Walmart closing stories in Chicago leaves workers in shock

Walmart is closing stores in Chicago, citing financial losses, plunging its hundreds of staffers into deep financial uncertainty with the sudden move as the chain-store giant presses ahead with layoffs to introduce automation.

“Today we have made the difficult decision to close four of our stores in Chicago,” Walmart said in a press release.

Walmart, which operates a total of eight markets in Chicago, said four stores would be closed on April 16, but their pharmacies will continue to serve customers with prescriptions for up to 30 days.

Walmart is closing stores located in Kenwood, Lakeview, Little Village and Chatham neighbourhoods of Chicago.

“These stores lose tens of millions of dollars a year, and their annual losses nearly doubled in just the last five years. The remaining four Chicago stores continue to face the same business difficulties, but we think this decision gives us the best chance to help keep them open and serving the community.”

“Over the years, we have tried many different strategies to improve the business performance of these locations, including building smaller stores, localizing product assortment and offering services beyond traditional retail,” the company said in a release. “As we looked for solutions, it became even more clear that for these stores, there was nothing leaders could do to help get us to the point where they would be profitable.”

Walmart said all the staffers at these four stores were eligible to transfer to other Walmart locations and will be paid through August 11.

The company will keep its other four Chicago stores open to give them the best chance at operating in the future.

Last week, Walmart said inflation would continue to pressure its business this year, and that it would slow hiring as it builds out automation technology.

"We believe, over time, the number of associates will grow, but at a slower pace than in the past as we complement people growth with technology and automation," Chief Financial Officer John David Rainey said at the company's investor meeting in Tampa, Florida.

Walmart said inflation continues to impact its business as shoppers add more lower-margin groceries to their carts over higher-margin apparel and home goods.

Rainey's comments come after the retailer on Tuesday said it expects about two-thirds of its stores to be serviced by automation within three years, and reduce costs taken to process a package by 20%.

Last month, hundreds of workers at five Walmart facilities that fulfill e-commerce orders are being asked to find jobs within 90 days at other company locations, a spokesperson confirmed to Reuters.

About 200 workers at Pedricktown, New Jersey, and hundreds of others at Fort Worth, Texas; Chino, California; Davenport, Florida; and Bethlehem, Pennsylvania were let go due to a reduction or elimination in evening and weekend shifts, the spokesperson said.

The layoffs at Walmart, a retail bellwether because of its size, could be a harbinger of further turmoil in the US economy, which many economists predict could enter recession this year.

"We recently adjusted staffing levels to better prepare for the future needs of customers," Walmart said in a statement, adding that it would work closely with affected associates to find jobs at other locations.