Necessary Layoffs?
I’m reading an article in the Arkansas News online addition, and I notice something that most of us would consider a little strange.
Let me explain something first. As I’m sure you know, Wal-Mart recently laid off between 700 and 800 employees. The normal logic to this would be for us to assume that Wal-Mart is having financial difficulties, right? I mean, why else would you lay off that many employees if you weren’t losing money?
Now I’ll explain what I was reading this morning. It seems that Wal-Mart topped over $400 Billion in annual sales.
Wal-Mart Stores Inc. reported Tuesday that its fourth-quarter profit fell to $3.79 billion, down from $4.1 billion in the year earlier period. That’s a loss of $310 million for the same period last year. Quarterly revenues rose, however, to $109.1 billion from $107.3 billion a year ago. This means they made $1.8 billion more during this quarter than the same quarter last year.
For the full year, the world’s largest retailer saw its revenues top $405.6 billion, up from $378.5 billion one year ago. Full year net income jumped 5 percent to $13.4 billion compared to $12.7 billion in the previous fiscal year. That’s an increase of $700 million for the year.
On February 1, 2009, Mike Duke assumed the title of CEO, replacing longtime leader Lee Scott. Were the layoffs some type of power trip? Were the layoffs even needed? Was this a way for Wal-Mart to boost an already huge profit? Is this a way for Wal-Mart to lead the country in the bounce back from the recession? After all, if Wal-Mart starts showing huge profits, then the United States economy must be doing pretty good, right?
Here’s the way I see it.
Wal-Mart didn’t have to layoff anyone at their corporate headquarters in Bentonville, Arkansas. I can’t predict the future of Wal-Mart, but I can predict that people will always need food, clothes and the many other items they sell. It wouldn’t seem normal to me if my wife didn’t tell me two or three times per week that we needed something from Wal-Mart. It’s a fact! Who knows, maybe their outlook for 2010 looks so bad that they had to start laying off people now in order to keep up. I honestly doubt this is the case.
Here’s another fact for you. Wal-Mart’s full year net income jumped 5 percent and they still laid off almost 800 corporate employees. What does this actually mean? Was this just an opportunity for them to cut a bunch of employees who didn’t make sense for the company? If that’s the case, as much as I hate to say it, it should make us all feel a little better. Why? Because it shows that Wal-Mart layoffs weren’t because of the economy after all, and it’s not as bad as it seems here in Northwest Arkansas.
I’ll probably do a couple of follow-ups on this. It’s got me interested in exactly how our local economy is doing. It’s also got me interested in seeing just how corporations are trying to play the American people by using the current economic recession to their advantage.