Walmart has launched a new service: Walmart Restored. This program will allow consumers to purchase used and refurbished products, making brands like Apple, Samsung Electronics, or KitchenAid.
Walmart CEO Doug McMillan said at a news conference. “Walmart U.S. apparel needs more price cuts.”
Inventory pressure under inflation
Walmart CEO Doug McMillon said in a recent news conference that persistent inflation has led to sharp increases in the price of food and fuel, and American consumer behavior has changed as a result. In June this year, the U.S. CPI increased by 9.1% year-on-year, the highest growth rate in 40 years. Among them, energy prices rose by 7.5% month-on-month, a sharp increase of 41.6% year-on-year; food prices rose by 1% month-on-month and more than 10% year-on-year, all of which were higher than one percent. Clothing categories suffered at the end of the quarter as U.S. consumers had to cut back on other products to buy necessities like food and fuel.
The current inventory of clothing products far exceeds normal sales, so Walmart has to reduce inventory through markdowns. Shoppers can find discounts of up to 60% under the clothing category on Walmart.com now.
In the early days of COVID-19, American consumers stayed at home and worked from home for a long time. So sales of casual clothes, home office supplies, and fitness equipment were very high. In order to meet the needs of consumers, various online platforms prepared a large amount of inventory. At the end of last year, Walmart carried out inventory reserves in advance and increased the inventory by 1/3 on the original basis. However, in the first quarter of 2022, consumers’ cuts in clothing and household items exceeded Walmart’s expectations, bringing them a larger inventory pressure. Moreover, Target also lowered prices on products in a number of categories, including clothing and electronics.
The giant Walmart is under promotion + layoffs
In addition to discounts, Walmart recently announced layoffs. The layoffs involve employees in the last-mile delivery department and sales department. Walmart will also add jobs in areas including e-commerce, health, ad sales, and supply chain.
On July 25, 2022, global retail giant Walmart cut its second-quarter and full-year profit guidance following a 25% plunge in first-quarter profits, leading to a nearly 9% drop in its shares in extended trading on the same day. In its latest update, Walmart expects operating income to decline 13%-14% and 11%-13% in the second quarter and full year, respectively, and adjusted EPS is expected to decline 8%-9% and 11%-13 %. Walmart’s president and chief executive attributed it to the near-out-of-control state of inflation in the U.S., saying “rising levels of food and fuel inflation are affecting the way customers spend”.
Walmart will report its second-quarter report on Aug.16. At present, the problem of the inventory left over in the first quarter has not been solved.
