Tag Archives: WMT

Business

CVS, Walmart to Cut Pharmacy Hours as Staffing Squeeze Continues

Leave a comment

CVS, the largest U.S. drugstore chain by revenue, plans in March to cut or shift hours at about two-thirds of its roughly 9,000 U.S. locations. Walmart plans to reduce pharmacy hours by closing at 7 p.m. instead of 9 p.m. at most of its roughly 4,600 stores by March.

Walgreens Boots Alliance Inc.

previously said it was operating thousands of stores on reduced hours because of staffing shortages. Combined, the three chains operate some 24,000 retail pharmacies across the U.S. 

Walmart last year raised pay for pharmacy technicians.



Photo:

Ryan David Brown for The Wall Street Journal

Earlier in the pandemic, CVS and Walgreens struggled to meet demand for Covid shots and vaccines. The chains cut hours and, in some cases, closed pharmacies for entire weekends. Walmart, which sells a wider variety of goods, cut overall store hours, in part, to cope with Covid-related labor shortages and make time to restock empty shelves as demand for basics such as toilet paper surged.  

CVS, in a recent notice to field leaders, said most of its reduced hours will be during times when there is low patient demand or when a store has only one pharmacist on site, which the company said is a “top pain point,” for its pharmacists. 

CVS said in a statement it periodically reviews pharmacy operating hours as part of the normal course of business to ensure stores are open during high-demand times. “By adjusting hours in select stores this spring, we ensure our pharmacy teams are available to serve patients when they’re most needed,” the company said, adding that customers who encounter a closed pharmacy can seek help at a nearby location. 

At Walmart, the shorter hours offer pharmacy workers a better work-life balance and best serve customers in the hours they are most likely to visit the pharmacy, said a company spokeswoman. “This change is a direct result of feedback from our pharmacy associates and listening to our customers,” she said. Some Walmart pharmacies already close before 9 p.m., which will become standard across the country after the change.

An online community message board for Holliston, Mass., a small town about 30 miles outside Boston, was populated with messages last month from locals venting about the unpredictable hours of the CVS in town, said resident Audra Friend, who does digital communications for a nonprofit. Ms. Friend said she struggled for a week in November to refill a prescription for a rescue inhaler at the store because the pharmacy was sporadically closed.

“I would go in, and there was a note on the door saying, ‘Sorry, pharmacy closed,’” said Ms. Friend, who switched her prescriptions to a 24-hour CVS about 5 miles away. She said it would be better to have consistently shorter hours if that meant fewer unexpected closures. “At least that way we’re not just showing up at CVS to find out the pharmacist isn’t there,” she said.

A CVS spokeswoman said that in recent weeks the Holliston store has had no unexpected closures.

The drugstore chains have been working to stop an exodus of pharmacy staff by offering such perks as bonuses, higher pay and guaranteed lunch breaks. Pharmacists were already in short supply before the pandemic, and consumer demand for Covid-19 shots and tests put additional strains on pharmacy operations. Walgreens recently said staffing problems persist and remain a drag on revenue. 

Retail pharmacies, which benefited from a bump in sales and profits during the pandemic, are now reworking their business models as demand for Covid tests and vaccines decline and generic-drug sales generate smaller profits.

CVS and Walgreens are closing hundreds of U.S. stores and launching new healthcare offerings as they try to transform themselves into providers of a range of medical services, from diagnostic testing to primary care.  

This past summer, Walgreens was offering bonuses up to $75,000 to attract pharmacists, while CVS is working to develop a system in which pharmacists could perform more tasks remotely. The median annual pay for pharmacists was nearly $129,000 in 2021, according to Labor Department data, which also projected slower-than-average employment growth in the profession through 2031. 

In the past year, the chains have poured hundreds of millions of dollars into recruiting more pharmacists and technicians but staffing up has proven difficult. Pharmacists remain overworked, pharmacy-chain executives have acknowledged, and fewer people are attending pharmacy schools. The number of pharmacy-school applicants has dropped by more than one-third from its peak a decade ago, according to the Pharmacy College Application Service, a centralized pharmacy-school application service.

Meanwhile, many pharmacists who aren’t quitting the field are leaving drugstores to work in hospitals or with other employers. 

Walmart raised wages for U.S. pharmacy technicians in the past year, bringing average pay to more than $20 an hour. Walmart said it planned to raise the minimum wage for all U.S. hourly workers in its stores and warehouses to $14 next month, from $12.

CVS and Walgreens last year raised their minimum wages to $15 an hour.

Write to Sharon Terlep at sharon.terlep@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Business

Corporate Layoffs Spread Beyond High-Growth Tech Giants

Leave a comment

The headline-grabbing expansion of layoffs beyond high-growth technology companies stands in contrast to historically low levels of jobless claims and news that companies such as

Chipotle Mexican Grill Inc.

and

Airbus SE

are adding jobs.

This week, four companies trimmed more than 10,000 jobs, just a fraction of their total workforces. Still, the decisions mark a shift in sentiment inside executive suites, where many leaders have been holding on to workers after struggling to hire and retain them in recent years when the pandemic disrupted workplaces.

Live Q&A

Tech Layoffs: What Do They Mean?

The creator of the popular layoff tracker Layoffs.fyi Roger Lee and the head of talent at venture firm M13 Matt Hoffman sit down with WSJ reporter Chip Cutter, to discuss what’s behind the recent downsizing and whether it will be enough to recalibrate ahead of a possible recession.

Unlike

Microsoft Corp.

and Google parent

Alphabet Inc.,

which announced larger layoffs this month, these companies haven’t expanded their workforces dramatically during the pandemic. Instead, the leaders of these global giants said they were shrinking to adjust to slowing growth, or responding to weaker demand for their products.

“We are taking these actions to further optimize our cost structure,”

Jim Fitterling,

Dow’s chief executive, said in announcing the cuts, noting the company was navigating “macro uncertainties and challenging energy markets, particularly in Europe.”

The U.S. labor market broadly remains strong but has gradually lost steam in recent months. Employers added 223,000 jobs in December, the smallest gain in two years. The Labor Department will release January employment data next week.

Economists from Capital Economics estimate a further slowdown to an increase of 150,000 jobs in January, which would push job growth below its 2019 monthly average, the year before pandemic began.

There is “mounting evidence of weakness below the surface,”

Andrew Hunter,

senior U.S. economist at Capital Economics wrote in a note to clients Thursday.

Last month, the unemployment rate was 3.5%, matching multidecade lows. Wage growth remained strong, but had cooled from earlier in 2022. The Federal Reserve, which has been raising interest rates to combat high inflation, is looking for signs of slower wage growth and easing demand for workers.

Many CEOs say companies are beginning to scrutinize hiring more closely.

Slower hiring has already lengthened the time it takes Americans to land a new job. In December, 826,000 unemployed workers had been out of a job for about 3½ to 6 months, up from 526,000 in April 2022, according to the Labor Department.

“Employers are hovering with their feet above the brake. They’re more cautious. They’re more precise in their hiring,” said

Jonas Prising,

chief executive of

ManpowerGroup Inc.,

a provider of temporary workers. “But they’ve not stopped hiring.”

Additional signs of a cooling economy emerged on Thursday when the Commerce Department said U.S. gross domestic product growth slowed to a 2.9% annual rate in the fourth quarter, down from a 3.2% annual rate in the third quarter.

Not all companies are in layoff mode.

Walmart Inc.,

the country’s biggest private employer, said this week it was raising its starting wages for hourly U.S. workers to $14 from $12, amid a still tight job market for front line workers. Chipotle Mexican Grill Inc. said Thursday it plans to hire 15,000 new employees to work in its restaurants, while plane maker Airbus SE said it is recruiting over 13,000 new staffers this year. Airbus said 9,000 of the new jobs would be based in Europe with the rest spread among the U.S., China and elsewhere. 

General Electric Co.

, which slashed thousands of aerospace workers in 2020 and is currently laying off 2,000 workers from its wind turbine business, is hiring in other areas. “If you know any welders or machinists, send them my way,” Chief Executive

Larry Culp

said this week.

Annette Clayton,

CEO of North American operations at

Schneider Electric SE,

a Europe-headquartered energy-management and automation company, said the U.S. needs far more electricians to install electric-vehicle chargers and perform other tasks. “The shortage of electricians is very, very important for us,” she said.

Railroad CSX Corp. told investors on Wednesday that after sustained effort, it had reached its goal of about 7,000 train and engine employees around the beginning of the year, but plans to hire several hundred more people in those roles to serve as a cushion and to accommodate attrition that remains higher than the company would like.

Freeport-McMoRan Inc.

executives said Wednesday they expect U.S. labor shortages to continue to crimp production at the mining giant. The company has about 1,300 job openings in a U.S. workforce of about 10,000 to 12,000, and many of its domestic workers are new and need training and experience to match prior expertise, President

Kathleen Quirk

told analysts.

“We could have in 2022 produced more if we were fully staffed, and I believe that is the case again this year,” Ms. Quirk said.

The latest layoffs are modest relative to the size of these companies. For example, IBM’s plan to eliminate about 3,900 roles would amount to a 1.4% reduction in its head count of 280,000, according to its latest annual report.

As interest rates rise and companies tighten their belts, white-collar workers have taken the brunt of layoffs and job cuts, breaking with the usual pattern leading into a downturn. WSJ explains why many professionals are getting the pink slip first. Illustration: Adele Morgan

The planned 3,000 job cuts at SAP affect about 2.5% of the business-software maker’s global workforce. Finance chief

Luka Mucic

said the job cuts would be spread across the company’s geographic footprint, with most of them happening outside its home base in Germany. “The purpose is to further focus on strategic growth areas,” Mr. Mucic said. The company employed around 111,015 people on average last year.

Chemicals giant Dow said on Thursday it was trimming about 2,000 employees. The Midland, Mich., company said it currently employs about 37,800 people. Executives said they were targeting $1 billion in cost cuts this year and shutting down some assets to align spending with the macroeconomic environment.

Manufacturer

3M Co.

, which had about 95,000 employees at the end of 2021, cited weakening consumer demand when it announced this week plans to eliminate 2,500 manufacturing jobs. The maker of Scotch tape, Post-it Notes and thousands of other industrial and consumer products said it expects lower sales and profit in 2023.

“We’re looking at everything that we do as we manage through the challenges that we’re facing in the end markets,” 3M Chief Executive

Mike Roman

said during an earnings conference call. “We expect the demand trends we saw in December to extend through the first half of 2023.”

Hasbro Inc.

on Thursday said it would eliminate 15% of its workforce, or about 1,000 jobs, after the toy maker’s consumer-products business underperformed in the fourth quarter.

Some companies still hiring now say the job cuts across the economy are making it easier to find qualified candidates. “We’ve got the pick of the litter,” said

Bill McDermott,

CEO of business-software provider

ServiceNow Inc.

“We have so many applicants.”

At

Honeywell International Inc.,

CEO

Darius Adamczyk

said the job market remains competitive. With the layoffs in technology, though, Mr. Adamczyk said he anticipated that the labor market would likely soften, potentially also expanding the applicants Honeywell could attract.

“We’re probably going to be even more selective than we were before because we’re going to have a broader pool to draw from,” he said.

Across the corporate sphere, many of the layoffs happening now are still small relative to the size of the organizations, said

Denis Machuel,

CEO of global staffing firm Adecco Group AG.

“I would qualify it more as a recalibration of the workforce than deep cuts,” Mr. Machuel said. “They are adjusting, but they are not cutting the muscle.”

Write to Chip Cutter at chip.cutter@wsj.com and Theo Francis at theo.francis@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Business

U.S. Retail Sales Fell 1.1% in December

Leave a comment

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. 

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

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Business

Target Shares Plunge on Earnings Miss and Weak Holiday Sales Forecast

Leave a comment

Target Corp.

TGT -13.14%

said consumers pulled back on their spending in recent weeks, sapping sales and profits in the latest quarter and putting a cloud over its holiday season.

Quarterly profits came in below Target’s forecasts and the company’s sales growth lagged behind larger rival

Walmart Inc.

WMT 0.72%

in the period. Target executives lowered their financial goals for the holiday quarter and said they are prepared to offer deep discounts in the coming months to clear out unwanted inventory and attract shoppers.

Target shares dropped 13% in Wednesday trading on the earnings, which came in well below Wall Street’s estimates. It is the second time this year the retailer has misjudged consumer demand—in the spring executives said they were surprised by shifts away from furniture and appliances.

Government data released Wednesday showed that retail spending, including purchases at restaurants, car dealers and gas stations, rose 1.3% in October from September. The data aren’t adjusted for inflation and the government earlier reported that consumer prices rose 7.7% in October from a year earlier.

Target executives said that sales worsened sharply in October and November with guests’ shopping behaviors increasingly affected by inflation, rising interest rates and economic uncertainty.

“Clearly it’s an environment where consumers have been stressed,” said Target Chief Executive

Brian Cornell

on a call with reporters. “We know they are spending more dollars on food and beverage and household essentials, and as they are shopping for discretionary categories they are looking for promotions.”

Target executives said consumers are waiting to purchase items until they spot a deal, buying smaller pack sizes and giving priority to family needs. Sales of food, beverage, beauty products and seasonal items were strong, they said.

Retailers are facing an uncertain holiday season with high food and gas prices pinching some households. Target, like many of its peers, has been discounting to try to clear out a glut of goods this summer. Target’s inventory rose 14.4% in the October quarter from a year ago, while its revenue rose 3.4%. Quarterly net income tumbled by half.

“We are committed to being clean at the end of the holiday season,” regarding excess inventory, said Target Chief Financial Officer

Michael Fiddelke,

on a call with analysts Wednesday. If consumer trends of recent weeks persist, “it will come with more markdowns to make sure we accomplish exactly that goal.”

Rival TJX Cos. reported mixed quarterly results on Wednesday, with lower sales and higher profit margins. The off-price retailer said its U.S. comparable-store sales declined 2% in the quarter, as gains in its Marshalls and T.J. Maxx apparel chains were offset by a drop in its HomeGoods chain.

TJX said it was comfortable with its inventory levels heading into the holidays and said it now expected U.S. comparable-store sales to be flat or up 1% from a year ago.

Walmart gets over half of its U.S. revenue from groceries, while Target’s business is more skewed toward discretionary categories such as home goods, apparel, electronics and beauty products. As consumers absorb higher prices, many are pulling back spending where they can.

Consumer spending has held up relatively well so far despite inflation, but experts say we’re approaching an inflection point. WSJ’s Sharon Terlep explains the role “elasticity” plays in a company’s decision on whether to raise prices. Photo illustration: Adele Morgan

For the most recent quarter, Target said comparable sales, those from stores and digital channels operating at least 12 months, rose 2.7% in the quarter ended Oct. 29 compared with the same period last year.

On Tuesday Walmart said U.S. comparable sales rose 8.2% in the quarter. Walmart executives said the retailer is attracting more higher-income shoppers as many shift spending away from discretionary categories to food and look for value.

Target said it is gaining market share in its five main categories, even as consumers pull back spending in some cases. Existing shoppers are buying more and visiting more frequently, said Christina Hennington, Target’s chief growth officer. Traffic to stores increased 1.4% in the most recent quarter.

This year Target expects a hit to its gross margin of around $600 million due to shrink, the industry term for theft and other product loss, said Mr. Fiddelke. “We’ve seen that trend has grown over the course of the year,” he said.

SHARE YOUR THOUGHTS

What’s your outlook on Target and why? Join the conversation below.

Target, which surprised investors by slashing its forecasts twice in the spring, on Wednesday reduced its sales and profits expectations for its fiscal year, which ends in January.

“We expect the challenging environment to linger on beyond the holiday,” said Mr. Fiddelke.

The company now expects a low-single-digit percentage decline in comparable sales and an operating margin around 3% for the fourth quarter. In August Target said sales would grow in the low- to mid-single-digit percentage range for the full year and operating margin would be around 6% for the second half of the year.

Target executives said they would look to cut at least $2 billion in costs over three years. Executives said the company isn’t planning major layoffs or hiring freezes as part of the new cost-cutting program, but streamlining processes inside the company.

—Suzanne Kapner contributed to this article.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

US

Walmart to Pay $3.1 Billion to Settle Opioid Lawsuits

Leave a comment

Walmart Inc.

WMT 7.24%

has agreed to pay $3.1 billion to settle opioid-crisis lawsuits brought by several U.S. states and municipalities, adding to a landmark settlement with rival pharmacy chains.

The agreement resolves a collection of lawsuits brought by states, cities and Native American tribes. Earlier this month,

CVS Health Corp.

CVS 1.08%

and

Walgreens

WBA 1.75%

Boots Alliance Inc. agreed to pay roughly $5 billion apiece to settle the lawsuits. The companies didn’t admit wrongdoing in their deals.

The Walmart agreement was announced the same morning that the retail giant reported its latest quarterly results. The company said it took $3.3 billion in charges in the last quarter related to opioid settlements.

Walmart reported stronger-than-expected sales in the October-ended quarter and raised sales and profit goals for the year, signs the big discount chain is drawing in shoppers despite high inflation. Walmart shares rose over 8% in midmorning trading.

Each state, local government and tribe will need to decide whether to participate in the settlement. Plaintiff’s attorneys that lead negotiations are encouraging them to do so, saying the payments hold the pharmacies accountable for their alleged roles in the opioid abuse.

Walmart said that it strongly disputes allegations made in the lawsuits and that the settlement isn’t an admission of liability. The company said its settlement payments will reach communities faster than other deals. CVS is paying out over 10 years, and Walgreens over 15 years.

Walmart has roughly half as many locations as either CVS or Walgreens, which combined have roughly 19,000 U.S. drugstores. Walmart has faced scrutiny from the federal government related to how it prescribed opioids.

The Justice Department filed a lawsuit in December 2020 over its alleged role in the opioid crisis, claiming Walmart sought to boost profits by understaffing its pharmacies and pressuring employees to fill prescriptions quickly. The settlement with the states doesn’t cover the federal case, which Walmart has sought to have dismissed.

The Justice Department sued Walmart a few months after the company had pre-emptively sued the federal government, saying the Justice Department and Drug Enforcement Administration were attempting to scapegoat the company for their failings. Walmart’s suit was dismissed in February 2021. Walmart appealed the dismissal, but lost that case late last year.

Opioid abuse has claimed more than half a million lives and triggered more than 3,000 lawsuits by governments, hospitals and others against players in the pharmaceutical industry, including manufacturers, distributors and drugstores.

The fact that Walmart will pay out funds almost immediately rather than over a decade or more “is particularly noteworthy considering that Walmart dispensed fewer opioids, and at lower dosages, than the other pharmacy defendants,” said lawyer

Paul Geller,

of Robbins Geller, a who is representing local communities.

Write to Sharon Terlep at sharon.terlep@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Business

Target’s Profit Sinks as Retailer Unloads Unwanted Inventory

Leave a comment

A glut of inventory sank profit at

Target Corp.

further than it expected, sparking investor concerns about the company’s response to an oversupply problem haunting retailers from

Walmart Inc.

to the parent of T.J. Maxx.

Like many other retailers, Target didn’t foresee the sharp reversal in buying behavior that has taken place in recent months as shoppers, squeezed by inflation, shifted more spending to travel and cut back on patio furniture, small electronics and other items that were in high demand for much of the Covid-19 pandemic. Target took a more aggressive approach than some of its competitors, slashing prices and canceling orders to clear out the glut as quickly as possible.

The decision to quickly move through excess inventory “had a meaningful short-term impact on our financial results,” Target Chief Executive

Brian Cornell

said on a call with reporters. He said the company didn’t want to deal with excess inventory for years, potentially degrading the customer and worker experience.

“Today the vast majority of the financial impact of these inventory actions is now behind us,” he said. In the current quarter the company expects a roughly $200 million impact from its effort to reduce inventory, Chief Financial Officer

Michael Fiddelke

said on a conference call Wednesday. The company expects operating margin to rise to 6% in the second half of the year.

About 75% of the U.S. population can find a Target store within a 10-mile radius. WSJ’s Sarah Nassauer explains how the retailer leverages its physical stores to expand services such as in-store pickup and same-day shipping. Photo Illustration: Ryan Trefes

Target shares were off 2.6% at $175.46 at midday Wednesday.

T.J. Maxx parent

TJX

TJX 4.43%

Cos. said Wednesday that inventory rose 39% in the most recent quarter, while sales fell 1.9%. The company said it is comfortable with its inventory levels and that lower gasoline prices could boost consumer spending for its goods.

Large retail chains including Walmart and

Home Depot Inc.

have reported higher sales for the most recent quarter driven by consumers’ willingness to absorb price increases. The results so far indicate Americans continue to spend even as they shift purchases away from nonfood items to offset the effects of inflation.

Overall retail sales—a measure of spending at stores, online and in restaurants—were flat in July as gasoline prices fell, compared with an increase of 0.8% in June, the Commerce Department said Wednesday. Stripping out gasoline and auto sales, retail sales rose 0.7% in July.

Walmart, like Target, has discounted goods to pare excess inventory. Those efforts ate into last quarter’s profit and will continue in the current quarter, executives said Tuesday.

Target executives said traffic gains and the overall spending strength among its core shoppers are evidence that the retailer can put the inventory issues behind it. The retailer believes it is gaining market share by unit sales in all major categories, executives said. Target shoppers are buying fewer discretionary items as prices rise, but “we’ve got a guest that is still out shopping,” Mr. Cornell said.

Target’s inventory challenge rippled through its business over the past quarter, company executives said on a call with analysts Wednesday. In June inventory in Target’s warehouse network peaked at more than 90% of capacity, before dropping to below 80% by the end of the period, Chief Operating Officer

John Mulligan

said. The company aims to keep capacity at or below 85% to reduce cost and operational difficulties, he said.

SHARE YOUR THOUGHTS

How has your shopping at Target changed over the past year? Join the conversation below.

To dispose of the excess inventory Target offered discounts, canceled orders and adjusted how it ordered products for the second half of the year, favoring items such as food that shoppers are now buying more of, executives said on the call. Target used store space typically reserved for seasonal goods to highlight deals, stopped selling outdoor products earlier than usual and brought in back-to-school items ahead of schedule. The company canceled $1.5 billion in fall discretionary product orders, executives said.

The company continues to import goods earlier than it did before the pandemic to make sure seasonal merchandise arrives on time, but believes supply-chain snarls have peaked, Mr. Mulligan said. Target’s inventory rose nearly 10% in the second quarter to $15.3 billion as the retailer prepares for fall and holiday shopping, he said.

Target’s net earnings were $183 million, compared with $1.8 billion during the same period last year.

The company’s revenue rose, boosted by strong sales of food-and-beverage, beauty and household items as well as more shopper visits. Comparable sales, those from stores and digital channels operating at least 12 months, rose 2.6% in the quarter compared with the same period last year. Shopper traffic increased 2.7% in the quarter. Shoppers spent slightly more for fewer items per transaction during the quarter.

Home Depot said Tuesday that its sales rose, in part because of higher prices, while traffic fell in the most recent quarter. Walmart said its sales rose, also helped by higher prices, and traffic increased 1% in the quarter.

Target revenue rose 3.5% during the quarter to $26 billion. It maintained previous estimates for the full year of revenue growth in the low- to mid-single-digit percentage range.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Business

Walmart Reaches Video-Streaming Deal to Offer Paramount+ to Members

Leave a comment

Walmart Inc.

WMT 0.29%

said it has agreed to a deal with

Paramount Global

PARA 1.41%

to offer the entertainment company’s Paramount+ streaming service to subscribers of Walmart’s membership program.

Walmart has been exploring a subscription video-streaming deal to draw more people to Walmart+ as it seeks to challenge

Amazon.com Inc.,

which has grown its own Prime membership program to about 200 million global members.

The companies agreed to a 12-month exclusivity agreement and a two-year deal that would give Walmart+ members access to Paramount’s ad-supported streaming service, according to people familiar with the deal. The perk will be available starting in September, Walmart said.

Walmart’s announcement on Monday came after The Wall Street Journal reported the two companies had reached an agreement. Walmart is scheduled to announce quarterly earnings on Tuesday.

The deal is the latest tie-up in the fast-changing streaming industry, where a growing group of companies are looking to bundle content to draw viewers or customers. YouTube is planning to launch an online store for streaming video services and has renewed talks with entertainment companies about participating in the platform. YouTube, which is owned by

Alphabet Inc.,

would join

Apple Inc.,

Roku Inc.

and Amazon, which all have hubs to sell streaming video services.

Walmart executives have held talks in recent weeks to discuss a streaming deal with executives at

Walt Disney Co.

,

Comcast Corp.

and Paramount Global, according to people familiar with the matter.

While this partnership is new, Paramount and Walmart have worked together for years. Paramount has had an office in Bentonville, Ark., dedicated to Walmart, which historically has been a big seller of its consumer products and home entertainment.

Paramount Global runs the Paramount+ service, which has shows such as “Halo,” the “Star Trek” series and “Paw Patrol.” The company said this month that Paramount+ had more than 43 million subscribers at the end of its latest quarter.

Walmart introduced Walmart+ in 2020 and aims to use the service to add new streams of revenue beyond selling goods, as well rival the success Amazon has had with its Prime membership services. A subscription to Walmart+ costs $12.95 a month or $98 a year and includes free shipping on online orders and discounts on gasoline. The retailer has added perks to build interest, such as six months of the

Spotify

music-streaming service.

Walmart said Monday that Walmart+ has had positive membership growth every month since its launch, without specifying membership numbers. A Morgan Stanley survey in May said the service has about 16 million members, compared with about 15 million the previous November.

Amazon has invested heavily to ramp up its own Prime Video service, adding original programming and live sports. Prime Video is included along with free shipping and other perks in its Prime membership, which costs $14.99 a month or $139 a year in the U.S. Amazon also recently added a year of Grubhub’s restaurant delivery services for Prime subscribers.

The deal would give Paramount+ a new avenue for growth in an increasingly competitive streaming market now that all of the major entertainment companies have streaming offerings and growth in the U.S. among many services, such as

Netflix Inc.,

has started to slow.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at the other’s share, often by borrowing the other’s ideas. Photos: Amazon/Walmart

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Business

Walmart Lays Off Hundreds of Corporate Workers

Leave a comment

Walmart Inc.

WMT -1.64%

is cutting hundreds of corporate roles in a restructuring effort, according to people familiar with the matter, a week after the retail giant warned of falling profits.

The retailer began notifying employees in its Bentonville, Ark., headquarters and other corporate offices of the restructuring, which affects various departments including merchandising, global technology and real-estate teams, the people said. Around 200 jobs in total are being cut, said one of these people.

A Walmart spokeswoman confirmed that there were roles being eliminated as the company updated its structure, but said that the company was also investing in other areas and creating some new roles.

Last week, Walmart warned that its profit would decline in the current quarter and fiscal year because it was having to mark down apparel and other merchandise that has piled up in its stores. The retailer said higher prices for food and fuel were causing U.S. shoppers to pull back on other categories that are more profitable for it.

Walmart was one of several retailers that was caught off guard this spring as shoppers shifted their spending away from products that have been in high demand throughout much of the pandemic. In addition, some products arrived late due to supply-chain snarls, causing oversupply as shopper interest waned.

Target Corp.

in June issued a profit warning after it reported quarterly results that, like Walmart, showed a surge in inventory levels. Last week,

Best Buy Co.

cut its sales and profit goals, saying consumers had pulled back on electronics.

Walmart is the largest private employer in the U.S. and while much of its workers are hourly staff, it has thousands of people in corporate roles. Walmart employed 2.3 million worldwide, including 1.7 million in the U.S., as of Jan. 31.

While the overall U.S. job market has been strong, a handful of other major employers are pulling back on hiring or cutting some jobs.

Ford Motor Co.

is preparing to cut thousands of white-collar workers, while technology giants such as

Microsoft Corp.

and Facebook parent

Meta Platforms Inc.

have pulled back.

Investors will get another update on the health of the U.S. job market on Friday when the government releases data for July. Economists surveyed by The Wall Street Journal think Friday’s jobs report will show that they added more than 250,000 in July, compared with 372,000 in June.

This is a developing story and will be updated.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the August 4, 2022, print edition as ‘Walmart Trims White- Collar Personnel.’

Read original article here

Business

U.S. Inflation Hits New Four-Decade High of 9.1%

Leave a comment

U.S. consumer inflation accelerated to 9.1% in June, a pace not seen in more than four decades, adding pressure on the Federal Reserve to act more aggressively to slow rapid price increases throughout the economy.

The consumer-price index’s advance for the 12 months ended in June was the fastest pace since November 1981, the Labor Department said on Wednesday. A big jump in gasoline prices—up 11.2% from the previous month and nearly 60% from a year earlier—drove much of the increase, while shelter and food prices were also major contributors.

The June inflation reading exceeded May’s 8.6% rate, prompting investors and analysts to debate whether the Fed would consider a one-percentage-point rate increase, rather than a 0.75-point rise, later this month. Slowing demand is key to the Fed’s goal of restoring price stability in an economy that is still struggling with supply issues, but raising interest rates also elevates the risk of a recession.

Core prices, which exclude volatile food and energy components, increased by 5.9% in June from a year earlier, slightly less than May’s 6.0% gain, the Labor Department said.

As inflation climbs in the U.S., rising food and energy costs have pushed the nation’s most popular price index to its highest level in four decades. WSJ’s Gwynn Guilford explains how the consumer-price index works and what it can tell you about inflation. Illustration: Jacob Reynolds

On a month-to-month basis, core prices rose 0.7% in June, a bit more than their 0.6% increase in May—a sign of inflationary pressures throughout the economy.

“Inflation makes everything difficult,” said

Lara Rhame,

chief U.S. economist for FS Investments. “It erodes your savings, your wages, your profits. It’s punishing everybody.”

Stocks declined on Wednesday after wavering for much of the day, with the S&P 500 index falling by 0.5%. Bond yields jumped following the inflation report, but yields on longer-term Treasurys quickly gave up those gains.

Despite June’s inflation reading, economists point to recent developments that could subdue price pressures in the coming months.

Investor expectations of slowing economic growth world-wide have led to a decline in commodity prices in recent weeks, including for oil, copper, wheat and corn, after those prices rose sharply following the Russian invasion of Ukraine. Retailers have warned of the need to discount goods, especially apparel and home goods, that are out of sync with customer preferences as spending shifts to services and away from goods, and consumers spend down elevated savings.

“There’s a pretty serious recession fear affecting a broad range of asset prices,” said

Laura Rosner-Warburton,

senior economist at MacroPolicy Perspectives.

Retailers’ ability to shed unwanted inventory could test whether pricing is returning to prepandemic patterns, Ms. Rosner-Warburton said. Some retailers, such as Target, have already said they are planning big discounts. Others with robust warehouse capacity, such as Walmart Inc., could be more likely to hold on to their excess inventory, analysts say.

we want to hear from you

How is inflation affecting you? Share your experience in the form below or join the conversation in the comment section.

“It would be really important if we do see discounting return, because it would show that we weren’t that far away from the pre-Covid environment in terms of pricing behavior,” Ms. Rosner-Warburton said.

Discounts haven’t shown up prominently in inflation figures so far: Prices for apparel and home goods both rose last month. New and used car price increases, a significant source of upward pressure on inflation, both eased on a month-to-month basis in June.

The Fed last month raised its interest-rate target by 0.75 percentage point, the largest increase since 1994. Besides tempering demand, the central bank is trying to prevent consumer expectations of higher inflation from becoming entrenched, as such expectations can be self-fulfilling. Fed Chairman

Jerome Powell

has said the central bank wants to see clear evidence that price pressures are diminishing before slowing or suspending rate increases.

Persistent high inflation is putting a strain on businesses and consumers who, after decades of price stability, aren’t used to it.

Dan Waag,

55 years old, the owner of Arlene’s Sunny Side Cafe in Alcester, S.D., made the difficult decision to close for a week after concluding that a drop in the number of customers was leaving the restaurant’s finances in the red.

“I know these are tough times with this inflation, little to no rain for the farmers, gas prices as high as they are,” he wrote to his customers on Facebook.

Mr. Waag attributes the slowing demand to a poor season for the corn and bean farmers in the area, and the added toll of higher gasoline prices that might make an outing to his restaurant an unaffordable luxury. He hasn’t changed his prices yet, but with his own rising costs and a drop in daily revenue from around $600-$700 to $300-$400, he feels he may have to soon.

High inflation and a poor farm season have driven Dan Waag to close Arlene’s Sunny Side Cafe in Alcester, S.D., for a week.



Photo:

Dan Waag

By closing for a week, he said he is betting customers will realize the value of having a non-fast food restaurant in their town of around 800 people. “I’m trying to show people, ‘This is what it will be like if I have to stay closed,’ ” Mr. Waag said.

Consumer inflation expectations have improved somewhat, according to a Federal Reserve Bank of New York survey this week. Americans expect slower inflation increases over the longer run than they had in recent months. The bank said in its June Survey of Consumer Expectations that respondents see the annual inflation rate three years from now at 3.6%, down from their expectation in May of 3.9%. The bank also said respondents expect the annual inflation rate five years from now to be 2.8%, down from their May expectation of 2.9%.

Higher interest rates won’t have the same effect on all prices simultaneously, economists say. Costs such as mortgages and rents—a big part of household budgets—respond over time to the demand-sapping effects of higher interest rates. Shelter costs rose by 0.6% in June over the prior month, the same rate as they did in May. The rent index rose 0.8% over the month, which was the largest monthly increase since April 1986.

Housing inflation is important because it represents around 40% of core CPI and around 17% of the Fed’s preferred inflation gauge, the personal-consumption expenditures price index.

“High rents are really troubling because they’re locked in once every year or once every two years, and that’s what leads people to go ask their boss for higher wages,” said Ms. Rhame.

Wages aren’t keeping up with inflation. With annual wage growth at 5.1%, average hourly earnings adjusted for inflation are declining at their fastest pace in four decades. After accounting for seasonal and inflation adjustments, average hourly earnings decreased 3.6% from June 2021 to June 2022.

Record home prices and higher mortgage rates in May made it the most expensive month since 2006 to buy a home. Those conditions are leading prospective buyers to drop out of the market for now. But with limited supply and continued demand, it may take months before housing prices see significant declines.

“We entered this year with so much more demand than supply—even with many home buyers unable to compete in the market, there’s still a lot of buyers,” said

Bill Adams,

chief economist at Comerica Bank.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here

Business

Walmart, Kroger Raise Prices of Covid-19 Test Kits

Leave a comment

Prices are going up for some of the cheapest and most popular at-home Covid-19 test kits in the U.S.

Walmart Inc.

WMT -1.83%

and

Kroger Co.

KR 2.17%

are raising their prices for BinaxNOW at-home rapid tests, after the expiration of a deal with the White House to sell the test kits at cost for $14.

The two U.S. retail giants and

Amazon.com Inc.

agreed with the Biden administration last summer to discount the tests, which are made by

Abbott Laboratories

ABT -2.35%

and generally cost $24 or more for a box with two tests.

Abbott Laboratories’ FDA-approved BinaxNOW kit is among the most commonly used rapid Covid-19 antigen tests in the U.S.



Photo:

Paul Hennessy/Zuma Press

BinaxNOW, approved by the U.S. Food and Drug Administration, is among the most commonly used over-the-counter, rapid antigen tests, which have been in high demand as the highly contagious Omicron variant spreads across the U.S.

The deal with the White House expired in December, and Walmart said this week that it is raising the kits’ price to $19.98 a box. Kroger now sells them for $23.99. The BinaxNOW tests aren’t currently available on Amazon.

Representatives for Walmart and Kroger said they fulfilled their commitment to sell tests at cost for three months and are taking steps to make tests more available. The White House didn’t respond to a request for comment.

An Amazon spokeswoman said the company is working with suppliers to alleviate shortages. She said Amazon made a large investment to develop its own FDA approved PCR test, which sells for $39.99, lower than most similar tests. The effort, she said, involved setting up an in-house laboratory to process results.

Pharmacy chains

CVS Health Corp.

and Walgreens Boots-Alliance Inc., along with other big retailers, have been selling the tests for $23.99 a box. Other retailers already are charging even more.

To help combat Omicron, the Biden administration is opening up more Covid testing sites and delivering 500 million Covid tests to Americans. WSJ’s Daniela Hernandez breaks down why testing is still a pain point in the U.S., two years into the pandemic. Photo Illustration: David Fang

Even at the higher prices, tests are difficult to find. BinaxNOW is sold out on many major retailers’ websites or takes more than a week to arrive. A Walmart spokeswoman said the BinaxNOW tests are more readily available in physical stores.

Abbott said it is running plants around the clock, seven days a week to pump out 70 million tests a month. “Despite rising U.S. material and labor costs, we have not passed along any of these costs to our customers and the price at retail has not changed since we launched the test,” the company said.

Covid-19 tests—both at-home kits and those done on location in clinics or at drugstores—remain costly and difficult to find in many places as the Omicron-driven surge pushes many Americans to seek out the diagnostic tools. The Biden administration has said it is working to expand access to free testing and has pledged to distribute 500 million free at-home tests. Some cities and states have established similar programs.

The White House said last month that it would begin delivering at-home tests in January and that they would be available to the public free by mail through a new website. Officials haven’t provided details of the plans to mail out tests or to cover the costs of testing.

Kroger now sells BinaxNOW Covid-19 test kits for $23.99 a box.



Photo:

Barrett Lawlis/Eagle-Gazette/USA TODAY NETWOR/Reuters

The cost and availability of tests varies widely. BinaxNOW tests are hard to find online for $24 but can be purchased for twice the price. At-home PCR tests are more readily available but generally cost close to $100 for a single test. Other rapid tests approved by the FDA for home use include the Ellume Covid-19 Home Test and the QuickVue test made by

Quidel.

Free testing is generally offered at medical and community clinics and at retail pharmacies. In places where demand for testing is especially high, people face hours-long lines or scarce appointment slots. How much people pay for in-person tests varies based on a number of factors including whether a person is insured, if they are symptomatic and how quickly they want results.

“When the prices are that high, people will rationalize not using a kit. They’ll wait until they’re sick or need it for school or something,” said Eric Feigl-Ding, an epidemiologist and health economist and a senior fellow at the Washington, D.C.-based Federation of American Scientists. “The problem with this pricing, besides creating a lack of access, is that it creates a perverse incentive for people not to use them.”

The tests need to be free or cost closer to $1, as is the case in much of Europe, to be an effective tool, Dr. Feigl-Ding said. That is because people who have few or no symptoms can still spread the virus.

Write to Sharon Terlep at sharon.terlep@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read original article here