Business

Amazon sinks after Walmart lowers profit outlook due to inflation concerns


Image of the front desk of the Amazon office in New York, May 1, 2019.

Carlo Allegri | Reuters

Shares of Amazon down more than 4% in extended trading on Monday after Walmart say it is lower quarterly and full-year profit guides.

Walmart announced after the bell on Monday that it expected adjusted earnings per share for the second quarter and full year to slide about 8% to 9% and 11% to 13%, respectively. It had previously forecast prices to be flat, up slightly in Q2 and down 1% for the full year.

Company blame Inflation moves up, particularly in food and fuel, which they say are affecting the way their customers spend. It also said it expected sales at similar stores in the US to grow about 6% in the second quarter, excluding fuel.

As consumers spend more on necessities, they will spend less on non-essential items, driving down prices.

CEO Doug McMillon said: “Increasing levels of food and fuel inflation are affecting how customers spend, and while we have made good progress in clearing tough categories , apparel at Walmart US is demanding more US dollars.”

The guidance cuts come days before Amazon is expected to report second-quarter earnings on Thursday. Wall Street will be watching closely for any signs that the e-commerce giant is navigating macro pressures from inflation, slower consumer discretionary spending and ongoing constraints. in the supply chain.

During last quarter’s earnings call, Amazon CFO Brian Olsavsky was asked if the company was seeing any weakness in consumer spending. Olsavsky said Amazon didn’t see any softening.

Shares of Walmart fell more than 8% during extended trading. The announcement also stunned investors in other retailers. Shares of Target and Costco decrease 5% and 2% after hours, respectively, while NordstromIts shares fell as much as 3%.

Melissa Repko contributed to this report.

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