Wal-Mart Canada Corp. is preparing to let go about 200 of its employees, industry sources say. The layoffs, mostly at its head office in Mississauga, comes on the heels of it cutting about 750 jobs across the country last spring in a store management restructuring.J.P. MOCZULSKI/The Globe and Mail
Wal-Mart Canada Corp. is preparing to let go about 200 of its employees as it feels the pressures of an increasingly fast-changing and crowded retail landscape, industry sources say.
The layoffs, mostly at its head office in Mississauga, come on the heels of it cutting about 750 jobs across the country last spring in a store management restructuring.
The latest staff reduction, which is expected to be announced next week, follows some disappointing financial results at Wal-Mart Canada over the past several quarters even as its total sales keep rising as it invests in expanding its stores and e-commerce. At the same time, digital heavyweights such as Amazon.com Inc. are bolstering their business, pinching rivals.
Andrew Pelletier, a spokesman for Wal-Mart Canada, said on Wednesday that he could not comment on rumours or speculation. "In this competitive retail climate it's not unusual for rumours to circulate." The domestic chain has more than 95,000 employees in all and almost 400 stores.
On Thursday, U.S. parent Wal-Mart Stores Inc. reported earnings of $3.71-billion, or $1.15 per share, in its fiscal third quarter. The company, based in Bentonville, Ark., posted revenue of $119-billion in the period, beating Street forecasts. Analysts expected $118.35-billion.
Wal-Mart Canada enjoyed some improvements in its third quarter. Its gross profit increased while same-store sales rose 0.6 per cent, even though shopper traffic to stores dropped 1.4 per cent while customers bought 2 per cent more compared with a year earlier. Overall sales rose 3.3 per cent, the company said.
"I'm especially pleased by the sales and profit improvements this quarter in Canada, both sequentially and over last year," chief executive officer Doug McMillon told a conference call. "The investments we've made to remodel our stores and drive supercentre expansion are resonating with customers."
In a sign that Wal-Mart Canada is grabbing grocery business from rivals, the division here gained 0.2 per cent basis points of market share in food, consumer products and health and wellness items, as reported by Nielsen for the 12-week period ended Oct. 18, Wal-Mart said.
The Canadian division's operating profit had dropped in three of the previous seven quarters, while its same-store sales had slipped in six of the previous seven quarters, picking up just 0.2 per cent in the second quarter, the company has reported. Same-store sales are considered an important measure of retail health.
But in its second quarter, its e-commerce sales, although a small percentage of its overall revenue, enjoyed a "triple-digit" surge, the company said. In the quarter, Wal-Mart Canada's total sales rose 2.9 per cent, driven by expansions of its Supercentres that include full supermarkets. Shopper traffic to its stores dipped 1.1 per cent, although customer purchase amounts rose 1.3 per cent.
Wal-Mart Canada is estimated to generate about $23-billion in annual sales; the company does not break out the amount of Canadian revenue.
The latest job cuts are part of the retailer's bid to operate in a more streamlined way, a source said. "This thing is designed to create changes that create a more efficient organizational structure," the person said.
The changes come as other big retailers feel a squeeze, including Sears Canada Inc. and Target Corp.'s fledgling Canadian division. Smaller chains, such as Reitmans (Canada) Ltd., Danier and Bikini Village have shut stores as they feel the heat of an ultra-competitive market.
Other retailers are operating under court proceedings, including fashion chain Jacob and home goods specialists Bowrings and Bombay.
Many retailers are under pressure as growth in online sales outpaces increases in physical stores. "The digital revolution is sweeping across all facets of retail," retail analyst Keith Howlett wrote in a report last month. "To compete in the new era, almost all discretionary retailers need to establish effective omni-channel operations." He was referring to retailers that operate seamlessly online and in stores, allowing shoppers to purchase at either one.
In Wal-Mart Canada's management changes last spring, 1,300 of its employees were promoted to more senior roles and about 200 store managers were added.