Why Walmart's Sell-Off Could Be a Buying Opportunity
Walmart's (NYSE: WMT) stock got slammed Tuesday after the retailer slashed its profit guidance for the second quarter and the full year.
Mirroring earlier comments from Target and other retailers, Walmart said that inflation in areas like food and fuel was weighing on general merchandise categories like apparel and home goods. According to the retail giant, consumers are cutting back their spending on discretionary categories because prices for consumer staples have risen so much.
Walmart actually said sales growth was stronger than expected, with comparable sales at U.S. stores up 6% in the quarter, compared to its earlier guidance of 4% to 5%, due to higher prices in categories like food. It also called for overall net sales to increase by 7.5% in the quarter. However, the bottom line is clearly taking a hit from bloated inventory, supply chain challenges, inflation, and consumer spending challenges. Management called for operating income to decline 13% to 14% in the second quarter and 10% to 12% for the full year, excluding divestitures.
Source Fool.com
