Walmart aims for 65% of stores to be automation serviced by 2026

By Siddharth Cavale

(Reuters) -Walmart Inc on Tuesday said it expects about 65% of its stores to be serviced by automation by the end of its fiscal year 2026, just days after revealing plans to lay off more than 2,000 people at facilities that fulfill online orders.

The announcement, amid the U.S. retail giant’s annual investor meeting in Tampa, Florida, comes as Walmart (NYSE:) increasingly uses its huge stores to handle online-order deliveries and invests heavily in automation to speed up order processing at its e-commerce fulfillment facilities.

It was not immediately clear if this move would lead to more layoffs at the country’s biggest private employer, with about 1.7 million U.S. workers and another 60,000 abroad. The company said the moves would reduce the need for lower-paid roles.

“As the changes are implemented across the business, one of the outcomes is roles that require less physical labor but have a higher rate of pay,” the Bentonville, Arkansas-based retailer said in a filing.

“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,” it added.

About 55% of packages that it processes through its fulfillment centers will be moved through automated facilities by January 2026, improving unit cost averages by about 20%, the company said.

“This increased efficiency will not only support better inventory management, but it will also support Walmart’s rapidly growing e-commerce business,” Stephens Inc analyst Ben Bienvenu wrote in a note.

Walmart, which operates more than 5,000 U.S. stores, did not immediately respond to questions about whether the moves will result in any near-term layoffs.

The world’s largest retailer by sales maintained its forecast for the fiscal year ending Jan. 31, 2024, which calls for net sales to rise by 2.5% to 3% and earnings by $5.90 to $6.05 per share.

It also kept its forecast for first-quarter sales to rise between 4.5% and 5% in constant currency.

Walmart has invested billions of dollars in technology for its online order facilities, including buying grocery robotics company Alert Innovation and partnering with companies such as Knapp to help cut the number of steps it takes for employees to process e-commerce orders down to five from 12.

On a post-earnings call in February, Walmart CEO Doug McMillon said he was “most excited about the automation opportunity we have” with plans to increase investments in automation technology as part of its more than $15-billion capital spending budget this year.