Wal-Mart Stores, Inc. (NYSE:WMT)’s streamlining machine continues to roar, with the latest development being about cutting workers’ hours at selected stores. The company recently raised the minimum wage of its store associates across the country, a move that will cost it $1 billion this year. However, the company believes that scheduling in some of its stores are wrongly done, and it its cutting hours in such cases.
Some Wal-Mart employees that may have had more than required work hours are poised to lose them. The retailer has announced that it is moving to cut the number of hours that have been allocated to staff in some stores. The reason for that is that the company has established existence of improper scheduling at some locations.
At Wal-Mart Stores, Inc. (NYSE:WMT), hours scheduling for store employees depends on factors that include the workforce requirement to meet certain sales targets. Therefore, if scheduling goes overboard, corrections become necessary and Wal-Mart is at it.
Minimum wage increment
However, the move comes just after the retailer recently announced sweetened wages for thousands of its employees. Wal-Mart raised the entry-level wage for its store associates to $9 per hour, which is about $1.75 above the minimum wage recommended by the federal government.
$1 billion impact
Because of the wage hike and related activities such as staff training, Wal-Mart expects to incur a cost of $1 billion this year. As a result, the retailer has warned that its operating profits will remain under pressure in the current year. In addition to the higher wages and staff training, Wal-Mart also plans to increase spending on its e-commerce build-out.
No performance disruption
Given the number of reforms lined up for this year, Wal-Mart Stores, Inc. (NYSE:WMT) is implementing cost controls to ensure that every dollar counts. Nevertheless, Wal-Mart’s spokesman, Kory Lundberg, pointed out that amid the cost curtailment and the cut in hours, there will be no adverse impact in the way stores operate.
Part of the reason Wal-Mart raised its minimum wage was to boost employee morale so that they can perform better and earn the retailer higher customer satisfaction ratings.