The United States (US) retail giant, Walmart Inc cut its profit forecast following a string of inflationary pressures that caused consumers to prioritize essential goods.
It is understood that consumers are exhibiting a shift in purchasing patterns, where essential spending such as food is prioritized over other items including clothing and electronics.
That streak, Walmart has updated its earnings per share forecast by reducing the 2nd quarter forecast to 8%-9% and the full year to 11%-13%.
In comparison the retail giant had previously expected a flat record with a slight upward trend for the 2nd quarter while the full year was down 1%.
Please be reminded that Walmart's fiscal year 2nd quarter report results will be published on August 16th.
Generally, Walmart is considered to be the driving force behind the entire US economy due to its status as the largest collection center for consumer spending.
With inflationary pressures continuing to mount and consumer purchasing patterns seen to be slowing, it is no surprise that Walmart has cut its profit forecast.
Not to be forgotten also last quarter Walmart has reduced its inventory stock to adjust to less spending.
Meanwhile, the retailer is seen increasing its store sales forecast to 6% (excluding fuel) in Q2 with a bias towards food products over other items.
In bulk, it is a higher projection than before at 4%-5%.
Commenting Chief Executive Officer (CEO) Doug McMillion, the increase in food prices mixed with fuel inflation has an impact on consumer spending patterns.
On the other hand, another US retail giant, Target, has also informed investors that it is reducing unwanted items in inventory.
Then it will have an impact on the company's profits in the short term explained CEO Brian Cornell.
