Shares of Walmart fell 11 percent on Tuesday after the company announced first-quarter results that showed revenues plummeted as the nation’s largest retailer faced rising inflation and supply chain disruptions.
The company also said it has lowered its full-year revenue guideline, which is expected to be lower than last year.
The Bentonville, Arkansas-based retailer is often viewed as a leader in the U.S. economy and consumer health due to the size and breadth of its customer base. The US economy was supported by strong consumer spending this year, but Walmart’s first-quarter results show inflation is holding back real economic growth.
Walmart sales rose 2.4 percent to $141.57 billion. That’s better than the $138.8 billion analysts estimated. But inflation ate up profits.
Walmart said its first-quarter revenues were $2.05 billion, or 74 cents per share. Adjusted earnings per share are $1.30, below the consensus estimate of $1.48 per share. A year ago, the company earned $2.73 billion, or 97 cents per share, in the first quarter.
The company said it expects its annual revenue to drop by one percent. Just a few months ago, the company said it expects mid-digit growth.
“The results below reflect an unexpected and unusual environment,” said CEO Doug McMillon. “US inflation rates are putting more pressure on margin structure and operating costs than we expected, especially for food and fuel.”
Inflation is changing the consumer spending pattern, Walmart executives said on Tuesday. Walmart executives say high prices are forcing some consumers to choose generic private labels, especially for meats, over national brands.
Sales at established US stores grew 3 percent, slower than growth of 5.6 percent in the fourth quarter and 9.2 percent in the third quarter. Online sales rose 1 percent, a significant slowdown as people turned to in-store shopping before the pandemic.
According to the consumer price index, food prices at home increased by 9.4 percent compared to last year. This is especially difficult at Walmart, the largest grocery retailer in the US.
Source: Breitbart
