Retail giant Walmart (WMT.N) has reportedly initiated a strategy to curb costs by requesting certain pharmacists out of its 16,000-strong workforce across the U.S. to voluntarily accept reduced pay through shorter work hours.
This unreported move, directed primarily at pharmacists in higher salary brackets, shines a light on the challenges facing Walmart’s pharmacy division.
The division has been grappling with dwindling profits due to the sale of costly weight-loss drugs, which despite their high price, have been dragging down overall earnings.
Adding to the company’s financial pressures, Walmart recently agreed to a $3.1 billion contribution as its portion of an opioid-related legal settlement, further inflating its legal expenses this year.
Nonetheless, the company’s shares saw a nearly 1% uptick during Tuesday’s afternoon trading, with a year-to-date increase of 12%.
This growth has outperformed the broader Dow Jones Industrial Average, which saw a 4.26% rise over the same period, establishing Walmart as the favored choice for budget-conscious consumers navigating a period of steep inflation.
In a May meeting, senior leadership in Walmart’s field division reportedly tasked market leaders from various regions to encourage pharmacists to voluntarily trim their base salary hours.
The change entails a shift from an 80-hour, two-week pay cycle to a shorter one, ranging between 64 and 72 hours.
Although this initiative was presented as a nationwide effort, market leaders from states including Arkansas, Tennessee, Missouri, Alabama, Georgia, Florida, and Louisiana took part in the meeting.
The move coincides with the company’s aim to employ pharmacists at lower base salaries, led by Davey Lavergne, Walmart’s Vice President of Health and Wellness.
Walmart, headquartered in Bentonville, Arkansas, confirms that it is adjusting the hours offered to certain pharmacists, attributing this decision to a seasonal dip in drug demand during the summer and pharmacists’ requests for a better work-life balance.
The company’s spokesperson, Marilee McInnis, asserts Walmart’s commitment to maintaining an optimal work environment through competitive pay and a balance between work and personal life.
The company continues to hire pharmacists in response to growing demand for their services.
Earlier in the year, Walmart had already scaled back the operating hours of its pharmacies by two hours at over 4,500 U.S. locations, citing a shortage of both pharmacists and pharmacy technicians that originated during the pandemic.
Michael Hogue, CEO of the American Pharmacists Association in Washington, contradicts the claim of declining medication demand during the summer, asserting that there’s no data to support this assertion.
Hogue argues that the real reason behind the reduction in pharmacists’ hours is a shortage of pharmacy technicians, whose support allows pharmacists to focus on prescription filling.
However, these technicians, without pharmacy degrees, earn less than pharmacists.
A study by the Pharmacy Workforce Center, published in May, indicates that nearly 80% of respondents working at chain pharmacies consider the shortage of technicians to be either severe or very severe.
Concurrently, the surging popularity of diabetes medications doubling as weight-loss drugs has increased the workload on pharmacists.
Although these drugs like Ozempic have boosted health and wellness sales, they’ve simultaneously weighed down profit margins.
Walmart’s pharmacy sales, housed within its health and wellness business, constituted 11% of the company’s total U.S. revenue the previous year.
Notably, Walmart’s involvement in the $3.1 billion opioid settlement has further burdened pharmacists, who are required to implement several court-ordered compliance mandates.
Complaints from pharmacists about the additional workload have emerged on social media platforms, as they juggle the same prescription volume with fewer personnel and work hours.