December 6, 2022

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Walmart warns of sharp decline in profits - E24

Walmart warns of sharp decline in profits – E24

Walmart expects less profit in the coming months, and the exchange will be severely punished.

Store giant Walmart is the world’s largest employer.
Posted:

– The company reduces expected profits in the second quarter and fiscal year 2023, Walmart writes in an announcement to the stock exchange on Monday evening.

Immediately after the announcement, Walmart’s stock plunged nine percent in after-market trading.

According to the report, Walmart expects a profit margin of 3.8 to 3.9 percent in the current fiscal year.

Walmart has inconsistent financial years. Thus, the second accounting quarter will be the May-July period in Walmart’s calendar, and they are already in the 2023 accounting year.

Walmart CEO Doug McMillon made news that rocked stock trading Monday night

High rates of food and fuel inflation affect how customers shop. We now expect more pressure on retail, Walmart CEO Doug McMillon says in the letter.

Right after the statements from Walmart, Amazon and Target also fell into the aftermarket.

More sales, less profit

Walmart believes that the next two months will lead to increased sales, but at the same time the remaining profit for the company will decrease.

For each store, we believe sales will increase by six percent, which is higher than previously expected, Walmart wrote.

At the same time, there will be goods with a smaller profit margin that will be traded more often. Thus, larger sales still result in lower Walmart profit.

Customers are choosing Walmart to save money during this period of inflation, the company writes in the letter.

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So Walmart expects earnings per share to be 10 percent lower for the current year than it forecast just two months ago, according to the report.

In addition, the supermarket giant wrote that they have to lower the prices of goods in order to sell what they already have in stock.

Store stocks are down

Several US department store stocks fell sharply in after-market trading shortly after the news broke:

  • Target falls 5.4 percent
  • As for Amazon, it decreased by 3.1 percent
  • Best Buy falls 2.4 percent
  • Dollar Tree down 2.8 percent
  • Costco fell 1.8 percent
  • The general dollar is down 3.1 percent

This isn’t the first time this year that the department store segment has fallen dramatically after the company posted poor numbers. When Target delivered an unfortunate quarterly report in May, it contributed to the entire industry’s decline significantly. Target stocks are down more than 30 percent this year.

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