By Sarah Nassauer
Walmart Inc. said it would raise wages for about 425,000 of its
employees after a year in which the Covid-19 pandemic boosted its
business and demand for workers who handle online orders.
The company reported strong holiday sales but predicted slower
growth and higher spending this year. U.S. comparable sales, or
those from stores and digital channels operating for at least 12
months, rose 8.6% in the quarter ended Jan. 29, an acceleration
from the third quarter, when sales climbed 6.4%, and higher than
most analysts' forecasts. U.S. e-commerce sales, which include
online grocery orders, increased 69% from a year earlier.
The country's largest private employer said it would raise pay
for hourly U.S. workers to an average above $15 an hour, up from an
average above $14 in January 2020. Its minimum starting wage for
U.S. workers will remain at $11 an hour. Walmart employs about 1.5
million hourly U.S. workers and 2.2 million people world-wide.
Walmart has been competing with Amazon.com Inc. and others for
warehouse workers and other staff that are handling a surge in
online orders during the pandemic. Amazon raised its starting U.S.
wage to $15 an hour in 2018 and hired 500,000 people last year to
bring its global workforce to 1.3 million. Both companies also
doled out bonuses to many of their staffers last year.
The pay raises will be for store workers in digital and stocking
roles, said Walmart U.S. Chief Executive John Furner. That targets
roles that have been especially important during the pandemic,
including workers that gather products from store shelves for
online orders picked up in parking lots or delivered to homes.
Walmart has worked to keep shelves stocked as shoppers stockpile
certain items such as food and cleaning supplies.
"We saw major changes to customer behavior last year we believe
will be lasting, and we have to continue working to stay in-stock,
deliver items on time and provide the best omni experience
possible," said Mr. Furner.
Starting March 13, pay for workers in those roles will move up
to $13 to $19 an hour, based on a store's location.
Smaller rivals Target Corp. and Best Buy Co. last year made $15
an hour their starting wage for all workers. The Biden
administration and Congress are considering raising the federal
minimum wage from $7.25 an hour.
Walmart CEO Doug McMillon has previously said the company
believes the federal minimum wage should go up, but that $15 was
too high for some regions and businesses. After the raises, about
half of Walmart's U.S. hourly workforce, or around 730,000
employees, will earn $15 or more an hour, the company said.
On a call Thursday with investors, Mr. McMillon said the company
adopted this approach, rather than a $15 minimum, to create a
"ladder of opportunity" for more workers to start at the company as
cashiers at the low end and advance to higher-paying roles. He said
he expected the company's minimum hourly U.S. wage will naturally
increase over time.
Walmart workers who receive the latest raises will no longer get
a quarterly bonus after the first quarter of this year, according
to documents viewed by the Journal. That is similar to bonus
elimination Walmart implemented for about 165,000 workers who got
pay raises last year.
"The overwhelming majority of our associates say their hourly
wages are the most important part of their pay," said a Walmart
spokeswoman. A regular raise instead of a bonus offers workers more
predictability in their pay, she said.
Average hourly earnings for nonsupervisory retail workers in the
U.S. was $18.17 an hour in January, according to the Labor
Department. The average wage was up from $16.92 an hour a year
earlier. Economists attribute at least part of the increase to
lower-wage workers losing their jobs during the pandemic. The
sector employed nearly 400,000 fewer workers in January than a year
earlier.
Walmart's sales rose during the fourth quarter due to strong
holiday shopping, with an additional boost when U.S. stimulus
checks arrived in January, Walmart said. Food sales went up as the
quarter progressed, the company said.
Adjusted per-share earnings hit $1.39 during the quarter, lower
than the $1.51 analysts expected, according to FactSet. Walmart
spent around $1.1 billion in the quarter on Covid-19-related
expenses such as increased pay and benefits. The expense was
partially offset by reduced travel and professional service costs,
the company said.
Walmart said it expects lower profits and slower growth in the
new fiscal year. It forecast U.S. comparable sales would rise by a
low-single-digit percentage, compared with 8.6% growth in fiscal
2021. Walmart, like many other businesses during the pandemic, had
stopped giving financial guidance in recent quarters.
After surging last year, the company's stock fell 5.5% in
trading Thursday morning.
Like recent quarters at Walmart, the number of shopper trips
declined but the average each spent per visit went up. Some
shoppers have avoided stores for health reasons, but are making the
most of each trip. During the most recent quarter, U.S. visits
declined 10.9%, while the average amount spent went up 21.9%.
Walmart, the country's largest retailer by revenue, has
generally fared well throughout the pandemic, rushing to fill
shelves when shoppers stockpiled early in the pandemic, then
benefiting as a drop in restaurant meals led more people to cook at
home and stock up on home goods and children's entertainment.
Unlike many retail competitors that were struggling before the
pandemic hit, Walmart had already invested heavily in e-commerce,
including online-order parking-lot pickup, a service that has grown
in popularity as more shoppers avoid stores for health reasons.
Walmart's total revenue reached a record $152.1 billion in the
fourth quarter, an increase of 10.3% from a year ago, and its
operating income rose 3% to $5.5 billion. The company reported a
quarterly net loss of $2.1 billion, reflecting hefty losses tied to
the pending sales of its U.K. and Japanese operations.
Retailers have reported mixed results over an unusual holiday
season that started early and relied heavily on e-commerce sales.
Amazon said quarterly sales jumped 44% to $125.6 billion, while
Target's comparable sales in November and December rose 17%
compared with a year earlier.
Tapestry Inc., which owns the Coach and Kate Spade brands, said
sales fell over the holidays due to less store traffic, while
profit increased as it pulled back on discounts.
The Commerce Department reported that retail sales, which
includes spending at restaurants and online, jumped a seasonally
adjusted 5.3% in January from a month earlier. It was the strongest
gain since last June, when the economy was in the process of
reopening from pandemic-related closures.
--Eric Morath contributed to this article.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
February 18, 2021 11:09 ET (16:09 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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