{"id":45444,"date":"2022-07-25T22:02:04","date_gmt":"2022-07-25T22:02:04","guid":{"rendered":"https:\/\/tahrir2day.com\/news\/2022\/07\/25\/walmart-profits-sink-as-inflation-slammed-customers-chop-spending-2\/"},"modified":"2022-07-25T22:02:04","modified_gmt":"2022-07-25T22:02:04","slug":"walmart-profits-sink-as-inflation-slammed-customers-chop-spending-2","status":"publish","type":"post","link":"https:\/\/tahrir2day.com\/news\/2022\/07\/25\/walmart-profits-sink-as-inflation-slammed-customers-chop-spending-2\/","title":{"rendered":"Walmart profits sink as inflation-slammed customers chop spending"},"content":{"rendered":"
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Walmart shares are sinking after the retailer told investors it expects lower profits for the rest of the year amid rising inflation. <\/p>\n

The nation’s largest retailer reported that high food costs are limiting customers’ ability to spend on discretionary items such as furniture and electronics.<\/p>\n

High prices for essential products “affect customers’ ability to spend on general merchandise categories and require more markdowns to move inventory, particularly apparel,” the Bentonville, Arkansas-based company said Monday. The company said it would further cut prices on high-end items, including apparel, to clear inventory that had built up during the pandemic.<\/p>\n

“Rising levels of food and fuel inflation are affecting the way customers spend, and while we’ve made good progress eliminating hard categories, apparel at Walmart USA requires more markdown dollars,” Doug McMillon, president and CEO of Walmart Inc. he said in the statement.<\/p>\n

McMillon said he expected more pressure on general merchandise prices in the second half of the year, but was encouraged by early signs of back-to-school shopping.<\/p>\n

The company’s US division is expected to report comparable sales excluding fuel rose 6%, more than previously expected, but the mix is \u200b\u200bmore heavily weighted towards lower-margin food and staples of consumption Walmart plans to report quarterly results next month.<\/p>\n

The fall in Walmart shares<\/h2>\n

Walmart’s advantage: growing market share. <\/p>\n

“Customers are choosing Walmart to save money during this inflationary period, and that’s reflected in the company’s continued market share gains in groceries,” the company said. <\/p>\n

Walmart shares fell nearly 9% in after-hours trading Monday.<\/p>\n

As a result, second-quarter and full-year adjusted earnings per share are expected to decline by about 8% to 9% and 11% to 13%, respectively. Excluding divestitures, full-year adjusted earnings per share are expected to decline between 10% and 12%.<\/p>\n

Adam Crisafulli of Vital Knowledge pointed this out other retailers, including Target<\/span> they face similar problems.<\/p>\n

“[D]Irrationally, this news from Walmart shouldn’t shock anyone \u2014 we all knew the retailer was sitting on a mountain of inventory, which meant aggressive price cuts,” Crisafulli said in a report. “Target is already out on June 6 and lowered its guidance for FQ2 (for all the reasons cited by Walmart) and investors should expect ugly margins\/EPS from almost everyone.”<\/p>\n

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