Walmart has revealed “weeks of over-staffing” due to Covid has hit its profits.

During the company’s quarterly earnings call on Tuesday, May 17, Walmart CEO Doug McMillon stated that the company experienced “weeks of over-staffing” during the first quarter of the fiscal year 2023, primarily due to the pandemic.

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Walmart had hired extra associates at the end of 2021 to cover for staff on COVID leave, but as Omicron cases fell in the first half of the quarter, employees returned to work earlier than expected.

McMillon stated that the overstaffing issue was resolved during the quarter, primarily through attrition.

Nonetheless, several weeks of over-staffing at the retail behemoth meant several weeks of wage pressure, which ate into the quarter’s profits.

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Walmart reported a 24.8 percent drop in profit from the previous year and announced on Tuesday that it would reduce its profit guidance for the full year.

Increased labor expenses weren’t the only factor in Walmart’s poor quarter; according to McMillon, inventory levels are up, as are container, storage, and fuel prices, all of which contributed to the company’s loss.

But Walmart isn’t the only retailer that ran into staffing challenges and elevated wage costs during the first few months of the year: Its primary US competition, Amazon, had the same issues.

Source: Business Insider

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