April 5 (Reuters) – Walmart Inc (WMT.N) on Wednesday said inflation would continue to pressure its business this year, and that it would slow hiring as it builds out automation technology.
“We believe, over time, the number of associates will grow, but at a slower pace than in the past as we complement people growth with technology and automation,” Chief Financial Officer John David Rainey said at the company’s investor meeting in Tampa, Florida.
Walmart said inflation continues to impact its business as shoppers add more lower-margin groceries to their carts over higher-margin apparel and home goods.
Rainey’s comments come after the retailer on Tuesday said it expects about two-thirds of its stores to be serviced by automation within three years, and reduce costs taken to process a package by 20%.
Last month, Reuters reported that hundreds of workers were let go at facilities that fulfill orders placed on Walmart.com.
Automation will also help the company prevent inventory build-up, which happened last year when food and gas prices sharply increased and consumers cut back on other purchases.
Automation will “get us closer to inventory optimization than ever before,” CEO Doug McMillon said.
The company, which has more than 5,000 U.S. stores, also stuck to its April quarter, full-year, and three- to five-year forecast of generating 4% sales growth and more than 4% operating income growth.
Rainey said Walmart was at an inflection point as the investments it makes in alternative revenue streams, including advertising, fulfillment services and membership programs, start making higher contributions to profitability over the next five years compared to its core brick-and-mortar retail business.
“(With the investments) We think the opportunity for operating income growth over the next three to five years could be better than what we’ve outlined.”
Reporting by Aishwarya Venugopal in Bengaluru and Siddharth Cavale in New York; Editing by Anil D’Silva, Mark Porter and Lisa Shumaker
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