(NewsNation) — Following a disappointing earnings season, Walmart is laying off 200 corporate employees.
This comes a week after the company slashed its annual profit forecast for the second time in less than three months, and U.S. consumers pulled back on purchases because of inflation, Bloomberg wrote.
Walmart spokeswoman Anne Hatfield said in a statement to The New York Times that the company is “updating its structure and evolving select roles to provide clarity and better position the company for a strong future,” adding that the company is investing in other areas such as e-commerce and technology.
Last month, Forbes reported that Walmart expects earnings per share for the second quarter to decline by 8% to 9%. The expected earnings drop for the full year is 11% to 13%, which is far lower than previous estimates of a 1% decline.
“Walmart was one of the major disappointments this earnings season,” NewsNation business contributor Lydia Moynihan said. “Not only did they miss earnings expectations, they also slashed their profit expectations for the rest of the year.”
Consumer confidence in the U.S. also slid in July because of inflation, going from 98.4 in June to 95.7 in July. A report by the Conference Board showed fewer Americans think conditions will improve over the next six months. More were pessimistic about their own financial prospects for the short term.
Food inflation getting higher means customers are spending more on groceries, but less on general merchandise categories, which means more markdowns could happen so Walmart can move through inventory, particularly in apparel, the company said in a July news release.
“The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars. We’re now anticipating more pressure on general merchandise in the back half; however, we’re encouraged by the start we’re seeing on school supplies in Walmart U.S.” said Doug McMillon, Walmart Inc. president and CEO.
With nearly 1.6 million workers, Walmart is the largest employer in the country.
“This is certainly a trend and I think Walmart was caught sort of flat-footed with consumer spending being pared back,” Moynihan said. “They certainly indicated that this would be happening and whether or not we’re going to see this across the economy writ large, of course, is a big question.”
The Associated Press contributed to this report.