Walmart boosts minimum wage as earnings climb

Walmart (NYSE:WMT) announced quarterly and annual earnings increases today, pairing the financial results with news that the company would boost wages for all hourly employees and introduce new employee development programs to grow leadership from within.

Walmart posted positive sales, earnings and comp store gains for the fourth quarter and full 2014 fiscal year.

Walmart U.S. comp sales increased 1.5 percent for the 13-week period ending Jan. 30, 2015. Comp sales for the Neighborhood Market branch increased 7.7 percent. Sam's Club comp sales, without fuel, rose 2 percent for the quarter.

Revenue rose $1.9 billion for the quarter to $131.6 billion, an increase of 1.4 percent. Consolidated revenue reached $485.7 billion, an increase of $9.4 billion, or 2 percent.

"We had a good fourth quarter to close out our fiscal year, with underlying EPS of $1.61. Walmart U.S. delivered better than expected comp sales. Sam's Club had its best performance of the year, and Walmart International had solid sales and profitability," said Walmart President and CEO Doug McMillon. "Like many other global companies, we faced significant headwinds from currency exchange rate fluctuations, so I'm pleased that we delivered fiscal year revenue of $486 billion. But, we're not satisfied."

"Today, we're announcing a package of changes in Walmart U.S. that will kick off a new approach to our jobs," McMillon said in a letter to employees. "We're pursuing comprehensive changes to our hiring, training, compensation and scheduling programs, as well as to our store structure, and these changes will be sustainable over the long term."  

Walmart intends to invest, not just in new stores and technology, but also in its employees. The retailer will raise the entry minimum wage to at least $9 per hour in April, and to $10 per hour by 2016 for existing employees. New employees will be eligible for the higher pay rate after six months of employment.

Roughly 500,000 associates will receive the pay raise.

Walmart is also launching two new employee development programs in 2015 to provide more hands-on training for associates within the first six months of employment, making them eligible for the higher hourly rate.

There are also plans to increase wages and opportunities for department managers, who will receive $15 per hour by this summer, up from the current $13 hourly rate.

Walmart is piloting a program that lets hourly employees create fixed schedules, in addition to committing $100 million through the Walmart Foundation to programs that increase economic mobility for entry level workers. The first round of grants will be announced in the coming weeks, according to a company statement.

McMillon has said that wage reform was coming to Walmart, but prior statements given as recently as the annual shareholder meeting in June 2014 pinned those promises to some form of federally mandated minimum wage reform. Walmart wasn't open to raising wages if its competition wouldn't be required to meet the same standard.

What changed?

"During our recent Walmart U.S. year beginning meeting, I asked all of those in the arena, more than 7,000 people, to stand if they started their Walmart career in an hourly role," McMillon said. "It felt like almost everyone stood up. It was an emotional moment."

Roughly 75 percent of Walmart's U.S. management team began as an hourly associate.

And while the shift will cost Walmart financially, it has already garnered praise, even from its toughest critics, although proponents of wage reform are calling for $15 per hour. This is a start and begs the question: Will other large merchants follow suit?

For more:
-See this letter to Walmart employees
-See this video of President and CEO Doug McMillon
-See this Walmart press release

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