Amazon sinks after Walmart lowers profit outlook on inflation concerns

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  • Shares of Amazon slid Monday after Walmart announced it was cutting its quarterly and full-year profit guidance.
  • Walmart blamed the move on inflation, which it said is affecting how its consumers are spending.
  • The announcement comes just a few days before Amazon is expected to report second-quarter earnings on Thursday.

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Shares of Amazon fell more than 4% in extended trading on Monday after Walmart said it was lowering its quarterly and full-year profit guidance.

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Walmart announced after the bell on Monday that it now expects same-store sales in the US to rise by about 6% in the second quarter, excluding fuel. The company blamed the move on rising inflation, particularly in food and fuel, which it said are affecting how its customers spend.

As consumers spend more on necessities, they’re spending less on non-essential items, spurring discounts.

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“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 US is requiring more markdown dollars,” CEO Doug McMillon said in a news release.

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

During last quarter’s earnings call, Amazon CFO Brian Olsavsky was asked whether the company is seeing any weakness in consumer spending. Olsavsky said Amazon had not seen any softness.

Walmart’s stock fell more than 8% in extended trading. The announcement also spooked investors in other retailers. Shares of Target and Costco slid as much as 5% and 2% after hours, respectively, while Nordstrom’s stock was down as much as 3%.

Melissa Repko

WATCH: Setting up ahead of Big Tech earnings

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Credit: www.cnbc.com /

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