“Bottom-line results were unexpected and reflect the unusual environment,” Walmart CEO Doug McMillon said in a news release. “US inflation levels, particularly in food and fuel, created more pressure” than the company predicted.
The results drove Walmart’s stock down 7% during morning trading Tuesday.
Walmart, America’s largest retailer and employer, is an economic bellwether.
Walmart’s net income fell 25% to $2 billion during its latest quarter ending April 30 compared with the same stretch a year ago.
In February, Walmart said it expected its profit to increase by about 3% this year. But Walmart now expects profit to decease by about 1%.
Some analysts said Tuesday that Walmart has been raising prices at a slower pace than many rivals to appeal to bargain shoppers. This likely impacted its profits, the analysts said.
Despite higher prices, consumers are still spending. Walmart’s sales at stores open for at least one year increased 3% during in its latest quarter.
Also on Tuesday, the Labor Department said US retail sales increased 0.9% in April, demonstrating the resilience of consumers.
However, Walmart said shoppers’ buying patterns changed because of inflation.
More customers have been turning to private-label food brands — particularly in meat, deli items and dairy products — and shifting away from discretionary items, the company said.
Walmart also said consumers were buying fewer items when they shopped.
