A shift from growth to efficiency is showing up in earnings calls across industries.
With half of the S&P 500 having held calls for last quarter thus far, the number of mentions made during the calls of terms like “personnel costs” and “spending on hiring” are 80% lower than they were the previous quarter, Bloomberg reported Monday (May 1).
Instead, the current theme is cutting costs and jobs. In fact, in a reversal from the previous quarter, there have been more mentions of “job cuts” than of a “labor shortage,” according to the report.
The report attributes these signs of a shift from growth to efficiency to companies’ concerns about rate hikes and the threat of an economic slowdown.
Firms are looking to preserve operating margins and respond to investors who are rewarding profitability rather than growth, according to the report.
This is especially true among tech firms like Meta, Amazon and Lyft that grew their headcounts rapidly during the pandemic.
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As PYMNTS has reported, Meta is laying off another 10,000 employees after cutting 11,000 jobs in November and freezing hiring for another 5,000 roles that had been open; Amazon is set to lay off another 9,000 employees in an ongoing series of job cuts that included 18,000 positions eliminated in January; and Lyft is reducing its staff by 26% as it seeks to gain “operating cost savings.”
However, the shift is happening in other industries as well. The Bloomberg report pointed to recent job cuts at companies as varied as manufacturer 3M, retailer Gap and Wall Street bank Lazard.
As PYMNTS reported Thursday (April 27), Gap said in a regulatory filing that it is cutting 1,800 jobs as it looks to reduce expenses, simplify and optimize its operating model and structure, and decrease management layers to improve quality.
“As we move forward, we believe these efforts will release untapped potential across our brands, allowing us to show up as a more customer focused, faster, and creative company,” Gap Interim CEO Bob Martin said at the time in a statement provided to PYMNTS. “As we shared in our last earnings release, these actions are estimated to result in annualized savings of $300 million.”
