US-based retail giant Walmart has lowered its second-quarter (Q2) and full-year profit outlook for the fiscal year 2023 (FY23) in response to the rising cost of food and fuel.
The revised outlook is primarily due to pricing actions aimed to improve inventory levels at Walmart and Sam’s Club stores in the US, as well as its mix of sales.
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Walmart expects consolidated net sales growth of around 7.5% and 4.5% for Q2 and the full year respectively. Excluding divestitures, it expects its consolidated full-year net sales to increase by around 5.5%.
The company’s updated consolidated net sales outlook for the full year is higher than its previous expectation of approximately 4%.
In its latest update, Walmart expects its US comparable sales, excluding those of fuel, to grow by 6% in Q2, while its expected growth remains unchanged at around 3% for the second half of the year.
For Q2, the retailer anticipates its operating income to decrease by 13-14%, while for the full year, this figure is expected to drop by 11-13%.
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By GlobalDataIts operating income for the full year is expected to decline by 10-12%, excluding divestitures.
Walmart has forecast its operating margin to be around 4.2% for Q2 and 3.8-3.9% for FY23.
The retailer expects its adjusted earnings per share (EPS) for Q2 and FY23 to decline by around 8-9% and 11-13% respectively.
Walmart president and CEO Doug McMillon said: “The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart US is requiring more markdown dollars.
“We’re now anticipating more pressure on general merchandise in the back half; however, we’re encouraged by the start we’re seeing on school supplies in Walmart US.”
Earlier this month, Walmart partnered with US-based automotive start-up Canoo to expand its last-mile delivery fleet.
