Published - March 24, 2023 @ 1:06 PM (EET)

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As Walmart (NYSE:WMT) braces for a more challenging year ahead and steps up investment in automation, the big-box giant is laying off hundreds of employees at nationwide e-commerce facilities, according to a company statement Thursday.

Walmart, the US's largest private-sector employer, is working with the affected employees in New Jersey, California, Florida, Pennsylvania, and Texas, to find other positions at Walmart, the company said. 

"This decision was not made lightly, and we're working closely with affected associates to help them understand what career options may be available at other Walmart locations," the statement said.

WHY IT MATTERS

To reduce the cost of handling online purchases, the Bentonville, Arkansas-based company is paring jobs, so far avoiding the kind of mass layoffs underway at rival Amazon.com Inc.

This week, Amazon (NASDAQ:AMZN) said it would cut another 9,000 jobs from its payroll, following 18,000 layoffs in January. The online retail giant has also closed, canceled, and delayed opening new warehouses as some online sales shifted back to stores.

Meanwhile, Walmart has been investing heavily in automation over the past few years, joining forces with companies like Knapp to help reduce the number of steps employees take to process e-commerce orders.

Walmart CEO Doug McMillon said, on a post-earnings call in February, he was "most excited about the automation opportunity we have" with plans to increase investments in the technology as part of its capital expenditure budget of over $15 billion this year.

NOW WHAT

Walmart foresees slower sales growth and lower profits in the coming fiscal year. 

Though online sales have continued to grow in 2022, the increase has been slower than during the peak of the pandemic. In the fiscal year ending 31 January, e-commerce sales for Walmart's US business rose 12%, compared with 11% growth in fiscal 2022 and 79% in fiscal 2021.

During Wednesday's trading session, Walmart shares climbed 1.3%. So far, the stock has fallen 1.6% this year through Wednesday, while the S&P 500 index advanced 2.5%.

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