Wal-Mart Reiterates $6.8 billion Spend, to Add 10,000 Jobs

To open, expand or relocate 59 Wal-Mart and Sam’s Club locations in 2017

Wal-Mart Stores Inc. (NYSE: WMT), the world’s largest retailer, announced its plans to open, expand, or relocate 59 Wal-Mart and Sam’s Club locations in 2017, as reported by Bloomberg on January 17th, 2017. While that adds 10,000 retail jobs, the expansion is far smaller than in many previous years and would increase its headcount by less than 1% in the US.

Wal-Mart’s plan points to $6.8 billion in US capital spending, including the construction of stores and distribution centers. Wal-Mart is the largest private employer in the US, with almost 1.5 million workers in the US, out of 2.4 million people that it employs worldwide. In addition to the 10,000 retail positions, the new and expanded stores are expected to bring in an estimated 24,000 construction jobs in 2017.

Wal-Mart’s slowdown in opening new physical stores, announced in October 2016 to cope with sluggish brick-and-mortar sales, seems to have been rehashed as a growth plan. This is because the Bentonville Arkansas-based Company faces more pressure to show that it is creating US jobs ahead of Friday’s inauguration of President-elect Donald Trump, who has pushed companies to employ more Americans.

Customer initiatives to spur job creation

Wal-Mart earlier announced that it would slow down new store openings and instead count more on e-commerce and existing stores. As such, the company is increasing investments in e-commerce, technology, store remodels, and other customer initiatives. Among the customer initiatives announced, Wal-Mart has pledged to invest $250 billion in products that support the creation of American jobs by 2023.

The traditionally brick-and-mortar retailer also has made a big ecommerce push, including the $3.3 billion acquisition of Jet.com on August 08th, 2016, and its recent alliance with JD.com in China. The acquisition, which will enable Wal-Mart to effectively compete with Amazon.com, will complement the Company’s multi-channel strategy already in place to serve customers across the Wal-Mart app, sites, and stores. The Wal-Mart-Jet.com deal is a win-win situation for both parties since it would also allow Jet.com plans to leverage Wal-Mart’s massive physical store network to grow its online business. Wal-Mart also announced in 2016 that it is investing $2 billion over two years to boost e-commerce sales and setting up new fulfillment warehouses to speed up delivery times and increasing the number of products sold on its website.

On the other hand, Wal-Mart has been laying off thousands of US employees go so it can focus more on ecommerce and putting more staff on the sales floor. Most of Wal-Mart’s 10,000 new employees, including hourly workers, department managers and supervisors, will be in 59 new stores that will be opened in the fiscal year beginning in February 2017. Store openings will decline from 130 this year. Wal-Mart hopes to offset that drop by adding positions for e-commerce services such as online grocery pick-up as well as new-format stores.

Rival Amazon.com to hire over 100,000 U.S. workers

Wal-Mart’s announcement comes close on the heels of rival Amazon.com Inc.’s (NASDAQ: AMZN) plans to hire more than 100,000 US workers in the next 18 months, as reported by Bloomberg on January 12th, 2017. Amazon’s announcement to hire more people comes at a time when the company is gearing up for expansion in multiple categories from groceries, hardware, and video to fashion and cloud services.

The online retailer said that the new jobs are full time and will largely support new Amazon fulfillment centers that are currently being built in states such as Florida, Texas, and California, expanded delivery capabilities, and its Amazon Web Services cloud computing business.

Amazon, which had a total of 306,800 full-time and part-time employees globally at the end of September 2016, hired a total of 123,700 globally during the 15 months ended September 2016. Over the past five years, Amazon.com has expanded its U.S. workforce alone by more than 150,000 people; its US workforce has grown from 30,000 in 2011 to over 180,000 at the end of 2016. As of 2015, Amazon was hiring an average of about 6,400 people per month globally.

In all, companies such as Wal-Mart, Amazon.com and telecom major Sprint Corp. (NYSE: S) have announced a total of more than 200,000 new jobs, ever since job creation became a hot-button political issue since the Presidential election on November 08th, 2016. Many companies say that they are prompted to announce new hires to avoid being targeted by the new government or gain bad press that could affect investors. It remains to be seen if the hiring spree of these companies would be sustainable in the long term, given that wage hikes, employee benefits, and other headcount costs will also have to be factored in as part of the overall game plan.

Stock Performance

Wal-Mart’s stock stood at $67.62, slipping 0.72%, at the close on Thursday, January 19th, 2017, having vacillated between an intraday high of $68.19 and a low of $67.48 during the session. The stock’s trading volume was at 6,780,442 for the day. The Company’s market cap was at $201.41 billion as of Thursday’s close.

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