The job cuts, first reported by the Wall Street Journal, will impact about 1% to 3% of Wal-Mart's information systems department at its Bentonville, AK headquarters.
"We don't take any decision involving our people lightly," said a Wal-Mart spokesperson. "We routinely evaluate the positions, skills and experience we need like any technology business. This includes eliminating some positions while recruiting and hiring new ones."
This move follows the 450 employees who were laid off in October. The company is hoping that these job reductions could help offset its struggles to drive sales and traffic. Earlier this year, Wal-Mart also said it would close 269 stores, 154 of which are located in the U.S.
Even though Wal-Mart has been aggressively working on improving stores and driving e-commerce sales, it appears that it's no match compared to other competitors.
"We believe Wal-Mart is stuck between a rock and a hard place; it cannot compete with Costco Wholesale's (COST) prices on the brick & mortar side, nor Amazon.com's (AMZN) prices on the e-commerce side," said Jack Mohr, a portfolio manager for Jim Cramer's charitable trust portfolio, Action Alerts PLUS.
Adding to these woes, the retailer last week lowered its fiscal 2017 sales forecast along with its mixed fourth quarter 2016 results, leaving investors doubtful of a quick turnaround.
It now anticipates sales growth in fiscal 2017, which began in February, to be "relatively flat," compared to its previous outlook of 3% to 4% growth as it battles the strengthening of the dollar and deals with the impact from closing underforming stores.
Earnings for the recent quarter came in at $1.49 a share, topping estimates by 3 cents but revenue of $129.7 billion missed forecasts of $139.6 billion.
Shares of Wal-Mart are tumbling 2.15% to $66.58 on Friday afternoon.
Mohr added that he prefers Target Corp. (TGT) over Wal-Mart, given its robust fourth quarter 2015 results reported Wednesday morning which showed a 34% growth in digital channel sales.
Even though Target's online sales are still a tiny fraction of rival Amazon.com, "it's early focus on investing in a sophisticated e-commerce platform - along with its decision sacrifice margins for the sake of free shipping - helps solidify its presence as an omni-channel retailer and positions it for sustainable growth long-term," Mohr noted.
(Targetis held in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holding with a free trial).
Separately, TheStreet Ratings currently has a "Buy" rating on the stock with a letter grade of B-.
The company's strengths can be seen in multiple areas, such as its attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: WMT