Walmart Cuts Profit Outlook: Continuously rising inflation is forcing customers to spend more on necessary items rather than on other items like clothes, electronics, home goods, kitchenware, etc. This trend has caused the U.S. retailer company Walmart to cut its profit forecast for the upcoming quarter and the entire year.
The customers are much more interested in buying food items. So other items remain unsold and kept lying on stores’ shelves and in the company’s warehouses. In the month of May, the inventory value of Walmart was $60 billion. The company is planning to reduce the prices of items other than food items so that they can be sold and their stocks can be reduced. So by increasing the discount amounts, the profit margins will be reduced.
The top U.S. retailer is detecting the items that are in demand the most and has decided to concentrate only on those ones. The company has noticed a fall in demand for appliances and apparel. But grocery items have lesser profit margins as compared to other items.
Walmart cuts the profit outlook for an entire year by 1%, and after this announcement, the shares of the company fell by 9%. The shares of other competitors like Amazon, Target, etc., also dropped.
Walmart was going to improve its subscription services with the name Walmart+. But now it will have to think twice before doing that as customers are already with tight hands. More and more customers are opting for discounted items.
However, there is some good news as well. The Federal Reserve of the U.S. is planning to increase the rates for interest to improve the buying capacity of customers.
Walmart caters mostly to the people who fall into the lower income group, and this group is suffering the most due to the rising prices of fuel and food. Time will tell if the company will be able to make good profits by increasing the sale of groceries.