|
 Wal-Mart <WMT.N>, Target Corp <TGT.N>, T.J. Maxx <TJX.N>, Gap
<GPS.N>, and McDonald's Corp <MCD.N> have already announced wage
increases, and the trend appears to be trickling further into the
retail and restaurant sectors.
"The competition for that job is tougher for the employer. The
employee has choices now," said Thomas Sudyka, managing director at
investment management firm Lawson Kroeker based in Omaha, Nebraska.
So far in this reporting season, companies such as Bed Bath & Beyond
Inc <BBBY.O> and Buffalo Wild Wings Inc <BWLD.O> have discussed wage
pressure, while Pier 1 Imports Inc <PIR.N> plans incentive pay for
the first time in three years.
Fast-food workers have been vocal in fighting for better wages. They
rallied in U.S. cities on April 15 to demand higher pay, using the
deadline for filing tax returns to publicize their argument that
they cannot survive on the hourly wages paid by many U.S.
corporations.
The U.S. government said Friday U.S. job growth rebounded last month
and the unemployment rate dropped to a near seven-year low of 5.4
percent, while average hourly earnings rose three cents in April, a
year-on-year gain of 2.2 percent.
RESULTS
Big retailers reporting in the week starting May 13 include Macys
Inc <M.N>, Nordstrom Inc <JWN.N> and Kohl's Corp <KSS.N>.
The following week, Home Depot <HD.N>, Wal-Mart, Staples Inc
<SPLS.O>, Target and Gap are due to report. Costco Wholesale Corp
<COST.O> and Tiffany & Co <TIF.N> both report on May 27.
Macys, Kohl's and Home Depot say they set their wages on a
market-by-market basis as the competitive situation varies around
the country. Kohl's said it also watches other factors driving
employee decisions, such as the work environment and future
opportunities for advancement.
Staples in March discussed a 2014 cash build-up for incentive
compensation that would be paid out in 2015 but it did not give
details.
Bed Bath & Beyond said during a conference call early in April it
had planned for an additional expense of 6 cents a share this year
due to increased compensation. Analysts expect Bed Bath & Beyond to
earn about $1.91 per share this year on a fully reported basis,
according to Thomson Reuters I/B/E/S.
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"We are modeling an increase in our investments in compensation and
benefits beyond what we have always historically planned for, to
continue to assure that we preserve our ability to attract, and
retain, the best associates," Sue Lattmann, the company's chief
financial officer told investors.
HIGHER WAGES, HIGHER COSTS
Many companies will try to cut other costs, or raise prices where
they can to absorb the extra expense of higher wages, said Lawson
Kroeker's Sudyka.
During its quarterly conference call on April 28, Buffalo Wild Wings
told investors it faced pressure to raise the salaries of minimum
wage workers as well as higher-paid workers. There were also
additional labor costs from the creation of new roles aimed at
boosting sales.
Chief Operating Officer James Schmidt told investors that "if labor
has to be a little higher, but it's driving higher same-store sales,
we would look and try to look at other lines of the (profit and loss
statement) where we can recapture that."
Some analysts said investors will likely take wage increases in
their stride, as better pay should translate to improved sales, with
consumers having more money to spend.
"Even if companies can't pass on the costs, it's a one-time hit and
we can grow from there," Sudyka said.
(Reporting by Sinead Carew in New York; Editing by Linda Stern and
Bernadette Baum)
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