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Corporate
America
has
a
message
for
Wall
Street:
It’s
serious
about
cutting
costs
this
year.
From
toy
and
cosmetics
makers
to
office
software
sellers,
executives
across
sectors
have
announced
layoffs
and
other
plans
to
slash
expenses
—
even
at
some
companies
that
are
turning
a
profit.
Barbie
maker
Mattel,
PayPal,
Cisco,
Nike,
Estée
Lauder
and
Levi
Strauss
are
just
a
few
of
the
firms
that
have
cut
jobs
in
recent
weeks.
Department
store
retailer
Macy’s
said
it
will
close
five
of
its
namesake
department
stores
and
cut
more
than
2,300
jobs.
JetBlue
Airways
and
Spirit
Airlines
have
offered
staff
buyouts,
while
United
Airlines
cut
first-class
meals
on
some
of
its
shortest
flights.
As
consumers
watch
their
wallets,
companies
have
felt
pressure
from
investors
to
do
the
same.
Executives
have
sought
to
show
shareholders
that
they’re
adjusting
to
consumer
demand
as
it
returns
to
typical
patterns
or
even
softens,
as
well
as
aggressively
countering
higher
expenses.
Airlines,
automakers,
media
companies
and
package
giant
UPS
are
all
digesting
new
labor
contracts
that
gave
raises
to
tens
of
thousands
of
workers
and
drove
costs
higher.
Companies
in
years
past
could
get
away
with
passing
on
higher
costs
to
customers
who
were
willing
to
splurge
on
everything
from
new
appliances
to
beach
vacations.
But
businesses’
pricing
power
has
waned,
so
executives
are
looking
for
other
ways
to
manage
the
budget
—
or
squeeze
out
more
profits,
said
Gregory
Daco,
chief
economist
for
EY.
“You
are
in
an
environment
where
cost
fatigue
is
very
much
part
of
the
equation
for
consumers
and
business
leaders,”
Daco
said.
“The
cost
of
most
everything
is
much
higher
than
it
was
before
the
pandemic,
whether
it’s
goods,
inputs,
equipment,
labor,
even
interest
rates.”
There
are
some
exceptions
to
the
recent
cost-cutting
wave:
Walmart,
for
example,
said
last
month
that
it
would
build
or
convert
more
than
150
stores
over
the
next
five
years,
along
with
a
more
than
$9
billion
investment
to
modernize
many
of
its
current
stores.
And
some
companies,
such
as
banks,
already
made
deep
cuts.
Five
of
the
largest
banks,
including
Wells
Fargo
and
Goldman
Sachs,
together
eliminated
more
than
20,000
jobs
in
2023.
Now,
they’re
awaiting
interest
rate
cuts
by
the
Federal
Reserve
that
would
free
up
cash
for
pent-up
mergers
and
acquisitions.
But
cost
reductions
unveiled
in
even
just
the
first
few
weeks
of
the
year
amount
to
tens
of
thousands
of
jobs
and
billions
of
dollars.
In
January,
U.S.
companies
announced
82,307
job
cuts,
more
than
double
the
number
in
December,
while
still
down
20%
from
a
year
ago,
according
to
Challenger,
Gray
and
Christmas.
And
the
tightening
of
months
prior
is
already
showing
up
in
financial
reports.
So
far
this
earnings
season,
results
have
indicated
that
companies
have
focused
on
driving
profits
higher
without
the
tailwind
of
big
price
increases
and
sales
growth.
As
of
mid-February,
more
than
three-quarters
of
the
S&P
500
had
reported
fourth-quarter
results,
with
far
more
earnings
beats
than
revenue
beats.
The
quarter’s
earnings,
measured
by
a
composite
of
S&P
500
companies,
are
on
pace
to
rise
nearly
10%.
Revenues,
however,
are
up
a
more
modest
3.4%.
Layoffs,
flight
cuts
and
store
closures
While
companies’
drive
for
higher
profits
isn’t
new,
they
have
made
bolstering
the
bottom
line
a
priority
this
year.
Downsizing
has
rippled
across
the
tech
industry,
as
companies
followed
the
lead
of Meta’s 2023
cuts,
which
many
analysts
credited
with
helping
the
social media giant
rebound
from
a
rough
2022.
CEO
Mark
Zuckerberg
had
dubbed
2023
the
“year
of
efficiency”
for
the
parent
of
Facebook
and
Instagram,
as
it
slashed
the
size
of
its
workforce
and
vowed
to
carry
forward
its
leaner
approach.
In
recent
weeks,
Amazon,
Alphabet,
Microsoft
and
Cisco,
among
others,
have
announced
staffing
reductions.
And
the
layoffs
haven’t
been
contained
to
tech.
UPS
said
it
was
axing
12,000
jobs,
saving
the
company
$1
billion,
CEO
Carol
Tome
said
late
last
month,
citing
softer
demand.
Many
of
the
largest
retail,
media
and
entertainment
companies
have
also
announced
workforce
reductions,
in
addition
to
other
cuts.
Warner
Bros.
Discovery
has
slashed
content
spending
and
headcount
as
part
of $4
billion in
total
cost
savings
from
the
merger
of
Discovery
and
WarnerMedia.
Disney
initially
promised
$5.5
billion
in
cost
reductions
in
2023,
fueled
by
7,000
layoffs.
The
company
has
since
increased
its
savings
promise
to
$7.5
billion,
and
executives
suggested
in
its
Feb.
7
quarterly
earnings
report
that
it may
exceed that
target.
Last
week,
Paramount
Global
announced
hundreds
of
layoffs
in
an
effort
to
“operate
as
a
leaner
company
and
spend
less,”
according
to
CEO
Bob
Bakish.
Comcast’s
NBCUniversal,
the
parent
company
of
CNBC,
has also
recently
eliminated
jobs.
JetBlue
Airways,
which
hasn’t
posted
an
annual
profit
since
before
the
pandemic,
is
deferring
about
$2.5
billion
in
capital
expenditures
on
new
Airbus
planes
to
the
end
of
the
decade,
culling
unprofitable
routes
and
redeploying
aircraft
in
addition
to
the
worker
buyouts.
Delta
Air
Lines,
which
is
profitable,
in
November
said
it
was
cutting
some
office
jobs,
calling
it
a
“small
adjustment.”
Some
cuts
are
even
making
their
way
to
the
front
of
the
cabin.
United
Airlines,
which
also
posted
a
profit
in
2023,
at
the
start
of
this
year
said
it
would
serve
first-class
meals
only
on
flights
more
than
900
miles,
up
from
800
miles
previously.
“On
flights
that
are
301
to
900
miles,
United
First
customers
can
expect
an
offering
from
the
premium
snack
basket,”
according
to
an
internal
post.
Several
of
the
country’s
largest
automakers,
such
as
General
Motors
and
Ford
Motor,
have
lowered
spending
by
billions
of
dollars
through
reduced
or
delayed
investments
in
all-electric
vehicles.
The
U.S.-based
companies
as
well
as
others,
such
as
Netherlands-based
Stellantis,
have
recently
reduced
headcount
and
payroll through
voluntary
buyouts
or
layoffs.
Even
Chipotle,
which
reported
more
foot
traffic
and
sales
at
its
restaurants
in
the
most
recently
reported
quarter,
is
chasing
higher
productivity
by
testing
an
avocado-scooping
robot
called
the
Autocado
that
shortens
the
time
it
takes
to
make
guacamole.
It’s
also
testing
another
robot
that
can
put
together
burrito
bowls
and
salads.
The
robots,
if
expanded
to
other
stores,
could
help
cut
costs
by
minimizing
food
waste
or
reducing
the
number
of
workers
needed
for
those
tasks.
Shifting
patterns
Industry
experts
have
chalked
up
some
recent
cuts
to
companies
catching
their
breath
—
and
taking
a
hard
look
at
how
they
operate
—
after
an
unusual
four-year
stretch
caused
by
the
pandemic
and
its
fallout.
EY’s
Daco
said
the
past
few
years
have
been
marked
by
a
mismatch
in
supply
and
demand
when
it
comes
to
goods,
services
and
even
workers.
Customers
went
on
shopping
sprees,
fueled
by
government
stimulus
and
less
experience-related
spending.
Airlines
saw
demand
disappear
and
then
skyrocket.
Companies
furloughed
workers
in
the
early
pandemic
and
then
struggled
to
fill
jobs.
He
said
he
expects
companies
this
year
to
“search
for
an
equilibrium.”
“You’re
seeing
a
rebalancing
happening
in
the
labor
markets,
in
the
capital
markets,”
he
said.
“And
that
rebalancing
is
still
going
to
play
out
and
gradually
lead
to
a
more
sustainable
environment
of
lower
inflation
and
lower
interest
rates,
and
perhaps
a
little
bit
slower
growth.”
The
auto
industry,
for
example,
faced
a
supply
issue
during
much
of
the
Covid
pandemic
but
is
now
facing
a
potential
demand
problem.
Inventories
of
new
vehicles
are
rising
—
surpassing
2.5
million
units
and
71
days’
supply
toward
the
end
of
2023,
up
57%
year
over
year,
according
to
Cox
Automotive
—
forcing
automakers
to
extend
more
discounts
to
move
cars
and
trucks
off
dealer
lots.
Automakers
have
also
been
contending
with
slower-than-expected
adoption
of
EVs.
David
Silverman,
a
retail
analyst
at
Fitch
Ratings,
said
companies
are
“feeling
a
bit
heavy
as
sales
growth
moderates
and
maybe
even
declines.”
Cost
cuts
at
UPS,
Hasbro
and
Levi
all
followed
sales
declines
in
the
most
recent
fiscal
quarter.
Macy’s,
which
reports
earnings
later
this
month,
has
said
it
expects
same-store
sales
to
drop,
and
there’s
early
evidence
that
may
come
to
bear:
Consumers
pulled
back
on
spending
in
January,
with
retail
sales
falling
0.8%,
more
than
economists
expected,
according
to
the
latest
federal
data.
Most
major
retailers,
including
Walmart,
Target
and
Home
Depot,
will
report
earnings
in
the
coming
weeks.
Credit
ratings
agency
Fitch
said
it
doesn’t
expect
the
U.S.
economy
to
tip
into
recession,
but
it
does
anticipate
a
continued
pullback
in
discretionary
spending.
“Part
of
companies’
decision
to
lower
their
expense
structure
is
in
line
with
their
views
that
2024
may
not
be
a
fantastic
year
from
a
top-line-growth
standpoint,”
Silverman
said.
Plus,
he
added,
companies
have
had
to
find
cash
to
fund
investments
in
newer
technology
such
as
infrastructure
that
supports
e-commerce,
a
resilient
supply
chain
or
investments
in
artificial
intelligence.
Forward
momentum
Companies
may
have
another
reason
to
cut
costs
now,
too.
As
they
see
other
companies
shrinking
the
size
of
their
workforces
or
budgets,
there’s
safety
in
numbers.
Or
as
Silverman
noted,
“layoffs
beget
layoffs.”
“As
companies
have
started
to
announce
them
it
becomes
normalized,”
he
said.
“There’s
less
of
a
stigma.”
Even
with
rolling
layoffs,
the
labor
market
remains
strong,
which
may
help
explain
why
Wall
Street
has
by
and
large
rewarded
those
companies
that
have
found
areas
to
save
and
returned
profits
to
shareholders.
Shares
of
Meta,
for
example,
almost
tripled
in
price
in
2023
in
that
“year
of
efficiency,”
making
the
stock
the
second-best
gainer
in
the
S&P
500,
behind
only
Nvidia.
After
laying
off
more
than
20,000
workers
in
2023,
Meta
on
Feb.
2
announced
its
first-ever
dividend
and
said
it
expanded
its
share
buyback
authorization
by
$50
billion.
UPS,
fresh
from
job
cuts,
said
it
would
raise
its
quarterly
dividend
by
a
penny.
Overall,
dividends
paid
by
companies
in
the
S&P
500
rose
5.05%
last
year,
according
to
Howard
Silverblatt,
senior
index
analyst
at
S&P
Dow
Jones
Indices,
and
he
estimated
they
will
likely
increase
nearly
5.3%
this
year.
—
CNBC’s
Michael
Wayland,
Alex
Sherman,
Robert
Hum,
Amelia
Lucas
and
Jonathan
Vanian
contributed
to
this
story.
Disclosure:
Comcast
owns
NBCUniversal,
the
parent
company
of
CNBC.
