Walmart’s revenue is affected by food inflation and staff expenses

Country Largest retailer by revenue Sales increased in the last quarter, but rising costs of production, supply chain and staff have eaten up profits, significantly reducing retailer shares .

Throughout the outbreak, Walmart and other major box retailers have benefited from strong demand for many products. And while some costs may increase, sales profits are also increasing. Walmart’s net profit fell 25% year-on-year in the quarter ended April, down from analysts’ expectations.

“Something different happened in the quarter than we expected. We’re trying to be transparent about that,” Walmart chief executive Doug McMillan said. our knowledge at that time. We’re going to have a solid year to put that behind us.

Shares of Walmart fell more than 11% to $131 in Tuesday trading, although the stock has performed better than the broader market this year. Compared to the S&P 500’s roughly 16% decline, stocks are up about 2% so far ahead of the earnings report.

The line between Amazon and Walmart is increasingly blurred as the two companies seek to maintain a $5 trillion retail market while losing each other’s share by borrowing each other’s ideas. Pictures: Amazon/Walmart

“We knew all the scary things about retail and we thought Walmart might be a safe haven.

The company believes Walmart’s profit struggles could present broader challenges for retail, but Plan to Guide Inflation would be a safer place to invest compared to other retailers, he said. declared.

For us traders raised retail costs Inflation remained in April for the fourth straight month as inflation hit a four-decade high, government data showed on Tuesday. Retail cost figures include restaurants, gas stations and car dealerships.

Higher food cost It prompted shoppers to change their spending Walmart executives said they were moving away from public goods and eating for profit. Some consumers are still buying bigger tickets, they said, while sales of branded goods are up, a sign that other shoppers are trying to save money.

“We are helping a family that is below the income level to feed their family during this time of inflation,” Mr Macmillan said. Walmart aims to undercut competitors by making more frequent purchases of products like bread, milk, canned tuna and protein, he said. “Since the trigger checks took place last year, there have been some benefits for some that have eroded over time.”

Even on Tuesday

Home deposit Inc.

HD 1.68%

Despite the high cost of everything from appliances to paint, consumers continue to spend money on home renovations. The retailer said there were fewer shoppers in its stores to kick off spring, but they were spending more on a trip. The company raised its earnings and revenue projections per year.

Walmart cited several expenses that made it profitable for the quarter.

As workers returning from Govt-19 are leaving faster than expected, executives said in a call to investigators that Walmart had overloaded its stores for several weeks. This problem was mainly solved by attrition. said Macmillan. As Walmart aims to keep prices lower than its competitors in an inflationary environment, price increases trickle down to profits. Executives pointed out that some prices would increase and that negotiations with suppliers would help balance those costs.

Inventory levels also rose very quickly, with executives accusing Walmart of putting more products on sale, executives said.

“We are not happy with the profit margins for the quarter, especially in the last quarter,” Macmillan said Tuesday.

Inventory levels increased by 33% per quarter compared to the same quarter last year. The rise reflects higher commodity prices due to inflation, with supply chain shifts in the last quarter and increased demand for some products, the company said, prompting Walmart to buy products from more aggressive way. When a retailer sells a discounted item, the product scores up to $100 million more than expected for the quarter.

Chief Financial Officer Brett Pigs said supply chain spending had been higher than expected due to the war in Ukraine and global government-19 development delays. “The supply chain hasn’t returned to normal as quickly as we thought,” he said.

Net profit for the last quarter was $2.05 billion. According to FactSet, adjusted returns per share are $1.30, with the consensus analyst forecast not being $1.48. Total revenue increased 2.4% to $141.57 billion.

Sales from comparable U.S. sales, stores or digital channels that have been operating for at least 12 months rose 3% for the quarter ended April 29, driven by strength in food products, the company said on Tuesday. society. The number of US transactions in the quarter was flat, while the amount spent each time increased 3%, the company said.

Walmart expects full-year U.S. comparable sales to grow about 3.5% from the previous estimate of 3%. It expects operating profit to fall about 1%, excluding currency fluctuations, from the previous estimate of a 3% increase.

Online shopping behavior has returned to pre-epidemic levels, which has weighed on sales at these online retailers.

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And Inc.

AMZN 4.11%

On Tuesday, Walmart’s U.S. e-commerce sales rose 1% in the latest quarter, compared with a 37% increase in the same quarter last year. Net sales in Amazon’s online store segment – the company’s largest – fell 3% in the first quarter from a year earlier.

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Write to Sarah Nassau at [email protected]

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