Boston - Wal-Mart Stores expects to be in heavy investment mode for the next 18 to 24 months as the company improves the way it handles inventory and outfits more locations with in-store pickup for online orders.
The Bentonville, Arkansas-based company also is working to make pricing more competitive in private-label products and bolstering its grocery business, Wal-Mart executives said on Wednesday in a presentation to analysts.
“We have as a top priority to grow sales and market share,” Greg Foran, head of Wal-Mart’s US operations, said at the event. “And that starts with improving the core and concurrently investing for the future.”
The world’s largest retailer is in the midst of a costly turnaround plan under Chief Executive Officer Doug McMillon, who took the reins a little more than a year ago. As part of the effort, Wal-Mart is raising wages this month, aiming to retain workers in an increasingly tight labour market. Half a million of its employees will see a bump in pay, with hourly rates going to $9 an hour now and $10 by next year.
Investors have had a tepid reaction to the boost in spending. When Wal-Mart announced the pay hike in February, it said the move would weigh on earnings. The shares fell 3.2 percent that day, the biggest one-day decline in four months. On Wednesday, the stock dropped 1.9 percent to close at $80.71 in New York.
Despite the expense, Wal-Mart’s push to improve its workforce will probably pay off in the long run, said Oliver Chen, an analyst for New York-based Cowen & Company.
“This year’s wage/training investments should put stores on better footing,” he said in a report.
Bloomberg