Retailers are on watch now that one of the industry’s biggest players is feeling the pinch of higher prices.
Shares of Walmart fell 7.6 percent to $121.97 on Tuesday, helping push the Dow Jones Industrial Average down 0.7 percent, or 228.50 points, to 31,761.54. Kontoor Brands Inc., down 10.6 percent to $33.20; Kohl’s Corp., 9.1 percent to $26.32; Macy’s Inc., 7.2 percent to $16.79; Levi Strauss & Co., 7.2 percent to $17.73; Hanesbrands Inc., 7.1 percent to $10.34; Ralph Lauren Corp., 6.3 percent to $90.63; PVH Corp., 6 percent to $58.03, and Lululemon Athletica Inc., 5.9 percent to $283.41.
Simeon Gutman, an analyst at Morgan Stanley, described the warning as “another warning shot for retail,” but kept his “overweight” rating on the stock.“This is a significant revision for a company of Walmart’s scale and historical defensiveness/stability,” he said, noting that while the forces behind the warning were well understood, the magnitude of the earnings revision was surprising.
McMillon did note the company was “encouraged by the start we’re seeing on school supplies in Walmart U.S.”But the competitive pressure remains intense. “For retailers, there’s a double-edged sword coming at them in the weeks ahead: Students are going back to in-person classes, in many cases, meaning that they’ll need supplies,” Placer.ai said. “But on the other hand, inflation is eating up consumers’ purchasing power. How brands respond, ultimately, will determine if there are any winners.”
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