US supermarket chain Walmart slashed its quarterly and full-year profit forecast on Monday as customers spent more on food and gasoline due to inflation, and less on other goods, usually with higher margins.
Therefore, the group must offer discounts on goods other than food and gasoline in order to sell its shares, which affects its profits, details a press release. The discounts have especially affected clothing.
Walmart expects its operating profit to fall 13% to 14% in the second quarter of its fiscal year ending in late July, where it previously expected flat or even a slight increase.
The supermarket chain forecasts an 11% to 13% drop in operating profit for the year, much more than the 1% drop previously forecast.
9% drop in the stock market
Its turnover should, for its part, be higher than initially forecast: the group forecasts sales growth of around 7.5% in the second quarter of the year ending at the end of July, and 4.5% in throughout the year, compared to 5% and 4% respectively previously.
Walmart’s stock, which is due to release its final results on August 16, fell more than 9% in electronic trading after the close of the New York Stock Exchange.
Inflation accelerated further in June in the United States, reaching 9.1% annually according to the consumer price index (CPI). This increase, the strongest in a year since November 1981, threatens growth to the extent that consumption is the main engine of the US economy.
The Commerce Department is due to release its first estimate of US gross domestic product (GDP) in the second quarter on Thursday. If, as in the first quarter, it appears to be falling, the country will theoretically be considered to be in recession.
Source: BFM TV
