YCD News – On April 14, Walmart announced it will lay off 953 workers at its distribution center in California, according to Retail Dive. The layoffs will be permanent, but the distribution center will continue to operate.
This is the latest e-commerce layoff after Walmart recently laid off nearly 2,000 workers at its warehouses in five U.S. states. After this layoff, Walmart’s e-commerce layoffs this year will total more than 3,000 workers.
Starting in early April, Walmart has announced layoffs at its distribution centers in five U.S. states, including 1,000 workers at its Texas distribution center, nearly 600 workers in Pennsylvania, 400 workers in Florida and 200 workers in New Jersey.
However, according to a Walmart spokesperson, Walmart needs to increase staffing in certain areas as it restructures its stores and distribution centers to handle more e-commerce orders, so the laid-off employees may be transferred to those positions.
At the same time, Walmart plans to invest more in warehouse robots to reduce labor costs. on April 4, Walmart announced that by the end of 2023, warehouse robots will do most of the work in its distribution centers and the unit cost of shipping goods will drop by 20 percent.
Wal-Mart Raises $5 Billion in Debt
YCD News – Major retailer Wal-Mart borrowed $5 billion in the corporate bond market on Wednesday, as strong investor demand lowered the national chain’s borrowing costs.
Wal-Mart, which has an AA credit rating, initially expected to raise about $4 billion, but increased the size of its borrowing and cut pricing after its order book reached about $20.5 billion, according to Informa Global Markets.
“If there was any question about the demand for higher qualifying risk, they answered them with minimal concessions and more than four times the book,” Tim Kurpis, portfolio manager at AllianceBernstein, said of the investor order for Wal-Mart bonds.
The Silicon Valley bank collapse sparked fears of broader instability in the U.S. banking system and also led to volatility and large swings in financial markets, with corporate bond issuance coming to a near halt in March.
Bank of America Global data showed several new deals in April, but as of last week, supply in the U.S. investment-grade market was still 15 percent lower than a year ago, at about $410 billion.
Still, Kulpis said highly rated companies entering the bond market have seen “very strong demand” in recent weeks.
Wal-Mart plans to use the proceeds of its debt for general corporate purposes. It has at least $4 billion in bonds maturing in about the next six months, according to CreditSights analysts.
Wal-Mart’s debt deal comes at a time when financial markets are once again becoming more conducive for borrowers to navigate. The retailer’s $1.5 billion 10-year bonds priced Wednesday at 70 basis points above the risk-free Treasury rate, or well below the initial range of about 95-100 basis points above the benchmark rate, according to Informa.
The 10-year Treasury rate was near 3.419 percent on Wednesday. Bond prices and yields are moving in opposite directions.
Corporate bond yields have been climbing over the past year as the Federal Reserve has raised interest rates to fight inflation. The yield on the Intercontinental Exchange Bank of America U.S. Corporate Index has fallen back from its recent high of 6% to around 5.06%, but is well above the near 2% yield during the pandemic low.
After a decade of ultra-low interest rates, rising borrowing costs are expected to eventually kill corporate profits.
In an effort to save costs, Walmart said in early April that by the end of fiscal 2026, about 65 percent of its stores will be served by automation, while about 55 percent of its operations centers will be served through automated facilities.
Walmart also said in early April that it expects adjusted earnings per share of $5.90 to $6.05 for the full 2024 fiscal year, which ends in January.