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Shares of Walmart fell nearly 10% in after-hours trading on Monday after the company slashed its profit outlook for the second quarter and rest of the year, warning that high inflation is having an impact on consumer spending habits.


The nation’s largest retailer announced that it was lowering its profit outlook for the rest of 2022, “primarily due to pricing actions aimed to improve inventory levels at Walmart and Sam’s Club in the US”

Walmart now expects earnings per share for the second quarter and full year to each decline by 8% to 9% and 11% to 13%, respectively—far lower than previous estimates of slightly positive earnings growth in the current quarter and a slight 1% decline for the full year.

The company said it expects same-store sales, excluding fuel, to rise by around 6% in the second quarter, with management describing that customers were cutting back on pricier items and instead spending more on groceries.

Food inflation has hit “double digits” and is notably higher than in the previous quarter, Walmart noted, a trend that has begun to affect margins as consumers spend less on general merchandise, sales of which yield bigger profits.

The company also warned of “more markdowns” as it continues to try and reduce extra inventory, while it will also continue “managing prices to reflect certain supply chain costs and inflation.”

Walmart’s stock plunged on the news, while shares of rival retailers also suffered in after-hours trading, with Target falling over 5%, Amazon 4%, Kohl’s 3%, Costco 2% and Kroger around 1.5%.