Wal-Mart, which is investing more than $1 billion in its workforce through training and raises, is now looking to cut costs.
Bloomberg reports today that “regional executives told store managers at the retailer’s annual holiday planning meeting this month to rein in expenses by cutting worker hours they’ve added beyond those allocated to them based on sales projections.”
Chief Executive Officer Doug McMillon is trying to balance a desire to improve service — partly through increased spending on his workforce — against investors’ pressure to keep profit growing. Labor costs, which rose after Wal-Mart increased its minimum wage to $9 an hour in April, have weighed on earnings, which missed analysts’ expectations last quarter. At the same time, Wal-Mart is trying to maintain low prices to fend off rivals.
A Wal-Mart spokesman tells Bloomberg that the effort to cut hours is only happening where managers have overscheduled employees and that the cuts won’t affect efforts to better staff stores.
Earlier this month, Wal-Mart’s quarterly earnings showed that its investments to overhaul stores are helping sales but also causing more pain on the bottom line than expected.