Shares of Walmart (WMT) fell 11% after the retailer reported a big first quarter earnings miss
and lowered its forward guidance.
The plunge in Walmart’s stock was the biggest single day decline in the company’s share price
in more than 20 years, and came after the Bentonville, Arkansas-based retail giant cut its full-
year profit outlook due to inflationary pressures, especially regarding food and gas.
The disappointing performance shook Wall Street’s faith in Walmart’s ability to cope with higher
costs for merchandise, transportation, and labour.
Walmart’s stock sank 11% to $131.35 U.S. for the biggest intraday drop since February 2000.
Walmart had gained 2.4% so far this year prior to yesterday’s (May 17) drop.
The company said that its earnings are likely to drop about 1% this year, the retailer said in a
statement, abandoning its previous forecast for a mid-single-digit gain. In the first quarter,
adjusted profit sank to $1.30 U.S. a share, below the lowest of 29 analyst estimates.
Surging fuel prices pushed up costs faster than Walmart was able to pass them along to
consumers last quarter, the company said. The company is also contending with labour
challenges and temporary overstaffing, higher costs for containers and storage, excess
inventory, and a shift in spending away from general merchandise.
For the current quarter, Walmart said it now expects earnings to be “flat to up slightly” compared
with a prior view of a low- to mid-single-digit increase.
Same-store sales at US Walmart stores rose 3% in the first quarter, excluding fuel, topping
analyst estimates for 2% growth. Revenue climbed 2.4% to $141.6 billion U.S., while Wall Street
had expected $139.1 billion U.S.
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