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Walmart's Wage Hike Would Represent Just Five Hours Of Sales

Published on Jan 14 2018 10:00 AM in Retail tagged: Walmart / US Retail / wages

Walmart's Wage Hike Would Represent Just Five Hours Of Sales

Walmart jolted the retail industry Thursday by raising its US starting pay to $11 an hour, a roughly 10% gain from the current level.

But what does that actually mean for the world’s largest retailer, which generates nearly $500 billion a year in global sales? About five hours.

At about $57 million in sales per hour, that’s how long it would take to ring up $300 million - the amount Walmart expects to spend on the wage increases, excluding the costs of separate one-time cash bonuses.

The company is on track for about $12 billion in net income this year, so it will take about nine days of profit to recoup the extra spending.

Small Fraction

Looked at another way, the $300 million payout is just slightly more than the $244 million that Walmart US e-commerce chief Marc Lore made in 2016, thanks to shares he received as part of the sale of his company, Jet.com, to the retail giant.

The $300 million also is just a small fraction of the $2 billion to $3 billion windfall that analysts expect Walmart to receive from the recent tax overhaul.

Some of that may go to lowering prices of bananas and batteries, some will probably be earmarked to ramp up its e-commerce business, and some could be returned to shareholders as buybacks.

Finally, Walmart has said that its employees usually spend a good chunk of their additional wages inside the retailer’s stores.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine. 

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