Walmart Cuts Q2, FY23 Profit Outlook as It Lowers Prices to Move Goods

Walmart has slashed its outlook for both the second quarter along with the fiscal year 2023 as the economy continues to see troubled times, per a company update Monday (July 25).

The company’s operating income for both Q2 and the fiscal year is likely to decline 13% to 14% and 11% to 13%, respectively.

Meanwhile, the adjusted earnings per share for Q2 and the full year will likely now decline 8% to 9% and 11% to 13%, respectively. This comes as there was a need for pricing actions to bolster inventory levels at Walmart and Sam’s Club.

Additionally, comp sales for Walmart U.S. are likely to be around 6% for the second quarter, which is higher than previously expected.

Food inflation has hit double digits and is higher than it was at the end of the first quarter, restricting customers’ budgets for more general merchandise items. The company said this has contributed to a greater need for markdowns on some products, such as apparel items.

Walmart also said it has made progress on cutting its inventory and managing prices to help out with the supply chain issues and inflation, along with cutting storage costs for a backlog of shipping containers.

“The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars,” said Doug McMillon, Walmart Inc. president and CEO. “We’re now anticipating more pressure on general merchandise in the back half; however, we’re encouraged by the start we’re seeing on school supplies in Walmart U.S.”

Earlier this month, PYMNTS wrote that Walmart was also working to expand its Spanish-language online search capabilities to better serve its fastest-growing demographic.

See also: Walmart.com Expands Spanish Language Search to Serve Fast-Growing Demographic

The company said the point was to focus on better shopping experiences, particularly with language being a big barrier to the shopping experiences for many people globally.

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