An employee arranges beauty product gift boxes displayed for sale at a Wal-Mart Stores Inc. location in Los Angeles, California.
Patrick T. Fallon | Bloomberg | Getty Images
Walmart said Tuesday that it is raising its minimum wage for store employees to $14 an hour, representing a roughly 17% jump for the workers who stock shelves and cater to customers.
Starting in early March, store employees will make between $14 and $19 an hour. They currently earn between $12 and $18 an hour, according to Walmart spokeswoman Anne Hatfield.
With the move, the retailer’s U.S. average wage is expected to be more than $17.50, Walmart U.S. CEO John Furner said in an employee-wide memo on Tuesday.
About 340,000 store employees will get a raise because of the move, Hatfield said. That amounts to a pay increase for roughly 21% of Walmart’s 1.6 million employees.
The retail giant, which is the country’s largest private employer, is hiking pay at an interesting moment. Some economists are calling for a recession. Prominent tech companies, media organizations and banks, including Google, Amazon and Goldman Sachs, have laid off thousands of employees and set off alarm bells. And weaker sales trends have prompted retailers, including Macy’s and Lululemon, to recently warn investors about a tougher year ahead.
But so far, retailers have largely avoided job cuts. Instead, they are still grappling with a tight labor market.
Retail, compared with other industries, tends to have higher churn than other industries — which allows employers to manage their headcount by slowing the backfilling of jobs said Gregory Daco, chief economist for EY Parthenon, the global strategy consulting arm of Ernst & Young.
Yet he said retailers may also be planning cautiously. For the past 18 months, they have had to work harder to recruit and retain workers. If they lose too many employees, he said, hiring and training new employees can be costly.
“Any retailer is going to have to think carefully and think twice about laying off a good share of their workforce,” he said.
In Walmart’s employee memo, Furner said the wage hike will be part of many employees’ annual increases. Some of those pay increases will also go toward store employees who work in parts of the country where the labor market is more competitive, the company said.
Walmart is sweetening other perks to attract and retain employees, too. Furner said the company is adding more college degrees and certificates to its Live Better U program, which covers tuition and fees for part- and full-time workers. It is also creating more high-paid roles at its auto care centers and recruiting employees to become truck drivers, a job that can pay up to $110,000 in the first year.
This story is developing. Please check back for updates.
A pedestrian walks by a Bed Bath and Beyond store in San Francisco, California.
Justin Sullivan | Getty Images
Check out the companies making headlines before the bell.
Verizon — Verizon shares slipped 1.51% after the company posted mixed results for the 2022 fourth quarter. While earnings met analyst predictions, forward earnings fell short of a Refinitiv consensus estimate. .
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Bed Bath & Beyond — The meme stock gained 5.78%, building on its dramatic start to the year, even as the retailer warns of a potential bankruptcy. Year to date, Bed Bath & Beyond shares are up 17.1%.
Lyft — The ride-sharing stock gained 3.4% following an upgrade from KeyBanc, which Lyft should feel positive impacts from cost-saving measures including layoffs and a stabilization in demand.
Johnson & Johnson — Shares of the drug maker ticked higher by less than 1% premarket after the company reported mixed quarterly financial results. Johnson & Johnson beat profit estimates by 10 cents per share, excluding items, according to Refinitiv. It also missed revenue estimates. Its full-year outlook for earnings was slightly higher than estimates while its revenue forecast was about in line with estimates.
Blackstone — Shares rose 1.3% after JPMorgan upgraded Blackstone to overweight from neutral, saying the investment management firm is a “best in class” business that’s set for a soft landing.
Lululemon — The athleisure retailer fell 2.07% after Bernstein downgraded the stock, warning that a reset is coming for the apparel stock and noting the company is facing an inflection point in its growth.
Lockheed Martin — Lockheed Martin shares gained 1.52% after the company posted latest quarterly results. The defense company’s revenue came in at $18.99 billion, topping a Refinitiv forecast of $18.27 billion. Lockheed’s earnings per share also topped expectations.
AMD — The chip stock fell more than 2% in premarket after Bernstein downgraded the chipmaker to market perform from outperform. The Wall Street firm said the downgrade is due to the sliding computer and new parts demand in the inflationary environment.
— CNBC’s Alex Harring, Yun Li, Tanaya Macheel and Sarah Min contributed reporting
Purchases at stores, restaurants and online, declined a seasonally adjusted 1.1% in December from the prior month, the Commerce Department said Wednesday. Sales were also revised lower in November and have fallen three of the past four months. The department seasonally adjusts monthly data to make it comparable over time. On an unadjusted basis, December is typically the peak sales month for the year.
A Federal Reserve report Wednesday found economic activity was relatively flat at the start of the year and businesses are pessimistic about growth in the months ahead. A separate Fed report showed U.S. industrial production slumped in December, led by weakness in manufacturing. A Labor Department report showed inflation was cooling.
Stocks fell Wednesday after the data releases. The S&P 500 shed 1.6%. The Dow Jones Industrial Average was down 1.8%, while the Nasdaq Composite Index lost 1.2%. The yield on the benchmark 10-year Treasury note declined 0.16 percentage point to 3.374%.
The latest data add to signs that the U.S. economy is slowing as the Fed pushes up interest rates to combat inflation. Hiring and wage growth eased in December, U.S. commerce with the rest of the world declined significantly in November, and existing-home sales have fallen for 10 straight months.
S&P Global downgraded its estimate for fourth-quarter economic growth Wednesday by a half percentage point to a 2.3% annual rate. Economists surveyed by The Wall Street Journal this month expect higher interest rates to tip the U.S. economy into a recession in the coming year.
“The lag impact of elevated inflation weighs heavily on U.S. households, it’s very clear that the median American consumer is still reeling from the loss of wages in inflation-adjusted terms,” said
Joseph Brusuelas,
chief economist at RSM US LLP. “We’re moving towards what I would expect to be a mild recession in 2023,” he added.
Federal Reserve Bank of St. Louis President
James Bullard
said Wednesday the central bank should keep on rapidly raising interest rates and supported a half-percentage-point increase at the Jan. 31-Feb. 1 meeting.
“We want to err on the tighter side to make sure we get the disinflationary process to take hold in the economy,” he said at a Wall Street Journal Live event.
Mr. Bullard’s position is at odds with several of his colleagues, who have suggested that a slower pace of rate increases would be appropriate to allow Fed officials to gauge how their aggressive pace of policy tightening has affected the economy.
Inflation, while still historically high, is showing signs of cooling as demand eases. Unlike many government reports, retail sales aren’t adjusted for inflation.
Consumer prices advanced 6.5% from a year earlier in December, the sixth straight month of deceleration. The producer-price index, which generally reflects supply conditions in the economy, fell in December from the prior month, and increased at the slowest annual pace since March 2021, the Labor Department said Wednesday.
The National Retail Federation said Wednesday holiday sales were disappointing. The trade group said November and December sales rose 5.3% compared with the same period last year to $936.3 billion. In November, the NRF said it expected holiday sales to rise between 6% and 8%. The NRF figures aren’t adjusted for inflation and exclude fuel, auto and restaurant spending.
Somewhat slower inflation at the end of the year didn’t offset weaker demand, said NRF Chief economist
Jack Kleinhenz.
Consumers are “hit with higher food prices, they are getting hit with higher service prices and they are having to make choices,” he said. Some spending was likely pulled into October as retailers kicked off deals early this year, he added. Retailers discounted heavily and early to clear excess stock from their shelves and warehouses.
Zach Carney, of Boston, said he has been cutting back on eggs and red meat because the prices are so high. “The price of eggs really jumps out at you,” the 28-year-old publicist said. Instead, he has been stocking up on value packs of chicken and buying more store-brand cereal and olive oil, which cost less than national brands.
In 2021, officials thought high inflation would be temporary. But a year later, it was still near a four-decade high. WSJ’s Jon Hilsenrath explains factors that have kept inflation up longer than expected. Illustration: Jacob Reynolds
The retail sales report showed spending declined in a number of gift-giving categories in December, including at electronics, clothing and department stores, and with online retailers, a category which includes companies such as Amazon.com Inc.
Dining out at bars and restaurants dropped 0.9% in December. Sales of furniture and vehicles, which are sensitive to higher borrowing costs, both fell sharply. The only categories to post slight growth in December were grocery, sporting goods and home improvement stores, as winter storms battered many parts of the U.S.
Some retailers have said the recently completed holiday shopping season turned out to be weaker than expected. Macy’s Inc. warned of softer sales, and Lululemon Athletica Inc. said its profit margins were squeezed as shoppers bought more items on sale.
Many retailers had benefited from surging sales earlier in the pandemic as shoppers stocked up on everything from toilet paper to home electronics and furniture, supported by government stimulus dollars. Those tailwinds have cooled, leaving retailers and product manufactures to confront slower spending in some categories and the longer term dynamics of the industry, such as a gradual shift to online spending.
Apparel retailers are especially exposed to the current pullback in discretionary spending, said Kelly Pedersen, the U.S. retail leader at PwC, a consulting firm. “Buying fashion items at department stores is discretionary,” said Mr. Pedersen. Many apparel retailers are still working to sell through excess inventory and offering deep discounts amid weak demand, he said.
Department stores, which saw a 6.6% sales drop in December, struggled to boost sales before the pandemic quickly shifted buying habits. In 2020, a string of department stores filed for bankruptcy, including Lord & Taylor, J.C. Penney Co., Neiman Marcus Group Ltd. and Stage Stores Inc.
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Party City Holdco Inc. filed for chapter 11 bankruptcy this week while noting inflationary pressures have hampered customers’ willingness to spend. Bed Bath & Beyond Inc. said this month it plans more layoffs and cost cuts amid falling sales.
The retail sales report offers a partial picture of consumer demand because it doesn’t include spending on many services such as travel, housing and utilities. The Commerce Department will release December household spending figures covering goods and services later this month.
Corporate reports out in February will add to that picture. Walmart Inc., Target Corp. and other large retailers—which sell a variety of goods such as food, clothes and décor—report quarterly earnings next month, which will include December sales.
—Suzanne Kapner and David Harrison contributed to this article.
Write to Harriet Torry at harriet.torry@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com
Check out the companies making the biggest moves midday:
Lululemon — Shares of Lululemon fell 12% after the athletic apparel company gave a weaker-than-expected fourth-quarter outlook. In the third quarter, the company beat Wall Street’s expectations on the top and bottom lines.
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Beyond Meat — Beyond Meat’s stock dropped more than 8% after being downgraded by Argus to sell from hold. The firm’s analyst cited falling demand amid weaker economic conditions.
Broadcom — Broadcom gained 3.1% after giving an upbeat revenue forecast and reporting better-than-expected quarterly results after the bell Thursday. The chipmaker also increased its dividend by 12.2% and said it would resume stock buybacks.
Tesla — Tesla’s stock was up more than 4%, paring some of the losses it suffered this week. Reuters reported on Friday the electric-vehicle maker will suspend Model Y assembly at its Shanghai plant between Dec. 25 and Jan. 1. Inventory levels at the plant had risen sharply over the summer.
Carvana — Shares of Carvana rose 2% after lenders told The Wall Street Journal that they don’t anticipate the online car seller will file for bankruptcy soon. These debtholders are joining together amid reports earlier this week that the company is looking to restructure its debt, the paper said. Carvana had seen success during the pandemic, but rising interest rates and weaker car demand have hurt its performance.
Netflix — Netflix gained 5% after being named a “best idea” for 2023 by Cowen and being upgraded by Wells Fargo to overweight from equal weight. Cowen said it sees free-cash flow ramping up next year, while Wells Fargo said content growth would lessen customer churn.
RH — RH, formerly known as Restoration Hardware, rose 4.5% after reporting third-quarter earnings-per-share and revenue that beat expectations. However, the retailer also said it expected business trends to deteriorate.
Coinbase — Shares of the crypto services firm fell 2.6% after Mizuho downgraded Coinbase and said its price could fall another 30%. Crypto equities such as Coinbase have been under pressure with cryptocurrency prices, as investors digest the macro picture and the latest developments on FTX.
DocuSign — Shares of DocuSign jumped 16% after the electronic signature company posted upbeat quarterly results. It also reported better-than-expected billings, subscription renewals and additional sales to existing customers.
Costco — The wholesaler gained 1.6% after Cowen named the stock a “best idea” heading into 2023, noting the company’s focus on value could be a winning strategy as consumers get more price conscious.
AmerisourceBergen — AmerisourceBergen fell 2.7% after Walgreens sold about $1 billion shares of the drug distributor. Walgreens remains its largest shareholder, with its stake now down to 17% from 20%.
Vale — The Brazil-based mining company gained 3.5% after Morgan Stanley upgraded the stock to overweight from equal weight, citing a “cocktail” of positive catalysts such as price momentum for iron ore and China exiting its Covid-zero policy.
Bath & Body Works — Shares of Bath & Body Works gained rose 2.1% after activist investor Dan Loeb boosted his stake in the retailer. Loeb said he might push for board charge to improve governance issues at the company.
— CNBC’s Carmen Reinicke, Alexander Harring, Tanaya Macheel and Christina Cheddar-Berk contributed reporting.
U.S. stock futures were up slightly on Thursday morning following a fifth straight day of losses for the S&P 500 as Wall Street weighed the likelihood of a recession.
Dow Jones Industrial Average futures added 30 points, or 0.09%. S&P 500 futures gained 0.11%, while Nasdaq 100 futures were 0.17% higher.
Shares of Rent the Runway surged more than 27% in extended trading. The online retailer topped revenue expectations in its most recent quarter as shoppers opted to borrow designer clothes amid rising inflation.
During the regular session Wednesday, the S&P 500 declined 0.19% in its fifth straight losing session. The Dow was virtually flat, adding just 1.58 points. Meanwhile, the Nasdaq Composite slipped 0.51%.
The Federal Reserve is expected to issue a 50 basis point interest rate hike next week. It’s a smaller increase than the prior four rate hikes. Still, investors are increasingly concerned whether the central bank can avoid a recession next year in its attempt to squash inflation.
“We’ve been waiting for earnings to come down, we’ve been waiting for CEOs to acknowledge the fact that a recession is more likely than not, and here we are,” Liz Young, head of investment strategy at SoFi, said Wednesday on CNBC’s “Closing Bell: Overtime.”
“It’s hard for me to see how we wouldn’t have one. But I think it would be a good thing if we just got it over with,” Young added.
On the economic front, investors are awaiting the latest data on weekly jobless claims before the bell on Thursday. Economists polled by Dow Jones are anticipating a reading of 230,000, up slightly from the prior week’s total of 225,000.
Traders are expecting the most recent earnings results from Lululemon Athletica, DocuSign, Broadcom and Costco after the bell Thursday.
CNBC’s Jim Cramer on Friday told investors that stocks could see another strong week of trading, given the right economic conditions.
“As the year winds down, the holidays will become more and more of a focus. Right now, the forecast is cloudy – too many cross currents. But if the job market stays strong and inflation stays tame, we could be in for still one more very good week,” he said.
related investing news
Jim Cramer’s Investing Club meeting Friday: Hot jobs report, Marvell earnings read through
Stocks closed up for the week on Friday, marking the first time since October the three major indexes saw consecutive weekly gains.
Markets were volatile this week as investors digested Federal Reserve Chair Jerome Powell’s indication that the central bank could start slowing down its pace of interest rate hikes soon and the hot wage and labor data.
Cramer said that he has his eye on the producer price index and University of Michigan Consumer Sentiment Index reports set to release next week, and is worried that sentiment might be too cold.
“Right about now, we need a boost, a big boost, if only to save Christmas for retail,” he said.
He also previewed next week’s slate of earnings. All earnings and revenue estimates are courtesy of FactSet.
Tuesday: AutoZone, Toll Brothers, SentinelOne
AutoZone
Q1 2023 earnings release at 6:55 a.m. ET; conference call at 10 a.m. ET
Projected EPS: $25.3
Projected revenue; $3.86 billion
He said the stock’s been a favorite of his for years.
Toll Brothers
Q4 2022 earnings release at 4:30 p.m. ET; conference call on Wednesday at 8:30 a.m. ET
Projected EPS: $4.01
Projected revenue: $3.17 billion
While it’s generally advised not to buy housing stocks going into a tightening cycle that could set off a recession, Powell’s recent remarks could make the stock an interesting investment, Cramer said.
SentinelOne
Q3 2023 earnings release after the close; conference call at 5 p.m. ET
CNBC’s Jim Cramer on Friday told investors that stocks could see another strong week of trading, given the right economic conditions.
“As the year winds down, the holidays will become more and more of a focus. Right now, the forecast is cloudy – too many cross currents. But if the job market stays strong and inflation stays tame, we could be in for still one more very good week,” he said.
Stocks closed up for the week on Friday, marking the first time since October the three major indexes saw consecutive weekly gains.
Markets were volatile this week as investors digested Federal Reserve Chair Jerome Powell’s indication that the central bank could start slowing down its pace of interest rate hikes soon and the hot wage and labor data.
Cramer said that he has his eye on the producer price index and University of Michigan Consumer Sentiment Index reports set to release next week, and is worried that sentiment might be too cold.
“Right about now, we need a boost, a big boost, if only to save Christmas for retail,” he said.
He also previewed next week’s slate of earnings. All earnings and revenue estimates are courtesy of FactSet.
Tuesday: AutoZone, Toll Brothers, SentinelOne
AutoZone
Q1 2023 earnings release at 6:55 a.m. ET; conference call at 10 a.m. ET
Projected EPS: $25.3
Projected revenue; $3.86 billion
He said the stock’s been a favorite of his for years.
Toll Brothers
Q4 2022 earnings release at 4:30 p.m. ET; conference call on Wednesday at 8:30 a.m. ET
Projected EPS: $4.01
Projected revenue: $3.17 billion
While it’s generally advised not to buy housing stocks going into a tightening cycle that could set off a recession, Powell’s recent remarks could make the stock an interesting investment, Cramer said.
SentinelOne
Q3 2023 earnings release after the close; conference call at 5 p.m. ET
Check out the companies making headlines before the bell:
Lululemon (LULU) – Lululemon rallied 9.5% in the premarket after reporting better-than-expected quarterly results and issuing an upbeat outlook. The athletic apparel and leisurewear maker said it continues to see strong sales momentum.
Broadcom (AVGO) – Broadcom rose 2% in premarket trading after quarterly earnings and revenue exceeded analyst forecasts. The chip maker also issued a stronger-than-expected revenue forecast for the current quarter. CEO Hock Tan said Broadcom expected strong demand across all its end markets to continue this quarter.
Starbucks (SBUX) – Starbucks named Laxman Narasimhan as its new chief executive officer. Narasimhan was most recently CEO of Lysol and Enfamil maker Reckitt Benckiser, and has served in executive positions at PepsiCo. Narasimhan will join Starbucks on October 1 as incoming CEO and take over for interim CEO Howard Schultz in April 2023.
Bed Bath & Beyond (BBBY) – The housewares retailer’s stock slid 5.5% in premarket trading, setting it up for a possible fourth straight negative session. Bed Bath & Beyond – popular among “meme stock” traders – unveiled a number of steps on Wednesday designed to shore up its finances.
PagerDuty (PD) – PagerDuty shares jumped 5.8% in premarket action following a better-than-expected quarterly report and strong guidance. The operations management software company saw a 7.1% increase in total paid customers compared with a year earlier and a 37.5% surge in the number of customers providing annual recurring revenue exceeding $100,000.
Shell (SHEL) – Shell CEO Ben van Beurden is preparing to step down next year, after nearly a decade in that job, according to two company sources who spoke to Reuters. The sources say the energy producer has identified four candidates to succeed van Beurden. Shell gained 1.4% in off-hours trading.
Beyond Meat (BYND) – Investment firm Baillie Gifford reported a 6.61% stake in the maker of plant-based meat alternatives as of August 31, compared with a 13.38% stake on December 31, 2021. Beyond Meat rose 1% in the premarket.
Rocket Lab USA (RKLB) – The space rocket company’s stock added 2.9% in premarket action after successfully test firing a reused Rutherford first stage engine for the first time. The Rutherford engine is a liquid propellant rocket engine designed and manufactured by Rocket Lab.
U.S. stock futures were flat Friday morning as investors await a key jobs report for August due Friday that will give more information about the state of the economy.
Dow Jones Industrial Average futures fell 63 points, or 0.2%. S&P 500 and Nasdaq 100 futures both slipped 0.17% lower. Shares of retailer Lululemon jumped nearly 10% in late trading after reporting quarterly results that beat Wall Street’s expectations.
Earlier Thursday, the Dow and the S&P 500 ended the day higher, snapping four days of losses to kick off the first trading day of September. The Nasdaq Composite slipped, posting its first five-day losing streak since February, weighed down by falling semiconductor stocks.
All three major averages are set to end the week lower after slumping in the last days of August, on course to notch their third negative week in a row. Stocks have been weighed down by hawkish comments from Federal Reserve officials signaling that interest rate hikes aren’t going away anytime soon. Now, traders are watching to see if stocks will retest the June lows, especially since September is historically a poor month for the market.
“A half a day rally right before we have a jobs number tomorrow could just be simply that people didn’t want to be as short as they were over the last couple of days,” said Brian Kelly, founder of BKCM LLC, on CNBC’s “Fast Money.”
Check out the companies making headlines before the bell:
Turning Point Therapeutics (TPTX) – The biopharmaceutical company’s shares more than doubled in premarket trading after agreeing to be acquired by Bristol Myers Squibb (BMY) for $76 per share in cash, or $4.1 billion. Turning Point specializes in cancer treatments.
Lululemon (LULU) – Lululemon shares rose 1% in premarket trading after the athletic apparel and leisurewear maker reported a better-than-expected quarter and raised its full-year forecast. Lululemon beat estimates by 5 cents with a quarterly profit of $1.48 per share, amid continued strong demand for premium sportswear.
RH (RH) – RH slipped 4% in the premarket after the luxury home goods company issued a weaker-than-expected revenue outlook for the full year. RH reported better-than-expected profit and sales for its latest quarter and announced a $2 billion expansion of its stock buyback program.
CrowdStrike (CRWD) – CrowdStrike fell 4.3% in premarket action even though the cybersecurity company posted better-than-expected results for its latest quarter and issued an upbeat outlook. CrowdStrike stock had surged 7.8% Thursday ahead of the earnings report.
Kohl’s (KSS) – Kohl’s shares rallied 7.3% in premarket trading after the Wall Street Journal reported that the retailer received takeover bids from private equity firm Sycamore Partners and retail holding company Franchise Group. Sycamore’s bid is said to value Kohl’s in the mid-$50s per share, while Franchise Group is offering about $60. Kohl’s had closed Thursday at $41.18.
Tesla (TSLA) – Tesla shares slid 4.7% in the premarket following a report that CEO Elon Musk ordered an immediate hiring freeze and a 10% reduction in staff. The order came in a memo seen by Reuters, which quoted Musk as saying he feels “super bad” about the economy.
Coinbase (COIN) – Coinbase is extending a hiring freeze and rescinding some job offers that had been accepted. The cryptocurrency exchange operator said in a blog post that it would pause hiring for “as long as this macro environment requires.” Coinbase fell 3.7% in premarket trading.
Alaska Air (ALK) – The airline boosted its current-quarter revenue outlook, saying it is experienced sustained strong demand. Alaska Air also said stronger revenue is offsetting higher costs for fuel. The stock added 1% in the premarket.
Okta (OKTA) – The identity management software company’s stock surged 15.6% in the premarket after it reported better-than-expected results for its fiscal first quarter. Okta said it is not seeing any impact from the security breach of its systems in March, nor from macroeconomic conditions. The premarket surge in Okta shares follows a nearly 11% gain in Thursday’s trading.
Chegg (CHGG) – The education technology company’s shares rallied 6.3% in premarket trading after it announced a $1 billion increase in its share repurchase program.
PagerDuty (PD) – The cloud computing company reported better-than-expected revenue for its latest quarter and a smaller-than-expected loss. The company also anticipates it will report an annual profit next year. PagerDuty added 3.2% in the premarket.
