Walmart cuts forecast due to soaring costs


Walmart cuts forecast due to soaring costs | Photo credits: Courtesy of Walmart

May 17 (Reuters) – U.S. retail giant Walmart lowered its full-year profit forecast on Tuesday due to the expected impact of rising costs on its profit margins.

The title fell 6.5% in pre-market trading.

Walmart outperformed most of its competitors in terms of inventory thanks to its bargaining power with suppliers, but its costs soared with the acceleration of imports and exports. At the same time, employees’ rapid return to work after a COVID-19-related shutdown and higher payroll investments have driven operating expenses higher, Walmart said.

“Rising US prices, particularly for food and fuel, have put greater than expected pressure on margins and operating costs,” Chief Executive Doug McMillon said.

The group estimates that its earnings per share for the fiscal year 2023 should fall by around 1% whereas it previously forecast an increase of 4 to 5% (“mid-single digit”).

The number one retailer has also tempered its expectations for the second quarter of 2022 and now expects earnings per share to be stable or slightly up, against an increase of 1 to 5% previously forecast (“low to mid-single digit” ).

Walmart posted first-quarter earnings of $1.30 a share, 18 cents below analysts’ forecasts. This is the first time in five quarters that the group has recorded a profit below expectations.

Turnover rose 2.4% to 141.57 billion dollars (134.25 billion euros) thanks to sales of food, health and well-being products. It thus exceeds the expectations of analysts who, according to Refinitiv data, were counting on 138.94 billion dollars. (Report Uday Sampath in Bangalore and Siddharth Cavale in New York, French version Laetitia Volga and Valentine Baldassari, edited by Kate Entringer)

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