Although the prices of household items continue to skyrocket, Walmart announced on Monday that it would be reducing prices on select items, as well as reducing its profit outlook for Q2 as inflation continues to affect consumer behavior.
“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 U.S. is requiring more markdown dollars,” Walmart CEO and President Doug McMillon said in a company release. “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 U.S.”
Inflation-related price upticks on necessities like food and other household supplies have led many to de-prioritize nonessential items like clothing, the retailer said.
Walmart also cut back significantly on inventory during the quarter as prices are expected to be marked down in the general merchandise category, which includes items like clothing, electronics, and toys.
Though the price decreases are great news for consumers, they mean quite the opposite for the companies imposing them — less money being spent by customers means less of a profit gain for the retailers.
Walmart explained that many customers have been coming to the store (known for its low prices) to “save money during this inflationary period” which can be reflected in the grocery gains reported by the retailer.
Still, Walmart remains hopeful that Q2 results will be profitable, as the company stated that it expects U.S. same-store sales to increase around 6% during Q2 of 2022.
Walmart follows in the footsteps of rival chain Target, which announced in June that it would begin storewide markdowns and inventory clearouts in an effort to keep its head above water amid inflation and supply chain issues.
Walmart was down around 8% in premarket trading on Tuesday.