NEW YORK, July 25 – Walmart Inc cut its full-year profit forecast on Monday, due to higher sales of lower-margin food products and discounts it had to take to free up inventory in the United States.
Shares of the nation’s largest retailer fell 8% in after-hours trading on Wall Street.
Second-quarter adjusted earnings per share will decline 8% to 9% and full-year earnings will fall 11% to 13%. Excluding divestitures, full-year earnings per share are expected to fall between 10% and 12%, the company said in a statement.
“Rising levels of food and fuel inflation are affecting how customers spend … we are now anticipating more pressure on general merchandise in the second half,” said Doug McMillon, Walmart’s chief executive officer.
Rising food costs are impacting shoppers’ ability to spend across general merchandise categories and require further price cuts to clear inventories, particularly in apparel, Walmart said.
The company, however, raised its forecast for comparable US sales, which it expects to rise about 6%, above its previous guidance of 4% to 5% growth.