Walmart publishes gloomy economic forecasts
2023.02.21 09:45
Walmart publishes gloomy economic forecasts
By Ray Johnson
Budrigannews.com – On Tuesday, Walmart Inc. issued a cautious economic outlook, predicting lower-than-expected full-year earnings and warning that consumers’ cautious spending could hurt profit margins.
In premarket trading, the world’s largest retailer’s shares fell 4.6 percent to $139.75 as the company continued to contend with price increases from numerous of its product suppliers in a high-inflation environment.
In addition to rising costs for food and rental housing, rising consumer prices in the United States have raised concerns that the Federal Reserve of the United States may further increase borrowing costs to dampen domestic demand, resulting in a recession in the second half of the year.
“With regard to the economic outlook, there is still a great deal of trepidation and uncertainty. “We’ve never been in a situation like this where the Fed is raising at the rate that it does,” Chief Financial Officer John David Rainey told Reuters. “Balance sheets are continuing to get thinner, and the savings rate is roughly half of what it was at a level prior to the pandemic.”
“So, because we simply don’t know what we don’t know, that makes us cautious about the economic outlook.”
Walmart, Inc. Refinitiv IBES data indicates that the company will report earnings of $5.90 to $6.05 per share for the year ending January 2024, as opposed to analysts’ estimates of $6.50 per share.
Investors in Walmart, which has more than 5,000 stores in the United States, have been paying close attention to the retailer’s efforts to negotiate better prices from its suppliers and ward off competition from rivals like Target Corp. (NYSE:). whose products tend to be more expensive.
Rainey stated that he anticipates that the trend of consumers purchasing more food and consumables from general merchandise will continue this year and be a drag on margins for inflation-strapped consumers.
Due primarily to markdowns and sales of lower-margin products, Walmart’s consolidated gross profit rate decreased by 83 basis points in the holiday quarter as a result of this.
Still, Walmart posted total revenue of $164.05 billion for the quarter that ended on January 31, a 7.3% increase from the previous year. The company reported strong demand. Revenues were predicted by analysts to be $159.76 billion. Including fuel, comparable sales in the United States increased by 8.3%, helped in part by higher prices and sales through e-commerce.
For the quarter, adjusted earnings per share were $1.71, exceeding the average expectation of $1.51.
Additionally, for fiscal 2024, the business increased its annual cash dividend by approximately 2% to $2.28 per share.
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