The major retailer’s inventory rose 25% at the end of the second quarter from a year earlier to $59.9 billion.
Walmart raised its annual profit forecast slightly on Tuesday, partially reversing a significant drop from less than a month earlier, as discounts to clear excess inventory and lower gasoline prices have already taken off. helping major retailers beat quarterly sales forecasts.
Shares rose 5.2% when the New York Stock Exchange opened Tuesday morning. Shares of competing retailers Target, Costco and Best Buy also rose.
Last monthWalmart shares drop nearly 9% after the company slashed its profit outlook for the second quarter and full year, underlining that increase in food and petrol prices are forcing shoppers to cut back on items like clothing that offer higher profit margins.
Walmart recently implemented steep discounts on items like clothing to try to reduce the more than $61 billion worth of inventory it had at the end of the first quarter.
Other major US retailers such as Target and Best Buy have also reported findings challenge in the movement of surplus goods.
Walmart reported inventory of $59.92 billion at the end of the second quarter on July 31. This is 25% higher than last year’s levels.
“I think it will take another quarter, maybe a little into the fourth quarter, to get back to where we want to be from an overall inventory perspective,” said Walmart CFO John David Rainey.
Rainey added that consumers at Bentonville, the Arkansas-based retailer, are continuing their pattern of buying food cheaper than regular goods, despite falling gas prices.
“Instead of buying maybe cold cuts or beef, they are dealing in things like canned tuna, chicken and even beans. We’re seeing the same thing in terms of quantity, where they’re trading for a smaller package size at a more affordable price. So instead of buying 12, buy six in a pack,” he said.
Back-to-school shopping boosted Walmart’s sales late last month. However, many parents choose to buy school supplies rather than clothes, Rainey said, adding that he believes sales of school clothes will increase in the next few weeks.
The prices consumers pay for goods and services also show signs of abating recent weeks. Consumer Price Index rose 8.5% in July, 9.1% lower read in juneThis is largely due to the sharp drop in oil prices.
The price cuts helped boost sales at Walmart stores in the United States that have been open for at least a year, up 6.5 percent, beating previous forecasts for a 6% increase.
Total revenue increased 8.4% to $152.86 billion in the second quarter. However, falling prices for discretionary products, slowing demand for items such as home appliances, electronics and clothing, and rising labor costs have kept the company’s quarterly operating income down. company fell 6.8% to $6.85 billion.
Same-store sales for Walmart US are expected to grow 3%, the company said.