This economic environment is certainly one that’s becoming more difficult to navigate. That goes for corporations as well as investors.
For investors in various transport-related stocks, it’s been a rough ride over the past week. Surging input costs (gasoline and wages, mainly), as well as a more ominous outlook for demand given the recent yield curve inversion, have investors on the defensive. Interestingly, Walmart (NYSE:WMT) is seeing much of the same play out, with the company announcing that the average Walmart truck driver salary will increase to a whopping range of $95,000-$110,000 per year.
This increase is rather impressive, compared to where salaries were prior to this hike. Walmart has increased its starting wage to an average of $102,500 from $87,500 previously. If my math checks out, that’s a healthy 17% bump for brand new truck drivers.
As many may expect, the tight labor market we’ve seen unfold is largely responsible for this notable wage hike. However, investors may be more interested in what this may mean for Walmart’s core business moving forward. Let’s dive in.
What to Consider As Walmart Truck Driver Salary Breaches $100K
Transportation costs happen to be a key input for prices of finished goods within the U.S. Whether it’s food or other discretionary/non-discretionary purchases, retailers like Walmart feel the direct impact of higher trucking costs.
For Walmart, a company that’s focused on vertically-integrating much of its supply chain, handling these costs internally has been seen as a key competitive advantage. Distribution and supply chains are extremely important to national retailers like Walmart. Thus far, the company has done an impressive job of managing its inventory in this tight market.
However, these costs are likely to bleed through to consumers. What this means for Walmart’s future top and bottom line numbers remain to be seen. However, with the market dynamics forcing such wage hikes, investors may begin to factor in what higher wages in the retail environment may mean for profitability moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
