Walmart cuts profit forecast as fuel, labour costs spike

Walmart Inc cut its full-year profit forecast on Tuesday, signalling a bigger knock to the retail giant's profit margins from surging costs of everything from fuel to labour, reports Reuters.
Shares tumbled 6.5 per cent to $138.51 in premarket trading, dragging down those of rival retailers including Target Corp.
Walmart has fared better than most rivals in maintaining inventory levels due to its massive scale and negotiating power with suppliers, but costs have soared as it expedited shipments and chartered cargo ships to get products on shelves.
Inventories jumped 32 per cent to $61.2 billion in the first quarter, exacerbated in part by fewer purchases of patio furniture, apparel and landscaping supplies due to cooler weather.
Meanwhile, higher wage investments and a rapid return of employees from COVID leave led to excess staffing, causing operating expenses to rise by 45 basis points as a percentage of net sales in the quarter, Walmart said.
These pressures reduced net profit by a quarter to $2.05 billion for the three months ended April 30.
Chief Executive Doug McMillon said the retailer's quarterly profit "reflect the unusual environment", at a time when US inflation is at a nearly four-decade high.
The company estimates fiscal 2023 earnings per share to fall about 1 per cent, compared to its previous forecast of a mid-single digit increase.