Special Report
Retailers Hiring the Most Employees for the Holidays
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Retailers are poised to add around 755,000 temporary workers this holiday season, in line with last year’s job additions, according to staffing experts Challenger Gray & Christmas. The only company that is adding significantly more workers than last year is Amazon.com. Traditional retailers, which are posting very modest sales this year, will in most cases report similarly modest holiday hiring.
According to the Challenger Gray & Christmas 2015 Holiday Retail Hiring Outlook, which forecasts total holiday season employment gains, job additions totaled 786,800 in 2013. This is considerably lower than the current outlook, an indication of how skittish retailers may be again this year. They may have reason to be. The National Retail Federation (NRF), based on a survey of consumers, expects average spending per person this holiday season to be $805.65, not that different from the $802.45 average spending in 2014. The same study shows that 46% of consumers will do their shopping online, which should favor Amazon.com.
Click here to see the 10 retailers adding the most jobs for the holidays.
Retailers need to be fully staffed partly because many are opening their stores earlier on Thanksgiving — each year earlier than the previous one it seems — and for longer. As an effort to gain desperately needed market share and induce sales, retailers — including Target, Macy’s, Sears, and Toys ‘R’ Us — will open earlier than they do normally.
As is the case for many retailers, sales peak during the holiday season and represent a bulk of annual sales for these retailers. In 2014, for example, 37% of Gamestop’s annual sales occurred during the last quarter of the year. Similarly, Kohl’s reports around 30% of its sales occur during the months of November and December each year.
To give some sense of the pressure many traditional retailers are facing this holiday season, shares of three of the 10 companies on this list — Macy’s, Walmart, and Kohl’s — are currently trading at near 52-week lows. Shares of Amazon.com, on the other hand, trade near an all-time high. Amazon.com’s market cap of $307 billion is more than Walmart’s and Target’s combined.
Modest holiday hiring could be expected based on the financial results of mainstream retailers. In its most recently reported quarter, Walmart, America’s largest retailer, reported U.S. revenue of $74 billion, up 4.8% from the previous quarter. Same-store sales dropped 1.1%. Target’s revenue in the last quarter rose only 2.8%, to $17.4 billion. Comparable-store sales rose 2.4%. Amazon’s results are not even in the same league. In its most recently reported quarter, revenue rose 23% to $25.4 billion. North American sales rose 28.2% to $15 billion.
However, some large retailers have badly missed forecasts. These include Macy’s, Nordstrom, and Gap. Some may question whether holiday job additions are a good investment for these companies.
To establish which retailers will add the most jobs for the 2015 holiday, 24/7 Wall St. reviewed the announced holiday hires from top retailers based on revenue in the Retail 100. Because their businesses are so closely related to retail, we also examined seasonal job additions at Fedex and UPS. Financial data was obtained from financial documents filed with the Securities and Exchange Commission (SEC) when available.
These are the retailers adding the most jobs for the holidays.
10. Fedex (NYSE: FDX)
> 2015 seasonal hires: 55,000
> 2014 seasonal hires: 50,000
> Total employees: 246,000
> U.S. stores: N/A
FedEx’s only significant competition other than UPS is the U.S. Postal Service. The company’s business is unusually strong. In the most recently reported quarter, revenue rose to $12.3 billion from $11.7 billion in the same period a year ago. Fedex also demonstrated that it has price leverage with its customers, raising most of its rates by 4.9%. The increase will not be tested during the holiday though, going into effect on January 4, 2016. Like UPS, Fedex expects a large increase in holiday shipments, which it expects to rise by 12.4% from last year to 317 million packages this season.
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9. UPS (NYSE: UPS)
> 2015 seasonal hires: 90,000 to 95,000
> 2014 seasonal hires: 95,000
> Total employees: 237,300
> U.S. stores: N/A
UPS and Fedex are entirely unlike the other companies on this list. They are service providers to the retail industry, rather than competitors. This means that their needs to grow their staff during the holiday season is dependent on retail sales activity. UPS expects an extraordinary holiday season, which may be a good sign for the retailer industry overall. The company said it expects to handle 630 million parcels between Black Friday and New Year’s Eve. That is an increase of more than 10% compared to the holiday deliveries during the same period last year.
8. J.C. Penney (NYSE: JCP)
> 2015 seasonal hires: 30,000
> 2014 seasonal hires: 35,000
> Total employees: 114,000
> U.S. stores: 1,063
J.C. Penney is one of the few large traditional retailers that can claim it has made a major turnaround. Under former Apple head of retail Ron Johnson, who was named Penney CEO in November 2011, the retailer suffered sales losses of well over 20%. The new CEO, Marvin Ellison, has overseen a return to impressive same-store sales and revenue improvement. In its most recently reported quarter, same-store sales rose 4.1% and revenue rose to $2.9 billion from $2.8 billion in the same quarter the year before. Penney offered positive guidance for the balance of the year. Penney’s stock is also an outlier among traditional retailers, up 32% so far this year. J.C. Penney announced this month its Black Friday holiday sale will begin at 3 pm on Thanksgiving
7. Macy’s (NYSE: M)
> 2015 seasonal hires: 85,000
> 2014 seasonal hires: 86,000
> Total employees: 166,900
> U.S. stores: 901
Macy’s is in trouble. Citigroup’s research group recently warned in a report that Macy’s would have a “tough quarter.” The research department at Cowen & Co. recently downgraded the retailer’s shares because of the growing threat of competition from Amazon.com. Struggling to increase its sales, Macy’s recently said it would close 35 to 40 stores. Wall Street was upset about the revenue drop in the last reported quarter from $6.3 billion in the year ago quarter to $6.1 billion in the most recent quarter. Macy’s also offered poor guidance for the rest of the year.
6. GameStop (NYSE: GME)
> 2015 seasonal hires: 28,000
> 2014 seasonal hires: 25,000
> Total employees: 18,000
> U.S. stores: 4,434
GameStop is the only other specialty retailer on this list along with Toys ‘R’ Us. The release of several very popular video games, led by “Call of Duty: Modern Warfare 3” this month, is expected to help GameStop boost its holiday sales. Recently, some of GameStop’s Black Friday ads leaked. According to the ads, GameStop will be offering very aggressive prices, including $299 Playstation 4 and Xbox One bundles. Wall Street likes GameStop’s strategy. Its shares currently trade near the very top of their 52-week range. In the most recently reported quarter, revenue rose 1.8% to $1.8 billion, and net income rose 34.6% to $33.1 million.
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5. Toys “R” Us
> 2015 seasonal hires: 40,000
> 2014 seasonal hires: 45,000
> Total employees: 66,000
> U.S. stores: 863
Toys “R” Us will keep long holiday hours this year, part of an industry wide effort to get a jump on Black Friday shoppers. Toys “R” Us needs the help. The toy store chain continues to be in the midst of a restructuring, looking for ways to cut costs — it has had trouble increasing its market share in this highly competitive retail segment. Toy departments are staples of all of the big box and department store retailers. Amazon.com, too, has a toys section with a massive selection and special holiday discounts. In its most recently reported quarter, Toy “R” Us reported that revenue fell to $2.3 billion, a decline of $147 million from the same period a year ago. The retailer lost $99 million during its most recent fiscal quarter.
4. Kohl’s (NYSE:
> 2015 seasonal hires: 69,000
> 2014 seasonal hires: 76,970
> Total employees: 32,000
> U.S. stores: 1,162
Kohl’s, the smallest general retail company on this list, describes itself as a company with a “commitment to family, value and national brands.” Like every other traditional retailer, it promotes the convenience of its website, which puts it — along with every other retailer — in competition with Amazon.com. Kohl’s formula has not helped it grow any faster than the industry as a whole, however. Revenue rose by just 0.6% in the last quarter to $4.3 billion.
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3. Walmart (NYSE: WMT)
> 2015 seasonal hires: 60,000
> 2014 seasonal hires: 60,000
> Total employees: 2,200,000
> U.S. stores: 4,618
Walmart, the world’s largest retailer, also has among the largest number of problems. Margins have been squeezed because of hourly pay increases for its permanent workers. However, that is not Walmart’s primary issue. It may be that Walmart is so large it can no longer grow in the United States. Walmart’s revenue growth over the last three years has been extremely modest. Its net income has been relatively flat for five years — and does not show a sign of recovery. Most of the large retailers on this list have 1,000 to 2,000 stores. Walmart has 4,618 stores. Even for a company as large an as ubiquitous as Walmart, holiday sales are a major component of its annual revenue. According to the company, its highest sales volume and operating income tend to occur in the fiscal quarter ending January 31.
2. Target (NYSE: TGT)
> 2015 seasonal hires: 70,000
> 2014 seasonal hires: 70,000
> Total employees: 347,000
> U.S. stores: 1,799
Target is recovering from the huge credit card breach it suffered in late 2013 that affected 70 million Target customers. However, it also continues to struggle with its sales. Target’s revenue rose by only 2.8% in its most recently reported quarter to $17.4 billion. Comparable stores sales rose by only 2.4%. Target will use several promotions to draw shoppers during the holidays. One of these promotions, 10 Days of Black Friday, expands Black Friday deals from just one day, November 22, to 10 days through December 1. The other primary promotion is Target’s “Holiday Odyssey,” which has been created to highlight “top holiday toys and products,” according to the company.
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1. Amazon.com (NASDAQ: AMZN)
> 2015 seasonal hires: 100,000
> 2014 seasonal hires: 80,000
> Total employees: 154,100
> U.S. stores: N/A
It is difficult to overstate Amazon.com’s success in the retail industry. Amazon.com reported revenue of $48 billion in 2011. In the most recent 12-months performance period, the retailer’s revenue reached just above $100 billion. During the same period, by contrast, Target’s revenue went from $69.9 billion to $73.6 billion. Amazon.com’s most obvious advantage over other retailers is that it does not have to maintain stores. However, it has huge fulfillment and sorting centers that get particularly busy during the holiday. Most of the temporary employees will work in such centers. Amazon.com’s other huge advantage is that it can bundle online retail with other services. The most highly promoted bundled service is Amazon.com’s Prime membership program. For $99 a year, customers get free shipping on many items, video streaming of tens of thousands of movies and television shows, and unlimited storage of photos.
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