Dive Brief:
- Less than three months after announcing plans to raises the wages of 100,000 workers, Wal-Mart is scaling back the hours of some employees as it tries to rein in costs, according an article at CBS.com.
- According to the retailer, which is also the largest U.S. private sector employer, the move affects a "small number of stores" that were "significantly" overscheduling workers, reports CBS, which posted an earlier article about how the pay raise was causing internal problems.
- The company didn't provide more specific information but stressed that the cuts wouldn't hurt its efforts to improve customer service, which has long been a weakness, according to CBS.
Dive Insight:
CBS reports that CEO Doug McMillon is under pressure from Wall Street to breathe new life into Wal-Mart's U.S. operations, which have lost ground in recent years to a plethora of competitors ranging from TJX, the parent company of TJ Maxx, to Amazon and the dollar stores. Wal-Mart's latest earnings report disappointed investors, further raising pressure on the world's largest retailer.
"It's not just raising wages, they have put labor back into the stores," Brian Yarbrough, an analyst with Edward Jones, told CBS MoneyWatch. "The problem is you're putting all these investments in the stores and all these expenses, and you aren't getting the (expected) sales return. It's crushing profits."
Unions trying to represent Wal-Mart employees have a different take. "We now have further evidence that Wal-Mart's so-called 'wage increase' was nothing more than a cruel PR stunt," wrote Jess Levin, a spokeswoman for the union-backed Making Change at Walmart campaign, in an email to CBS. "Hard-working Wal-Mart workers -- many of whom did not even see a raise in pay -- are having their hours cut all so Wal-Mart can pad its bottom line."
