Walmart targets 65% of its stores to become automation serviced by 2026

On Tuesday, Walmart Inc. (WMT.N) stated that by the end of its fiscal year in 2026, it anticipates that around 65% of its stores will be automated. just a few days after it was revealed that over 2,000 workers would be laid off from online order fulfillment centers.

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As Walmart prepares to announce the announcement during its annual investor meeting in Tampa, Florida, the announcement comes as the U.S. retail giant increasingly uses its large stores to handle online-order deliveries, while investing heavily in automation in its e-commerce fulfillment facilities to speed up orders processing.

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There was no clear indication immediately whether this move would lead to more layoffs at the nation's largest private employer, which employs about 1.7 million Americans and another 60,000 abroad. The company has stated that these moves will reduce the need for lower-paid roles as a result of the changees.

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"The company is implementing changes across the entire company, and one outcome is that roles will require less physical labor while having a higher rate of pay as the changes are implemented across the business," the Bentonville, Arkansas-based retailer said in a filing.

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"It is anticipated that the company will be able to achieve greater throughput per person as a result of the automation over time, while maintaining or even increasing its number of associates as new roles are created in the future." the company said.

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Approximately 55% of the packages it processes through its fulfillment centers will be moved to automated facilities by the end of January 2026, resulting in an approximately 20% decrease in average unit costs, according to the company.

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"By increasing efficiency, Walmart will not only be able to manage its inventory more effectively, but will also be able to support the current and future growth of its e-commerce business," analysts at Stephens Inc wrote in a note.

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Walmart, which operates more than 5,000 stores in the United States, did not immediately answer questions regarding whether or not there will be any layoffs in the near future as a result of these changes.

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There was no change in the first quarter forecast for Amazon, which calls for net sales to increase by 2.5% to 3% and earnings to rise by $5.90 to $6.05 each share for the fiscal year ending Jan. 31, 2024, according to the company.

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In addition, the company still expects that in constant currency terms, first-quarter sales will increase between 4.5% and 5%.

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There have been billions of dollars invested by Walmart in technology related to online ordering, including the purchase of grocery robotics company Alert Innovation and the collaboration with companies like Knapp to help reduce the number of steps employees have to take to process e-commerce orders down to five from 12.

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As part of Walmart's more than $15-billion capital spending budget this year, Walmart CEO Doug McMillon said in a post-earnings call in February that the company was "most excited about the automation opportunity we have" with plans to increase investment in automation technology as part of its more than $15 billion capital spending budget.