Walmart sees high inflation sticking around this year

Walmart expects high inflation to continue to squeeze its business this year as the retail giant begins a push to automate 65% of its workforce by 2026.

Walmart said on Wednesday that it expects stubborn inflation to continue weighing on its business this year as it prepares to lay off thousands of employees.

"We're assuming that this year is going to be somewhat anomalous," Chief Financial Officer John David Rainey said at the company's investor meeting, according to Reuters. He noted the company is "still feeling the effects of higher prices."

Although inflation has cooled from a peak of 9.1% notched last summer, it remains uncomfortably high, underscoring the persistent financial burden placed on millions of U.S. households.

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The Labor Department reported last month that the consumer price index climbed 0.4% in February from the previous month and 6% on an annual basis – about three times the pre-pandemic average. Core prices, meanwhile, rose faster than expected, climbing 0.5% in February.

Scorching-hot inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations. 

Walmart said that shoppers have added more lower-margin groceries to their carts instead of higher-margin apparel and home goods due to inflation. 

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Rainey's comments come one day after the retailer said that it expects more than two-thirds of its stores to be serviced by automation within three years. By that time, about 55% of fulfillment center volume would move through automated facilities, the company said. Together, the moves are expected to lower average unit costs by roughly 20%. 

"Over time, the company anticipates increased throughput per person, due to the automation while maintaining or even increasing its number of associates as new roles are created," the company said in a statement. 

Walmart is in the process of laying off more than 2,000 employees at five warehouses in the U.S. that fulfill website orders, according to regulatory filings. 

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In a statement, the company said the decision was not "made lightly" and that it is "working closely with affected associates to help them understand what career options may be available at other Walmart locations."

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