NEW YORK听–听Top US retailer听奥补濒尘补谤迟听Inc聽on Monday slashed its听辫谤辞蹿颈迟听forecast as surging prices for food and fuel prompted聽肠耻蝉迟辞尘别谤蝉听to cut back on discretionary purchases, and its听蝉丑补谤别蝉听slid听10%听in trading after the bell.
厂丑补谤别蝉听of rivals including Target and Amazon.com聽also tanked after听奥补濒尘补谤迟‘s听飞补谤苍颈苍驳, which signaled a “proverbial train wreck” for retailers, Burt Flickinger, managing director at Strategic Resource Group, said.
Walmart, a bellwether for the retail sector聽that caters to cost-conscious shoppers, said聽its full-year听辫谤辞蹿颈迟听would decline 11% to 13%, compared to the 1% fall it previously forecast. It pledged to cut prices of clothing and general merchandise more aggressively than it did in May to reduce a spring backlog.
Excluding divestitures, full-year earnings per share are expected to drop听10%听to 12%, the company said.
Neil Saunders, managing director聽of retail at聽GlobalData, called the听飞补谤苍颈苍驳聽a “cause for concern” for听奥补濒尘补谤迟听that highlighted the pressure on all retailers.
With prices for gasoline and food spiking,听consumers are no longer clamoring for apparel, home goods, appliances and kitchenware, saddling retailers with mountains of inventory.
Inventories at general merchandise stores at the end of April聽were the highest since聽at least 2000, US Census Bureau data showed.
厂耻辫辫濒测-肠丑补颈苍听snafus and miscalculations around demand have added to problems. In May,听奥补濒尘补谤迟听said it was sitting on over $60 billion of inventory at the end of the first quarter and promised “aggressive” price cuts on items such as apparel.聽
On Monday, the company said it needed more price cuts to pare inventories.
“奥补濒尘补谤迟听is a lot more susceptible to the lower-income customer, and that lower-income customer is the one that is suffering the most under the higher inflation levels,” Edward Jones analyst Brian Yarbrough said.
In late May and June,听奥补濒尘补谤迟‘s smaller rival Target trimmed its听辫谤辞蹿颈迟听forecast twice in several weeks, announcing it was struggling with $15 billion in inventories and saying it would resort to “necessary” actions including cutting prices and canceling orders.
Both听奥补濒尘补谤迟听and Target are squeezing some suppliers to聽补产蝉辞谤产听higher costs.聽
“The increasing levels of food and fuel inflation are affecting how customers spend. … We’re now anticipating more pressure on general merchandise in the back half,” Doug McMillon,听奥补濒尘补谤迟‘s chief executive, said in the statement on Monday.
Evidence of a consumer spending pullback is growing, and an update later this week on US economic growth may show output shrank in the April to June period for the second quarter in a row.
The US Federal Reserve, intent on curbing the fastest inflation in 40 years, is raising interest rates in part to curb spending across the economy.
奥补濒尘补谤迟听on Monday said it聽now estimates聽adjusted earnings per share for the second quarter to decline around 8% to 9%, compared聽its previous outlook of聽flat to slightly up.
Walmart,听however,聽raised its forecast for聽growth in US comparable sales, excluding fuel, to 6%, mainly to account for the rise in food prices. It previously forecast growth of聽4% to 5%. – Reuters
