze) and position terminations.
“Those impacted are typically given 60 days notice, and told that they can apply for open jobs within the company,” one of the consultants explained.
Bill Simon, CEO of Walmart U.S., has said at any given time the retailer has between 15,000 and 50,000 jobs open. There are roughly 10,000 corporate jobs in Bentonville between Sam’s Club and Wal-Mart and their ancillary operational units.
Two former retail executives, who spoke on condition of anonymity, said they knew several individuals with more than 25 years of service who were recently informed that their home office positions were being eliminated.
Ron Loveless, a former Sam’s Club and Wal-Mart executive, told The City Wire that all brick and mortar retailers are under pressure as they are losing share to more online players. He said this is the time of year when retailers scale back their payrolls, and home office positions are not immune from that purge. Although Loveless said he has not personally heard of any major home office cutbacks at Wal-Mart and Sam’s Clubs at this time, those recently announced in club operations were likely needed.
“Wal-Mart and Sam’s Club are making substantial investments in their online operations and continue to hire people as they should. I wouldn’t be surprised if there is some downsizing of other departments as a result,” Loveless said.
He also praised the management teams of Wal-Mart and Sam’s Club, saying if cuts are being made, they likely are justified during the challenging times for the retail sector.
Analysts with Kantar Retail have said Wal-Mart is struggling with its mature brick-and-mortar formats, and they expect the retail giant to face flat to 2% same-store sales for the foreseeable future.
Wal-Mart U.S. has reported negative same-store sales for the past two quarters and Sam’s Club continues to underperform its major competitor Costco.