Even people who used to be making good money aren’t making good money any more, especially as inflation continued to run riot throughout the economy. Most of us know these days that nothing costs what it did even four years ago. And retailer Walmart (WMT) is looking to pick up the slack, with a major new plan to hike employee wages, at least in Canada. Investors didn’t take it well, and shares fell fractionally in Friday afternoon’s trading.
The plan for Walmart Canada is to drop $53 million to step up hourly wages for around 40,000 staffers. Interestingly, this is also a plan that hit Walmart locations in the United States for much the same reason: Walmart wants to hang on to its current employees and doesn’t want them to find new jobs that might pay more.
Canada’s inflation has been starting to ease, but its unemployment rate is also up to a high not seen in close to two and a half years. And even with inflation easing, all that really means is that prices are going up slower than they were, not going back to the far more reasonable levels of four years ago.
An Advertising Blitz, Too
Walmart’s going to have to pay for these wage hikes somehow. Rather than sticking customers with another price hike, Walmart is essentially putting its stores on an ad-supported model. A recently “leaked pitch deck” from Walmart, according to a report from Adweek, reveals that Walmart is pitching advertising in stores to a range of brands.
Frankly, this is a great idea, as its stores are full of shoppers interested in buying things. By promoting products in a place where they can be immediately obtained, the latency of the buying decision is cut, and advertisers are more likely to land a win.
Is Walmart a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on WMT stock based on 27 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 33.26% rally in its share price over the past year, the average WMT price target of $74.11 per share implies 6.02% upside potential.
