US retail giant Walmart’s profits were eaten into by inflation as it maintains its outlook for the next financial year despite revenue being up 8.4 per cent.
The supermarket chain took in $152.9bn in Q2 but said this strong growth was “partially driven by inflation”, which tempered its outlook, and its profits.
Its comparative sales were up 6.5 per cent while its e-Commerce and food sectors also experienced growth but its gross profit rate declined 132 basis points.
This comes after the US inflation rate his 9.1 per cent earlier in the month, with the Federal Reserve hiking interest rates by 0.75 percentage points last month.
Walmart, which owns UK supermarket chain Asda, said its international net sales were at $24b.4n, an increase of almost six per cent, while its advertising businesses around the world increased by 30 per cent.
Despite strong results, it maintained guidance for the third quarter, expecting sales growth of five per cent, impacted by more than $1bn in currency fluctuations.
For the next fiscal year, it expects there to be sales growth of about three per cent, with Doug McMillon president and CEO, saying he was “ “pleased to see more customers choosing Walmart during this inflationary period, and we’re working hard to support them as they prioritise their spending.
“The actions we’ve taken to improve inventory levels in the U.S., along with a heavier mix of sales in grocery put pressure on profit margin for Q2 and our outlook for the year.
“We made good progress throughout the quarter operationally to improve costs in our supply chain, and that work is ongoing. We continue to build on our strategy to expand our digital businesses, including the continued strength we see in our international markets.”