Walmart is cutting prices for clothing and general merchandise, he said Monday.
Indeed, soaring food and fuel prices mean shoppers have less money to spend on other items.
Stores are struggling to cope with excessive inventory levels, Insider previously reported.
Walmart dramatically cuts the price of clothing to eliminate excess inventory and attract shoppers hurt by inflation.
Food prices in the United States rose 10.4% in the year to June, the largest annual increase in more than 40 years, according to data from the Bureau of Labor Statistics.
Shoppers are spending more on food and fuel, which means they’re buying less in other product categories like clothing, Walmart said in a business update Monday.
As a result, the chain must cut prices on certain products “to run through inventory, especially clothing,” the retailer said.
Walmart had a third more stock on April 30 than on the same day a year earlier.
Employees told Insider that store back rooms were filled with pallets and outdoor storage trailers, with some workers blaming it on the company’s inventory system that automatically orders supplies, including some that their stores don’t. already had in stock.
Some employees said their stores had resorted to trailers to store excess, while one shared a photo of a stack of boxes blocking access to a private nursing room.
During a company earnings call in mid-May, CEO Doug McMillon said inventory was up due to inflation, late shipments and intentional inventory hoarding, and that the company would resolve excess inventory over the next several quarters.
Walmart had been “aggressive” with its price cuts on apparel during the first quarter and had “higher than normal” markdowns on general merchandise, which fueled buying, Walmart executives said during the the call for results.
Unexpected markdowns caused an impact of about $100 million on Walmart US gross profit in the first quarter, Chief Financial Officer Brett Biggs said.
Other retailers also cut prices due to increased inventory.
“During the quarter, the company made progress in reducing inventory, managing pricing to reflect certain supply chain costs and inflation, and reducing storage costs associated with a container backlog. shipping,” Walmart said in its update Monday.
McMillon, however, warned that the company would still have to introduce new apparel markdowns.
The company released updated guidance, saying it expected operating profit for the quarter ending July to decline 13-14%, compared to its previous guidance that said operating profit would remain stable or increase slightly.
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