Walmart just gave all the recession mongers on Wall Street a huge adrenaline shot in the collective arm.
The world’s largest retailer slashed its second quarter and full-year profit outlooks late Monday owing to rampant inflation and a consumer retrenchment.
Here’s where Walmart stands compared to its guidance offered in mid-May:
Second Quarter Net sales Growth: +7.5% (+5% previously)
Second Quarter Operating Income: -13% to -14% (flat to up slightly)
Second Quarter EPS: -8% to -9% (flat to up slightly)
Full Year EPS: -11% to -13% (-1%)
Walmart shares plunged 9% in after-hours trading.
“The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars,” Walmart CEO Doug McMillon in a statement. “We’re now anticipating more pressure on general merchandise in the back half; however, we’re encouraged by the start we’re seeing on school supplies in Walmart U.S.”
Walmart declined to make CEO Doug McMillon or CFO John Rainey available for an interview.
The Bentonville Bruiser now joins a growing list of household name retailers seeing their profits under siege from brutal inflation in transportation and merchandise with little room to pass on those higher costs to increasingly cash-strapped shoppers.
In early June, Walmart’s primary rival Target kicked off concerns about the retail sector’s health with a ການຕັດສິນໃຈທີ່ຫນ້າຕົກໃຈ to liquidate massive amounts of slow-moving inventory and take a more cautious view on near-term profits. It may take several quarters for Target to clear excess inventory, pros have warned.
Since Target’s bombshell, discretionary retailers such as RH, Bed Bath & Beyond, and Kohl’s have issued financial warnings for their second-quarter results.
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Source: https://finance.yahoo.com/news/walmart-warning-stock-price-recession-worries-205538127.html