Escaping the virus lockdown in Wuhan would have torn his family, so he stayed
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Wal-Mart Stores Inc. WMT is slashing workers’ hours at some of its store locations in an effort to check its costs, per Bloomberg. Wal-Mart has told its store managers to cut hours of those workers who are working beyond the allocated time. Workers have also been asked to leave shifts early. The decision to reduce work hours comes after the retail giant pledged to spend $1 billion to raise employees’ wages and give them extra training. We note that Wal-Mart had increased its minimum wage to $9 an hour in April, and expects to increase it to $10 per hour in Feb 2016. Higher labor costs along with the company’s efforts to overhaul its stores and invest in its online operations have weighed on its earnings. Bentonville, AR-based Wal-Mart has been posting disappointing results for the past several quarters due to sluggish U.S. sales. Wal-Mart delivered weak results in the second quarter of fiscal 2016. While earnings lagged the Zacks Consensus Estimate, revenues beat the same. Higher expenses along with lower margins at Wal-Mart U.S. and unfavorable currency impact took a toll on the company’s earnings. The company also slashed its fiscal 2016 earnings guidance due to lower-than-expected earnings in the quarter. Such a strategy to reduce work hours will definitely help the company to reduce expenses. However, we believe that the company might lose some of its best employees to competitors that can provide more stable schedules. Reduced working hours might also lead to customer complaints such as unorganized store shelves or poor customer service. In the past too, Wal-Mart had to face criticism for issues such as barren shelves, dirty stores and long check-out lines. Nevertheless, we are encouraged by the fact that Wal-Mart is addressing its concerns. It has been making efforts to improve its grocery offerings to provide quality fresh food and meat products at affordable prices. We believe these efforts will surely boost the company’s sales. Wal-Mart carries a Zacks Rank #5 (Strong Sell). Stocks to Consider Better-ranked companies in the retail sector include Citi Trends, Inc. CTRN, The Kroger Co. KR and Ingles Market Inc. IMKTA. All of them carry a Zacks Rank #2 (Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WAL-MART STORES (WMT): Free Stock Analysis Report KROGER CO (KR): Free Stock Analysis Report CITI TRENDS INC (CTRN): Free Stock Analysis Report INGLES MARKET A (IMKTA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research View comments
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