FirstFT: Walmart warns of earnings

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walmart issued second profit warning in 10 weeks after the market closed yesterday, saying inflation was putting pressure on price-sensitive consumers.

“Rising food and fuel price levels are impacting how shoppers spend,” Walmart chief executive Doug McMillon said in a statement.

He said Walmart was forced to cut prices in order to move goods, especially clothing.

Walmart’s warning sent its stock down nearly 10 percent to $118.97 after hours, slashing the stock market’s capitalization by about $35 billion. This caused a sell-off in the shares of competitors including Target, Costco and Home Depot, while Amazon shares fell more than 4%.

Walmart shares fell in May biggest one-day drop since 1987 when he first cut his forecast for the coming quarters. Its shares are down 8.7% year-to-date compared to the S&P 500’s 17% drop.

Investors are increasingly concerned that retailers will have to discount unsold items as rising prices and a shift in spending from goods to services will hurt sales.

Amazon said yesterday that get past the rise in prices in Europe for customers and increase the value of their popular Prime membership scheme months after doing the same for US customers.

The company attributed the move to “growth in inflation and operating costs.”

Walmart, which is due to report earnings for the April-June period in three weeks, said operating profit would fall 13-14% for the quarter as it discounted merchandise to get rid of excess inventory. The company said that for the full year, operating profit will fall by 11-13%.

As with other U.S. multinationals, Walmart is also suffering from dollar strength, which led to a $1 billion headwind in the second quarter and, based on current exchange rates, will add $1.8 billion in additional spending in the second. half of the year. year, as they say.

Thank you for reading FirstFT Americas. Here’s the rest of today’s news – Gordon

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5. Conservative leader’s televised debate is bitter Rishi Sunak and Liz Truss exchanged blows on the UK economy decisive televised debate on Tory leadership it ended in a bloody stalemate, but brought the competition to a new level of ferocity. A snap poll of 1,000 voters showed Sunak only by a narrow margin of 39-38%. While an Opinium poll showed Conservative voters believe Truss has done 47 percent to 38 percent more than the two vying for Boris Johnson’s premiership. The winner will be announced on September 5th.

The next day

US interest rate meeting The Federal Reserve is starting a two-day monetary policy meeting and markets are expecting the central bank to raise the federal funds rate by 75 basis points. second month in a row in the range from 2.25% to 2.5%.

Stock Market Outlook The Walmart warning and the Fed meeting have alarmed investors. Futures for the Wall Street S&P 500 fell 0.3% after indecisive session on monday as corporate reporting season is in full swing.

Company income Microsoft and Alphabet, the parent company of Google, are kicking off reporting season for big tech companies today. In addition to the technology sector, McDonald’s, Coca-Cola, Kimberly-Clark and food chain Albertsons will report ahead of the opening of trading. Industry groups General Electric and General Motors also report.

Economic Data House prices in the 20-city Case-Shiller Composite Index are expected to rise 20.6% year-on-year in May, according to a Refinitiv survey of economists. The Conference Board is expected to report that consumer confidence fell to 97.1 in July from 98.7 in June, according to analysts polled by Refinitiv.

Donald Trump returns to Washington Former US President to address tonight at a two-day summit hosted by America’s First Policy Institute in Washington. It comes the day after former Vice President Mike Pence unveiled his so-called Freedom of Speech agenda at the Legacy Foundation. Both politicians are testing the waters for participation in the presidential elections in 2024.

Indo-Pacific War Chiefs Conference US Commander-in-Chief Mark Milley and Admiral John Aquilino, head of the US Indo-Pacific Command, will arrive in Sydney today and tomorrow. discuss Taiwan and what lessons from the Ukrainian conflict can be applied to the island.

Meeting of EU Energy Ministers An extraordinary meeting of the bloc’s energy ministers is being held in Brussels to develop a package of measures to ensure fuel supplies. Premium FT subscribers can read more in our Newsletter Europe Express

What else do we read

Prospects for spending cuts loom on Wall Street Investment bankers must be ready – Wall Street banks prepare to tighten their belts. After a boom in deals and IPOs linked to Spac, conditions have changed radically this year, and financial executives now recognize that radical spending cuts will be inevitable.

Tech Bros thrive in New York Meanwhile in New York the tech sector is booming. But while Silicon Valley needs skilled engineers, businesses in New York are leveraging technology applications in sectors such as advertising tech, financial and advertising tech and remain a small part of the city’s workforce, unlike San Francisco.

Is the dollar about to reverse? The US dollar is up more than 10% against other major currencies since the beginning of the year. But if the economy weakens and inflation picks up, the Federal Reserve is likely to put on the brakes and the dollar will reverse. writes Professor Barry Eichengreen.

Argentines turn to black market dollars as crisis escalates Confidence in the Argentine economy is evaporating as the government grapples with political infighting, ever-increasing domestic debt and inflation approaching 90%. The rapidly deteriorating sentiment and the government’s growing funding difficulties are intensifying. fears of a full-blown economic crisis.

HSBC’s past may not help its future Sharp minds are trying to predict the future of the bank, figuring out how its profitability, regulation and capital base will change in the event of its collapse, as demanded by shareholder Ping An Insurance. But it is politics, not metrics, that decides how China operates. writes author Michael Sheridan — and history is not on HSBC’s side.

Obituary

Lord David Trimble, key author of the Good Friday Agreement that brought peace to Northern Ireland almost a quarter of a century ago, died after a short illness. The joint 1998 Nobel Peace Prize winner was 77 years old.

Lord David Trimble

Lord David Trimble received the Nobel Peace Prize in 1998. © Gerry Penny/EPA-EFE/Shutterstock

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