(Bloomberg) -- Walmart Inc. might be one of the few big winners in the pandemic, having posted surging sales month after month, but that isn’t stopping the company from tightening its belt.
The world’s biggest retailer has laid off hundreds of workers in units including store planning, logistics, merchandising and real estate, according to people familiar with the matter. It is also reorganizing its roughly 4,750 U.S. stores by consolidating divisions and eliminating some regional manager roles, two of the people said.
Some of those affected were told in-person, while others learned over a Zoom call, said the people, who asked not to be identified because they aren’t authorized to speak publicly. Conversations with those impacted will continue throughout the week. Those who lose their jobs will be paid until the end of January, when Walmart’s fiscal year ends and annual bonuses get doled out, according to one of the people.
The company declined to comment specifically on the plans, saying via email that it would “share additional information after we’ve completed our communication with associates.” John Furner, head of Walmart’s U.S. operations, is expected to address the restructuring in a statement to employees Thursday afternoon.
“We are continuing on our journey to create an omni-channel organization within our Walmart U.S. business and we’re making some additional changes this week,” Walmart said in the email, without clarifying. The company said its goal is to increase “innovation, speed and productivity.”
Walmart is performing well thanks to soaring demand and its low prices during the pandemic. The move is an acknowledgment that the retailer is simply not opening many new stores in the U.S. anymore, so it doesn’t need as many people to find new locations and design them.
It’s also part of a multi-year streamlining effort that has sought to consolidate its brick-and-mortar and online divisions, bringing cohesion to what had been disparate -- and sometimes conflicting -- functions. The changes to store operations follow a similar move in 2017 that reduced the number of U.S. divisions from six to four. Walmart has re-named its store divisions “business units,” and will now have three for its massive Supercenters and one for its smaller Neighborhood Markets, which are the size of traditional grocery stores. It has also added some new roles in certain markets, Walmart said.
The changes signal that Furner, who took over the U.S. business in November, wants to put his own stamp on the company’s most important unit, which generates two-thirds of its sales and delivers better profit margins than the rest of the company.
Walmart fell less than 1% to $129.89 at 12:25 p.m. in New York. The stock had climbed 10% this year through Wednesday, beating the S&P 500 but trailing peers like Costco Wholesale Corp. and Dollar General Corp.
The retailer’s merchandising division, whose buyers choose what products to carry and how to price them, has also been hit with job reductions as store and dot-com positions get merged, two of the people said.
Some of those impacted might find other jobs inside Walmart, according to one of the people. Often, those leaving Walmart get jobs with one of the retailer’s vendors who maintain offices near Walmart’s headquarters in Bentonville, Arkansas. But those openings have dried up somewhat, according to Cameron Smith, an executive recruiter in nearby Rogers, Arkansas. Normally, Smith’s firm has as many as 80 open jobs in the region, but today it has just 54, he said.
Layoffs are also happening in departments such as transportation, human resources and product design, one of the people said. Online message boards and private Facebook groups popular with Walmart associates lit up with the news. “20 years, good performance...but given the big boot today,” said one anonymous poster. “Just laid off, 26 years with Walmart,” said another.
Many retailers have been trimming back-office workforces during the pandemic. L Brands Inc., the owner of Victoria’s Secret and Bath & Body Works, said this week it will eliminate 850 office jobs, or about 15% of its corporate staff. Last month, Macy’s Inc. said it was eliminating 3,900 corporate and management jobs. Tailored Brands and Levi Strauss & Co. are cutting corporate positions, too.
But they’re all reeling during the pandemic, while Walmart -- America’s go-to for groceries and other essentials -- has seen sales surge. In May, Walmart reported coronavirus-related stockpiling led to a boost in quarterly sales, underscoring the company’s strong position amid widespread carnage in the U.S. retail sector. It next reports earnings on Aug. 18.
(Updates with details on U.S. divisional restructuring in second paragraph)
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