retail news in context, analysis with attitude

Bloomberg reports that “Wal-Mart Stores Inc., the largest U.S. private employer, plans to end profit-sharing contributions in February, replacing them with matches to employee 401(k) retirement plans to bring down benefits costs. The retailer will match contributions up to 6 percent of eligible employees’ pay, according to a memo obtained by Bloomberg News. Previously, Wal-Mart automatically put up to 4 percent of pay into the profit-sharing plan, according to spokesman David Tovar.”

Walmart founder Sam Walton began the company’s profit sharing plan in 1971. According to Bloomberg, “During the year ending Jan. 31, 2008, Wal-Mart contributed $724.4 million to 838,955 hourly employees in profit-sharing and 401(k) contributions, according to a May 2008 company press release. Data for more recent years wasn’t immediately available ... The switch by Wal-Mart, which has about 1.4 million U.S. employees, will only benefit those who are in the plans, so staff will need to join to profit from the move.”

Bloomberg quotes a benefits expert as saying that retail employee participation in 401(k) retirement plans tends to be lower than the 75 percent national average.
KC's View:
This may not do a lot for morale, but it is a pretty good bet that the Walmart analysts meeting this week will greet this as good news. (See the MNB Walmart Watch, below.) Which will be good for the company’s stock price. Which may be a priority at the moment.