The front desk of the Amazon office in New York, May 1, 2019.
Carlo Allegri | Reuters
Walmart announced after Monday’s call that it now expects second-quarter and full-year adjusted earnings per share to decline from about 8% to 9% and from 11% to 13%, respectively. Previously, it was predicted that in the second quarter they will remain unchanged or grow slightly, and for the whole year they will fall by 1%.
Company accused a move to increase inflation, especially for food and fuel, which he says affect how her customers spend. He also said he expects U.S. same-store sales to rise about 6% in the second quarter, excluding fuel.
If consumers spend more on essentials, they spend less on essentials, which encourages discounts.
“Rising food and fuel inflation is impacting how customers spend, and while we’ve made good progress clearing hard categories, clothing at Walmart US needs more markdown dollars,” CEO Doug McMillon said in a press release.
The downgrade comes days before Amazon is expected to report its second-quarter earnings on Thursday. Wall Street will be watching closely for any sign of how the e-commerce giant is coping with macro inflation pressures, slower consumer discretionary spending and continued supply chain restrictions.
During last quarter’s earnings report, Amazon CFO Brian Olsavsky was asked if the company sees any decline in consumer spending. Olsawski said Amazon didn’t see any softness.
Walmart shares fell more than 8% in extended trading. The announcement also spooked investors from other retailers. Stock Target as well as Costco decreased by 5% and 2% after business hours, respectively, while nordstromshares fell as much as 3%.
Melissa Repko contributed to this report.
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