A profit warning by Walmart ignited a sell-off in shares of major US retailers late on Monday, quickly evaporating over $100 billion in stock market value in extended trade.
Sounding an alarm that inflation is hurting its shoppers and forcing them to change what they spend on, Walmart cut its forecast for full-year profit, saying it expects its adjusted earnings per share to drop as much as 13 per cent.
Inflation is leading customers to spend more on food and less on higher-margin merchandise, Walmart said in a filing. That change in consumer spending has forced Walmart to cut prices on items like apparel in order to reduce its inventory.
Walmart's stock tumbled over 9 per cent in extended trade, and other big retailers also sold off. Target fell over 5 per cent and Amazon was down about 4 per cent. Meanwhile Costco Wholesale Corp, Best Buy, Dollar General and Dollar Tree each declined more than 3 per cent. Home Depot fell almost 2 per cent.
ALSO READ - China's Alibaba to apply for dual primary listing in Hong Kong
Together, US retailers were down more than $100 billion in stock market value, based on the after-hours declines in their share prices, with Amazon and Walmart accounting for the vast majority of that decline.
Monday's after-hours slide in retailers' shares adds to a 24 per cent drop in the S&P 500 retailing index so far in 2022.
