Walmart Lowers Profit Forecast as Inflation Hits Customers

“The increasing levels of food and fuel inflation are affecting how customers spend, and, while we’ve made good progress clearing hard-line categories, apparel in Walmart U.S. is requiring more markdown dollars,” Walmart’s chief executive, Doug McMillon, said in a statement.

Walmart’s stock price plunged more than 9 percent in after-hours trading, after ending the regular trading day only slightly in the red, down 0.1 percent. The shares of other major retailers, including Target, also fell after hours.

Retailers have been struggling with rising inventory levels since the spring, when customers began pulling back on discretionary spending. Last month, Target also warned that its profits would be lower because of inventory markdowns.

Initially, many companies attributed the glut of goods on their shelves to shipping delays that caused seasonal items to arrive late, after demand for them had faded. But, as inflation — particularly food and gas prices — has continued to climb since the spring, it has become clear that consumers are pulling back on certain purchases.

Article source: https://www.nytimes.com/2022/07/25/business/walmart-lowers-profit-forecast-inflation.html