And now all of this is playing out in Walmart.Īnd, guys, it's going to take several quarters potentially to work down this inventory. So you start to see increasing signs of strength- just stress in the consumer. They noted weakness in some jeans lines inside of Target. Also a red flag just before that two weeks before, we talked to Levi's. They normally don't pre-announce, even if it's a good quarter or bad quarter.īut Mattel last week noted price weakness or sales weakness in higher-priced items, like the Barbie Dream House.
WALMART INSTOCK UPDATE
You really got to tell, I would say, over the past few weeks that this quarter or this update was coming from Walmart is not something they do. And, first of all, it's very important as an investor to always be looking for signs, and piecing things together, and looking for clues. So this seems to be what we're seeing that there are certain areas that are getting squeezed in particular at Walmart and at all these other places.īRIAN SOZZI: Yeah, let me be a little instructional here very briefly.
He said he's been writing since May that whether or not the US overall is going into a recession, it's going to feel like a recession in apparel. So one comment that caught my eye this morning was from Paula over at Citi who said, it's going to feel like a recession in apparel. And the non-food stuff is now not moving out the door. And that means that Walmart, which is trying to not raise prices too much on the necessities, is getting squeezed in that way, right? It makes higher margin on the non-food stuff. Less of the share, as you mentioned, on general merchandise, on apparel, on non-necessity, on consumer discretionary items. The shift, like it was with Target, is what people are spending their money on.Īt Walmart, they are spending more of their share on, food on necessities. What's happening here is that the company is actually forecasting second quarter comparable sales above estimates, an increase of 6%. JULIE HYMAN: But you can argue with the other grocery store chains that they actually have more pricing power than does Walmart on the consumer side. Of course, a business that has a lot to do on the e-commerce front. And then, going forward, what we see even more of this from Amazon once they report earnings. But also on the food side, I mean, Kroger. And it's impacting customers ability to spend on general merchandise categories, requiring more markdowns to move through the inventory, and particularly apparel, what Walmart said as part of the release.Īnd so with that, it largely throws into the conversation, you mentioned, Target. But particularly, food inflation double digits higher than at the end of Q1, the company is saying. The necessities where they were still having to price and have to pass prices on to consumers, that impacting some of the other discretionary parts of the business here. So this is a worrying release to say the very least.īRAD SMITH: And the warning here, too, comes back to the fact that Walmart being the largest retailer in the US, if it's hitting them, then what business is it not hitting right now? And especially in the retail front, particularly in the core categories. They ended that first quarter with inventory up over 30% coming into this quarter. And now you have Walmart really lagging here in this economic slowdown. But Target came out many months ago, took their medicine, reset investor expectations. This their second profit warning of this year so far.Īnd Target- look, it's a tough space for all them to be in. And it's tough for me to say this- that it's behind the curve on this economic slowdown. And you really get the sense of a company. The stock is down nine- now down about close to 9% here in the pre-market, with the retail giant expecting annual profits to fall by up to 13% compared to the 1% fall it previously predicted.Īnd, wow, guys, this is a very big- and I said it on Twitter, and I'll reiterate it here.
WALMART INSTOCK FULL
Retailers are shaking in their boots this morning after Walmart slashed its second quarter and full year profit outlooks, which sent the stock plunging. Video TranscriptīRIAN SOZZI: Here are three things you need to know right now. Yahoo Finance Live anchors discuss the Walmart stock plunge as the retail giant slashes its profit outlook.